Court Opinion

ID: 8504748
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:26:01.382517+00
Date Added: 2024-06-11T16:50:50.271922
License: Public Domain

Parker, C. J.
By the second section of the act of Congress to establish a uniform system of bankruptcy, passed August 19, 1841, all future payments, securities, conveyances or transfers of property, &c. made or given by any bankrupt in contemplation of bankruptcy, and for the purpose of giving any creditor, &e. any preference or priority over the general creditors of such bankrupt, and all the payments, conveyances, &c. made or given by such bankrupt in contemplation of bankruptcy, to any person not being a bond fide creditor or purchaser, for a valuable consideration, without notice, are to be deemed utterly void and a fraud upon the act; and the assignee in bankruptcy is entitled *118to claim and recover the same as part of the assets of the bankrupt’s estate.
The mortgage to the plaintiff in this case is not within the condemnation of these provisions. It does not appear to have been made in contemplation of bankruptcy, and the plaintiff was a bond fide creditor, who could not have had notice of what, according to the testimony in the case, did not exist.
The section then contains two provisos, by which all dealings and transactions by and with any bankrupt, bond fide, made and entered into more than two months before the petition filed against him or by him, shall not be invalidated or affected, if the other party to such dealings had no notice of a prior act of bankruptcy, or of the intention of the bankrupt to take the benefit of the act.
These provisos certainly do not operate,vof themselves, to avoid any transaction between the bankrupt and third persons, nor do they bring any cases within the condemnation of the previous clauses. Their office is to save a certain class of cases from the operation of the general language of the first part of the section. If there have been payments or conveyances by a bankrupt, in contemplation of bankruptcy, and for the purpose of giving a preference, and still the other party acted in good faith, without any notice of any act of bankruptcy, or of the intention of the bankrupt to take the benefit of the act, and more than two months have elapsed before a petition in bankruptcy is filed, .such transactions shall not be invalidated or affected. What has been received by a party in good faith, without notice, and permitted to stand so long, shall not be avoided, notwithstanding the bankrupt himself had bankruptcy and the benefit of the act in his contemplation.

Judgment for the plaintiff.