fact in this case, it may be in the next one, and so the illustration will serve to test the correctness of the construction contended for. In such a case we should be called upon to order that the party guilty of usury, and liable for a penalty therefor, should relieve himself from such liability by crediting the amount of the penalty upon a worthless claim against a bankmpt estate. That would be to defeat the evident purpose of the law. I am of the opinion that the bank must pay the judgment obtained by the plaintiff as assignee. Its share of the proceeds of the judgment will go to the satisfaction of its claim, but no more. The money, when collected. must be distributed pro rata among creditors. The demurrer to the bill is overruled, and if the defendant stands upon its demurrer there will be decree for plaintiff. reversing the order of the district court, and directing proceedings in accordance with this opinion.
FLATT, Assignee, v. PRESTON and others.
(District GOUl't; S. D. New York. July 26, 1880.) .
CHATTEL MORTGAGE-FILING-BANKRUPTCY.-The failure to
chattel mortgage pursuant to the statute of the state of New York does not, per se, avoid the mortgage in favor of an assignee in bankruptcy. Stewart v. Platt, 19 N. B. R. 347.
In Equity. A. Blu.nunshiel, for complaina.nt. B. F. Tracy and Henry Brodhead, for defendant Preston. F. W. A ngell, for defendant Weinfeld. CHOATE, D. J. This is a bill in equity, brought by the assignee in bankruptcy of one Neumann, against William J. Preston. Montz Weinfeld, and Anthony J. Diekelman, to set aside, as fraudulent against the creditors of the bankrupt, a chattel mortgage given to the defendant Preston, a lease to the defenddant Weinfeld, and a general assignment made to the defendant Diekelman, all of whiQh are alleged to have been made
· PLATT tI. PRESTON.
and executed in pursuance of a. common fraudulent purpose, and as parts of a single scheme to defraud, hinder, and delay creditors. The defendants Preston and Weinfeld appeared and defended upon the merits. Diekelmandied, after appearing to resist an application for an injunction, and the suit has been revived against his administrator, who, on the fifth day of August, 1879, apl'eared in the cause by his solicitor, but no answer has been put in for him, nor has any order been entered taking the bill, pro confesso, as against him. Upon the issues raised by the answer of Preston and Weinfeld, which deny all the allegations of fraud contained in the bill, the proofs have been taken, and the cause has been heard on the pleadings and proofs. The supreme court of the United States, in the case of Steward v. Platt, 19 N. B. R. 347, having decided that the failure to file a chattel mortgage pursuant to the statute of the state of New York does not, per se, avoid the mortgage in favor of an assignee in bankruptcy, there is no question to he determined, under the answer of the defendant Preston, except whether the mortgage was, in its inception, fraudulent in fact as against creditors. The opinion expressed when the case was before the' court upon an application for an injunction pendente lite, that the proofs then produced would not justify a finding that "the mortgage was not, in its inception, made in good faith, otherwise than as it may have been intended to keep it secret as regards creditors," is fully confirmed by the proofs now taken; and I am entirely satisfied that the mortgage was given and received in good faith, as security for an existing debt, and for future advances, without any purpose or intention of delaying, hindering, or defrauding creditors, and not in contemplation of bankruptcy on the part of the mortgagor, and that the omission to file the same was not with any such fraudulent purpose or intention, or for the purpose of keeping it secret from creditors, but because the mortgagee was advised that it was unnecessary to file it if he had, as in fact he had, confidence in the personal integrity of the mortgagor. In l'espect to the lease executed by the bankrupt tot"te
defendant Weinfeld, the proof now is that the rent reserved ,vas a full and adequate rent for the use of the premises. Previous to its execution Weinfeld had become the purchaser of the machinery and chattels connected with the brewery, under the sale to enforce the chattel mortgage. The proof is that the negotiations between the bankrupt and Weinfeld for the making of the lease were all subsequent to this purchase. There was no fraud in making it, nor any injury done or intended towards creditors. Weinfeld's only object in taking the lease was to make an economical use of the property he had on the premises. These conclusions necessarily dispose of the bill as against Preston and Weinfeld. There is an entire failure to prove as against them the fraud a.lleged, which is the basis of the suit. The suspicious circumstances shown upon the motion for an injunction have been explained, or have become immaterial, upon .the case now made by the testimony. See 19 N. B. R. 241., If, as claimed by the complainant, Weinfeld removed and sold certain beer from the brewery, which, under the contract between Preston and the bankrupt, referred to in the chattel mortgage; did not belong to Weinfeld, as the purchaser of the chattel mortgage and assignee of the contract, but to the bankrupt's estate, the complainant's remedy is not by this s!lit in equity. Whatever trespass Weinfeld may have committed in this respect appears to have been a.ctuated, not by a fraudulent purpose in respect to creditors, but ,by a. misapprehension as to his own title. It is not intended to be intimated that Weinfeld had not a perfect right, as assignee of Preston's beer contract, to take and sell all the beer on the premises; but that question does not arise in this suit, and is not passed upon. The bill must, therefore, be dismissed a.s a.gainst Pres. ton and Weinfeld, with costs. As to the administrator of Diekelman, no decree can be made in the present state of the record, and the bill, as to him, is retained for further pro. ceedings. Decree accordingly.
DOUGHERT'1V. THE .STEAMER FRANCONIA,
(District Court, S. D. New York. July 27,
OF PROOF.-Where a vessel hBll vlolated a, known rule of navigation, and that violation of duty mayha\':e contributed to the disast\lr, the is on her to prove that the fault did not contribute to the collision. .
·. SAME-SAME-INNOCENT Tm;RD PARTY.':"-In such' case inpo6ent' third party has the right to recover' his damagell against either of the offending vessels, h:owevet WlI.equal theirtllSpective faults mlll,d1aye, been. ThlJ Atlas, 93 U., S,
E. D. McCarthy,' for libellant. rv: R. Beebe and F. A.' Wilcox, for claimant. CHOATE, D. J. is' a: libei by the owner of the barge Hope,to recover for the loss of the barge and her cargo of coal. She was in tow of the steam-tug George L. Merkle, on 'a voyage from Jersey City to Port Chester, on the twenty. sixth day of November, 1878. She was lashed to tbeport side of the tug. Off Ward's island, in the East river, be. tween 6 and 6: 80 o'clock in the morning, and about 800 feet from the shore, the tug and tow came into collision with the steamer Franconia, a propeller belonging to the Maine Steam· ship Company. From the effects of the collision the tug and tow soon after sunk, and became a total loss. This libel was filed against both the Franconia and the tug, charging each with negligence, which caused or contributed to the collision. The monition, however, was not served upon the tug, and the suit is prosecuted against the steamer alone.