An intent to defraud is essential under this clause." 74 An actual intent to defraud, whether directly shown or established by presumption, must exist; the commission or permission of any of the acts therein specified with intent not to become a bankrupt is not in all cases equivalent to an intent to hinder, delay or defraud creditors.75 The intent need exist only on the part of the person making the transfer; if that exists the debtor clearly commits an act of bankruptcy, however innocent the intent of the preferred creditor or the person receiving it may be.76 If the natural consequence of a fraudulent transfer is to defraud creditors the intent will be presumed." It rarely can be established by direct proof.78 It may be inferred from the act itself as a necessary consequence of it, or it may be established by admissions and

face, were intended as mere securities, to prove that there was no intent to defraud. Acme Food Co. v. Meier, 18 Am. B. R. 550, 153 Fed. 74.

Intent to hinder, delay and defraud creditors is not shown where a mother, who had, years previously, executed continuing guar anty of her son's notes, renewals, etc., conveyed real estate of considerable value to a creditor, in satisfaction of a large indebtedness due him, in the absence of satisfactory evidence that the grantor knew at the time of the conveyance that she was insolvent or that she had any creditor other than the grantee. Merchants' Nat. Bank v. Cole, 18 Am. B. R. 44, 149 Fed. 708.

74. In re Belknap, 12 Am. B. R. 326, 129 Fed. 646; Bean, etc., Mfg. Co. v. Spoke, etc., Co., 12 Am. B. R. 610, 131 Fed. 215, 65 C. C. A. 201, intent presumed from result of transfer; Clark v. Henne, 11 Am. B. R. 583, 127 Fed. 288, 62 C. C. A. 172; Lansing Boiler Works v. Ryerson & Son, 11 Am. B. R. 558, 128 Fed. 701;

In re Wilmington Hosiery Co., 9 Am. B. R. 581, 120 Fed. 180; In re Goldschmidt, 3 Ben. (U. S.) 379, 10 Fed. Cas. No. 5,520, 3 N. B. R. 164; Langley v. Perry, 14 Fed. Cas. No. 8,007, 2 N. B. R. 596; In re Cowles, 6 Fed. Cas. No. 3,297, 1 N. B. R. 280; In re McKibbin, Fed. Cas. No. 8,859; Fox v. Eckstein, Fed. Cas. No. 5,009. 75. In re Wilmington Hosiery Co., supra.

76. In re Drummond, 7 Fed. Cas. No. 4,093, 1 N. B. R. 231.

77. In re Bloch, 6 Am. B. R. 300, 109 Fed. 790, 48 C. C. A. 650; Johnson v. Wald, 2 Am. B. R. 84, 93 Fed. 640, 35 C. C. A. 522; Wager v. Hall, 16 Wall. (U. S.) 584, 21 L. Ed. 504; Toof v. Martin, 13 Wall. (U. S.) 40, 20 L. Ed. 481, 6 N. B. R. 49; In re Smith, 4 Ben. (U. S.) 1, 22 Fed. Cas. No. 12,974, 3 N. B. R. 377; Sawyer v. Turpin, 1 Holmes (U. S.), 251, 21 Fed. Cas. No. 12,409, 5 N. B. R. 339, aff'd 91 U. S. 114, 23 L. Ed. 235; Miller v. Keys, 17 Fed. Cas. No. 9,578, 3 N. B. R. 224.

78. Van Wyck v. Seward, 18 Wend. (N. Y.) 375, 395.

declarations. The burden is, of course on him who asserts it. Thus, in the absence of proof as to when or how assets were lost, the presumption is against fraud.79 It is still an open question whether a voluntary receivership by an insolvent corporation under a State law may not be "with intent to hinder or delay creditors" and thus an act of bankruptcy, irrespective of the amendment of 1903.80 The weight of authority seems to be that it is.81 In a proceeding instituted prior to the amendment of 1903, it was held that the appointment of a receiver of an insolvent partnership was not an act of bankruptcy under this clause.82 A transfer intended to delay creditors was under the former statute held to be an act of bankruptcy.83 Allegations that the defendant. transferred his property with intent to hinder, delay, or defraud his creditors should be specific if possible, but the purpose of the law does not require greater detail than it is probable that creditors can furnish.84 An allegation, in the language of the statute, of a disposition of property to hinder, delay, and defraud creditors, is not sufficient; facts and circumstances should be stated from which the inferences may be drawn that the dispo sition of the property was done with evil intent.85

§ 14. Insolvency.-The insolvency of an alleged bankrupt at the time of the filing of the petition in an involuntary bankruptcy proceeding is only important as a defence to a conveyance made with intent to hinder, delay, or defraud creditors, charged as

79. Davis v. Stevens, 4 Am. B. R. 763. Compare In re Shapiro & Novick, 5 Am. B. R. 839, 106 Fed. 495.

80. Scheuer v. Smith, 7 Am. B. R. 384, 112 Fed. 407; In re Harper & Bros., 3 Am. B. R. 804, 100 Fed. 266; West v. Lea, 2 Am. B. R. 463, 174 U. S. 590; In re Gutwillig, 1 Am. B. R. 388, 390, 92 Fed. 337; In re Empire Metallic Bedstead Co., 1 Am. B. R. 136, 141, this point not having been passed on when this case was subsequently reversed.

81. In re Wilmington Hosiery Co., upra. Compare Bean, etc., Mfg. Co. v. Spoke Co., supra.

82. Matter of Burrell & Carr, 9 Am. B. R. 625, 123 Fed. 414, 59 C. C. A. 508.

83. In re Goldschmidt, supra. 84. In re Mero, 12 Am. B. R. 171, 128 Fed. 630.

85. In re Hark Bros., 14 Am. B. R. 400, 135 Fed. 603; In re White, 14 Am. B. R. 241, 135 Fed. 199.

an act of bankruptcy under section 3a (1),86 and the burden of showing this is on the defendant.87 Insolvency of a person as defined in the act, exists "whenever the aggregate of his property, exclusive of any property which he may have conveyed, transferred, concealed or removed, or permitted to be concealed or removed, with intent to defraud, hinder, or delay his creditors, shall not, at a fair valuation, be sufficient in amount to pay his debts." 88 The Bankruptcy Act declares that "it shall be a complete defense to any proceedings in bankruptcy instituted under the first subdivision of this section to allege and prove that the party proceeded against was not insolvent as defined in this act at the time of the filing of the petition against him, and if solvency at such date is proved by the alleged bankrupt the proceedings shall be dismissed, and under said subdivision one the burden of proving solvency shall be on the alleged bankrupt." 89 This subdivision has reference only to the first act of bankruptcy and to solvency at the time of filing the petition. It is conceivable that a debtor may have been insolvent at the time of the act of bankruptcy, but not when the petition is filed. Insolvency, other than as evidence of intent, being unimportant where the act of bankruptcy consists of hindering, delaying, or defrauding creditors, it was both proper and scientific to insert this subsection.90 It seems, therefore, that, where this act of bankruptcy is relied on, it is not necessary that the petitioning creditors either allege or prove insolvency at either period.91 On the other hand, it is clear that proof of solvency by the debtor at the time the petition is filed is a complete defense. Solvency may be pleaded by a responding creditor as well as by the alleged bankrupt.92

86. Acme Food Co. v. Meier, 18 Am. B. R. 550, 153 Fed. 74.

87. Acme Food Co. v. Meier, supra; Bankr. Act, 1898, § 3c.

88. Section 1(15), Bankr. Act, 1898.

89. Section 3-a-c, Bankr. Act, 1898.

90. In re Pease, 12 Am. B. R. 66, 120 Fed. 446.

91. West Co. v. Lea, 2 Am. B. R. 463, 174 U. S. 590; In re West, 1 Am. B. R. 261.

92. In re West, supra. See Collier, Bankruptcy, 6th ed., p. 56,

15. Meaning of words and phrases." Convey" has its common meaning and is the equivalent of "grant." The act provides that "transfer' shall include the sale and every other different mode of disposing of or parting with property, or the possession of property, absolutely or conditionally, as a payment, pledge, mortgage, gift or security." 93 The payment of a partner's individual debts out of the assets of the partnership is, as to creditors of the partnership, a transfer.94

& 16. Concealment and removal.-The Act provides that "conceal" shall include secrete, falsify, and mutilate.95 It may, perhaps, with correctness, be said that the separation of some tangible thing, money, or chose in action, from the body of the insolvent debtor's estate, and its secretion from those who have a right to seize upon it for the payment of their debts, is, within the law, a concealment, and continues such as long as the secretion remains.9 96 An attachment secured upon a fictitious debt for the purpose of preventing an attachment by a bona fide creditor has

93. Bankr. Act, 1898, § 1(25). 94. In re Gillette, 5 Am. B. R. 119, 104 Fed. 769; Mattocks v. Rogers, Fed. Cas. No. 9,300.

95. Bankr. Act, 1898, § 1(22).

As to what concealment of the property of a bankrupt will prevent his discharge, see Bankr. Act, 1898, section 14b.

The concealment of property by a bankrupt, while a bankrupt or after his discharge, is an offense against the Bankruptcy Act and is punishable by imprisonment. Bankr. Act, 1898, § 29b (1).

96. Citizens' Bank v. De Pauw, 5 Am. B. R. 345, 105 Fed. 926, 45 C. C. A. 130, where an officer of an insolvent corporation buys up at a discount, under the guise of another person, outstanding judgments against such corporation, under which its property, under the same

guise, is subsequently purchased at a judicial sale, and where the quantum of the property is not kept under cover or concealed, but remains visible, and the only concealment is that of the actual consideration paid, such transaction is not a continuing concealment within the meaning of the Bankruptcy Act, 1898, § 3a (1), although it may be fraudulent. See also Fox v. Eckstein, 9 Fed. Cas. No. 5,009, 4 N. B. R. 373; O'Neil v. Glover, 5 Gray (Mass.), 144, 159. Compare In re Quackenbush, 4 Am. B. R. 274.

Presumption of concealment. -If money belonging to an insolvent debtor has been lost or not accounted for, there is no presumption that it has been secreted or concealed. Davis v. Stevens, 4 Am. B. R. 763, 104 Fed. 235.

been considered a concealment, because the words imply not only a physical removal or concealment of the property, but also a concealment of title and the position of the property.97 The word ❝removed," as used in this clause, signifies an actual or physical change in the position or locality of the property constituting the subject of removal.98 The removal of property within the meaning of the act is a removal from the jurisdiction of the court with intent to deprive creditors of their legal rights in respect thereto."9 An insolvent debtor who absconds and takes with him property which, had he remained, must have been transferred to his trustee in bankruptcy, both "conceals" and "removes" his property with intent to defraud his creditors and commits an act of bankruptcy.1 Where property is removed by a creditor in the debtor's absence, and against his protest, the failure to take legal proceedings to recover such property is not an act of bankruptcy.2

§ 17. Second act of bankruptcy; a preferential transfer; subs. a(2). As we have heretofore shown the rule is well settled that, in the absence of statutory restrictions, an insolvent debtor may pay one creditor in full to the exclusion of all others, and has the right to sell and transfer the whole or any portion of his property to one or more of his creditors to pay or secure his debts, when that is his honest purpose, although the effect of the sale or transfer is to hinder, delay, or defeat other creditors.3 But, under the Bankruptcy Act, "having transferred, while insolvent, any portion of his property to one or more of his creditors with intent to

97. In re Williams, 1 Lowell (U. S.), 406, 29 Fed. Cas. No. 17, 703, 3 N. B. R. 286; In re Hussman, 12 Fed. Cas. No. 6,951, 2 N. B. R. 437.

98. In re Wilmington Hosiery Co., 9 Am. B. R. 581, 120 Fed. 180, the word "removed" has no application to the taking of property by a receiver of a corporation acting under competent authority.

99. In re Hammond, 1 Lowell (U. S.), 381, 11 Fed. Cas. No. 5,999, 3

N. B. R. 273.

1. In re Filer, 5 Am. B. R. 332, 108 Fed. 209. Note the additional word "destroyed" in § 14b (4) .

2. In re Belknap, 12 Am. B. R. 326, 129 Fed. 646.

3. Preferences to creditors, chap. XI, supra.

4. As to what constitutes insolvency, see Insolvency, § 4, supra; for burden of proof under this subsection, see under § 30, infra.