Illinois Paper Co. v. Northwestern National Bank

Citations

• 149 Ill. 450
• 37 N.E. 66

Syllabus

<p>1. Insolvent debtors—assignment for the benefit of creditors—unlawful preference. If an insolvent debtor, in contemplation of making a general assignment for the benefit of his creditors, under the statute, pays a debt not due, and the creditor accepts payment in cash without notice of the debtor’s insolvency or contemplated assignment, under the statute, the payment will not be an unlawful preference, and will be sustained.</p> <p>2. A debtor contemplating an assignment may not dispose of his estate to favored creditors by creating liens or incumbrances thereon, and thereby indirectly accomplish the preferences prohibited by the statute. But this court has never held that while the debtor retains-the jus disponendi he may not pay, in money, such of his bona fide indebtedness as he may desire, if the payment is received by the creditor in good faith, without knowledge of the purpose of the debtor. If the payment is made by collusion between the debtor and creditor, for the purpose of defeating the equitable distribution of the debtor’s estate, a different rule might prevail.</p>