New-York tribune., 1867-03-06
FRAUDULENT PREFERENCES.


The Bankrupt law, as finally passed and now
in force, contains one important provision which
will prevent the continuance of what has been
a very common but very unjustifiable prac-
tice among merchants-namely, Of lending
money which is secured from future assign
ment under the guise of preferred claims. 1t
has been very frequent transaction for A,
being in financial difficulty, and having doubt
of his ability to carry his debts to borrow
money on security of B, under a bargain that,
in case an assignment becomes necessary, the
claim shall be previously secured against loss.
Such bargain is a fraud upon the rest OF AS
creditors in case of failure, inasmuch as it de-
frauds them of the benefit of so much Of his as
sets as are required to pay BIS claim,
Notwithstanding the fact that the money
lent by b has been a pant Of AS stock in
trade as much as the flour for which he is in
debted to c, or the real estate which he pur-
chased of d. This unjust preference is pro-
hibited by the new law. Section % provides
for the preference, 1st of the costs and ex-
penses of the proceedings in bankruptcy; I'd,
of debts or taxes due the United States Sd, of
debts and taxes due the State, and 4th, of
wages not exceeding $50, due any employG for
labor performed during The six months pre-
ceding the beginning of proceedings in bank
ruptcy. Section % enacts that, if the bankrupt
"has given any fraudulent preferences con-
"trary to the provisions Of this act, or made
"any fraudulent payment, gift, transfer, con-
"veyance, or assignment of any part OF his
property or II he has, III con-
temptation of becoming bankrupt, made any
"plcdge, payment, transfer conveyance, or
assignment for the purpose of
"prcfcFTng any creditor or person having any
80 claim against him or for the
"pupose of preventing the property from
coming into The hands of his assignee, or Ol
being distributed under this act in satisfaction
"of his debts" then no discharge shall be granted
To the bankrupt. Section 80 further provides
/ that, y any person becoming msolvent, or con
/ templaiing becoming so, shall, within four
months previous TO such bankruptcy, cause to
/ be attached or secured any portion OF his prop
| crty to give preference to any person having
claim against him, such attachment shall be
void and the property may be recovered by
| the assignee for the benefit of the creditors
| in general. 1t is stu further enacted that :
" II any person, being insovcnt or in cOntcm-
"plotion of insolvency or bankruptcy, within
/ " six months before the filing OF the petition
| "by or against him, makes any payment sale,
assignment, transfer, conveyance or other dis
| position of any part of his property to any
"pcrsOn who then has reasonable cause to be-
/ lcve him to be insolycnt, or to be acting in
contemplation of insolvency, and that such
payment, sale, assignment, transfer or other
Conveyance is made with view TO prevent
." his property from coming TO his assignee in
'" bankruptcy, or to prevent the same from be-
cling distributed under this act, or to defeat
the object Of or in any way impair, hinder,
impede or delay the operation and effect oil,
"or to eyadc any of the provisions of this act,
the sales assignment, transfer or conveyance
! shall be- void, and the assignee may recover
"theN property or the value thereof as the as
" sets of the bankrupt. And if such sale, as
! "Sqeneni, transfer or conveyance, is not made
in the usual and ordinary course of business
"of the debtor, the fact shall be primd tacie
evidence of Fraud The bill containing these
specific provisions is now law, and no such
preferred claims can henceforth be allowed.
The prevalence of the practice heretofore rem
ders il especially important that all business
men should have Il fair understanding OF tho
express prohibitions we have herein noted.