In re Finn , 9 F. Cas. 72 ( 1873 )

LONGYEAR, District Judge.

The bankrupt, on his final examination, states as follows: “Some few days previous to the filing of my petition in bankruptcy I gave a chattel mortgage to Edward Ryan and Peter Ruppe for one thousand dollars, to secure them for a note for that amount which they had previously endorsed for me. . After filing the petition I sold the same parties goods to the amount of one thousand and ten dollars. I suppose their object was to secure themselves for their endorsement, and my object was not to prevent their doing so if they could get it. The mortgage was cancelled at the time of the sale of the goods to the said parties.” He also states that the value of goods so sold to Ryan and Ruppe was afterward paid by them to the assignee, and that what he did in giving the chattel mortgage and sale of goods was done by him under advice of counsel. He also states that after the bankruptcy he collected about six hundred dollars in money, four hundred and fifty dollars of which he paid over to the assignee, eighty dollars converted to his own use, fifty dollars “for sundry small bills previously incurred” and the balance to his attorneys for services in connection with the bankruptcy proceedings.

It does not need argument to show that the foregoing fully sustains the specifications. The fact that the property was surrendered by Ryan and Ruppe in no manner does away with the effect of the bankrupt’s act in giving them the fraudulent preference. As to the statement that he acted on the advice of counsel, it is sufficient to observe that it is not made to appear that he did so in good faith, believing that he had a legal right to do what he did; neither can it be well conceived that so flagrant a violation of law, and of the most common principles of honesty and fair dealing toward his other creditors, could have been done in good faith, whether with or without legal advice. The petition for a discharge is denied.