Year: 1876

In January, 1872, Patrick Flannigan, being embnr-
rassed and unable TO meet his demands, made
general assignment OF his property, Tor tho benefit Of
his creditors to Thomas 0Brien. Fannigan was sub
sequentiy adjrdicacd bankrupt in the United States
District Court Louis Haas. the assignee in bank
ruptcy, brought suit the assets from the
assignee for benefit OF the creditors The
tried before David McAdam, as referee, prior TO his
elevation to the Marine cour; Bench, who found that
Flanagan, being embarrassed and unable 10 pay his
debts and beng bankrupt within the meaning of the
Bankruptcy act did make general assignment to
OBren, under tho laws Of tho State OF New York; of all
his property consisting Of stock OF merchandise for
the benefit Of his creditors and that such assignment
drawn and perfected in all things in slric,
comp lance with the laws OF the State or New
York; that tho assignee sold tho properly at auction
sale and market price. and that tho assignee
and his attorney well the assgnor: knew that the
assignor was q bankrupt within the meaning OF The
Bankruptcy act at the tmo when the assignment was
drawn and perfected IL was admitted that there was
fraud in the matter OF the assignment and that the
parties thereto acted in good iah The referee among
other things found conclusion OF Law that the gen.
eral assignment to OBrien was void under the Bank
rupcy and that II did tend 10 evade the PROVISIONS
OF the act and to prevent the assienos property be-


ing distributed under 1t. and ordered judgment Tor
niaintia which Judgment the General Term
was carried TO tho Court of Appeals.
which has just rendered its decision reversing the
previous Judgment Judge Miller writing the opinion
Judge Miller holds that although the referee found
that the assignment void under the bankruptcy
act that IL did tend to evado the provisions OF the
and prevent the AssiEnor's property from being
distributed, there ID no distinct finding that tho as
signment made in direct contravention OF the pro-
cited and tho fact that II was done in good
faith and without any intention TO violate or defeat tho
provisions OF the act, as already stated rohuts any
presumption arising under tho act that II WAS prna
iacic fraudulent And as the proof and admissions
show good faith tho conclusion that tho assignment
act docs not appear to bs warranted Tho OBJECT and
purpose Of the act IN question was to provide
system by which the property Of an insolvent
could be appropriated and applied 10 tho
payment Of his debts IN equal and just proportions.
The theory upon which this bankrupt act Is based IS
that no preferences shall be allowed; that every cred
itor shall be entitled TO his pro rata share Of the
bankrupts estate, and thus fraud prevented In the
Distribution oI ms asscs mnen, ner9'o.e, an assign
equally, In good faith, without fraud, or any intent
found to conravene any provisions OF the law, or TO
hinder delay defraud creditors Is not apparent
how such assignment can be considered as violation
Of the spirit and intention OF the act itself n Tii


fany va Lucas. 15," "Walace u 5. s. z. r., 41c and
4i2 . II held that two things must concur TO bring
an assignment within the prohibition OF the Bank
rupicy act, viz tho fraudulent design Of tho
features characterize the case at bar The
principle s solcd In this Court that whom the debtor
has not been proceeded against or taken any proceed


inas IN the Bankrupt Court an assignment for tho
benefit by insolvent debtor which gives
void per in hostility 70 tho bankruptcy act Tho
fact proceedings were instituted within tho six
months provided Tor by tho section ciled docs not
change the application of the rule referred to- unless
there is the fraudulent design and knowledge There
the strongest for holding that the
intended interfere with the debtor when, with
honest purpose entire good faith no sought


ply his property for the benefit OF his creditors pre-
cisely In the sAme manner as was intended
and would have been done by proceed
ings under tho Bankruptcy act and probably At
lcas expense and far moro to tho advantage
OF the creditors Tho act aimed fraud and TO
prevent precrsnce and where neither Of these ap


parent there ground for claiming that equita-
hla
OF the law The cases referred upheld these views
very decidedly, and should be followed. Tho Court
below erred In holding that the ssgnment void
tended TO evadc the provisions Of the Bankruptcy act


and for this error without considering tho other ques
tons raised, the Judgment must bo reversed and a
new trial granted with costs TO abide the event.
Messra Jacob Gross and Francis c. Dcvhn appeared
for appellant, and Mcssrs. Jacob Koch and Samuel
Hand for respondent