NOYES, Circuit Judge
(after stating the facts as above). The one thing absolutely essential to a preference is that the bankrupt transfer *531sonic portion of his property to the creditor. If the creditor receive none of the bankrupt’s property, there is no preference. And that is the primary difficulty with the complainant's case. The defendant bank received no property or money of the Newport Company. The Sheard Company as indorser of the note took up and paid its own funds therefor — funds in which the Newport Company had no interest whatever. It is true that the Sheard Company at the time it paid the note was indebted to the Newport Company, but that in no sense made its funds the property of the latter. An unsecured creditor has no interest in his debtor’s property until he has sequestered it. The money which the defendant received belonged to the Sheard Company, and not to the bankrupt. It follows, then, that there was no preference unless that which was actually done can be treated as the equivalent for something else. And that is the theory of the District Court’s decision. It is pointed out that, if the Newport Company had collected its claim from the Sheard Company and had itself paid the note, there would have been a transfer from the Newport Company to the bank. And it is said that it was merely a short cut for the Sheard Company to pay the note and charge the amount paid upon its account against the Newport Company — that the effect of the two transactions was the same. There would he much force in this argument if the Sheard Company stood in the transaction merely as a debtor of the Newport Company. It may well be that when a debtor with the approval of his creditor takes up the latter’s note at. a bank, and offsets the amount paid upon his debt, the payment to the bank will be treated as having been made by the creditor; the debtor being really his agent in the transaction. But that was not the situation here. The Sheard Company was the indorser of the note, and had pledged its own property as security therefor. In taking up the note and collateral it acted in its own behalf, and in no sense as the agent of the Newport Company. The note was not discharged. The Sheard Company as against the Newport Company became the bidder instead of the hank. Upon no permissible theory in law or equity can it he said that the note was paid by the Newport Company.
But it is further urged that the effect of the transaction was to appropriate certain assets of the Newport Company, to wit, its demand against the Sheard Company, to the payment of this note to the exclusion of other creditors. As already pointed out, however, this ultimate result would not make the transaction a preference; the Sheard Company alone dealing with Ihe bank and acting in its own interest. But it cannot be conceded that the result claimed would follow. If the Sheard Company, knowing the Newport Company to be insolvent, acquired the note with a view to using it as a set-off or counterclaim against its debt, it could not legally do so. Bankruptcy Raw, § 68b. And, if the Sheard Company could not offset the note against the account of the Newport Company, there was no transfer or appropriation of such account, and much less a preference. The debt could still be collected by the trustee of the Newport Company and used for the benefit of all the creditors.
Filially, it is contended, in substance, that equity requires that the decree he permitted to stand— -that the whole transaction was an eva*532sion of the bankruptcy act. We see no basis for this contention.- The note which was paid was apparently well secured by the indorser’s collateral. There was no reason why it should not have been paid in full. The bank received no more than it was entitled to without looking to the bankrupt’s property at all. It cannot be said that equity requires us to affirm a decree compelling a bank to pay back to the trustee of the maker of a note money received from an indorser, and upon the payment of which it surrendered collateral deposited by such indorser.
The decree of the District Court is reversed, with costs, and the cause is remanded, with instructions to dismiss the bill, with costs.