In re TERRILL

In re TERRILL. (District Court, D. Vermont. February 23. 1900.) Bankruptcy — Preferences. A mortgage or assignment of property by an insolvent debtor to one of Ms creditors, intended to prefer that creditor over others, but executed before the enactment of the bankruptcy law, is not void under that statute or at common law; and, if such a transfer is not contrary to the statutes of the -state, or is not annulled by proceedings taken under a state law within the time limited thereby, the property cannot be recovered from the creditor by the trustee in bankruptcy of the mortgagor or grantor. In Bankruptcy. George IS. Terrill was adjudged bankrupt on the 28th of October. 1898. and in due time thereafter made his application for discharge, and was examined by the creditors. At an adjourned meeting, the bankrupt having meanwhile died, certain creditors tiled specifications in opposition; lint these were after-wards withdrawn, leaving the petition for discharge unopposed. The facts shown by the evidence raised the question whether the trustee in bankruptcy would be justified in bringing suit for the recovery of certain property of the bankrupt, and, at, the request of the trustee, the referee certified his findings to the judge for his opinion. It appeared that the bankrupt, who was a merchant in embarrassed circumstances, on January 27, 1898, being heavily indebted to liis father, executed to the, latter a. chattel mortgage covering the stock of goods, furniture, and fixtures in his store. On January 21, 1898, he assigned to the same creditor, by written assignment, other personal property, and his store accounts and bills receivable; and on June 24. 1898, assigned to him his interest in the property and credits of a partnership of which the bankrupt was a member. On the day last named the father took possession under his mortgage. It was agreed by the parties that the stock should be applied on the debt at a certain valuation, and that, if more could be realized from the sale thereof, the bankrupt should have the benefit of it. The mortgagee accordingly remained in possession, selling the stock, giving the bankrupt credit, and reimbursing himself. The referee found as facts that the bankrupt was insolvent at the time of giving- the mortgage and assignments, and intended thereby to prefer the creditor to whom they were given, and that Ike la (tor was cognizant of Uto circumstances, and intended to secure a preference over oilier creditors. W. L. Burnap ¡uul -J. J. Mona ban, for bankrupt. T. A. Bullard, for creditors. [MAJORITY — WHEELER, District Judge.] WHEELER, District Judge. The mortgage and assignment would not. be held null and void as against the creditors by the laws of (he state, within the meaning of section G7e of the bankrupt act. They were nieie preferences, which would become void by insolvency proceedings if begun within a required time, and might not he, and in fact were not, begun at all. If they liad been made in fraud of the rights of creditors generally, instead of preferring- one over the rest, they would have been void at common law, as well as by the statute's of the state; the title would not have passed as against creditors; and flint provision of the bankrupt act would draw that remaining' title into the bankruptcy proceedings. But there was no such title to he drawn. They were not void by other provisions of the bankrupt act., for they took place before it. passed. There is nothing in the proceedings upon them to affee-f. the right of the bankrupt to a discharge. Beport accepted, and discharge granted.