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10 F. Cas. 338

Giddings v. Dodd

U.S. District Court

Decided July 1, 1871

U.S. District Court · decided 1871-07-01

This cause comes before the court on a writ of error, to the district court for the Eastern district. Giddings, the bankrupt, in October, 18G0, was a country merchant, owing $G,000, and having assets to the amount only of $2,400. In that month he sold his entire stock of goods to one Pendleton, for $l.S0n, who executed two notes to Giddings therefor, one for $1,378, the other for $302.

Decided 1871-07-01

DILLON, Circuit Judge.

¶1The 35th section of the bankrupt act [of 1SG7 (14 Stat. 534)] makes payments to creditors in violation of its provisions void and gives the assignee the right to recover the amount of the illegal preference. The only questions which can be now reviewed are those arising on the declaration of law above mentioned.

¶2It correctly states the elements which must concur to invalidate a payment made with a view to give a preference. But it is objected by tlie defendants that the rule of law declared may be abstractly correct, yet it was inapplicable to the circumstances of this case, since the evidence negatived any intent on the part of Giddings to give a preference, *339as he was either passive on the matter, or acted only at the instance of Pendleton, and the argument is, that if Giddings had no intent to give a preference then it is not possible that the defendants could have “had reasonable cause to believe that such payment was made (by him) in fraud of the provisions of the bankrupt act.”

¶3But it is undeniable that Giddings did eon-.sent to and did turn out the note against Pendleton to the defendants. He owed in all about $0,000, and the note he thus gave in payment to the defendants constituted the bulk of his available assets. What could he have meant but to give them a preference? By the payment to them the defendants secured a preference, — the lion’s share of his assets, and this, too, when they knew he was insolvent, and had made acts which are acts of bankruptcy grounds for their attachment against, him.

¶4If under the circumstances these defendants can retain the advantage they sought to derive from the attachment and through that agency secured, manifestly the purpose of the bankrupt act, which is intended to prevent preferences and put all general creditors upon an equal footing, is subverted. See Linkman v. Wilcox [Case No. 8,374].

¶5Affirmed.

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