Rex Buggy Co. v. Hearick

HOOK, Circuit Judge, after stating the case as above, delivered the opinion of the court. If a merchant is hopelessly insolvent during the four months preceding the filing of a petition in involuntary bankruptcy against him, and with knowledge of such condition of insolvency pays to certain of his creditors substantial sums of money in full satisfaction of their claims, and denies payment to others whose claims are due and equally entitled to payment, he has committed an act of bankruptcy within the meaning of section 3, subd. “a,” cl. 2, Bankr. Act July 1, 1898, c. 541, 30 Stat. 546 [U. S. Comp. St 1901, p. 3422]. His payments under such circumstances inevitably result in giving the creditors so favored a preference over the others. The debtor is presumed to intend the necessary results of his own intelligent acts. This doctrine is abundantly supported by authority (Johnson v. Wald, 93 Fed. 640, 35 C. C. A. 523; Bloch v. Farjieon, 109 Fed. 790, 48 C. C. A. 650; In re Rome Planing Mill [D. C.] 96 Fed. 812; In re Grant [D. C.] 106 Fed. 496; In re Gilbert [D. C.] 112 Fed. 951; under the similar provisions of section 35, Act March 2, 1867, c. 176, 14 Stat. 534; Toof v. Martin, 13 Wall. 40, 20 L. Ed. 481; Wager v. Hall, 16 Wall. 584, 21 L. Ed. 504; Farrin v. Crawford, Fed. Cas. No. 4,686; In re Merchants’ Insurance Co., Fed. Cas. No. 9,441), and is decisive of this case. The order of the District Court will be reversed, and the cause remanded, with directions to enter an order adjudging the appellees to be bankrupts.