Continental Trust Co. v. Chicago Title & Trust Co, 229 U.S. 435 (1913)

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Continental & Commercial Trust & Savings Bank

v. Chicago Title & Trust Company
No. 741

Argued January 6, 1913
Decided June 10, 1913
229 U.S. 435

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

To constitute a preferential transfer within the meaning of the Bankruptcy Act of 1898, there must be a parting with the bankrupts’ property for the benefit of the creditor and a consequent diminution of the bankrupt’s estate. Newport Bank v. Herkimer Bank, 225 U.S. 178.

In determining whether there has been a preferential payment, the nature of the property transferred is not as essential as the facts showing exactly what transpired between the parties.

The arrangement involved in this action, made between a bank and a grain broker in regard to transfering certificate of deposit held as collateral for dealings in rain on the Chicago Board of Trade, do not appear to have in any way diminished the estate, and held not to have amounted to an illegal preference.

The purpose of § 68 of the Bankruptcy Act is to prevent debtors of the bankrupt from acquiring claims against him for use by way of setoff and reduction of their indebtedness by way of setoff; but the transaction in this case does not come under § 68a. Western Tie & Timber Co. v. Brown, 196 U.S. 502, distinguished.

The facts, which involve the construction of certain provisions of the Bankruptcy Act of 1898 relating to preferential payments, are stated in the opinion.