In re George M. Hill Co.

Citations

• 130 F. 315
• 66 L.R.A. 68
• 1904 U.S. App. LEXIS 4161

Syllabus

<p>L Bankruptcy — Preferential Transfer of Property — Deposit in Bank.</p> <p>The deposit of money in bank by an insolvent within four months prior to his bankruptcy, on open account, subject to check, does not constitute a transfer of property amounting to a preference, under Bankr. Act July 1, 1898, c. 541, § 60a, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445], although the bank may be at the time a creditor, and under section 68a the bank has the right to set off so much of its claims as equals the balance in such account</p> <p>2. Same — Payment of Notes to Indorsee.</p> <p>The payment to a bank by an insolvent, within four months prior to bankruptcy, of notes given to third persons, but which have been indorsed to and are owned by the bank, constitutes a preference given to the bank, under Bankr. Act July 1, 1898, c. 541, § 60a, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445], which it must surrender under section 57g before proving a claim against the estate.</p> <p>3. Same — Payments and New Credits — Net Result of Transactions.</p> <p>A corporation previous to its bankruptcy had borrowed large sums from a bank, giving its notes therefor, and had also obtained a discount of customers’ notes, which it indorsed. The bank had also discounted notes given by the corporation to third persons. Such transactions continued during the four months prior to bankruptcy, the corporation being in fact Insolvent, but the bank having no knowledge or notice of such fact. The net result of the transactions during such time was to decrease the corporation’s direct indebtedness on its own notes, both those given direct to the bank and those given to third persons, by the excess of payments over new notes given, but to increase its contingent indebtedness on indorsements of customers’ notes. Held, that the latter should not be considered in determining the amount of preferences received by the bank which must be surrendered under Bankr. Act July 1, 1898, e. 541, § 57g, 30 Stat. 560 [U.