the property, in replevin,661 or trover for conversion, or eject 664 (5) PLEADING AND PRACTICE.- The trustee must bring himself within the elements of pleading and proof recognized by the statutes and decisions of his State. The rule enunciated by a majority of the cases is that in an action to avoid a transfer under subdivision e the trustee must allege and prove that the property of the bankrupt is not sufficient to pay his creditors in full,665 on the theory that a suit by a trustee is essentially a creditor's bill, and that the insufficiency of the property left in the debtor's hands is an essential to the right to question a fraudulent conveyance, whether the suit 661. Godwin v. Tuttle (Ore. Sup. Ct.), 33 Am. B. R. 93, 141 Pac. 1120. 662. Burns v. O'Gorman (C. C., R. I.), 17 Am. B. R. 815, 150 Fed. 226. 663. Ejectment.- Where land was conveyed to a bankrupt and his wife as tenants by the entireties and the consideration was paid by the former, the trustee in bankruptcy may, on behalf of the creditors existing at the time of the transfer, maintain an action in ejectment to recover the land. Shaver v. Mowry (Pa. Sup. Ct.), 43 Am. B. R. 101, 105 Atl. 505. 664. In re Gray, 3 Am. B. R. 647, 47 N. Y. App. Div. 554, 62 N. Y. Supp. 618; Mueller v. Bruss, 8 Am. B. R. 442, 112 Wis. 406; Halbert v. Pranke, 11 Am. B. R. 629, 91 Minn. 204, 97 N. W. 976; Woodman v. Butterfield (Me. Sup. Ct.), 40 Am. B. R. 40, 101 Atl. 25. See Am. Bankr. Dig. § 673. Complaint in an action by a trustee in bankruptcy to set aside a deed for fraud, to recover the possession of land, and to petition the land, examined and held good on motion to compel plaintiff to separately and distinctly state what he wanted the court to exact from the defendants. O'Farrell v. Poston (S. Car. Sup. Ct.), 37 Am. B. R. 470, 89 S. E. 483. Form of complaint.- See Supplementary Forms, Nos. 399-401, Vol. III, post. 665. Prescott v. Galluccio (D. C., N. Y. ), 21 Am. B. R. 229, 235, 164 Fed. 618; Mueller v. Bruss (Wis. Sup. Ct.), 8 Am. B. R. 442, 112 Wis. 406, 88 N. W. 229; Knapp v. Milwaukee Trust Co., 216 U. S. 545, 24 Am. B. R. 761, 30 Sup. Ct. 412, 54 L. Ed. 610; Feinhaber v. Cream City Cartage Co. (Wis. Sup. Ct.), 47 Am. B. R. 647, 186 N. W. 175. And see cases cited under section 67, ante, subtitle "Pleading and practice." Sufficiency of allegation.-An allegation, in the complaint of a trustee in bankruptcy, in an action to recover property claimed to constitute part of the bankrupt's estate, that creditor's claims had been filed and proved in the bankruptcy court, that the trustee had no assets to pay such claims, and that the claims could not be paid unless recovery be had in such action, implies that the claims have not been paid and is sufficient on demurrer. Fallon v. Sockolov (Cal. Ct. of App.), 47 Am. B. R. 515, 202 Pac. 909. Amendment of pleadings.— Upon proof of insufficiency of assets without objection an amendment to the complaint may be allowed to supply the omission. Prescott v. Galluccio (D. C., N. Y.), 21 Am. B. R. 229, 164 Fed. 618. Claims not reduced to judgment.Evidence as to the amount of all allowed claims is admissible whether they have been reduced to judgment or not. Riggs v. Price (Mo. Sup. Ct.), 43 Am. B. R. 413, 213 S. W. 420. 668 667 be maintained by a creditor or by a trustee in his behalf.666 The correctness of this rule, since the amendment of § 47-a (2) in 1910, has been questioned on the ground that by such amendment the trustee is in the position of a creditor who has proved by an execution returned unsatisfied that a deficiency of assets exists, and, therefore, it is not necessary that he should aver such fact in his pleading." It is not necessary for the trustee to make a demand upon the defendant before bringing the action, or to allege the amount or nature of any claim to which the property sought to be recovered can be applied, as the property recovered becomes a part of the general estate for pro rata distribution.669 The merger of the identity of the creditors in the estate renders their specific designation in the complaint unnecessary, 670 unless the alleged fraudulent transfer is a mortgage, in which case the bill, upon the issue of its priority of lien, should allege the names of the bankrupt's creditors other than the defendant, the amount of their debts, the character of the same and when created.67 A trustee in bankruptcy may sue in trover for a conversion of goods occurring either before or after bankruptcy, and in a declaration may join a count upon the bankrupt's title, and a count upon the trustee's title.67 The complaint is not demurrable as being multifarious and inconsistent because it alleges an unlawful preference and a fraudulent transfer,' or because the separate transactions alleged had no connection with each other.674 It should be alleged that the conveyance was procured or received by the defendant with an intent or understanding that creditors should thereby be defrauded.675 But there is no necessity for any special pleading of the facts constituting the fraud,676 and if the proof clearly shows 671 672 In support of this allegation it is permissible to prove the amount of the secured claims as well as the unsecured claims. Riggs v. Price (Mo. Sup. Ct.), 43 Am. B. R. 413, 213 S. W. 420. 666. Hibschman V. Bevis (Wash. Sup. Ct.), 103 Wash. 317, 42 Am. B. R. 154, 174 Pac. 5. 667. Kraver v. Abrahams (D. C., Pa.), 29 Am. B. R. 365, 203 Fed. 782; Conquest v. Goldman (Me. Sup. Jud. Ct.), 48 Am. B. R. 450, 117 Atl. 236. 668. Philoon v. Babbitt (Me. Sup. Jud. Ct.), 45 Am. B. R. 489, 109 Atl. 817. 669. Riggs v. Price (Mo. Sup. Ct.), 43 Am. B. R. 413, 213 S. W. 420. 673 670. Barrett v. Kargler (Ala. Sup. Ct.), 40 Am. B. R. 161, 76 So. 320; Riggs v. Price (Mo. Sup. Ct.), 43 Am. B. R. 413, 210 S. W. 420. 671. Teague v. Anderson Hardware Co. (D. C., Ga.), 20 Am. B. R. 424, 161 Fed. 765. 672. Burns v. O'Gorman (Cir. Ct., R. I.), 17 Am. B. R. 815, 150 Fed. 226. 673. Kraver v. Abrahams (D. C., Pa.), 29 Am. B. R. 365, 203 Fed. 782. 674. Kimbrough v. Alred (Ala. Sup. Ct.), 43 Am. B. R. 116, 80 So. 617. 675. Davis v. Gates (D. C., Pa.), 37 Am. B. R. 818, 235 Fed. 192. 676. Fallon v. Sockolov (Cal. Ct. of App.), 47 Am. B. R. 515, 202 Pac. 909. fraud on the part of the defendant, the complaint may be amended to conform to the proof.677 680 - 679 (6) EVIDENCE AND BURDEN OF PROOF. The burden of proving fraud by full, clear and convincing evidence, is upon the trustee.678 Proof of fraud on the part of the defendant is not restricted to direct and positive evidence. It is sufficient to prove facts and circumstances from which the fraudulent intent may be inferred." The record in the bankruptcy proceedings is admissible for a number of purposes, and if any part is inadmissible objection must be taken. particularly to that part." The trustee who introduces adversary parties as witnesses is not bound by every statement or conclusion of such witnesses, and he may show that they were in error. Where the evidence is conflicting on the question whether a transfer was made with intent to hinder, delay and defraud creditors it presents a question of fact that should be submitted to the jury.682 Where a transfer is made by a debtor who is in embarrassed circumstances, although not insolvent, a jury in some cases may be warranted in finding the fact of intent to delay and defraud. 683 681 (7) JUDGMENT.-Upon the rendition of a decree in favor of a trustee in a suit to set aside a fraudulent conveyance, the property enures, not to the benefit alone of the unsecured creditors existing at the time of the transfer, and who, in the absence of bankruptcy, would have been authorized to attack the conveyance, but to all of the creditors having provable claims, including those whose claims. accrued subsequent to the transfers.684 He may recover all the prop680. Osley v. Adams (C. C. A., 5th Cir.), 46 Am. B. R. 40, 268 Fed. 114. 677. Davis v. Gates (D. C., Pa.), 37 Am. B. R. 818, 235 Fed. 192. V. 678. Peterson Mettler (D. C., Wash.), 29 Am. B. R. 158, 198 Fed. 938; In re Mosher (D. C., N. Y.), 35 Am. B. R. 284, 224 Fed. 739; Jones v. Shiro (Me. Sup. Ct.), 40 Am. B. R. 387, 102 Atl. 76; Murray v. Ray (C. C. A., 9th Cir.), 42 Am. B. R. 315, 251 Fed. 866, 164 C. C. A. 82; French v. Cunningham (C. C. A., 8th Cir.), 44 Am. B. R. 534. 261 Fed. 909; Minott v. Johnson (Me. Sup. Ct.), 46 Am. B. R. 583, 113 N. W. 464; Reed v. Chase (Mass. Sup. Jud. Ct.), 46 Am. B. R. 638, 130 N. E. 257. 679. Davis v. Gates (D. C., Pa.), 37 Am. B. R. 818, 235 Fed. 192; Harper v. Sanderson (D. C., N. J.), 45 Am. B. R. 579, 264 Fed. 857. VOL. II-25 681. Adversaries as witnesses.Where adversary witnesses testify generally that the transfers were for a valuable consideration, the opposite conclusion may be drawn where their own testimony showed otherwise and warranted findings that the deeds were without consideration. Osley v. Adams (C. C. A., 5th Cir.), 46 Am. B. R. 40, 268 Fed. 114. 682. Ignatius V. Farmers State Bank (C. C. A., 9th Cir.), 47 Am. B. R. 42, 272 Fed. 33. 683. Holbrook v. International Co. (Sup. Jud. Ct., Mass.), 33 Am. B. R. 808, 107 N. E. 656. 684. McCrory v. Donald (Miss. Sup. Ct.), 43 Am. B. R. 181, 80 So. 643; erty transferred in fraud of creditors, although such recovery may result in the possession by the trustee of property in excess of the entire indebtedness of the bankrupt.685 e. Bona fide holders. The saving clause as to bona fide holders for value in this subsection is similar to those found in § 67-e and § 67-f, and is for the same purpose. What has already been said of them will not be repeated here. This saving of the rights of bona fide holders for value is also merely expressive of the law.686 But, after adjudication, the filing of the petition amounting to constructive notice, there can be no bona fide holder.687 f. Miscellaneous cases.- The cases turn on the law of the State and a further summary of their doctrines would be useless; those not already considered are merely cited in the foot-note.688 Riggs v. Price (Mo. Sup. Ct.), 43 Am. B. R. 413, 210 S. W. 420. Contra. American Trust & Savings Bank v. Duncan (C. C. A., 5th Cir.), 43 Am. B. R. 7, 254 Fed. 870. 685. Davis v. Gates (D. C., Pa.), 37 Am. B. R. 818, 235 Fed. 192. 686. In re Mullen (D. C., Mass.), 4 Am. B. R. 224, 101 Fed. 413. Bona fide holders. A mortgagee who knows that the mortgagor is selling mortgaged chattels for his own use, and who consents to his doing so, is not a bona fide holder and the mortgagor's trustee in bankruptcy may avoid the chattel mortgage, and recover the property transferred thereby or its value. Skillen v. Endelman, 11 Am. B. R. 766, 39 N. Y. Misc. 261, 79 N. Y. Supp. 413. 687. Harrell v. Beale, 17 Wall. 590. Compare In re Lake, Fed. Cas. 7,002. 688. In re Brown (D. C., Oreg.), 1 Am. B. R. 107, 91 Fed. 358; In re Grahs (Ref., Ohio), 1 Am. B. R, 465; In re Phelps (Ref., N. Y.), 3 Am. B. R. 396; In re Mullen (D. C., Mass.), 4 Am. B. R. 224, 101 Fed. 413; Mueller v. Bruss, 8 Am. B. R. 442, 112 Wis. 406; Barber v. Coit (C. C. A., 6th Cir.), 16 Am. B. R. 419, 144 Fed. 381, holding that under the Ohio statute declaring that a creditor may sue to set aside fraudulent transfers, actual fraud need not be shown; Cohen v. Wagar, 16 Am. B. R. 381, 183 N. Y. 33, 75 N. E 691; Lesser v. Bradford Realty Co., 15 Am. B. R. 123, 47 N. Y. Misc. 463, 95 N. Y. Supp. 933, affd. 17 Am. B. R. 524, 116 App. Div. 212, 101 N. Y. Supp. 571, as to sufficiency of complaint in action to set aside chattel mortgage made within four months' period; Breckons v. Snyder, 15 Am. B. R. 112, 211 Pa. St. 176, as to sufficiency of evidence in action to recover preferential payment; Durham v. Wick, 14 Am. B. R. 385, 210 Pa. St. 128; Wright v. Skinner (D. C., N. Y.), 14 Am. B. R. 500, 136 Fed. 694, as to allegations as to citizenship in bill where jurisdiction depends upon diverse citizenship; Horskins v. Sanderson (D. C., Vt.), 13 Am. B. R. 101, 132 Fed. 415, as to jurisdiction over property within the district where defendant resides elsewhere; Union Trust Co. v. Amery (Wash. Sup. Ct.), 27 Am. B. R. 499, 120 Pac. 539; Holbrook v. International Trust Co. (Mass. Sup. Ct.), 33 Am. B. R. 808, 107 N. E. 665, citing text; Woodman v. Butterfield (Me. Sup. Ct.), 40 Am. B. R. 40, 101 Atl. 25; Sherwood v. Holbrook (N. Y. App. Div.), 40 Am. B. R. 100, 165 N. Y. Supp. 514; Matter of Franklin Brewing Co. (D. C., N. Y.), 43 Am. B. R. 111, 254 Fed. 910; Kimbrough v. Alred (Ala. Sup. Ct.), 43 Am. B. R. 116, 80 So. 617; XI. EFFECT OF CONFIRMATION OF COMPOSITION Subsection f of this section declares that "upon the confirmation of a composition offered by a bankrupt, the title to his property shall thereupon revest in him." 689 The result of the confirmation is to take the estate out of the jurisdiction of the bankruptcy court and restore it to the bankrupt.690 This subdivision does not apply where McCrory v. Donald (Miss. Sup. Ct.), 43 Am. B. R. 181, 80 So. 643; Smith v. Powers (D. C., N. Y.), 43 Am. B. R. 303, 255 Fed. 582; Garland v. Arrowood (N. Car. Sup. Ct.), 43 Am. B. R. 549, 99 S. E. 100; Commonwealth V. Leventhal (Pa. Quarter Sess.), 44 Am. B. R. 84, 67 Pittsb. L. J. 553; Markham v. Waterman (Kan. Sup. Ct.), 44 Am. B. R. 103, 182 Pac. 546; Scales v. Holje (Cal. Ct. of App.), 44 Am. B. R. 127, 183 Pac. 308; Simpson v. Combs (Wash. Sup. Ct.), 44 Am. B. R. 152, 182 Pac. 566, as to setting aside foreclosure of chattel mortgage and sale thereunder; Moran v. Moran (C. C. A., 2d Cir.), 44 Am. B. R. 178, 258 Fed. 234; French v. Cunningham (C. C. A., 8th Cir.), 44 Am. B. R. 534, 261 Fed. 909; Willman v. Peterson (Neb. Sup. Ct.), 44 Am. B. R. 568, 175 N. W. 644; Cohen v. George (Ga. Sup. Ct.), 44 Am. B. R. 617, 101 S. E. 803; Termini v. Huth (N. Y. App. Div.), 45 Am. B. R. 263, 191 App. Div. 218, 181 N. Y. Supp. 224; Harper v. Sanderson (D. C., N. J.), 45 Am. B. R. 579, 264 Fed. 857; Hardy v. Oregon Eilers Music House (Ore. Sup. Ct.), 46 Am. B. R. 435, 195 Pac. 563; Blue v. Herkimer Nat. Bank (D. C., N. Y.), 47 Am. B. R. 290, 276 Fed. 559; Allen v. Hillman (Mich. Sup. Ct.), 48 Am. B. R. 186, 183 N. W. 936. In New Jersey an insolvent debtor may prefer any creditor either by a mortgage securing an antecedent debt or by a conveyance of property in satisfaction of such indebtedness, provided that the transaction is in good faith and for an adequate considera tion, and the trustee in bankruptcy of the debtor may not avoid such transfer under section 70-e. Manning v. Evans (D. C., N. Y.), 19 Am. B. R. 217, 223, 156 Fed. 106. Redemption by bankrupt.- Where a bankrupt fraudulently conveyed land prior to his adjudication and failed to include it in his schedules, he has no interest in such lands founded on an antecedent title, and subsequent equities in his favor cannot be based on such title in order to enable him to redeem the land. Bagley v. Bagley (Ala. Sup. Ct.), 48 Am. B. R. 217, 89 So. 739. 689. See Bankr. Act, § 21-g, ante, as to evidence of order of confirmation, and the recording thereof. 690. Matter of Hollins (C. C. A., 2d Cir.), 36 Am. B. R. 168, 229 Fed. 349; Am. Improvement Co. v. Lilienthal (Cal. Dist. Ct. of App.), 44 Am. B. R. 365, 184 Pac. 692. Cross reference.- See also under section 12, ante, subtitle "Effect of composition." Liens which would be valid and unassailable in the ordinary course of bankruptcy proceedings are protected in composition arrangements and are not affected or discharged. Oilfields Syndicate v. American Improvement Co. (C. C. A., 9th Cir.), 44 Am. B. R. 490, 260 Fed. 905, affg. 43 Am. B. R. 325, 256 Fed. 979. A liquidating trustee to whom the assets of a bankrupt are transferred pursuant to a composition agreement duly approved by the Federal court is a trustee for creditors and authorized by section 19 of the New York State |