Opinion op the court by
JUDGE HOBSON
Affirming.
Oil May 9, 1895, John I. Moore executed a mortgagei to William M. Layson and others to secure them as creditors in certain debts owing by him. On August 29, 1895, he sold eighty-five head of cattle, which he owned at the time the mortgage was executed, and received therefor a check for $4,557.75. This check he deposited with the Northern Bank of Kentucky, and was credited by the amount on its books. It held a note against him for $4,534.78, which had' been due for three months, and on September 4, 1895, it charged the note to his account. After this he checked on the account, but the bank refused to pay. The reason for charging the note to the account was that the surety in the note denied signing it, and the bank was advised that it released the surety if it did not apply the deposit to the payment of the note. See Pursifull v. Banking Co., 97 Ky., 154" court="Ky. Ct. App." date_filed="1895-03-22" href="https://app.midpage.ai/document/pursifull-v-pineville-banking-co-7133130?utm_source=webapp" opinion_id="7133130">97 Ky., 154 (17 R. 38) (30 S.W., 203" court="Ky. Ct. App." date_filed="1895-03-22" href="https://app.midpage.ai/document/pursifull-v-pineville-banking-co-7133130?utm_source=webapp" opinion_id="7133130">30 S. W., 203). After all this, on September 21, 1895, Sallie E. Barnett filed her petition in equity against Moore and the holders of the mortgage executed on May 9th, alleging that she was a creditor of Moore, that he was insolvent, and that the mortgage was executed by him in contemplation of insolvency, with the intent to prefer the mortgagees to the exclusion of his other creditors. No mention was made in this petition of the transaction with the Northern Bank of Kentucky; but on November 7, 1895, the Farmers’ National Bank of Cynthiana filed its petition attacking in the first paragraph the mortgage of May 9th, and in the second paragraph *354made the following allegation's' “The plaintiff further says that on the said 9th day of May, 1895, the defendant, John I. Moore, owned a large lot of feeding cattle, or fat cattle, the number or value of which is to the plaintiff unknown; and that on the-d!ay of August or September, 1895, he sold eighty-one (81) head of cattle to one Moses Kahn for $5,811.75, and received the purchase price therefor, and the same was deposited to his credit, with the defendant, the Northern Bank of Kentucky, and the said defendant, the Northern Bank of Kentucky, is now seeking to appropriate said sum of money to the satisfaction of the ' debt d'ue to it by the defendant, John I. Moore, before the 9'th day of May, 1895; and'plaintiff says that the money so deposited, 'being the avails of the cattle ' owned by John I. Moore on the 9th day of ' May, 1895, passed by his act- of preference committed on said day, as hereinbefore stated', to and for the benefit of all his creditors, and was an act done, suffered, or permitted' by the said défendant, John I. Moore, in contemplation of insolvency, and with the design to prefer said bank to the exclusion, in whole or in part, of his other creditors.” The cases were consolidated, and on final submission, the ' court, at the November term, 1896, adjudged the mortgage an act of insolvency, and referred the cases to the commissioner to report what property Moore owned at the' time the mortgage was executed, and what had become of it and the proceeds. The commissioner, on June 8, 1897, reported the sale of the cattle, the deposit of the money with the bank, and its application by the bank to the payment of the note, as above stated. The bank at this time had filed no answer to the petition, but only a demurrer'. After this its demurrer was overruled.' Also a motion by it that the plaintiff be required' to elect *355whether it would attempt to proceed against the Northern Bank to refund the.money as being the proceeds of property owned by Moore at the time of his committing the act of insolvency, or rely upon the payment of -the note as having been made by Moore in contemplation of insolvency, with the design to prefer the bank to the exclusion of his other creditors. «In overruling this motion the court placed its decision on the ground that only one cause of action was set up; to-wit, the refunding of the money deposited by- Moore as being the proceeds of property owned by him at the time of his' committing the alleged'act of insolvency. At the December term- of 189T the bank filed answer, in which it denied that, the transaction was done in contemplation of insolvency by Moore, or to prefer it to his • other creditors, but alleged that it was in good faith, and before any suit had been filed attacking the mortgage; that it had no notice that Moore was insolvent, or had committed an act of insolvency; and that the deposit was applied to the payment of the note on the advice of counsel, the surety disclaiming having signed the note. The case having been submitted at the March term, 1899, the court ordered ' the Northern Bank to pay to its receiver the amount of the deposit. From this judgment the bank appeals.
No reply was filed to the answer -of the bank, but its allegations were in the nature of an affirmative denial, and we do not think a reply was necessary. It is earnestly insisted for the bank that, the .transaction with it having occurred before any suit was filed attacking the mortgage, under section 1913, Kentucky Statutes, the court was without power to compel it to surrender the money to the receiver, and, to sustain this conclusion, Fuqua v. Fer*356rell, 80 Ky., 69" court="Ky. Ct. App." date_filed="1882-02-11" href="https://app.midpage.ai/document/fuqua-v-ferrell-7131260?utm_source=webapp" opinion_id="7131260">80 Ky., 69 (3 R. 571) is relied on. Substantially the same question was made in Baker v. Kinnaird, 94 Ky., 5" court="Ky. Ct. App." date_filed="1893-02-02" href="https://app.midpage.ai/document/baker-v-kinnaird-7132765?utm_source=webapp" opinion_id="7132765">94 Ky., 5 (14 R. 695) 21 S.W., 237" court="Ky. Ct. App." date_filed="1893-02-02" href="https://app.midpage.ai/document/baker-v-kinnaird-7132765?utm_source=webapp" opinion_id="7132765">21 S. W., 237, where the debtor had made a number of transfers, after 'the- original act of insolvency, and it was held that “all the transfers of real and personal estate and collections made from and after that date by reason of the transfers and in payment *f these debts passed to the creditors.” The court thus reasoned the matter: “We are aware of the oases -cited of Southworth v. Casey, 78 Ky., 395" court="Ky. Ct. App." date_filed="1880-04-01" href="https://app.midpage.ai/document/southworth-v-casey-7131054?utm_source=webapp" opinion_id="7131054">78 Ky., 395, and Fuqua v. Ferrell, 80 Ky., 69" court="Ky. Ct. App." date_filed="1882-02-11" href="https://app.midpage.ai/document/fuqua-v-ferrell-7131260?utm_source=webapp" opinion_id="7131260">80 Ky., 69. In the first case the debtor, before suit was brought, sold some of the property to a bona fide purchaser, and obtained the money; and this court held that parties who purchased in good faith could not be compelled to surrender the property, because the' statute provides that the court shall compel every person, acquiring by purchase, assignment or otherwise, property- or effects of the debtor after the suit contemplated by that act shall be instituted, to surrender the same to the receiver. The question decided in that case does not arise here, for the' reason that none of the estate of the debtor was purchased in good faith, but all the collaterals- and mortgages taken to secure antecedent debts by an insolvent debtor with the design to prefer, and the sums of money collected by the creditor from the collaterals, is the money the chancellor requires refunded. The debtor has paid no money, as in the case of Fuqua v. Ferrell, but the creditor has collected it from the pledged estate, which pledge was an act of insolvency within the statute. In other words, there are no bona fide purchasers in this- case, and, while there are bona fide creditors, they have brought themselves within the statute by obtaining the -preferences already referred to. Bona fide creditors are not protected unless the debt and *357mortgage are simultaneously created and executed before suit brought, without knowledge of the contemplated insolvency and the design to prefer.” In the subsequent case of Oliver v. Sutton, 1,02 Ky., 334; (19 R. 1368) 43 S.W., 475" court="Ky. Ct. App." date_filed="1897-12-01" href="https://app.midpage.ai/document/oliver--obryan-v-sutton-7133705?utm_source=webapp" opinion_id="7133705">43 S. W., 475,where the same question was made again, the court said, after quoting the sections of the statute: “We see, therefore, that the proceeding contemplated by the act is one to secure the possession by the court of all the property owned by the debtor at the time the act was committed which operated as an assignment, and to administer the estate of the insolvent in the same manner as the estate of a deceased person is administered. To secure the possession, it was essential to make parties to the .pro.ceeding, all persons to whom transfers had been made giving preferences, and it was essential to make complete, averments as to all such transfers which were made prior to the beginning of the suit; for otherwise, as distinctly held in Fuqua v. Ferrell, 80 Ky., 69" court="Ky. Ct. App." date_filed="1882-02-11" href="https://app.midpage.ai/document/fuqua-v-ferrell-7131260?utm_source=webapp" opinion_id="7131260">80 Ky., 69, the surrender of the property sotransferred could not be compelled. Holding this view as to the scope and meaning of the act, we are of opinion that all transferees, within the statutory period of limitation, were properly parties defendant to the cross petition of appellants, and were, moreover, necessary parties, if it were intended to subject the property transferred to them to the proceeds of administration as a part of the insolvent’s estate. The object authorized by the statute to be accomplished is the declaration and administration of a trust embracing all the property of the insolvent debtor for :the benefit of all his creditors. The limitation sought to be applied by the appellees, the Western Rank and others, would result in the declaration and administration of a trust embracing only such property as was transferred to a' single creditor, together with property *358transferred subsequent to the bringing of the suit. Taking the whole statute together, it is impossible to believe that this could have been the legislative intent. As a matter of course, each of the preferences alleged can not be adjudged to operate as an assignment, but the earliest preference established within the period of limitation should be so adjudged, and the subsequent preferential transferees be adjudged to surrender the property obtained by them.” The circuit court seems to have followed these cases. The proof warrants the following conclusion: Moore was insolvent at the time the deposit was made and when the note was charged to his account. The bank knew this, or had reason to believe it. The deposit was made in the usual course of business. Moore did not have in mind, at the time, the giving of a preference to the bank. He intended checking the money out in his business. But the preference of the bank was the logical and natural result of his depositing the money there. The bank did not intend to charge the note to the account when the deposit was made. This was suggested by its learning from the surety that he claimed not to have signed the note, and by the advice of its counsel that-, if it allowed the money withdrawn, it would release the surety. It is insisted for the bank that, the deposit having been made in the usual course of business, without actual intention on the part of Moore to give it a preference over his other creditors, and the amount having been applied to the payment of the note by the bank in good faith, as it had to do, or release the surety, the bank should not now be made to give up the money, as by the transaction the surety has been released, and it can not be placed in statu quo. No suit had been brought against Moore, at the time of the transaction, attacking the *359mortgage made in May as a preferential act, and the transaction with the bank can not be assailed unless it was itself a preferential act under the statute. To give it this character, the proof as to the design to prefer the bank to his other creditors must be established by the proof without regard to the prior transaction in which the mortgage was made. It has been held that, where a debtor makes a transfer or payment to one of his creditors with the. knowledge that he is insolvent, the design to prefer will be presumed, unless the accompanying circumstances show plainly that there was no such intention. This rests upon the .presumption that one designs the usual result of his act. But the presumption is not absolute. The intent of the debtor is the essence of the statute. Still the purpose of the statute would be defeated if it were denied application simply .because the debtor did not in fact contemplate the necessary effect of his act. If Moore had handed the check for $1,557.75 to' the bank, and directed the proceeds collected and credited on this note, undoubtedly the transaction would have been within the statute. He can not be allowed to do by indirection the same thing without the same result. His act not only put it in the power of the bank, but imposed on it the necessity of applying the proceeds of the check to the payment of the note; for, if it had failed to do this, it would have released the surety in the note, and, after paying out the money, it would have had nothing to look to for its debt but the personal obligation of Moore, who was insolvent. The aim of the statute is to secure equality between creditors, and its just purpose can not be defeated in such a way. This is the equity of the case. Grimes v. Grimes, 86 Ky., 511" court="Ky. Ct. App." date_filed="1888-01-07" href="https://app.midpage.ai/document/grimes-v-grimes-7131956?utm_source=webapp" opinion_id="7131956">86 Ky., 511; (9 E. 694) 6 S.W., 333" court="Ky. Ct. App." date_filed="1888-01-07" href="https://app.midpage.ai/document/grimes-v-grimes-7131956?utm_source=webapp" opinion_id="7131956">6 S. W., 333. In McMakin v. Stratton, 82 Ky., 226" court="Ky. Ct. App." date_filed="1884-09-11" href="https://app.midpage.ai/document/mcmakin-v-stratton-7131532?utm_source=webapp" opinion_id="7131532">82 Ky., 226 (8 R. 766) renewal notes bad been ac*360eepted, which were forgeries as to the surety. It was held that the surrender of the old notes and the acceptance of the new ones by the creditor did not release the surety on the original note. In Struss v. Bank, 89 Ky., ,61 (11 R. 333); 11 S.W., 769" court="Ky. Ct. App." date_filed="1889-06-01" href="https://app.midpage.ai/document/struss-v-masonic-savings-bank-7132211?utm_source=webapp" opinion_id="7132211">11 S. W., 769; 12 S. W., 266, the credit- or was induced by a fraudulent representation to cancel the note upon which the surety was bound. It was held that neither the surety nor any one else should be allowed to assert rights or claim benefits derived through the fraud of others, and a number of other cases are cited to sustain this conclusion. The statute against preferences by insolvent debtors applies, however innocently the creditor may act in the transaction. Nock’s Ex’r v. Goodloe, 5 Ky. Law Rep., 217. The principle announced in the foregoing cases should, therefore, apply where 'a note is discharged by a payment which is afterwards adjudged within the statute. Failing debtors are often especially solicitous to protect their sureties. When money is tendered to the creditor, or he has the means of retaining it in his hands, he is bound to accept it or retain it, in order to 'hold the surety. The transaction is good if not attacked within six months, and when attacked and a payment is adjudged within the statutes as, as by the terms of the statute, such transfers are subject to the control of courts of equity. (Ky. St., sec. 1911.) The court must, upon equitable principles, place the parties where they were originally. We are, therefore, of opinion that on the merits the judgment complained of is right. If there was any defect in the petition, it was cured by the answer, proof, and judgment, and on the whole case we see no error to the prejudice of appellant’s substantial rights. The judgment is affirmed.