port, is fraudulent as to his creditors, and would be an act of bankruptcy at the instance of his creditors.52 If a transfer be made in good faith to a wife, in consideration of her release of her inchoate dower right, it is valid.53 A voluntary transfer made while the grantor was free from debt cannot be impeached by subsequent creditors, unless it be shown to have been fraudulent, or made with a view to defraud future creditors.54 Where a grantor is engaged, or is about to engage in a business involving great risks, or which is in a failing condition, such transfers are then looked upon with suspicion.55 The settlement of property of moderate value upon his wife, by a bankrupt when in prosperous circumstances, all his debts existing at the time being afterwards paid, is valid as against his creditors.56 A voluntary transfer made to a child at a time when the grantor is in prosperous circumstances, although in debt to a small amount, is not fraudulent, if it be shown that the gift is reasonable and sufficient property remains to pay debts.57 22. General assignment for the benefit of creditors. Where a debtor has made a general assignment for the benefit of creditors under a State law, whether with or without preferences, and subsequently and within four months after such assignment a petition in bankruptcy is filed against him, the deed of assignment becomes voidable, and the trustee in bankrupty may recover the property or its proceeds from the assignee.58 The legal effect of a general assignment is considered elsewhere.59 52. In re Johann, 2 Biss. (U. S.) 139, Fed. Cas. No. 7,331. Compare Adams v. Collier, 122 U. S. 382. 53. In re Porterfield, 15 Am. B. R. 11, 138 Fed. 192; In re Grundy, 17 Am. B. R. 206. 54. In re Jones, 6 Biss. (U. S.) 68, 13 Fed. Cas. No. 7,444; Barker v. Barker, 2 Woods (U. S.), 87, 2 Fed. Cas. No. 986. 55. Case v. Phelps, 39 N. Y. 164; Beecher v. Clark, 12 Blatchf. (U. S.) 256, 3 Fed. Cas. No. 1,223. 56. Smith v. Vodges, 92 U. S. 183, 23 L. Ed. 481. 57. Sedgwick v. Place, 5 Ben. (U. S.) 184, 21 Fed. Cas. No. 12,620. 58. In re Gray, 3 Am. B. R. 647; West Co. v. Lea, 174 U. S. 590, 2 Am. B. R. 463; Lea v. West Co., 1 Am. B. R. 261; In re Gutwillig, 1 Am. B. R. 78, 90 Fed. 475, aff'd 1 Am. B. R. 388, 92 Fed. 327; Davis v. Bohle, 1 Am. B. R. 412, 92 Fed. 325, aff'g In re Sievers, 1 Am. B. R. 117, 91 Fed. 366; Globe Ins. Co. v. Cleve § 23. Practice. If the property may be recovered summarily a petition, duly verified, will usually be enough to secure the order to show cause. The petition should show facts bringing the transfer or incumbrance within the terms of one or more of the subdivisions of this section.60 If the bankrupt or his agent who is in possession refuses to deliver the property, contempt proceedings may be brought. In cases where a suit is necessary, it must be for either the property or its value, and in accordance with the rules and practice of the court where brought. The trustees should not, however, bring such a suit without obtaining a direction to that effect from the referee in charge.61 Where it appears that the sale in bulk of the stock in trade of alleged bankrupts and assignments of their open accounts a few days before the filing of the petition is clearly fraudulent and null and void as to creditors under section 67e, the bankruptcy court has power to order the receiver in bankruptcy to take possession of the property pending adjudication and suit by the trustee, when appointed, to set aside the transfers.62 8 24. Liens through legal proceedings generally; subs. c and f.-Under the former bankruptcy law only attachment liens land Ins. Co., Fed. Cas. No. 5,486; Boese v. King, 108 U. S. 379; In re Romanow, 1 Am. B. R. 461, 92 Fed. 510; In re Curtis, 1 Am. B. R. 440, 91 Fed. 737. 59. See under section 3, chapter XXI, and section 23, chapter XXIV. 60. See McNulty v. Wiesen, 12 'Am. B. R. 341, in an action by a trus tee to compel an accounting by the transferees of book accounts assigned to them by the bankrupt within the four months period, an answer alleg ing that the purchase was made without any intent on the part of the defendants to hinder, delay and defraud the bankrupt's creditors, or any of them, is not impertinent, for the reason that under section 67e the defend ants are required to show that they were purchasers in good faith and for a present fair consideration; and an allegation of the bill that the assignment of the book accounts was without a present fair consideration is sufficiently met by an allegation in the answer of the cash payment of such a consideration, without setting forth the circumstances in detail. See also Johnston v. Forsyth Mercantile Co., 11 Am. B. R. 669, 127 Fed. 845. 61. See under sections 2 and 23, chapter XXIV, and section 60, chapter XXIII. 62. In re Haupt Bros., 18 Am. B. R. 585. were dissolved. Now all liens through legal proceedings are dissolved by the adjudication. Thus, the subsections under discussion are in harmony with the so-called "passive" act of bankruptcy under section 3a(3), and establish a new and important class of constructive frauds, which invalidate liens which were formerly enforced and regarded as matters of course, if not, indeed, of right.63 There was a conflict of opinion in the early administration of the law as to whether subsection f applied to voluntary bankruptcies. Some cases held that it did not. The weight of authority, however, is that both subsections may refer to either voluntary or involuntary cases.65 Some confusion also arose from the fact that two subsections with apparently the same purpose were in many respects inconsistent, but now subsection f is usually relied on as being the latest expression on the subject since it occurs later in the law. 66 Subsection f covers in general 64 terms almost every lien specifically declared voidable in subsection c, as well as many more. Subsection e is, therefore, important only in instances where subsection f does not apply. The element of insolvency at the time of the lien not always being essential under subsection c, as under subsection f, cases. where this fact is in doubt will, if possible, be brought within the former. Liens may be obtained through legal proceedings which amount to a fraud on the act irrespective of insolvency. In that event subsection c applies. The distinction between "void" and "voidable," in the respective subsections is regarded as unimportant. 63. In re Rhoads, 3 Am. B. R. 380, 98 Fed. 399. 64. In re Collins, 2 Am. B. R. 1; In re De Luc, 1 Am. B. R. 387, 91 Fed. 510; In re Easley, 1 Am. B. R. 715, 93 Fed. 419; In re O'Connor, 95 Fed. 943. 65. Mohr v. Mattox, 12 Am. B. R. 330; McKenney v. Cheney, 11 Am. B. R. 54 (Ga. Sup.); Mencke v. Rosenberg, 9 Am. B. R. 323, 202 Pa. St. 131; In re Benedict, 8 Am. B. R. 463; Brown v. Case, 6 Am. B. R. 744, 61 N. E. 279; In re Kemp, 4 Am. B. R. 242, 101 Fed. 689; In re Lesser, 3 Am. B. R. 815, 100 Fed. 433; In re Dobson, 3 Am. B. R. 420, 98 Fed. 86; In re Rhoads, 3 Am. B. R. 380, 98 Fed. 399; In re Fellerath, 2 Am. B. R. 40, 95 Fed. 121; In re Richards, 2 Am. B. R. 518, 95 Fed. 258; Peck, etc., Co. v. Mitchell, 95 Fed. 258; In re Friedman, 1 Am. B. R. 510. 66. In re Tune, 8 Am. B. R. 285, 115 Fed. 906. Several of the classes making up subsection e have been considered elsewhere.67 The phrase "in fraud of the provisions of the act" has been held, under the former law from which it is derived, to mean, in brief, any act intended to disturb or resulting in a disturbance of that equilibrium between creditors of the same class which is the basic principle of all bankruptcy laws.68 The concluding clause of subsection c is doubtless expressive of the law. It extends to liens through legal proceedings69 the rule of subrogation stated in subsection b. In order that a judgment or other lien obtained within four months of bankruptcy should be dissolved thereby, it must appear that the person whose property is subject to the lien was at the time insolvent.70 Liens through legal proceedings acquired more than four months before the bankruptcy are not affected." When the question is one of hours, only whole days are counted.72 But it is the accrual of the lien, not the entry of a judgment not amounting to a lien, from which the time runs.73 25. Invalid liens by judgment and execution.-A mere judgment is not always a lien. Until it becomes such, as by issue of execution or docketing in a register's office, it is not affected by this subsection;74 and this notwithstanding the use of the word "judgment" in the first clause.75 The law of each 67. For instance, "Within four months prior to filing the petition;" "Reasonable cause to believe that the defendant was insolvent;" "In contemplation of bankruptcy;" "Obtained or permitted;" and "Insolvency." 68. Wagner v. Hall, 16 Wall. (U. S.) 584; Buchanan v. Smith, 16 Wall. (U. S.) 277; Toof v. Martin, 13 Wall. (U. S.) 40. 69. In re Moore, 6 Am. B. R. 175, 107 Fed. 234; In re Higgins, 3 Am. B. R. 364, 97 Fed. 775. 70. Simpson v. Van Etten, 6 Am. B. R. 204, 108 Fed. 199. 71. In re Blumberg, 1 Am. B. R. 633, 94 Fed. 476. 72. Jones v. Stevens, 5 Am. B. R. 571, 48 Atl. 170. 73. Compare Parmenter Mfg. Co. v. Stoever, 3 Am. B. R. 220, 97 Fed. 330. See also Metcalf v. Barker, 187 U. S. 165, 9 Am. B. R. 36. 74. In re Kenney, 5 Am. B. R. 355, 105 Fed. 897; Levor v. Seiter, 5 Am. B. R. 576. Compare In re Darwin, 8 Am. B. R. 703; Doyle v. Heath, 4 Am. B. R. 705; 3 Am. B. R. 832, 99 Fed. 928. 75. In re Lesser, 187 U. S. 165, 9 Am. B. R. 36, 5 Am. B. R. 320; In re 79 Under the State determines when a judgment becomes a lien.76 former law, judgments, even when followed by execution and levy, were not affected by bankruptcy." Now, if in fact liens and the element of insolvency appears, such judgment-liens are annulled by bankruptcy if the petition is filed within four months.78 But this is not so where the money collected has already been paid to the judgment creditor." The term "all levies" is comprehensive enough to include a seizure of the property of an insolvent under replevin process. A judgment or decree enforcing a pre-existing lien is not necessarily within the prohibition of subsection f, since such subsection is confined to judgments which themselves create liens.81 But if a judgment is rendered upon an unsecured claim within the four months period, it becomes null and void under such subsection upon the Beaver Coal Co., 6 Am. B. R. 404, 110 76. In re Darwin, 8 Am. B. R. 703; In re Blair, 6 Am. B. R. 206, 108 Fed. 509. 77. In re Winn, Fed. Cas. No. 17,876; In re Gold, etc., Co., Fed. Cas. 5,515. 78. Compare In re Richards, 2 Am. B. R. 518, 95 Fed. 258. See also In re Benedict, 8 Am. B. R. 463; In re Stout, 6 Am. B. R. 505, 109 Fed. 794; In re Storm, 4 Am. B. R. 601, 103 Fed. 618. 79. In re Bailey, 16 Am. B. R. 289, 144 Fed. 214; Matter of Pollman, 16 Am. B. R. 144; Levor v. Seiter, 8 Am. B. R. 459, modifying 5 Am. B. R. 576. 80. In re Hymes, etc., Co., 12 Am. B. R. 477, 130 Fed. 977; Matter of 80 Weinger, 11 Am. B. R. 424, 126 Fed. 875; In re Haynes, 10 Am. B. R. 715, 123 Fed. 1001. 81. Metcalf v. Barker, 187 U. S. 165, 9 Am. B. R. 36; Hiller v. Leroy, 179 N. Y. 369, 12 Am. B. R. 733, in which case the judgment had been received and docketed more than four months prior to the filing of a petition in bankruptcy by the judgment debtors, and it was held that the lien thus impressed upon the real estate of the debtors could be enforced within such period either by a sale of the land under execution or by an action in equity to obtain a decree adjudging transfers made by the judg ment debtors to have been void. Compare Mencke v. Rosenberg, 9 Am. B. R. 323, 202 Pa. St. 131, in which case it was held that under the Pennsylvania statute, if a testatum fi. fa. is issued within the period of four months prior to the filing of the petition, a lien is created which is invalidated by section b. |