was made prior to the four months period.31 Where there had been no effective transfer of certain insurance money to a creditor until the money was in fact paid, which was within the four months period, the amount so paid constituted a voidable preference.32 A transfer of property for a past consideration and within ten days of the filing of the petition is voidable as a preference.3 33 Where a verbal agreement is entered into between the parties more than four months prior to the filing of the petition, and a chattel mortgage or other incumbrance is executed in accordance with such agreement within such period, such mortgage or incumbrance is a voidable preference.34 Prior to the amendments of 1903 this clause was in subdivision b in the original law. It led to the anomalous doctrine that mere preferences, as, for instance, bona fide payments, must be surrendered if since insolvency, no matter how many months or years back, but fraudulent preferences were good unless within the four months period.35 The clause has been changed to subsection a and no transaction can now be held a preference unless complete within four months of the petition, or, if after the petition, if before the adjudication.

6. Running of time where the evidence of transfer must or may be recorded.—The concluding sentence of subdivision a is new and was inserted by the amendatory Act of 1903. Its purpose is to meet the decisions that held the date of the delivery of a preferential instrument, rather than the date of its record, the beginning of the four months period.36 Where a preference

31. Matter of Mandel, 10 Am. B. R. 774; Matthews v. Hardt, 9 Am. B. R. 373. Compare Christ v. Zehner, 16 Am. B. R. 788, 212 Pa. St.; In re Chadwick, 15 Am. B. R. 528, 140 Fed. 674.

32. Long v. Farmers' State Bank, 17 Am. B. R. 103, 147 Fed. 360.

33. In re Gesas (C. C. A.), 16 Am. B. R. 872, 146 Fed. 734.

34. In re Dismal Swamp Contracting Co., 14 Am. B. R. 175, 135 Fed.

415; In re Rounk, 7 Am. B. R. 31, 111 Fed. 154.

35. See the now inapplicable cases of In re Rosenberg, 7 Am. B. R. 316; In re Abraham Steers Lumber Co., 6 Am. B. R. 315, 110 Fed. 738, 7 Am. B. R. 332, 112 Fed. 406; In re Jones, 4 Am. B. R. 563. Contra, In re Biswick, 7 Am. B. R. 395; In re Dickinson, 7 Am. B. R. 679.

36. In re Mersman, 7 Am. B. R. 46; In re Kindt, 4 Am. B. R. 148,

consists in a transfer, the period of four months does not expire until four months after the date of recording, if by law such recording is required.37 A similar clause is contained in section 3b of the Bankruptcy Act, but after the word "required" that section contains the words: " or permitted, or permitted, or if not, from the date when the beneficiary takes notorious, exclusive, or continuous possession of the property," which for some reason have been omitted from this section. The evils aimed at by this amendment are thus but partially eradicated, since the concealment of preferences through the four months, and thus the accomplishment of gross frauds on creditors, will be possible, unless the preference is accomplished by an instrument which must be recorded.38 The omission from this subsection of words equivalent to "unless the petitioning creditors have received actual notice of such transfer or assignment," found in the concluding sentence of section 3b should also be noted.39 This clause as amended only refers to transfers originally intended as preferences, or which, at their inception, constituted such as a matter of law.40 It will sometimes be found difficult to determine whether the law actually requires the recording or registering of a transfer within the meaning of this section. For instance, it has been held that "required," as here used, has reference to the character of the instrument rather than to the particular individuals who may or may not be affected by an unrecorded instrument.41 It has also been held that, under a statute requiring the recording of a chattel mortgage, a failure to register rendered the mortgage

101 Fed. 107; In re Wright, 2 Am. B. R. 364, 96 Fed. 187.

37. In re Reynolds, 18 Am. B. R 666, 153 Fed. 295.

38. See In re Mersman, supra; In re Tonawanda Street Planing Mill, 6 Am. B. R. 38.

39. See subs. 3b, chap. XXI, supra. Note distinction made between the language here used and that used in section 3b, as discussed in Little v. Holly Brooks Hardware Co. (C. C.

A.), 13 Am. B. R. 422, 133 Fed. 874. See also English v. Ross, 15 Am. B. R. 370, 140 Fed. 630, where it is suggested that the amendment to section 60a was for the purpose of bringing it into substantial accord with section 3a.

40. Bradley Clark Co. v. Benson, 13 Am. B. R. 170, 100 N. W. 670.

41. In re Reynolds, 18 Am. B. R. 666, 153 Fed. 295.

void only as against lien creditors, subsequent purchasers or incumbrancers in good faith, and that such recording was therefore not required to make the instrument valid as against the mortgagor's general creditors; it is this character of a requirement which is needed to bring the transaction within this subdivision.42 On the other hand, it has been held that a State statute which requires conveyance or transfer to be recorded in order to be effectual as against any class or classes of persons is a law by which such recording is "required" within the meaning of the Bankruptcy Act.43 If a chattel mortgage first comes into existence as against general creditors, under a State statute, when it is recorded, it is "required" to be recorded under this subdivision, even though it is not absolutely void in all circumstances because not so recorded.44 Where, under a State law, an unrecorded instrument is valid between the parties and against general creditors of the grantor, the failure to record a deed until after the grantor's adjudication as a bankrupt is not sufficient to make it an unlawful preference within the meaning of sections 60a and 60b, amended.45 An assignment of a mortgage of real estate is an instrument" required to be recorded" in the State of New York, under section 60a of the Bankrupt Act.46

as

7. Procured or suffered a judgment.-The words here are not the same as those in section 3a (3), which reads "suffered or permitted." They are similar to those of the law of 1867.47

42. In re Chadwick, 15 Am. B. R. 528, 140 Fed. 674; Meyer Bros. Drug Co. v. Pipkin Drug Co. (C. C. A.), 14 Am. B. R. 477, 136 Fed. 396; Matter of Hunt, 14 Am. B. R. 416, 139 Fed. 283.

43. Loeser v. Savings Deposit Bk. & Trust Co. (C. C. A.), 17 Am. B. R. 628, 148 Fed. 975, construing the Ohio law.

44. In re Montague, 16 Am. B. R. 18; First Nat. Bank v. Connett (C. C. A.), 15 Am. B. R. 662, 142 Fed.

33; In re Noel, 14 Am. B. R. 715, 137 Fed. 694.

45. In re McIntosh, 18 B. R. 169 · (C. C. A.), 150 Fed. 546, construing California law. Correction of defect which affects only right to record allowed after bankruptcy. In re International Mahagony Co., 16 Am. B. R. 797 (C. C. A., N. Y.), 147 Fed. 147. 46. In re John J. Coffey, 19 Am. B. R. 148.

47. Act of 1867, section 39.

"Procuring" a judgment implies active agency on the part of the debtor. It is very different from "permitting" the same thing. But the disjunctive "or" being used, as is the word "suffered," cases in point under section 3a (3) are thought to be properly equally in point as to preferences which are voidable. The cases under the former law are not controlling here.48 The crucial element of intent is now unnecessary. The decisions under the present law directly in point are to like effect.49

§ 8. Made a transfer of his property.-The word "transfer " here includes every mode of disposing of or parting with property.50 It includes the payment of money.51 It includes a mortgage or a lien voluntarily created by the debtor.52 A mortgage given to secure repayment of misappropriated trust funds is a preference.53 The method of transfer is immaterial.54 A resultant inequality being now the essence of a preference, it makes no difference that the transferee was coerced by his creditor.55 The fact that the transfer was made in good faith is immaterial, if it is made within the prescribed period to secure an, antecedent debt, and is intended and accepted as a preference, and so results.56 A fictitious transaction not affecting the estate of the

48. See Wilson v. The City Bank, 17 Wall. (U. S.) 473.

49. In re Collins, 2 Am. B. R. 1; In re Richards, 2 Am. B. R. 518, 95 Fed. 258.

50. Bankr. Act, 1898, section 1 (25).

51. West v. Bank of Lahoma, 16 Am. B. R. 733; New York County Nat. Bank v. Massey, 192 U. S. 138, 11 Am. B. R. 42; Jaquith v. Alden, 189 U. S. 78, 82, 9 Am. B. R. 773; Pirie v. Chicago, etc., Trust Co., 182 U. S. 438, 5 Am. B. R. 814; In re Fixen, 4 Am. B. R. 10, 102 Fed. 296; In re Arndt, 4 Am. B. R. 773, 104 Fed. 234; In re Sloan, 4 Am. B. R. 356, 102 Fed. 116; In re Warner, Fed. Cas. No. 17,177; In re Clark,

Fed. Cas. 2,812.

52. Coder v. Arts (C. C. A.), 18 Am. B. R. 513, 152 Fed. 943, modifying In re Armstrong, 16 Am. B. R. 583, 145 Fed. 202.

53. Smith v. Au Gres Township, 17 Am. B. R. 745 (C. C. A.), 150 Fed. 257.

54. Stern v. Louisville Trust Co., 7 Am. B. R. 305, 112 Fed. 501. This was so under the former law. Gibson v. Dobie, Fed. Cas. No. 5,394; In re Waite, Fed. Cas. No. 17,044.

55. Clarion Bank v. Jones, 21 Wall. (U. S.) 325; Giddings v. Dodd, Fed. Cas. No. 5,405; In re Batchelder, Fed. Cas. No. 1,098.

56. Morgan v. First Nat. Bank (C. C. A.), 16 Am. B. R. 639, 145 Fed.

debtor or the rights of creditors cannot be deemed a transfer, although assuming the form of one.57 A preference must have actually resulted from the transfer.58 Where the transfer does not diminish the general fund, as where it consists of the giving of a fair security for a present loan,59 the substitution of securities pledged to an old loan,60 or a pledge or payment for a consideration given in the present or to be given in the future, whether in money, goods, or services,61 no preference results. For a going concern, when unable to pay all its debts, to use a part of its assets to pay current expenses does not constitute a preference.62 But any transfer within the statutory time by way of payment on or security of an antecedent debt is a preference.63 It is only

466, so held in respect to a trust deed executed in good faith to secure an antecedent debt. Intent by bankrupt to prefer is essential. GoodlanderRobertson Lumber Co. v. Atwood (C. C. A.), 18 Am. B. R. 510, 152 Fed. 978.

57. In re Steam Vehicle Co., 10 Am. B. R. 385, 121 Fed. 939.

58. See Gomila v. Wilcombe (C. C. A.), 18 Am. B. R. 143, 151 Fed. 470; Richmond Standard Steel, Spike & Iron Co. v. Allen (C. C. A.), 17 Am. B. R. 583, 148 Fed. 657; Belknap & Co. v. Lyell (Miss.), 42 So. 799.

59. In re Noel, 14 Am. B. R. 715, 137 Fed. 694; First Nat. Bank v. Penn Trust Co., 10 Am. B. R. 782, 124 Fed. 968; In re Wolf, 3 Am. B. R. 555, 98 Fed. 74; Tiffany v. Boatman's Sav. Bank, 18 Wall. (U. S.) 375.

60. See Stewart v. Platt, 101 U. S. 731; Sawyer v. Turpin, 91 U. S. 114; Birnhisel v. Firman, 22 Wall. (U. S.) 70; Clark v. Iselin, 21 Wall. (U. S.) 369; Cook v. Tullis, 18 Wall. (U. S.) 332.

61. Furth v. Stahl, 10 Am. B. R. 442, 205 Pa. St. 439. See also Dres

sel v. North State Lumber Co., 9 Am. B. R. 541, 119 Fed. 531, the return of money to a bank advanced to the bankrupt upon a check under an agreement that it was to be used to obtain a loan, which was not made. is not a preferential payment to the bank.

62. Richmond Standard Steel Spike & Iron Co. v. Allen, 17 Am. B. R. 583, 148 Fed. 657, paid president's salary.

63. In re Jones, 9 Am. B. R. 262, 118 Fed. 673; In re Wolf, 3 Am. B. R. 555, 98 Fed. 74; In re Belding, 8 Am. B. R. 718, 116 Fed. 1016; In re Cobb, 3 Am. B. R. 129, 96 Fed. 821; In re Montgomery, Fed. Cas. No. 9,732; Coggeshall v. Potter, Fed. Cas. No. 2,955. But compare Brooks v. Davis, Fed. Cas. No. 1,950; Adams v. Merchants' Bank, 2 Fed. 174. See also In re Sanderlin, 6 Am. B. R. 384, 109 Fed. 857, and McNair v. MeIntyre, 7 Am. B. R. 638, 113 Fed. 113, reversing the former. In re Nechamkus, 19 Am. B. R. 189, a horse delivered by a bankrupt to a creditor in payment of, or as security for, a debt, is a voidable preference.