claimed the goods; and it appears in the record that the law firm of which the trustee is a member represented petitioning creditors, and hence there was actual notice of such claim. Amounts paid out by trustees otherwise than is allowed in the bankrupt act will not be allowed in the settlement of the estate. The manifest purpose of congress in requiring trustees, referees, and designated depositories to give bonds was to protect estates in bankruptcy from (among other acts on the part of these officers of the court) paying out funds otherwise than the law and rules permit. For this amount ($1,000) the trustee is primarily liable on his bond; and, if the amount was paid by or under the authority of the referee, this officer would be liable secondarily on his official bond, as would the designated depository if the fund had been deposited therein and paid out otherwise than is provided in the rules above cited, which rules have been duly certified as required. To deposit the funds of a bankrupt estate in any bank other than a designated depository renders the officers making such deposit liable. The claim of the O. K. Stove & Range Company, amounting to $607.27, mostly for attorneys' fees and expenses, except as allowed by the special master, is disallowed. Two items in this claim are for bonds, one it does not appear for what it was given; and the other states, bond to indemnify the marshal. The costs in bankruptcy go, as in other causes, to the prevailing party. These parties have not prevailed, and are not entitled to costs. They are entitled to have the filing fees refunded, under the act (section 2, subd. 18 [U. S. Comp. St. 1901, p. 3421]). It is presumed the bonds were given in a surety company, but this does not appear, and no voucher is filed showing the

amount.

Prior to the act of congress giving the privilege of giving bonds in surety companies (a modern convenience), such a thing as a fee for bondsmen was unheard of as costs. There is no act making it taxable as costs, and, while courts may have allowed such costs to prevailing parties litigant, it is a new departure, and has not yet become the rule of court. But this is upon a supposition or presumption. It does not appear the amounts were paid a surety company, and they must be disallowed for the reasons stated in the report of the special master.

After paying the amounts set out in the report of the special master, including the bill of costs in this proceeding in the United States court, and the fees of the trustee as fixed in the bankrupt act, the balance in the depository will be at once reported to this court. And this proceeding in bankruptcy is held for further order.

WHITE et al. v. BRADLEY TIMBER CO.

(District Court, S. D. Alabama. November 26, 1902.)

No. 148.

1. ACT OF Bankruptcy-FAILURE TO DISCHARGE LIEN-Intent.

Under Bankr. Act, § 3, cl. 3 [U. S. Comp. St. 1901, p. 3422], providing that acts of bankruptcy by a person shall consist of his having "(3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings," the intent of the insolvent is immaterial; and when an insolvent corporation fails to cause a preference by legal proceedings obtained by one creditor to be vacated or discharged by showing that the claim is illegal or unfounded, or by paying the debt, such insolvent commits an act of bankruptcy.

In Bankruptcy.

Fitts & Stoutz, for complainants.

Fred G. & C. L. Bromberg, for defendant.

TOULMIN, District Judge. A jury trial was demanded by the alleged bankrupt, which, under the charge of the court, resulted in a verdict finding that the company had committed an act of bankruptcy under clause 3 of section 3 of the bankrupt act [U. S. Comp. St. 1901, P. 3422], being the provision relating to preferences under legal proceedings. A motion was made by the defendant company to set aside the verdict on the ground that the court erred in giving the charge requested by the petitioners and in refusing the charges requested by the defendant. After due consideration of the motion and the argument submitted in its support the motion is denied.

A careful examination of the authorities satisfies me that the conclusion reached by me is sustained by a decided weight of authority. I cite, as sustaining that conclusion, the foilowing: In re Reichman. (D. C.) 91 Fed. 624; In re Moyer (D. C.) 93 Fed. 188; In re Ferguson (D. C.) 95 Fed. 429; In re Rome Planing Mill (D. C.) 96 Fed. 812; Manufacturing Co. v. Stoever (1st Cir.) 38 C. C. A. 200, 97 Fed. 330; Wilson v. Nelson, 183 U. S. 191, 22 Sup. Ct. 74, 46 L. Ed. 147.

The principal end of the bankrupt law is to take into legal custody all the property and assets of a man who is unable to pay his debts for the purpose of making a fair and just distribution of them among his creditors. The theory is that when a man is unable to pay his just debts the property remaining to him rightly belongs to his creditors, and ought to be distributed ratably among them towards the satisfaction of their debts. In order to secure this purpose of the bankrupt law that is, the ratable distribution of the property of an insolvent debtor among his creditors-no one creditor should be suffered or permitted to obtain a preference over the other creditors. If he is "suffered or permitted" to do so by the debtor's failure to vacate or discharge the preference, either by showing that the claim was illegal or unfounded or by paying the debt, the result is to leave the debtor as having committed an act of bankruptcy. The fact of such failure

11. See Bankruptcy, vol. 6, Cent. Dig. § 82.

is, in contemplation of clause 3, § 3, of the bankrupt law, an act of bankruptcy.

It will be observed that the clause of the bankrupt law referred to says nothing about the bankrupt's intent to enable the creditor to secure a preference; neither does it use the word "procure," which might seem to imply that the debtor must take some part in bringing the preference about, as was the case under the bankrupt act of 1867. The actual results only are considered by the present act. The actual result attained by the creditor seems to be the dominant fact. The debtor's intent regarding the matter is wholly immaterial. In Re Rome Planing Mill, supra, the court said: "The debtor's intent is not made an ingredient. It is enough that the creditor has obtained a preference, and that the debtor has permitted it to remain undischarged. What was the debtor's intent regarding the matter is wholly immaterial."

In Manufacturing Co. v. Stoever, supra, the circuit court of appeals, in considering the proposition submitted by the appellant (the alleged bankrupt corporation), that the words "suffered or permitted" found in the statute must have a narrow, literal interpretation, said:

“In giving the words a narrow interpretation, the appellant refers only to the following portion of the statute cited, namely, 'suffered or permitted.' while insolvent, any creditor to obtain a preference through legal proceedings. It maintains that a corporation cannot file a voluntary petition in bankruptcy, and thus defeat legal proceedings, and that, therefore, as the appellant is a corporation, it cannot be said to have 'suffered or permitted' what ensued from them. Regard, however, must be had to the whole of clause 3: and, in view of that, what the appellant 'suffered or permitted' was the sale of its property through legal proceedings. This was clearly the true act of bankruptcy, within the contemplation of the statute, although the statute is somewhat awkwardly expressed."

Views contrary to those held by the authorities I have cited are to be found in the dissenting opinion in Wilson v. Nelson, 183 U. S. 191, 22 Sup. Ct. 74, 46 L. Ed. 147, and in the opinion of the court in Duncan v. Landis (3d Cir.) 45 C. C. A. 666, 106 Fed. 839, opinion by Circuit Judge Gray, concurred in by District Judge Bradford, and dissented from in an opinion by Circuit Judge Dallas.

So far as I have been able to find, the only decision sustaining the contention of counsel for the defendant in this case is that of the circuit court of appeals of the Third circuit, in Duncan v. Landis, supra, (and that concurred in by two of the judges only), and In re Nelson (D. C.) 98 Fed. 76. The last case was overruled by the decision of the United States supreme court. Wilson v. Nelson, supra. An order will be made adjudicating the Bradley Timber Company a bankrupt, and granting said company five days in which to present a bill of exceptions and petition for appeal and review, as it may be advised.

In re VARICK BANK OF NEW YORK et al.

(District Court, S. D. New York. January 14, 1903.)

1. BANKRUPTCY-ACT OF BANKRUPTCY-PROCURING APPOINTMENT OF RECEIVER. Obtaining the appointment of a receiver by an insolvent partnership through dissolution proceedings in a state court, though such action was taken for the purpose of preventing the bankruptcy court from obtaining possession of the assets, is not an act of bankruptcy, under Bankr. Act 1898, § 3a, cl. 1 [U. S. Comp. St. 1901, p. 3422].

In Bankruptcy. On creditors' petition in involuntary bankruptcy.
Frederick M. Czaki, for petitioning creditors.
Stern, Singer & Barr, for receiver of State Court.

ADAMS, District Judge. This is a petition by the creditors to have the alleged bankrupts, composing the firm of Burrell & Corr, adjudged involuntary bankrupts as individuals and as copartners. The allegations of bankruptcy were put in issue by answer and the matter referred to a Special Commissioner to take testimony and report.

It appears that while insolvent, the alleged bankrupts applied to the Supreme Court of the State of New York for a dissolution of the copartnership and the appointment of a receiver of all their assets, with the usual powers. An order was accordingly made by the State Court, dated August 16, 1902, appointing such receiver. On the Ist day of August, 1902, the creditors' petition was filed in this court. It is alleged therein:

"First, that the alleged bankrupts within four months before the filing ol the petition herein and while insolvent transferred and disposed of assets, and did dispose, sell, secrete and remove same for the purpose of impeding, hindering delaying and defrauding creditors. Second, that while insolvent and within four months of the filing of the petition herein they conveyed and transferred assets with intent to hinder, delay and defraud their creditors by means of a fraudulent and collusive proceeding or action brought by Burrell against Corr in the Supreme Court of the State of New York in New York County, in which action a Receiver was appointed upon the motion of one party and the consent of the other which action was instituted and prosecuted for the sole purpose of controlling their assets and placing them beyond the reach of their creditors and of distributing their assets in derogation of the terms and provisions of the Acts of Congress relating to Bankruptcy, etc. Third, that while insolvent and within said four months they transferred a portion of their property to various creditors with intent to prefer them over others of the same class."

The answer does not deny the insolvency but does deny any act of bankruptcy.

The creditors, in support of the petition, have shown that while insolvent, one of the alleged bankrupts instituted the action in the State Court against his partner for a dissolution of the copartnership and, upon the consent of the defendant, procured the appointment of a receiver therein who took possession of the copartnership assets. It may be inferred from the evidence that the proceedings were instituted for the purpose of preventing the bankruptcy court from obtaining possession of the assets, in the expectation by the insolvents that they would be able to make a better settlement with their creditors than they could through bankruptcy proceedings.

The question is, whether the acts of the alleged bankrupts fall within the provisions of section 3a (1) of the Bankruptcy Act [U. S. Comp. St. 1901, p. 3422], providing that acts of bankruptcy shall consist of having:

"(1) Conveyed, transferred, concealed, or removed, or permitted to be concealed or removed, any part of his property with intent to hinder, delay or defraud his creditors, or any of them."

The Commissioner has reported that in his opinion, the alleged bankrupts committed an act of bankruptcy in having the receiver appointed under the circumstances and that an adjudication should be ordered.

The determination of the question is not without difficulty in view of the insolvency and the apparent attempt to avoid the effect of the bankruptcy law; yet as these proceedings are entirely statutory, they must rest upon the provisions of the Act. It is conceded by the creditors that justification for an adjudication must be found in the section. quoted.

In the Act of 1867, it was provided (section 39) that it constituted an act of bankruptcy for a person to suffer or procure his property to be taken on legal process with intent by such disposition of it to defeat or delay the operation of the Act, which was construed to cover the case of a person procuring his property to be taken possession of by a receiver of a State Court-In re Bininger, 7 Blatchf. 262, 3 Fed. Cas. 412, but no similar provision is found in the present Act and it may properly be concluded that Congress did not intend that under such circumstances the property of insolvents should be subject to the provisions of the present Bankruptcy Law. None of the provisions of section 3a (1) have been violated by the proceedings of the alleged bankrupts, unless the words of the section be given a construction apparently contrary to the intention of Congress. My attention. has not been called to any authority decisive of the point involved but the tendency of the courts is apparently adverse to extending the bankruptcy jurisdiction to cases not clearly within the provisions of the Law-In re Empire Metallic Bedstead Co. (D. C.) 2 Am. Bankr. R. 329, 3 Am. Bankr. R. 575, 95 Fed. 957; Id., 39 C. C. A. 372, 98 Fed. 981; In re Blair (D. C.) 3 Am. Bankr. R. 588, 99 Fed. 76; Vaccaro v. Bank, 4 Am. Bankr. R. 474, 43 C. C. A. 279, 103 Fed. 436; In re Baker-Ricketson & Co. (D. C.) 4 Am. Bankr. R. 605, 97 Fed. 489; Metcalf v. Barker (U. S. Supreme Court, Dec. 1, 1902) 23 Sup. Ct. 67, 47 L. Ed.

The petition is dismissed.