Dickinson v. Security Bank of Richmond

SIMONTON, Circuit Judge (after stating the facts as above). One of the purposes of the bankrupt act is to obtain an equal/division of the assets of the bankrupt among his creditors. To this end it sets its face against preferences. All preferences made within four months of the adjudication of bankruptcy are set aside. If a credit- or, during these four months, has received, however innocently, any part of the assets of the bankrupt on account of his debt, he must return it, or be debarred of any interest in the bankrupt’s estate. The relations between him and the bankrupt must be restored in statu quo. Bankr. Act 1898, §§ 57-59; In re Fixen, 4 Am. Bankr. R. 10, 42 C. C. A. 354, 102 Fed. 295, 50 L. R. A. 605; Electric Co. v. Worden, 39 C. C. A. 582, 99 Fed. 400; Pirie v. Trust Co. (May 355 27, 1901) 21 Sup. Ct. 906, 45 L. Ed. 1171. In the present case, the bank, dealing with the china company, within four months of the adjudication, received of its assets $800.08 in cash and the note of W. M. Miller. After the adjudication the bank returned just what it received, — the cash and the note. In re Drummond, 4 Biss. 149, Fed. Cas. No. 4,094. The appellant, however, insists that the bank purchased the note from the china company for its face value less the discount, and that it must now account for this value in cash. But the transaction shows no such purchase. The bank, the creditor, with the view of reducing its claim upon the china company, took part of its assets. In order to ascertain how much of the claim was thus provided for, it was necessary to ascertain the value of these assets. The deposit had its fixed value, $800.08. The time note was valued at its then present value, — that is to say, its face, less the interest until maturity. These were deducted from the $5,000 claim, and the remainder ascertained. The bank did not take the note for discount in the regular course of business, or pay money for it. Nor did it part with the note. When, by the operation of the bankrupt law, the whole transaction was annulled, it returned the note and the cash deposit, and everything was put in statu quo. Even if the transaction were fraudulent, all that the bank could be required to do would be to return the asset or its value. In re Heinsíurter (D. C.) 97 Fed. 198. In this case the bank has returned the asset, and it is admitted that its value is nothing. It is supposed, however, that inasmuch as there is no satisfactory evidence that the note was protested at maturity, or of any evidence of its dishonor given to the china company it is discharged. But no claim is made on the china company as indorsee of this note. Nor is its claim against Miller at all impaired because of want of notice of its dishonor. All that the bank has done has been to return to the china company this part of its assets, exactly as it had received it. We see no error in the decision of the district court, and it is affirmed.