in full so long as there is some way of identifying it as a fund; because in this case A is not merely a creditor; he is the real owner of certain money in D's possession and therefore may obtain it. Or, if D holds any real or personal property as trustee, he has no such interest in it that will pass to the trustee in bankruptcy; though D may have technical title, he is not the real

owner.

(3) Property which Bankrupt has Obtained under a Conditional Sale. Conditional sales in which the property is delivered to the buyer and title for purposes of security is retained in the seller are transactions which are good in all their provisions when only buyer and seller are involved, but to be good in most states against creditors must be recorded. Therefore if not recorded, the trustee takes title to property so purchased by the bankrupt, although the seller has for purposes of security reserved title. In Illinois, recording such a transaction will not keep creditors from levying on the property as assets of the buyer and the trustee gets title.

Illustrating this section, A sells and delivers property to D, and to secure himself for all or part of the unpaid purchase price makes it a part of the contract of purchase that he shall retain the title until D has paid as agreed upon. In this case D has the apparent ownership and in most states, A cannot enforce his title where the rights of third persons intervene unless he has recorded the transaction, just as he must record chattel mortgages. Unless recorded, therefore, the

trustee gets title.86

86. In re Nelson, 191 Fed. 233.

(4) Property Owned by Bankrupt Subject to Chattel Mortgage. A chattel mortgage must either be properly acknowledged, executed and recorded or possession taken thereunder in order to be good against third persons. Therefore if the bankrupt have in his possession property on which he has given a mortgage to another, it is not a valid lien against the trustee unless the mortgagee has placed it properly of record.

Sec..58. PROPERTY HELD BY THIRD PERSONS CLAIMED BY BANKRUPT. In general any property which the bankrupt could demand as his property from third persons, the trustee can demand as the property of the bankrupt's estate.

Whatever belongs to the bankrupt, except his exemptions, passes to the trustee, subject to all valid liens, no matter in whose possession it may be.

We may suppose several situations:

(1) Property of Bankrupt on Consignment with Another. This of course still belongs to the bankrupt and the trustee can reclaim it.

(2) Property Bailed for Other Purposes. Property in the hands of agents, or any bailee passes to the trustee subject to whatever valid liens may be on it.

Sec. 59. RIGHTS TO SUE. The bankrupt may sue upon any claim for damages to the bankrupt's property, or arising out of a contract express or implied.

Whenever before the petition is filed the bankrupt has a right to sue on account of injuries to his property, or for breach of or to enforce contracts, express or implied, the trustee may sue on such rights or if

suit is already pending may become a party to the suit and prosecute it for the benefit of creditors.87

Purely personal rights of action the trustee gets no title to. Thus for damages growing out of assault and battery or any personal injury for libel and slander and the like, the trustee cannot sue.88

Sec. 60. BURDENSOME PROPERTY: TRUSTEE'S ELECTION TO REJECT. All property passes to the trustee of whatever nature, unless because of its burdensome or unprofitable character he elects not to take it. he has a right to do this.

And

The trustee may elect to reject his title to property which is of no profit to the estate.89 Thus if there is a lease which has no value to the estate as a convertible asset, the trustee can let title thereto remain in the bankrupt.90

When the trustee elects not to take property he should act upon an order of the Court secured upon a petition filed by him after full notice to all the creditors.

Sec. 61. TO WHAT LIENS TRUSTEE'S TITLE IS SUBJECT.91 The trustee takes subject to all liens acquired by contract at the inception of the indebtedness, all liens allowed by law except through judicial process no matter how soon before the petition is filed, and all liens of whatever sort are good provided they were ac

87. In re Eureka Furniture Co., 170 Fed. 458. 88. Sibley v. Nason, 196 Mass. 125.

quired in good faith more than four months prior to the filing of the petition.

As it is the purpose of the bankruptcy law to give equal distribution of property to all creditors, any lien which would amount to the giving of a preference to one creditor over another is voidable, if it attaches within the four months prior to the filing of the petition in bankruptcy. This means that liens acquired through judicial proceedings are dissolved by a petition in bankrupcy filed within four months from the time the lien is acquired. We may tabulate liens thus:

(1) Judicial Liens Secured Within Four Months prior to the time the petition is filed; that is, liens of judgment, attachments, etc. These are dissolved, that is, the lien creditors become simply general creditors.92

(2) Judicial Liens Acquired More than Four Months from the time the petition is filed. These are good in bankruptcy proceedings, and can be enforced against the estate.

Thus in the case last cited93 the court said: "In our opinion the conclusion to be drawn from this language [Sec. 67f. Bankr. Act 1898] is that it is the lien created by a levy, or a judgment, or an attachment, or otherwise, that is invalidated, and that where the lien is obtained more than four months prior to the filing of the petition, it is not only not to be deemed to be null and void on adjudication, but its validity is recognized. When it is obtained within the four months the property is discharged therefrom, but not otherwise."

(3) Liens Arising Out of Contract at the Inception of the Indebtedness. These are good no matter when they are acquired. Thus D borrows money from A and to secure him gives him a mortgage which is properly recorded or under which possession is taken. This is good though the mortgagee knew the borrower to be insolvent and though bankruptcy proceedings are begun the next day.94 However, such liens will not be good against the trustee, where, when the bankruptcy proceedings were begun, they would not have been good against creditors, because not recorded or possession taken under them.95

(4) Liens Arising Out of Contract After the Inception of the Indebtedness. As these would amount to preferences, they are voidable on that ground if within the four months period. Thus D owes A $1000. He concludes at A's request to give A security. If this security were allowed to stand, A would be a preferred creditor. But if it is secured more than four months from the time the petition is filed it will stand.96

94. This is well stated in an early case (Darly v. Inst., 1 Dill. 144, Fed. Cas. 3571) in which the court says: "An insolvent person may properly make efforts to extricate himself from his embarrassment, and therefore he may borrow money and give at the time security therefor, provided always, the transaction be free from fraud in fact, and upon the Bankrupt Act."

95. In re Buchner (D. C., Ill.) 202 Fed. 979.

96. Stedman v. Bank of Monroe, (C. C. A., 8th Cir.) 117 Fed. 937 (holding that a chattel mortgage given in part to secure a past, and in part to secure a present indebtedness is void pro tanto only.)