US SUPREME COURT DECISIONS

As the exchange of a valid security for one of equal value within four months prior to the filing of a petition in bankruptcy, even when the creditor and debtor know of the insolvency of the latter, takes nothing away from the other creditors, and is therefore not in conflict with the thirty-fifth section of the Bankrupt Act, held that a chattel mortgage, taken within that period of time by a creditor in exchange for a prior valid bill of sale of the same property and recorded pursuant to the laws of the state where the transaction took place before any rights of the assignees in bankruptcy accrued, cannot be impeached by them as a fraudulent preference within the meaning of that act. chanrobles.com-red

Page 91 U. S. 115

On the fifteenth day of May, 1869, J. C. Bacheller, in order to secure a debt due by him to Novelli & Co., executed a bill of sale conveying his chattel interest in certain property to Turpin, one of the defendants below.

This conveyance was not recorded, nor was possession had thereunder.

On the 31st of July, 1869, Turpin having surrendered the bill of sale, Bacheller, in exchange therefor, executed to him a mortgage upon the same property. This mortgage was recorded on the 17th of the following September.

Bacheller filed his petition in bankruptcy the twenty-second day of October then next ensuing, and the appellants, his assignees, filed their bill in the district court to set aside the mortgage as a fraudulent preference of a creditor, alleging that Bacheller was insolvent when the mortgage was given, and that Turpin, and Novelli & Co., the other defendants, knew of the fact.

The district court passed a decree dismissing the bill, which was affirmed by the circuit court. The assignees appealed to this Court.

The recording statutes of Massachusetts which apply to the case are set forth in the opinion of the Court. chanrobles.com-red

Page 91 U. S. 118