Dutton v. Steam-Tug Express.

starboard before he was directed to port, but the better opinion. is that he did not correctly understand the order, and, knowing what the contract was, assumed that it was an order to starboard, which would have been the proper order if the intention had been to go by the eastern channel. Caused as the mistake was, either by the omission of the master of the steam-tug to give reasonable notice to the master of the schooner that he had determined not to fulfil his contract and go by the eastern channel, or by his own improper order to starboard, the court is of the opinion that the defence that the disaster was occasioned by the negligence, carelessness, or want of skill and knowledge of the master of the schooner is not sustained.

Argument to show that some portion of the injuries received by the schooner were occasioned by the grounding of the vessel is unnecessary, as the evidence to support the proposition is too full to require any comments to enforce it; but the respondents insist that certain other portions of the injuries might have been prevented if the master had removed his deck load, or even shifted it from one side of the vessel to the other, or if he had taken any proper precaution in the emergency. Injuries occasioned by the grounding of the vessel, it is conceded, constitute a proper charge to the claimants if the disaster was in fact occasioned by the fault of the master of the steam-tug, but it is insisted that the additional injuries occasioned by the heeling over of the schooner do not fall within the same category. Defences of the kind just mentioned are more particularly for the consideration of the master, as they do not constitute an answer to the entire cause of action set up in the libel; but the court has looked into the record, and is of the opinion that the charge of negligence made against the master of the schooner is not sustained by the proofs. Much greater reason exists to conclude that the master of the steam-tug was guilty of fault, in prematurely abandoning the schooner which he had in tow, than to suppose that the master of the schooner was guilty of any culpable omission to save the vessel from further injury.

Complaint is also made that the master of the schooner at the time the contract was made was guilty of misrepresentation

Scammon v. Cole et al.

as to the draught of the schooner when loaded; but the charge is wholly unsupported by proof, and is therefore dismissed without further remarks. Error in the amount awarded is not alleged in argument, nor is it necessary to re-examine that question, as the parties waived the usual reference to a master, and the clear inference from the record is, that both parties acquiesced in the finding of the court as to amount.

Decree affirmed with costs.

JOHN Q. SCAMMON, Assignee in Equity, v. THOMAS H. COLE et al., Appellants.

The United States Bankrupt Act now in force, confers jurisdiction in Equity upon the District Courts in certain cases, and appeals may be taken from the District to the Circuit Courts in all such cases where the debt or damage claimed amounts to more than five hundred dollars, provided the appellant complies with the conditions specified in § 8 of the act.

A mortgage given to secure the payment of two promissory notes, the consideration of which being pre-existing debts of the bankrupt, for almost all of which the mortgagees were liable either as sureties or indorsers, is void when it appears that it was made within four months next preceeding the filing of the petition in bankruptcy, for the, express purpose of giving a preference; that the mortgagors were insolvent and the mortgagees had reasonable cause to believe that the mortgagors were insolvent at the time of the execution of the mortgage, and that the conveyance was made in fraud of the provisions of said act.

BILL in Equity praying that the respondents might show cause why certain property and the proceeds thereof should not be adjudged to have been the property of certain bankrupts, Chadbourne and Nowell, at the time a petition in bankruptcy was filed against them in the District Court.

On July 11, 1868, a creditor of the firm of Chadbourne and Nowell of Biddeford, in this district, filed in the office of the clerk of the District Court a petition in bankruptcy against the firm, and on December 2 following they were adjudged bankrupts. Pursuant to the decree the appellee was appointed assignee of the estate of the bankrupts, and a conveyance of all their property was made to him as such assignee by the register in

Scammon v. Cole et al.

bankruptcy having charge of the case. It was alleged that the debtor on June 17 of the same year, and within four months before the filing of the said petition, being insolvent or in contemplation of insolvency, made a conveyance to the appellants of the personal property described in the bill of complaint, with a view to give to the grantees a preference as creditors of their firm, they, the said appellants, having reasonable cause to believe that the grantors were insolvent, and that such conveyance was made in fraud of the provisions of the Bankrupt Act. Possession by the appellants of the property conveyed, and demand of the same by the assignee, and their refusal to deliver the same, were also alleged by the complainant, and he prayed that the respondents might be summoned to appear and answer the complaint, and show cause, if any they had, why the property or the proceeds thereof should not be adjudged the property of the bankrupts at the time the said petition was filed, and that the same should be delivered to the complainant as such assignee. Service was duly made, and the respondents appeared and filed separate answers. They severally admitted that the bankrupts at the time alleged made a mortgage to them of the goods and chattels specified in the bill of complaint, but they alleged that it was given for a present consideration, and explicitly denied that the mortgagors, at the time the instrument was executed, had any knowledge that they or either of them were insolvent, and they also denied that the debtors gave the mortgage, or that they, the respondents, took the same with any view to give or to secure to them any preference as creditors of the bankrupts, or to prevent their property from being duly distributed under the Bankrupt Act. Proofs were taken in the District Court, and the cause was heard, and a decree entered that the conveyance made by the bankrupts to the appellants was illegal, fraudulent, and void, and that the cause be referred to a master to take an account of the property received by the respondents. Due report was made by the master, specifying the property received by the respondents under the mortgage, and the net proceeds of such portion of the same as they had sold and appropriated to their own use. Such of the property as remained in their possession they were re

Scammon v. Cole et al.

quired, by the final decree of the District Court, to deliver to the complainant, and that he should also recover of them, for such portion of the property as they had sold, the sum of $956.12, together with costs of suit.

Appeal was duly taken by the respondents to this court, and the parties were fully heard upon the merits of the controversy. Certain exceptions were taken to the master's report, but were not pressed at the argument, and need not therefore be noticed. J. and E. M. Rand, for complainant.

A. A. Strout, for appellants.

[After a review of the facts of the case, and certain references to the pleadings, both of which are to be found in the statement, the court proceeded to say:

CLIFFORD, J. Jurisdiction is conferred upon the District Courts in certain cases, by the act of Congress establishing a uniform system of bankruptcy, and § 8 of the act provides that appeals may be taken from the District to the Circuit Courts in all such cases when the debt or damages claimed amount to more than $500, provided the appeal is claimed within ten days after the entry of the decree, and the appellant complies with the other conditions specified in that section.

Preferences, as well as fraudulent conveyances, if made within four months before the filing of the petition by or against the bankrupt, are, under certain conditions, declared void by § 35 of the Bankrupt Act; those conditions, so far as they are applicable to this case, are as follows: "That if any person, being insolvent, or in contemplation of insolvency, within four months before the filing of the petition by or against him, with a view to give a preference to any creditor or person having a claim against him, or who is under any liability for him, . . . . makes any payment, pledge, assignment, transfer, or conveyance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, assignment, transfer, or conveyance, or to be benefited thereby, . . . . having reasonable cause to believe such person is insolvent, and that such . . . . payment, pledge, assignment, or conveyance is made in fraud of the provisions of this act, the same shall be void, and the assignee

....

Scammon v. Cole et al.

may recover the property, or the value of it, from the person so receiving it, or so to be benefited."

Three things must appear in order that the transaction may fall within that provision and be affected by it, as alleged in the bill of complaint.

1. That the payment, pledge, assignment, transfer, or conveyance was made within four months before the filing of the petition by or against the bankrupt, and with a view to give a preference to some one of his creditors, or to a person having a claim against him, or who was under some liability on his account.

2. That the person making the payment, pledge, assignment, transfer, or conveyance was insolvent or in contemplation of insolvency at the time the preference was given or secured.

3. That the person receiving such payment, pledge, assignment, or conveyance, or to be benefited thereby, had reasonable cause to believe that the person making the same and giving or securing such preference, was insolvent, and that the payment, pledge, assignment, transfer, or conveyance was made in fraud of the provisions of the Bankrupt Act.

All these matters are fully alleged in the bill of complaint, but they are distinctly denied in the answers, so that the complainant takes the burden of proof in the first instance. Much discussion of the first requirement to maintain the bill of complaint is unnecessary, as the record shows that the mortgage in question was made to give a preference to the mortgagees, and was executed by the bankrupts only twenty-five days before the petition in bankruptcy was filed in the District Court. By the terms of the mortgage it appears that it was given to secure two promissory notes, signed by the mortgagors, of even date with the mortgage, one given to the first-named appellant for the sum of $1,272.50, and the other to the other appellant for the sum of $1,547.61, both payable on demand with interest. Both notes were given for pre-existing debts of the bankrupts, for all of which the appellants were liable, either as sureties or indorsers, except a small sum due to one of the mortgagees.

Prior to the decree in bankruptcy, the mortgagors were en