Van Iderstine v. National Discount Co., 227 U.S. 575 (1913)

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Van Iderstine v. National Discount Company

No. 136

Argued January 22, 23, 1913
Decided February 24, 1913
227 U.S. 575

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

A general verdict in an equity case to declare a payment to be fraudulent preference in favor of the trustee, which was only advisory, and which was practically demanded by the instructions of the court, cannot be treated as a finding of intent by the bankrupt to defraud, of which intent defendant had notice.

There is a difference between intent to defraud and intent to prefer -- the former is malum per se and the latter malum prohibitum, and only to the extent forbidden.

A bona fide transfer of securities to secure a loan made to one who immediately thereafter becomes a bankrupt is not an illegal preference where the person making the loan has no knowledge that the borrower intends to defraud any of his creditors, even though he may know that the whole or part of the money loaned is to be used to pay some of his debts.

Where error is assigned in the circuit court of appeals not only on refusal of the trial court to set aside the verdict against, but also for failure to enter a verdict in favor of, defendant, the circuit court of appeals, if it finds facts justifying such action, may reverse and order the complaint dismissed.

171 F. 518 affirmed.

The facts, which involve the determination of whether a payment by a bankrupt constituted an illegal preference, are stated in the opinion.