200 U. S. Argument for Plaintiff in Error. from the jury was an admission of all the facts which the evidence tended to prove, and there was presented only a question of law to the court. When a question decided by the state court is not merely of the weight or sufficiency of the evidence to prove a fact, but of the competency and legal effect of the evidence as bearing upon a question of Federal law, the decision may be reviewed by this court. Dower v. Richards, 151 U. S. 658; Mackay v. Dillon, 4 How. 421. The payment to the bank was a preference under the bankrupt law. Sections 60a, 60b, 57g. The fact that the payment was made circuitously was immaterial. A preference was nevertheless given and received. In re Lyon, 114 Fed. Rep. 327; Gibson v. Dobie, 5 Biss. 198; Crooks v. People's National Bank, 46 App. Div. N. Y. 339. The clearing house and its manager were agents of all the banks which belonged to the clearing house. The clearing house was created by a voluntary contract entered into between the banks that formed the same. It was a common banker of the members of the association. Merchants' National Bank v. National Bank, 139 Massachusetts, 513. See also Yardley v. Philler, 167 U. S. 344, 359. The bankrupt statute required plaintiff in error to prove that defendant in error had reasonable cause to believe that a preference was intended. No more was required. Section 60b; Loveland's Bankruptcy, pp. 468-471. The plaintiff in error was not required to prove a "conscious participation" in the bankrupt and his creditor in giving and receiving a preference. Pirie v. Chicago Title & Trust Co., 182 U. S. 438. The test of a voidable preference is whether or not a transfer or payment will have the effect to pay on one claim a larger dividend out of the estate of the bankrupt than that estate will pay on other claims. It is the effect which it has upon the distribution of the estate of the bankrupt, and not its effect upon the creditor that gives character to the preference. This is the controlling purpose of the statute. In re Bashline, 109 Argument for Defendant in Error. 200 U. S. Fed. Rep. 966; Kimball v. Rosenbaum Co., 114 Fed. Rep. 85; Pirie v. Chicago Title & Trust Co., supra; Toof v. Martin, 13 Wall. 40. Plaintiff in error could not have maintained an action against the clearing house; the express provision or stipulation in the articles of agreement entered into by the banks composing the clearing house, which expressly provided that "in no case is the association to be held responsible for any loss that may occur," would have defeated such an action. Mr. Talfourd P. Linn for defendant in error: The record shows that no Federal question occurred to counsel for plaintiff in error until after the decision of the Supreme Court of Ohio. Having submitted to the jurisdiction of the Ohio courts, and having failed at any stage of the proceedings to indicate to those courts that a Federal question was involved, or that some right or title was claimed under a statute of the United States, plaintiff in error cannot have the decision of the court below reviewed. In order to entitle him to relief, the record must affirmatively show that the Federal question was raised, or the right or title claimed. Sayward v. Denny, 158 U. S. 180; Turner v. Richardson, 180 U. S. 87; Yazoo &c. R. R. Co. v. Adams, 180 U. S. 1. The question cannot be raised for the first time in the assignment of error. Jacobi v. Alabama, 187 U. S. 133; Johnson v. Insurance Co., 187 U. S. 491. Even if the petition filed by plaintiff in error should be considered as if it had directly alleged a preference in violation of $860a and 69b, the facts disclosed by the record do not bring the action within the jurisdiction of this court. The court will not review on error mere questions of construction of Federal statutes, or applications of facts to those statutes, when the validity of the act or statute is not involved, and where no right to proceed under the statute is denied by the state court. Cameron v. United States, 146 U. S. 533; Choteau v. Marguerite, 12 Pet. 509; Cook Co. v. Dock Co., 138 U. S. 635; Osborne v. Florida, 164 U. S. 650; Kinnard v. Nebraska, 186 U. S. 304. This question was decided in the recent case of Thompson v. Fairbanks, 196 U. S. 516. To the same effect is Dresser v. Wilson, 195 U. S. 409... The decision of the Supreme Court of Ohio confirming the lower courts, is final, and not subject to review by this court. Kaufman v. Treadway, 195 U. S. 271. The record does not disclose any intention on the part of the bank to obtain a preference. An unlawful preference within the meaning of the bankruptcy act, must have been a preference obtained by the creditor with full knowledge of the insolvency, and with a deliberate intent to obtain the preference at the expense of other creditors. Collier on Bankruptcy, 4th ed., 418 et seq. MR. JUSTICE WHITE delivered the opinion of the court. The firm of Reinhard & Company, composed of John G. Reinhard and Henry A. Reinhard, carried on a banking business in Columbus, Ohio. On April 10, 1900, the firm made a general assignment under the insolvent laws of Ohio. On the following day a petition in involuntary bankruptcy under the laws of the United States was filed against the firm, and on August 10, 1900, it was adjudged bankrupt, and subsequently Rector, the plaintiff in error, was appointed the trustee. In a Court of Common Pleas of the State of Ohio the trustee began this suit against the defendant in error to recover the sum of $1,300, which it was subsequently agreed was only $1,161.74. The petition alleged the adjudication in bankruptcy and the appointment of the trustee, and based his right to recover upon the ground that on April 10, 1900, the firm had transferred and assigned to the defendant bank, who had received the same the sum of money sued for, which it was alleged was the property of Reinhard & Company, and, in substance, the payment to the bank was alleged to constitute a voidable preference. The answer admitted the making of the general assignment, the adjudication of the firm as an involuntary bankrupt, and the appointment and qualification of the plaintiff as trustee. The other averments of the petition were denied. A trial was had to a jury. At the close of the evidence for the plaintiff the court at the request of the defendant instructed a verdict in its favor and judgment was entered dismissing the action. The Circuit Court of Franklin County affirmed the judgment, which was thereafter affirmed by the Supreme Court of Ohio, without opinion. The Chief Justice of the Supreme Court of Ohio made and the court caused to be filed and entered on its journal the certificate which is in the margin.1 1 On motion of the plaintiff in error, Fred C. Rector, trustee, this court orders it to be certified and made part of the record in this case, and the Honorable William T. Spear, Chief Justice of said Supreme Court, does now certify, that in said cause, and on the hearing before this court, it was claimed, contended and alleged by the said plaintiff in error that, on the tenth day of April, A. D. 1900, Reinhard & Company, a partnership, by deeds of its individual members committed an act of bankruptcy, to wit: made a general assignment for the benefit of creditors; that on the eleventh day of April, A. D. 1900, a petition in bankruptcy was filed in the District Court of the United States of the Southern District of Ohio, Eastern Division; that on the tenth day of August, A. D. 1900, said Reinhard & Company were, by said court, adjudged bankrupt, and on September 13, A. D. 1900, said plaintiff in error was appointed trustee thereof; that on the tenth day of April, A. D. 1900, said Reinhard & Company, then being to the knowledge of the defendant in error, insolvent, assigned and transferred to the defendant in error, The City Deposit Bank Company, and that the said last named company then and there received from said Reinhard & Company the sum of $1,161.74 of moneys belonging to said Reinhard & Company; that said assignment and transfer was an unlawful preference, given to the said defendant in error, and violated the provisions of section 60a and section 60b of the United States bankrupt law; that it became and was material to the said cause for this court to determine whether the said sum of $1,161.74 was so assigned and transferred; whether it was an unlawful preference; whether it was a violation of said section 60a and section 606 of the said bankrupt law; and whether the said plaintiff in error, under said law, was entitled to have the said assignment and transfer set It is contended that this court is without jurisdiction. The argument upon which this proposition is rested is this: First. It is said that whilst in the petition the right of recovery was based upon the ground of fraudulent preference, it was not disclosed therein whether the preference relied upon was in violation of the bankrupt law of the United States or of the insolvent laws of the State of Ohio, and therefore a Federal question was not raised, as it was necessary to specially direct the attention of the state court to such a question if it was intended to rely upon it. Second. But even if a Federal question was referred to in the petition, as the cause of action stated in nowise involved the construction or validity of any provision of the bankrupt act, therefore there is no right to review under section 709 of the Revised Statutes. Both these contentions might well be disposed of by saying that the action was brought by a trustee appointed under the bankrupt law of the United States, seeking to recover what was asserted to be an asset of the bankrupt estate under that law. This, therefore, presented a Federal question, and the denial of the asserted right was a denial of a right or title specially claimed under a law of the United States. Peck v. Jenness, 7 How. 612; Barton v. Geiler, 108 U. S. 161; Williams v. Heard 140 U. S. 529; Dushane v. Beall, 161 U. S. 513; Stanley v. Schwalby, 162 U. S. 255. Whether expressions, relied upon in argument, contained in Cramer v. Wilson, 195 U. S. 408, 416, must be taken as not in harmony with the previous cases, or whether those expressions simply implied that where a right claimed by a trustee in bankruptcy in its final aspect depended aside and declared null and void, and to have a judgment and order for the recovery of said money against said defendant in error; that the decision of this court was adverse to the claims and contentions of the said plaintiff in error, in this that said court decided that said assignment and transfer of said sum of $1,161.74 was not an unlawful preference, in violation of the said provisions of the bankrupt law, and that the said plaintiff in error was not deprived of any right under said law, and was not entitled to have said assignment and transfer set aside, and to recover the said sum of $1,161.74 from said defendant in error. |