five days before a sale or final disposition of any property affected by such preference vacated or discharged such preference; or (4) made a general assignment for the

entitled to but very little credence (Oxford Iron Co. v. Slafter, 13 Blatch. 455; s. c. 14 B. R. 380), since his conduct affords stronger proof of his intention than his words (Trader's Bank v. Campbell, 14 Wall. 87; s. c. 6 B. R. 353). Nor is the intent negatived by the fact that no other debts are due at the time the preferential payment is made (Warren v. Bank, 10 Blatch. 493; s c. 7 B. R. 481), though there must be other provable claims (Beers v. Hanlin [D. C.], 99 Fed. Rep. 695). The fact that the preferential transfer or payment was made in fulfillment of a prior promise made when the debt was contracted will not negative the intent (Arnold v. Maynard, 2 Story, 349), for the obligation is no greater than if the prior promise to transfer or give security had not been made (Forbes v. Howe, 102 Mass. 427; Sawyer v. Turpin, 91 U. S. 114; S. c. 13 B. R. 271; Nat. Bank v. Hunt, 11 Wall. 391; s. c. 4 B. R. 616). Yet, a distinction has been drawn where the agreement to give security on, or transfer, certain specific property was made at the time the obligation arose. A conveyance in fulfillment of such a promise within a reasonable time was held not to be a preference (Gattman v. Honea, 12 B. R. 493. See also in re Jackson Iron Co., 15 B. R. 438), the general rule being that the preference can only arise when the transfer or payment is applied to antecedent debts (Burnhisel v. Firman, 22 Wall. 170; s. c. 11 B. R. 505; Clark v. Iselin, 21 Wall, 360; s. c. 11 B. R. 337; Tiffany v. Boatman's Sav. Inst., 18 Wall. 376; Cook v. Tulliss, 18 Wall. 332; s. c. 9 B. R. 433; Sawyer v. Turpin, 91 U. S. 114; S. c. 13 B. R. 271. See also 60, 67 d). No transfer or payment is a preference within the meaning of the statute, if the creditor has not been injured by it (Winter v. R. R. Co., 2 Dill. 487; s. c. 7 B. R. 289; Livingston v. Bruce, 1 Blatch. 318; Coxe v. Hale, 10 Blatch. 56; s. c 8 B. R. 562; Catlin v. Hoffman, 9 B. R. 342, Winslow v. Clark, 47 N. Y. 261; Windsor v. Kendall, 3 Story, 507; Rix v. Bank, 2 Dill. 367; Schlitz v. Schantz, 2 Biss. 248; Rumsey & Sikemier Co. et al. v. Novolty & Machine Mfg. Co. [D. C.]. 99 Fed. Rep. 699). The intent is to be drawn from the whole transaction (Sparhawk v. Richards, 12 B. R. 74; Gattman v. Honea, 12 B. R. 493; in re McKay, 7 B. R. 230; in re Perrin, 7 B. R. 283). A preferential transfer made under coercion is an act of bankruptcy (Arnold v. Maynard, 2 Story, 349; Clarion Bank v. Jones, 21 Wall. 325; S. c. 11 B. R. 381; Sawyer v. Turpin, 91 U. S. 114; S. c. 13 B. R. 271; Giddings v. Dodd, 1 Dill. 115; s. c. 4 B. R. 657; Strain v. Gourdin, 2 Woods, 380; s. c. 11 B. R. 156). So also is one made in payment of a claim which cannot be proved in bankruptcy (In re Dibble, 2 B. R. 617; s. c. 3 Ben 354) A principal is charged with an agent's intention to make a preferential transfer or payment (Beattie v. Gardner, 4 B. R. 323; Graham v. Stark, 3 B. R. 357).

1See 860a as to when one is deemed to have given a preference. In connection with the same subject, the act of 1841 used the word "procured", and that of 1867, "permit or suffer" instead of "suffered or permitted" as in the present act. The language of the act of 1841, "procured," is employed in 60 of this act, so that for all purposes of construction, the language of this subdivision may be considered "procured, suffered or permitted." The act of 1867 expressly provided that the debtor "should permit or suffer his property to be taken on legal process with intent to give a preference." Under that statute, the District Courts ignored the question of intent and held that the debtor was guilty of an act of bankruptcy if he failed to file a voluntary petition in bankruptcy when his property became jeopardized by the action of creditors (In re Gallinger, 1 Saw. 224; S. c. 4 B. R. 729; in re Black & Secor, 1 B. R. 353; in re Craft, 1 B. R. 378; in re Sutherland, I B. R. 531; in re Dibblee, 2 B. R. 617; in re Schick, 1 B. R. 177; in re Haughton, 1 B. R. 460; Buchanan v. Smith, 4 B. R. 397). These cases were over-ruled by

benefit of his creditors;' or (5) admitted in writing his

the U. S. Supreme Court which held that one was not obliged to defend an action to which he had no meritorious defense, and his failure so to do did not amount to an act of bankruptcy because it was lacking in the essential element of intent to prefer or suffer a preference (Wilson v. Bank of St. Paul, 17 Wall, 473; s. c. 9 B. R. 97). Since the present statute omits the element of intent, the District decisions stand as upon a precisely similar statute, while the Supreme Court decision rests upon an entirely different one and cannot be regarded as a precedent. A preference while insolvent is an act of bankruptcy, and it is of no consequence from what cause or in what manner it arose. The law presumes that it is within the power of the insolvent to prevent it by contesting proceedings leading to it, or going into voluntary bankruptcy when the preference cannot otherwise be prevented (In re Arnold [D. C.], 1 N. B. News, 334; s. c 94 Fed. Rep. 1001; in re Whalen [D. C.], 1 N. B. News, 228). This presumption is so strong that it even attaches to one against whose property a judgment levy is made without collusion and without the insolvent's knowledge (In re Moyer [D. C.], 1 N. B. News, 260; s. c. 93 Fed. Rep. 188; in re Reichman [D. C.], 91 Fed. Rep. 624; in re Cliffe [D. C.], 94 Fed. Rep. 352). It is not a preference to sell a leasehold interest not assignable and apply the proceeds to rent, taxes and expenses of sale (In re Pearson [D. C.], 95 Fed. Rep. 425). Nor is it an act of bankruptcy to suffer a preference where a lien upon which it is predicated was obtained more than four months before the filing of the petition in bankruptcy (In re Ferguson [D. C.], 95 Fed. Rep. 429). The question of preference is one of fact, the burden of proving which rests on the petitioning creditors (In re Rome Planing Mill [D. C.], 96 Fed Rep. 812). The proving of the preference, under this subdivision, is in fact nothing more than establishing insolvency and showing the transfer, intent being immaterial. The act of bankruptcy rests in the mere failure of the bankrupt, while insolvent, to vacate or discharge the execution on which the property was seized at least five days before the sale (In re Planing Mill supra; Parmenter Mfg. Co. v. Stover et al. [C. C. A.], 97 Fed. Rep. 330). The subdivision does not apply to liens not affected by the act (In re Chapman [D. C.], 99 Fed. Rep 395; in re Nelson [D. C.], 98 Fed. Rep. 76).

The four months within which the petition may be filed runs from the date the bankrupt should have vacated the execution (Parmenter Mfg. Co. v. Stover, supaa), the day on which the failure took place to be excluded and that on which the petition is filed to be included (In re Dupree [D. C.], 97 Fed. Rep 28).

The former act of bankruptcy contained no provision on the subject of this subdivision. The question as to whether an assignment was an act of bankruptcy, was open, the decisions being pro and con. The old decisions on the subject are now inapplicable, in view of the positive enactment here contained. A general assignment for the benefit of creditors, though valid until a subsequent adjudication in bankruptcy (in re Romanow [D. C.], 92 Fed Rep. 510), is in itself an act of bankruptcy, though made without preferences, without actually intending to defraud creditors, and without the existence of insolvency (in re Meyer [C. C. A.], 98 Fed. Rep. 976; Clark v. Am Mfg. & Enameling Co. [C. C. A], 101 Fed. Rep. 962) In view of this, an averment of insolvency, when the petition in bankruptcy is founded on an assignment for the benefit of creditors, raises an immaterial issue (West Co. v. Lea [U. S. Supreme Ct.], 174 U. S. 590; s. c. 19 Sup. Ct. Rep. 836), on which the defendant is not entitled to a jury trial (Simonson v. Sincheimer et al. [C. C. A.], 100 Fed. Rep. 426). A corporation's voluntary application in a State court for dissolution and appointment of a receiver is not an assignment within the meaning of this subdivision, even if the receiver be appointed (in re Empire Metallic Bedstead Co. [C. C. A.], 98 Fed. Rep. 981). Such a proceeding, the same case holds, may produce results equivalent to those brought about by a

inability to pay his debts and his willingness to be adjudged a bankrupt on that ground.'

b A petition may be filed against a person who is insolvent and who has committed an act of bankruptcy within four months after the commission of such

general common law assignment, but the acts of bankruptcy enumerated will not be enlarged by construction to include similar but not identical transactions. The same is true when the proceedings in the State court are not voluntary. They operate only on property within the state, and must give way to creditors pursuing their remedies in other states (Huntington v. Chesapeake, O. & S. W. Ry. Co. [C. C.], 98 Fed. Rep. 458). A similar case has arisen in regard to a copartnership. Where two of the members filed an application in a state court for the appointment of a receiver, the other partner not objecting, the act was held to be one of bankruptcy on the theory that it was in effect a general assignment (Mather v. Coe [D. C.], 92 Fed. Rep. 333). This case does not differ from either of the two last cited and must be regarded as overruled by them. See $5 and notes as to partners. The question of insolvency not being involved in proceedings under this subdivision, the defense of solvency cannot be made (Lea Bros. & Co. et al. v. West Co. [D. C.], 1 N. B. News, 79; s c. 91 Fed. Rep. 237; Bray v. Cobb [D. C.], 1 N. B. News, 209; s. c. 91 Fed. Rep. 102; West Co. v Lea Bros. [U. S. Supreme Ct.], I N. B. News, 298; s. c. 19 Sup. Ct. Rep. 836; Chemical Nat. Bank v. Meyer [D. C.], 1 N B. News, 304; s. c. 92 Fed. Rep. 896; in re Empire Metallic Bedstead Co. [D. C.], 1 N. B. News, 386; s. c. 95 Fed. Rep. 957; Leidigh Carriage Co. v. Stengel [C. C. A.], 1 N. B. News, 296, 387; s. c. 95 Fed. Rep. 637).

'It is not an act of bankruptcy, within the meaning of this subdivision, for a corporation to authorize one of its officers by a unanimous vote of its stockholders to appear in court on behalf of the corporation, in the event of an involuntary petition in bankruptcy being filed against it, and make admission of insolvency. The act contemplates a more unqualified admission. Nor can the officer so instructed make a written admission after the petition is filed so as to authorize an adjudication (in re Baker-Ricketson Co. [D. Č.], 97 Fed. Rep. 489). The admission of inability to pay debts and willingness to be adjudged a bankrupt on that ground is within the authority of the directors of the corporation, and is not a corporate function to be exercised by the stockholders generally (In re Rollins Gold & Silver Min. Co.[D. C.], 102 Fed. Rep. 982). A petition based on such an admission will not be construed as in effect voluntary so as to allow corporations otherwise excluded the benefit of voluntary bankruptcy (In re Kelly Dry Goods Co. [D. C.], 102 Fed. Rep. 747).

2 The person must be actually insolvent within the meaning of this act. It is not enough that his business is such that he will soon become insolvent (Beals v. Quinn, 101 Mass. 262).

As to the effect and treatment of two or more petitions filed against the same individual in different districts, see Rule VI, and as to priority of petitions filed against a common debtor, alleging separate acts of bankruptcy, see Rule VII. See also 59 as to who may file and dismiss petitions; 18 as to courts and procedure therein, and Rule XXX as to imprisoned debtors.

The four months within which the petition may be filed are computed by excluding the day on which the alleged act of bankruptcy was committed and including that on which the petition is filed. For instance, for an act of bankruptcy committed on Oct. 20, 1898, a petition filed on Feb. 20, 1899 was within the time. This applies to the duplicates required in 7a (8) as well as the original, it

act.1

Such time shall not expire until four months after (1) the date of the recording or registering of the transfer or assignment when the act consists in having made a transfer of any of his property with intent to hinder, delay, or defraud his creditors, or for the purpose of giving a preference as hereinbefore provided, or a general assignment for the benefit of his creditors, if by law such recording or registering is required or permitted, or, if it is not, from the date when the beneficiary takes notorious, exclusive or continuous possession of the property unless the petitioning creditors have received actual notice of such transfer or assignment.

c 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 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

being fatal if either be not filed within the time. (See in re Stevenson [D. C.], 1 N. B. News, 313; s. c. 94 Fed. Rep. 110, and cases under former bankruptcy acts there cited.)

A

This is a provision whereby one's property may be taken from him and distributed among his creditors. A bankrupt law is one whereby (1) creditors are satisfied so far as possible out of the debtor's property, and (2) the debtor entirely discharged of his obligations. Without entering upon a discussion, this is the meaning attached to this word before and at the time of the adoption of the United States Constitution (13 Eliz., c. 7; 4 Anne, c. 17; 10 Anne, c. 15; 53 Geo. III, c. 102), and since (6 Geo. IV, c. 16; 2 Will. IV, c. 56; 1 and 2 Vict., c. 110). bankrupt has no absolute right to a discharge under the present act, for the discharge rests on so many contingencies that it is practically discretionary (14). We have, therefore, under this section, provisions for stripping one of his property, distributing it among his creditors, and leaving him without a discharge. Such a statute embodies only one of the two elements of a bankrupt law. A bankrupt law is one which has for its object the relief of the debtor. The involuntary feature of this act is designed for the benefit of the creditor rather than for the debtor. It seems to be an insolvent's or fraudulent debtor's act with which the States rather than the Federal government have to do (Am. to U. S. Const., Art. X.), and in harmonious with Art. 1, 28 of the U. S. Constitution which authorizes Congress to enact laws on the subject of "bankruptcies." It is very questionable whether, under our constitution, Congress can enact a valid involuntary bankrupt law at all, even though it provide for a certain and complete discharge of the debtor. The English statute in which this involuntary provision first appears was exclusively a fraudulent debtor's act, and so designated (34 and 35 Hen. VIII. c. 4). But even though it

the burden of proving solvency shall be on the alleged bankrupt.'

d Whenever a person against whom a petition has been filed as hereinbefore provided under the second and third subdivisions of this section takes issue with and denies the allegation of his insolvency, it shall be his duty to appear in court on the hearing, with his books, papers and accounts, and submit to an examination, and give testimony as to all matters tending to establish solvency or insolvency, and in case of his failure to so attend and submit to examination the burden of proving his solvency shall rest upon him."

e Whenever a petition is filed by any person for the purpose of having another adjudged a bankrupt, and an application is made to take charge of and hold the property of the alleged bankrupt, or any part of the same, prior to the adjudication and pending a hearing on the petition, the petitioner or applicant shall file in the same court a bond with at least two good and sufficient sureties who shall reside within the jurisdiction of said court, to be approved by the court or a judge thereof, in such sum as the court shall direct, conditioned for the payment, in case such petition is dismissed, to the respondent, his or her personal representatives, all costs, expenses, and damages occasioned by such seizure, taking, and detention of the property of the alleged bankrupt.3

were a bankrupt law, it would not be a precedent of which Congress might take advantage on account of our constitution.

The

This is nothing more than saying that the petitioning creditors shall first establish their case. By so doing, a presumption of insolvency arises. burden of proof then, and not before, shifts to the alleged bankrupt. If he can rebut the presumption by showing himself to be solvent, the court loses jurisdiction to proceed further. (See West Co. v. Lea et al. [U. S. Sup. Ct.], 19 Sup. Ct. Reporter, 836).

The burden of establishing insolvency rests with the petitioner except where otherwise provided in this act; but when they make out a prima facie case, the burden then shifts to the alleged insolvent to establish his solvency (In re Oregon Printing Co., 13 B. R. 503). The insolvency may be established by evidence of a letter written by the respondent stating that he was unable to pay his debts, in an effort to induce his creditors to accept a percentage of their claims (In re Lange [D. C.], 97 Fed. Rep. 197).

See 269 relative to the bond, the showing required on the application here