a settlement thereof cannot be considered a fraudulent preference within the meaning of the bankrupt law. In re Frantzen, 20 Fed. 785. But the requisite intent on the part of an insolvent debtor to give, and of a creditor to secure, an illegal preference, may be inferred from circumstances. Vanderhoof v. City Bank, 1 Dill. 476, Fed. Cas. No. 16,842. And when a debtor is insolvent and knows it, any payment then made by him to a creditor in full must be made with an intent to prefer, as the intention of the parties is to be judged from the legal effects of their acts. Traders' Bank v. Campbell, 14 Wall. 87. Where the circumstances tend to show an intent to give and receive a preference, the failure to produce the testimony of the debtor, or of the alleged preferred creditor, as to the intent, will be considered strongly corroborative of the evidence of an intent to prefer. Darling v. Townsend, 5 Fed. 176. Where one had ceased to be a trader years before, and had disposed of all his property, but not settled all his trade debts, and was living on his salary as a clerk, and paid his rent and some other necessary expenses every month, without intending to become bankrupt, it was held that such payments were not fraudulent preferences of which his trade creditors could take advantage in opposing his discharge. In re Locke, 1 Low. 293, Fed. Cas. No. 8,439.

Burden of Proof.

The burden of showing that a creditor of a bankrupt has acquired an illegal preference is upon the trustee in bankruptcy seeking to avail himself of that fact. He must establish, by a fair preponderance of proof, that the debtor was insolvent, or in contemplation of bankruptcy or insolvency, that the security was designed to give a preference, and that the creditor had reasonable cause to believe the fact of insolvency, and knew the security was intended as a preference. Crane v. Penny, 2 Fed. 187; Parsons v. Topliff, 14 N. B. R. 547; Barbour v. Priest, 103 U. S. 293. In the case last cited

the court observed: "It has never been denied, so far as we are advised, that it is necessary for the assignee of the bankrupt, in attacking such a conveyance, to prove the existence of this reasonable cause of belief of the debtor's insolvency in the mind of the preferred party." But since one is always presumed to intend the necessary and legitimate consequences of his own acts (2 Whart. Ev. § 1258), "where the act which is made the act of bankruptcy is a passive act, such as that of suffering property to be taken on legal process, when the debtor is insolvent or in contemplation of insolvency, with intent to give a preference to a creditor, if the natural and probable consequence of the act of sufferance is to give the preference to the creditor, it will be inferred that the debtor had such intent, unless he shows the contrary; and the burden will be upon him to show the contrary." Blatchford, J., in In re Black, 2 Ben. 196, Fed. Cas. No. 1,457; Webb v. Sachs, 4 Sawy. 158, Fed. Cas. No. 17,325. The testimony of the parties to a transaction challenged as preferential under the bankrupt law, as to their intentions, though competent, is inherently weak and can rarely avail against the stronger proof which the transaction itself affords. Oxford Iron Co. v. Slafter, 13 Blatchf. 455, Fed. Cas. No. 10,637.

Recovery by Trustee.

Under the provisions of this section, it might appear at first sight that the trustee could not maintain an action to set aside or avoid a transfer of property made by the debtor prior to the time limited by the bankrupt law itself; that if such transfer or conveyance were made more than four months before the filing of the petition in bankruptcy, the trustee would have no authority to recover the property. But this is to be read in connection with section 70 of the act, which provides that there shall vest in the trustee the title to "property transferred by him [the bankrupt] in fraud of his creditors," and that "the trustee may avoid any transfer, by the bankrupt, of his prop

erty which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication." And it has been decided, under a substantially similar clause, that this gives to the trustee a right of action to annul any fraudulent conveyance of the bankrupt, whenever made, even before the bankrupt act was passed, so it be not barred by the statute of limitations. Cady v. Whaling, 7 Biss. 430, Fed. Cas. No. 2,285; Cookingham v. Ferguson, 8 Blatchf. 488, Fed. Cas. No. 3,182. Where property has been transferred under such circumstances as to constitute a preference, the trustee may recover possession of the property itself, and the market value of any that has been sold by the transferee, with interest from the time he demanded it. Cookingham v. Morgan, 7 Blatchf. 480, Fed. Cas. No. 3,183. The trustee of one partner cannot set aside a conveyance made by both partners with intent to prefer a joint creditor, the other partner not being bankrupt; for the preference does not become fraudulent and therefore voidable, unless they both become bankrupt within the time limited. Forsaith v. Merritt, 1 Low. 336, Fed. Cas. No. 4,946. Where the grantee in a conveyance made by an insolvent debtor, in fraud of the bankrupt act, takes the title merely at the request of and in trust for a third person, and derives no profit from the transaction, he is not liable to the assignee in bankruptcy for the value of the land, unless he not only knew of the insolvency, but also shared the bankrupt's intent to defeat the law. Alleman v. Kneedler, 2 Fed. 671. The amount which the trustee is entitled to recover from a creditor who has received a preference by means of a judgment, is the gross amount obtained on execution, without any deduction for the costs and expenses of the creditor. Traders' Bank v. Campbell, 14 Wall. 27; Street v. Dawson, 4 N. B. R. 207, Fed. Cas. No. 13,533.

CHAPTER VII.

ESTATES.

DEPOSITORIES FOR MONEY.

§ 61. a Courts of bankruptcy shall designate, by order, banking institutions as depositories for the money of bankrupt estates, as convenient as may be to the residences of trustees, and shall require bonds to the United States, subject to their approval, to be given by such banking institutions, and may from time to time as occasion may require, by like order increase the number of depositories or the amount of any bond or change such depositories.

Depositories.

Under the statute and the rules of court, all sums of money received by assignees in bankruptcy, and by the clerk of the district court were required to be deposited, with a certain bank to be named by the court, to be drawn out upon the checks of the court. The funds so deposited were kept as a unit to the credit of the court, and were paid out on checks signed by the clerk and countersigned by the judge. The clerk failed to make deposit of all the funds received by him, and the bank paid checks drawn on it until it had paid out all the funds deposited, but refused to pay other checks drawn, whereupon suit was brought on a check so refused. It was held that the bank was not liable to the holder of such check. As there was no misappropriation of the funds by the bank, it was not liable for any deficit in the amount due beneficiaries, arising from the neglect of the clerk

to deposit all the trust funds that came to his hands as an officer of the court. The bank was not bound to open a separate account as to the several cases in which the deposits were made, nor to take notice of any memoranda either on the margin or in the body of any check drawn upon it, for such memoranda are to be regarded as having been made for the convenience of the drawers, and not as an order or direction to the bank. State Nat. Bank v. Reilly, 124 Ill. 464, 14 N. E. 657.

EXPENSES OF ADMINISTERING ESTATES.

$62. a The actual and necessary expenses incurred by officers in the administration of estates shall, except where other provisions are made for their payment, be reported in detail, under oath, and examined and approved or disapproved by the court. If approved, they shall be paid or allowed out of the estates in which they were incurred.

Allowance for Expenses.

On a trustee's accounting in bankruptcy, charges for the employment of a book-keeper will not be passed, beyond what is proved to have been necessary in the administration of the estate, nor for a longer period than the exigencies required. And where charges are made for a book-keeper employed partly in the personal business of the trustee, and partly for the estate, no apportionment of charges by the trustee will be approved except upon proof of the services rendered, their necessity, and their reasonable value. In re Barnes, 18 Fed. 158. And the same rule applies to rent for offices used for

both purposes. Id. The court may, in proper cases, author

ize the trustee to expend money of the estate in finishing goods for sale, when it is clear that benefit will result to the estate, and that the work can be done within a reasonable

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