Time for vacation of preference. — In Citizens' Banking Co. v. Ravenna Nat. Bank, (1914) 234 U. S. 360, 34 S. Ct. 806, 58 U. S. (L. ed.) 1352, the court construing the clause relating to the time within which a preference must be vacated said: "Without any doubt this clause shows that the debtor is to have until five days before an approaching or impending event within which to vacate or discharge the lien out of which the preference arises. What, then, is the event which he is required to anticipate? The statute answers, 'a sale or final disposition of any property affected by such preference.' As these words are part of a provision dealing with liens obtained through legal proceedings, and as the enforcement of such a lien usually consists in selling some or all of the property affected, and applying the proceeds to the creditor's demand, it seems quite plain that it is to such a sale that the clause refers. And as there are instances in which the property affected does not require to be sold, as when it is money seized upon execution or attachment, or reached by garnishment, it seems equally plain that the words 'or final disposition' are intended to include the act whereby the debtor's title is passed to another when a sale is not required. No doubt, the terms 'sale or final disposition,' explained as they are by the context, are comprehensive of every act of disposal, whether by sale or otherwise, which operates as an enforcement of the lien or preference. But we do not perceive anything in the clause which suggests that the time when the lien is obtained has any bearing upon when the property must be freed from it to avoid an act of bankruptcy. On the contrary, the natural and plain import of the language employed is that it will suffice if the lien is lifted five days before a sale or final disposition of any of the property affected. This is the only point of time that is mentioned, and the implication is that it is intended to be controlling."

Sufficiency of petition. In the case of In re Fineman, (E. D. Pa. 1915) 223 Fed. 652, wherein a petition in bankruptcy was held sufficient on a motion to dismiss the court said: "A statement of the record facts in this case is necessary to bring out the question involved. On November 7, 1914, a petition in an involuntary proceeding was filed. The act of bankruptcy intended to be averred was the third of those set forth in section 3a of the act. The ground of bankruptcy is that usually referred to as an act of 'preference.' It may be noted here that three things together constitute the act of bankruptcy. The alleged bankrupt must have been insolvent; he must have suffered or permitted a creditor to obtain a preference through legal proceedings; and he must have failed to have had such preference vacated at least five days before a final sale or other disposition of the property affected by such

preference. The averments of the petition by means of which the insolvent is to be made subject to the provisions of the Bankruptcy Act are that the alleged bankrupt is insolvent and has suffered and permitted certain of his creditors to obtain a preference through legal proceedings. The preference set forth is the suffering of a judgment and an attachment in execution to be issued thereon against an insurance company as garnishee, and that judgment, had been obtained against the garnishee in the proceedings, the amount of which is about to be paid over to the creditor thus preferred. There is a further averment of the failure of the alleged bankrupt to have the preference thus obtained vacated. No other ground of bankruptcy is suggested. It is evident that no decree of adjudication can be entered unless the above averments bring the proceeding within the quoted section of the Bankruptcy Law. It is equally clear that the securing by a creditor of the amount of his claim through attachment in execution proceedings is a 'final disposition of property affected by such preference' as effectually as if he had received payment from the proceeds of a sale under a writ of fieri facias or venditioni exponas. There is no necessity or

excuse even for discussing the question, as it has been set at rest in a number of adjudications. In re Harper, (D. C.) 105 Fed. 900. Essentially the same question was disposed of in In re Goldie Fisher, (D. C.) 219 Fed. 638. The difference of views expressed by the respective counsel is due to the overlooking by counsel for the bankrupt of the distinction between cases in which the attachment in execution proceedings have gone no further than the issuance of the writ and those in which they have progressed beyond the point of a judgment against the garnishee. It is to be observed that the distinction is analogous to that between cases in which a judgment has been recovered, but no sale or other disposition of the property of the alleged bankrupt threatened, and those in which a sale through execution process is impending. It seems to be an extremely technical view (although there is some sanction for it in judicial expressions) to take of a petition that, because there is no averment of the fact that the debt attached is the property of the defendant in the judgment, there is therefore no averment that any property of the alleged bankrupt is affected by a preference.' In the first place, the averments are of the fact of the preference; and in the second place, the averment of a judgment and issuing of an attachment in execution upon that judgment, and following this a judgment against the garnishee, necessarily carries a statement of the fact that there was property of the defendant out of which the preference was obtained. The motion to dismiss the petition is therefore disallowed."

1912 Supp., p. 488, sec. 3a (4).

I. ASSIGNMENT FOR BENEFIT OF CREDITORS.

The making of a general assignment for the benefit of creditors. The "general assignment" contemplated by section 3a(4).— To the same effect as the original note, see In re Heleker Bros. Mercantile Co., (D. C. Kan. 1914) 216 Fed. 963, wherein the court said: "The term 'general assignment for the benefit of creditors' as employed in clause 4, subdivision 'a,' section 3, of the Bankruptcy Act, does not concern itself merely with such acts of a debtor as would constitute an assignment for the benefit of creditors under the laws of the state in which it is made or, merely with the form of the written instrument employed to effectuate such purpose; on the contrary, the act does concern itself with, and does contemplate, all acts of a debtor, regardless of the manner or form of their accomplishment, by which he parts with the title and possession of all his property of every kind and nature for the benefit of his creditors, to be disposed of as his trustee or assignee by him selected and named may employ, independent of the Bankruptcy Act."

Preferential or fraudulent intention unnecessary. To the same effect as the original note, see Pelton v. Sheridan, (1914) 74 Ore. 176, 144 Pac. 410.

Insolvency unnecessary. To the same effect as the original note, see Hill v. Western Elec. Co., (C. C. A. 6th. Cir. 1914) 214 Fed. 243, wherein the court held that the solvency or insolvency of the assignor was immaterial, because the language of the statute disclosed an intent to make such an assignment alone an act of bankruptcy.

II. APPOINTMENT OF RECEIVER OR TRUSTEE Appointment of receiver or trustee. - To the same effect as the original note see In re Muir, (M. D. Pa. 1914) 212 Fed. 495; Pugh v. Loisel, (C. C. A., 5th Cir., 1915) 219 Fed. 417.

In the case of In re Rankin, (N. D. Ohio, 1913) 210 Fed. 529, it was held that it was an act of bankruptcy for a debtor, whose property was below the amount of his debts and who was unable because of the pressure of some of those debts to continue as a going business, to apply to the state court for a receiver.

Authority to make application. Express authorization by formal action of the board of directors or stockholders of an insolvent corporation is not necessary to make an application for a receiver by the corporation an act of bankruptcy. James Supply etc., Co. v. Dayton Coal etc., Co., (C. C. A. 6th Cir. 1915) 223 Fed. 991.

Although an insolvent corporation is a defendant in an action in which a receiver is appointed for it the appointment constitutes an act of bankruptcy provided the corporation applied for it. James Supply

etc., Co. v. Dayton Coal etc., Co., (C. C. A. 6th Cir. 1915) 223 Fed. 991.

Insolvency. Under the last clause insolvency itself is not made one of the substantial issues to be tried as an issue of fact in the bankrupt court except in so far as the appointment of a receiver or trustee has been because of insolvency. In other words, if the action of the court appointing a receiver was based upon insolvency, that is the only question for determination, and in itself would appear to determine the question of insolvency as adjudicated in the order making the appointment. It is not necessary under this subdivision that, in addition to evidence showing the appointment of a receiver by the court appointing the receiver because of insolvency, evidence should be additionally produced outside of the action of the court to show that the alleged bankrupt was in fact insolvent. In other words, it is not necessary, upon an application for involuntary bankruptcy under this last clause, to prove both that the alleged bankrupt had had a receiver appointed because of insolvency, and in addition and wholly dehors of this order of appointment the alleged bankrupt was actually insolvent, but to establish only that the receiver was appointed by the court appointing him because of insolvency, which involves and establishes the existence of insolvency. This question is to be determined principally by the inspection of the record of the court appointing the receiver. In re Maplecroft Mills, (N. D. S. C., 1914) 218 Fed. 659. Compare In re Commonwealth Lumber Co., (W. D. Wash. 1915) 223 Fed. 667, wherein it appeared that a receiver was appointed in a state court of Washington on the ground of the insolvency of a corporation and it was held that the act did not of itself constitute an act of bankruptcy. The court said: "The act of bankruptcy alleged in the petition is putting the corporation in charge of a receiver by the state court.

+ The petitioners contend that the state court having appointed a receiver 'for the reason that said corporation is utterly insolvent and unable to meet or pay its obligations' is a finding which is conclusive, and adjudication must now follow. There is no doubt that a receiver may be appointed in the state court for a corporation in financial depression, when bankruptcy proceedings could not be entertained. The statute of Washington authorizes the appointment of a receiver when a corporation is in imminent danger of insolvency (section 741, Rem. & Bal. Washington Code), and the state court holds that a corporation is insolvent when it is unable to meet its obligations as they mature in the ordinary course of business (State ex rel. v. Superior Court, 20 Wash. 575, 59 Pac. 483; Nixon v. Hendy Machine Works, 51 Wash. 419, 99 Pac. 11); while

under the Bankruptcy Act, when the assets at a fair valuation do not equal the liabilities, a corporation is insolvent (section 1, subd. 15, Bankr. Act). Petitioners rely on In re Maplecroft Mills, (D. C.) 218 Fed. 661, in which the District Court of the Fourth District held the appointment of a receiver under the South Carolina code provision that a receiver may be appointed when a corporation is 'in imminent danger' of insolvency, and at page 673, the court says: 'Under the evidence in the case now before the court it is found that the only ground upon which the state court, to wit, the court of common pleas for Pickens county, could possibly have made the order of appointment of a receiver and taken possession of, to operate and eventually liquidate and marshal and distribute, the assets of the Maplecroft Mills, under the allegations of the complaint, was because of insolvency. The Supreme Court of the state of South Carolina has approved, for the state courts of the state of South Carolina, the same definition of insolvency as that given in the Bankruptcy Act (citing case). Where the court of common pleas for Pickens county appointed a receiver because of insolvency, it must be presumed that it found under the laws of South Carolina it was such an insolvency as is defined to be insolvency in the Bankruptcy Act, and that it adjudicated that question as against the Maplecroft Mills,

1912 Supp., p. 491, sec. 3a (5).

An admission in writing. -Qualified admission insufficient. — Where a letter was written by the president of an alleged bankrupt corporation, admitting that the floating indebtedness could not be met promptly because too much capital was invested in the plant in proportion to the working capital, and requesting a conference with its creditors, it was held that it was not an admission warranting an adjudication in bankruptcy. Lackawanna Leather Co. v. La Porte Carriage Co., (C. C. A. 7th Cir. 1914) 211 Fed. 318.

so as to determine it as well for these proceedings as for those in the state court.' The Circuit Court of Appeals of the First Circuit (In Re Wm. S. Butler & Co., Inc., 207 Fed. 705, 125 C. C. A. 223), Judge Putnam dissenting, held that the appointment of a receiver to assume control of the business and conduct the affairs of a corporation until further ordered, on a complaint, answer, and decree, for the reason that the corporation was unable to meet its obligations as they matured in the ordinary course of business, in the absence of an allegation that the corporation's property, at a fair valuation, was insufficient to pay its debts, was not a finding of insolvency within the act of bankruptcy. The Supreme Court of Washington recognizes a distinction between insolvency under the Bankruptcy Act and state statute. State ex rel. v. Superior Court, supra. I do not think that the finding of the state court upon the allegations of the complaint, in the absence of testimony, is conclusive of the insolvency of the corporation in issue, under the Bankruptcy Act, in this proceeding."

That a receivership ordered under the third clause was not ordered because of

insolvency is immaterial. If the corporation was actually insolvent at the time the receivership was applied for it is enough. James Supply etc., Co. v. Dayton Coal etc., Co., (C. C. A. 6th Cir. 1915) 223 Fed. 991.

Admission by solvent corporation. — A solvent corporation may admit in writing its inability to pay its debts and its willingness to be adjudicated a bankrupt on that ground, and such admission is just and sufficient cause for an adjudication, upon the filing of a petition by the necessary creditors, and within the period of four months after such admission. In re Russell Wheel, etc., Co., (E. D. Mich. 1915) 222 Fed. 569.

penses and damages occasioned by said seizure, taking and detention of the property of the alleged bankrupt.' In construing the language of this section it was said in the case of In re Spalding, 150 Fed. 120, 80 C. C. A. 74: "The fact that the second paragraph provides that all costs, etc., shall be allowed, is based upon the assumption that a bond will be taken large enough to cover all costs.' In re Haff, 135 Fed. 742, 68 C. C. A. 380, referring to the provisions of these sections of the Bankruptcy Act, it was also said that it was the obvious purpose of the act to require indemnity to be given to an alleged bankrupt before his property should be taken from

did in terms. He chose to invoke in the state courts the aid of the latter. He was not privileged to so proceed at his election. In so far as voluntary proceedings were concerned, both federal and state legislation covered the same field. By force of the existence of the former legislation the latter was held in abeyance and superseded in respect to persons and conditions coming within the purview of the former, and the former became exclusive. Sturges v. Crowninshield, (1819) 4 Wheat. 122, 196, 4 U. S. (L. ed.) 529; Ogden v. Saun

1912 Supp., p. 495, sec. 4b.

II. STATUTORY EXCEPTIONS. Persons engaged chiefly in farming or the tillage of the soil. To the same effect as the original note, see Counts v. Columbus Buggy Co., (C. C. A. 4th Cir. 1913) 210 Fed. 748; In re Sherwoods, (C. C. A. 2d Cir. 1913) 210 Fed. 754.

When status must exist.-To the same effect as the original note, see In re Disney, (D. C. Md. 1915) 219 Fed. 294, wherein the court said: "The fact that a particular farmer will not suffer if he be adjudicated, and many of his creditors will if he be not, is therefore no reason for construing the exemption narrowly. Nor does the probability or reverse of such an outcome give even in a close case much help in determining whether a debtor was or was not chiefly engaged in farming. It is settled, at least in this circuit, that whether a debtor was or was not chiefly engaged in farming is to be determined as of the time at which he committed the act of bankruptcy charged against him. Counts v. Columbus Buggy Co., 210 Fed. 748, 127 C. C. A. 298; Flickinger v. First Nat. Bank of Vandalia, 145 Fed. 162, 76 C. C. A. 132." A partnership engaged chiefly in farming may not be adjudged a bankrupt. Still v. American Nat. Bank, (C. C. A. 4th Cir. 1913) 209 Fed. 749.

IV. CORPORATIONS AND UNINCORPORATED COMPANIES.

Unincorporated companies. To the same effect as the original note, see In re Associated Trust, (D. C. Mass. 1914) 222 Fed. 1012.

Effect of prior receivership of corporation's property.—An order appointing receivers of a corporation's property and enjoining the corporation, its officers and creditors from interfering with the receiver's possession, and from instituting or prosecuting any suits or proceedings to enforce the claims of creditors, does not bar the corporation or ny of its creditors from instituting proceedings to have it adjudged a bankrupt. In re Yaryan Novel Stores Co., (C. C. A. 6th Cir. 1914) 214 Fed. 563, wherein the court said: "In the appointment of the receivers and the issuance of the injunction, the powers of the

ders, (1827) 12 Wheat. 213, 278, 6 U. S. (L. ed.) 606. Any doubt which might otherwise exist upon the subject is removed by the necessary implication arising from the provision contained in section 70 of the federal act that proceedings commenced under state insolvency laws before its passage should not be affected by it. Whenever the federal door is open, the state door is automatically shut. Ketcham v. MacNamara, (1900) 72 Conn. 709, 711, 46 Atl. 146, 50 L.R.A. 641. The latter door was shut to this insolvent."

court in Georgia were

properly

exercised. There the solvency of the company was averred and admitted. The necessary element of involuntary bankruptcy was wanting. Only a court of equity I could give the desired relief. But the order of that court must be read and interpreted in the light of, and in connection with, the relevant and explicit provisions of the controlling act of Congress. When so read and interpreted, it contains nothing which indicates an intention to prohibit a due application being made to the appropriate bankruptcy court, or the exercise by the latter court of its special jurisdiction and powers, whenever the requisite statutory conditions might be found to exist. This language [of section 4] is so broad and comprehensive as to be all-embracing and all-inclusive. It clearly manifests the intention of Congress to confer the rights and privileges of the Bankruptcy Act upon all persons and all corporations except those expressly exempted from its operation. Rights and privileges so positively bestowed cannot be destroyed, denied, or abridged by any power save that which created and brought them into being. Nor, in the absence of specific declaration, will it be presumed that any court intends to make an order, which must be ineffective because in direct conflict with the legislative will and mandate.

"The settled rule is that the jurisdiction of the courts in bankruptcy in the administration of the affairs of insolvent persons and corporations is exclusive and paramount."

Pleading The character of the business of an alleged bankrupt corporation need not be set forth in the phraseology of the Bankruptcy Act. Sabin v. Blake-McFall Co., (C. C. A. 9th Cir. 1915) 223 Fed. 501, wherein the court said: "It is alleged in the amended petition that the Equal Rights Company, Incorporated, is a corporation duly organized and existing under and by virtue of the laws of the state of Oregon, with its principal place of business in the city of St. Johns, county of Multnomah, state of Oregon; that the corporation, for the greater part of six months preceding the date of the filing of the original petition herein, has had its prin