be presumed to have had knowledge of these transactions; if not actual notice, legal notice, for there was enough to put them upon inquiry, | and the slightest investigation would have given them full knowledge. The controller never received any statements or accounts from the city attorney of moneys received, as required by the ordinance, and never made any inquiries on the subject. The city treasurer always received the personal check of W. C. Moreland for moneys paid in, and thus knew that Moreland's accounts in the four banks were in his own name, not designated as city attorney. He could, therefore, have ascertained from the banks the amount of deposits; yet it does not appear that he ever made any inquiry, while the balance on the deposits was always enormous, running from $95,000 in 1885 to $311,000 in 1891. The offices of the city treasurer and controller were in city hall, where they could, any day. have seen the check books in the city attorney's office, and the stubs, disclosing all the transac tions between House and Flinn. 24. The evidence does not show that the city lost one cent by these transactions between House and Flinn; it fails to show that the money loaned by House was from collections of | the first class, which should have been paid into the city treasury. The Act of 1864 expressly directed the city attorney to collect all assessments for benefits in the grading of streets and pay the damages to parties entitled thereto. Whether there was any law authorizing him to collect and pay out the money in the other cases, embraced in the second class, does not appear; but that was the practice for more than twenty years, and recognized as the law, by all the city officials. If Moreland had paid into the city treasury, at the date of each check, all that was due the city, under the first class of collections, there was more than enough left, of money collected of the second class, to pay the checks to Booth & Flinn, and William Flinn. If House failed to collect from Flinn the whole of the interest, or failed to deposit all the interest he received, it was no loss to the city, if the loans were from the second class. 25. The city of Pittsburgh never lost a cent or suffered any damage whatever, by the trans actions between W. H. House and Booth & Flinn, or William Fliun. CONCLUSIONS OF LAW. that statute. They have both been tried, convicted and sentenced to prison, for misdemeanor in office. Whether they can again be tried for a misdemeanor in office may be doubtful, but it is not material in this issue. This is not a criminal proceeding. It is a civil action to recover damages from them, and Booth & Flinn and William Flinn, in a joint action, for money loaned by House to Booth & Flinn, and William Flinn. Booth & Flinn, or William Flinn, are not responsible for the criminal acts of Moreland and House. The statute does not subject the borrower of the money to a criminal prosecution. However, if the city suffered any loss, a civil action will lie to recover that loss. As the borrowed money in this case was all paid back, the only claim of the city now would be for interest in the nature of damages for the use of the money. And if the interest was paid, or the city not entitled to interest on the money loaned, there is no cause of action. As the statute punishes only the municipal officer loaning the money, and imposes no penalty upon the borrower, nor subjects him to any criminial prosecution, he cannot be considered a particeps criminis with the officer for loaning the money, if he acted in good faith as a borrower. Under the old forms of pleading, this would be an action of trespass on the case. There was no fraud, force, or violence used, and no trespass upon property. There was no unlawful act committed by Booth & Flinn, or William Flinn, and not the semblance of any malicious intent. The money was voluntarily offered and loaned by House. Perhaps an action of assumpsit might have been maintained. The case is entirely different from that of the Com'th v. The Press Company, Limited, 156 Pa. 516. In that case there was a fraudulent scheme to cheat the Commonwealth by over-charging for the advertisements. Under the Act of January 6, 1864, and the practice of the city departments for more than twenty years, if the loans were from collections of the second class, the city would not be enti tled to the interest. It would go into that fund, and be for the benefit of the parties entitled to damages. They could claim it as against the city. As the city has failed to establish any just claim against Booth & Flinn, or William Flino, The Act of March 31, 1860, sections 62 and 63, the judgment should be in their favor. While made the loaning of money by a municipal offi- | possibly Moreland and House may be liable to cer a misdemeanor, punishable by fine and im- | indictment for a misdemeanor in office, for prisonment, and forfeiture of office. No doubt | loaning the money, the evidence fails to show Moreland and House were both guilty under that the city has suffered any pecuniary loss by the loaus to Booth & Flinn, or William Flinn. If no exceptions be filed hereto within thirty days, after the filing hereof in the prothonotary's office, judgment will be entered for defendants. For city of Pittsburgh, Clarence Burleigh. District Court, United States, Western District of Pennsylvania. In re RHODES. as this court should thereafter determine the execution creditors had, sold the property and realized a fund sufficient to pay Baum's execution if the lien thereof be held valid. On distribution the referee held the lien was void and at request of Baum has certified the question for the opinion of the court. Baum's lien was not obtained until November 28, 1898, five days before the petition was filed, and Rhodes was insolvent when it was so obtained. Under section 67, clause f of the Bankrupt Act, which provides, "That all levies, judgments, attachments or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy Bankruptcy-Validity of executions within four against him, shall be deemed null and void in months. A. issued execution against B., the latter being insolvent at the time, and within four months B. was dedeclared a voluntary bankrupt. Held, that the lien of A.'s execution was avoided. case he is adjudged bankrupt, and the property affected by the levy, judgment, attachment or other lien shall be deemed wholly discharged and released from the same." Baum's lien is void unless the clause does not apply to voluntary cases or its provisions are modified by some other section. After careful examination of the act and the conflicting decisions thereon we are of opinion this clause covers both voluntary No. 81, in Bankruptcy. Sur certificate of and involuntary cases. This conclusion is war All liens acquired when the debtor is insolvent, and within four months of his bei g declared a bankrupt, are avoided whether the bankruptcy proceedings are voluntary or involuntary. W. R. Blair, Referee. [For opinion of William R. Blair, Referee in the same case, see 47 PITTSBURGH LEGAL JOURNAL, 175.] ranted both by legislative definition and by the clearly expressed general purpose of the act. Analysis of its provisions show that its aim is to avoid preferences created after a debtor is Opinion by BUFFINGTON, J. Filed Decem- insolvent and enforce an equal distribution of ber 18, 1899. This certificate raises the question of the validity of an execution lien claimed by one Baum against the proceeds of the personal property of Rhodes, the bankrupt. The facts of the case are: On March 16, 1898, Rhodes borrowed from Baum one thousand dollars and gave him a note at one day containing a warrant of attor ney to confess judgment. On November 20, 1898, one Jamison entered a judgment against Rhodes in the State court and issued execution thereon. By virtue of such execution the sheriff levied on the goods in Rhodes' store and closed it. Baum learned what Jamison had done and on November 23, 1898, had judgment entered on the note given to him by Rhodes, issued execution and placed his writ in the sheriff's hands. By virtue thereof, under the Pennsylvania practice, 1 Troubat & Haley's Practice, paragraph 1063, he then and then only acquired a lien on Rhodes' personal property. On November 28, 1898, the latter filed a petition in bankruptcy and on December 20, 1898, was duly adjudged bankrupt. A receiver was appointed by the court who took possession of the personalty so levied upon, subject to such lien the insolvent estate among creditors. Acts of an insolvent at variance with such object are by the law made acts of bankruptcy and warrant the court's taking possession of the estate of such insolvent and distributing it on the principle of equality the debtor has sought to defeat by preference of particular creditors. Thus section 3, clause a, provides, "Acts of bankruptcy by a person shall consist of his having . . . transferred, while insolvent, any portion of his property to one or more of his creditors; or (3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings, and not having at least five days before a sale or final distribution of any property affected by such preference vacated or discharged such preference." Moreover, section 60 a, defining preferred creditors, viz: "A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any seem to be repugnant. But if there be a clear, evident repugnancy, the latter vacates the former. This rule applies to the making of laws, rules and contracts." Now clause f is not only the latest expression of the legislative will, but it is also in harmony with the general purpose of the act to avoid preferences obtained after insolvency and on express inhibition against, and a declaration of the unlawful character of liens which clause c, if it sustains, does so only by implication and not by express provision, other of such creditors of the same class," shows held that where the proviso of an Act of Parliathat equality among creditors of the same class ment is directly repugnaut to the purview is the prime object of the law. If it be con- the proviso shall stand and be a repeal of the ceded, as we think it must be, that such is the pnrview as it speaks the last intention of the case, how can this purpose be more effectually law-maker, and in Puffendorf's Rules, page 132 thwarted than by putting it in the power of the of Potter's Dwarris' Treatise on Statutes, it is bankrupt to make or unmake preferences at laid down that, "When we meet with a seemwill? If this clause only applies to involuntarying repugnancy in the terms, conjectures are cases then an insolvent by filing a voluntary necessary to work out the genuine sense, by petition removes from the ban of this provis-reconciling it, if possible, to those terms that ion certain preferences which by allowing his creditors to file a petition against him, he can thereby subject to such provision and so avoid. A construction so hostile to the general intent of the act we could only accept under stress of language permitting no other. It will be noted that in the section defining preferences there is an absence of express provision or implication that such preference shall either be created or affected by the voluntary or involuntary character of the subsequent petition. Moreover, the indifferent character, so to speak, of petitions in that regard is shown by the first provision of the bill, section 1, clause 1, and when Congress has declared that the term, "a person against whom a petition has been filed' shall include a person who has filed a voluntary petition," is a court not alone warranted but impliedly bound to follow the spirit of such construction when substantially the same language, viz., | "the filing of a petition in bankruptcy against | him," is used in clause f. To do otherwise is to sacrifice clear legislative intent to mere literalism. But it is said such constuction renders clause c, section 67, of no effect. Suppose such be the fact. While it is the duty of courts to so construe a statute as to give every part effect, yet cases will arise where irreconcilable provisions exist and courts are powerless to harmonize them. Such is the case in hand. It is quite clear either that clause c was inadvertently left in the bill after clause ƒ was added, or that Congress intended the act should be strenghtened by the broader and more drastic provisions of the latter clause. Whether they are contradictory in every respect it is not here necessary to decide; in some they are. Clause c provides that liens of a certain character shall be void under certain specified conditions, while clause f. in effect, provides that all the liens embraced by clause c shall be void without reference to any conditions save insolvency of the debtor and their being obtained within four months. Where there is conflict which clause shall prevail? In the case of The Attorney General v. Chelsea Water Works, Fitzgibbon, 195, followed in Townsend v. Brown, 4 Zabriskie, 88, it was We are therefore of opinion clause f must, where there is conflict, prevail, and that it is the law governing liens obtained within four months prior to the filing of the petition through legal proceedings against an insolvent debtor. The views here expressed are supported by In re Richards. 96 Fed. Rep. 937, and 95 Id. 250; In re Peck Lumber Co., 1 Amer. Bank. R. 701; In re Moyer, Id., 579; In re Francis Valentine Co., 93 Fed. Rep. 953. This clause being applicable to the present case its terms are plain. By it the test of the validity of Baum's execution lien was the insolvency of the debtor when it was obtained. That the note was given more than four months prior to the petition in bankruptcy and the maker was then insolvent is immaterial under this clause. Nor does the fact it was given prior to the passage of the bankrupt law relieve the lien obtained after the passage of the act from the effects of its provisions. The act does not impair the obligation of existing contracts, and hence is not open to constitutional objection on that ground, but simply affects the remedy to enforce such contracts. "The difference between the obligation of a contract, and the remedy given by the Legislature to enforce that obligation, exists in the nature of things. Without impairing the obligation of the contract, the remedy may certainly be modified as the wisdom of the nation shall direct:" Sturgis v. Crowinshield, 4 Wheaton, 368. The Bankrupt Act of 1867 differed widely from the present one in regard to perferences. Thus in Clark v. Iselin, 21 Wallace, 272, it is said: "To bring the case of a judgment and execution or attachment within the thirty-fifth section of the bankrupt act, several things must concur. No. 85, in Bankruptcy. For trustee, Albert York Smith and W. H. Falls. Under the Act of 1867 it was held that 1. The debtor must have procured the judg❘ where a trustee sued a preferred creditor to rement and attachment of his property. 2. He must have procured them within four months next prior to the filing of the petition in bankruptcy by or against him, 3. He must have been insolvent, or contemplating insolvency, at the time, and he must have procured the judgment execution with a view to give a preference to the judgment creditor. 4. The creditor must have had a reasonable cause to believe that the debtor was insolvent and that the judgment and execution were given in fraud of the provisions of the bank. rupt act." But the present act contains more stringent provisions. By clause f Congress has made facts, not intentions, the test of the execution lien validity. These facts are the date of the lien and the then insolvency of the debtor. | The language is clear, and though its enforce ment invalidates liens which we have through our professional careers enforced and regarded as matters of course, if not indeed of right, yet we must recognize the fact that Congress in the exercise of express constitutional warrant has not said that all such execution liens when obtained against an insolvent debtor | within four months of bankruptcy are invalid. The plain language of the act the referee has held to mean what it says and rightly so for there is no safer canon of statute interpretation than that where the terms of a statute are plain there is no room for a construction which makes them obscure. For trustee and creditors, John S. Lambie, Albert York Smith and Chantler, Cunningham & McGill. For creditor, W. W. Wishart. In re WILLIAM T. VINTON, Bankrupt. Bankruptcy-Right of preferred creditors to dividend-When preference must be surren dered. A. had an execution against B. at the time when B. was declared an involuntary bankrupt. The ourt of Common Pleas made an order directing the fund realized from sale of bankrupt's goods to be paid to the trustee subject to A.'s rights. Two months later A. released his claim. Held, that he was entitled to participate in a dividend as an unsecured creditor. Under section 57, clause g of the Bankrutcy Act, relating to preferred creditors a creditor who has security may surrender his security at any time before adjudication against him and participate in the common .fund. cover property alleged to have been sold or conveyed to him by the bankrupt in fraud of the act and the creditor denies his liability, resists a recovery, goes to trial and judgment is rendered against him, such judgment conclusively establishes that the creditor sought to obtain a fraudulent preference and disentitles him to prove up that claim, and if he pays such judgment under execution, this is not a surrender' under the act and will not enable him to prove his debt. "But in a case where the assets were sufficient to pay all the other creditors in full and leave a surplus, it was held that a preferred creditor from whom his advantage had been wrested by compulsion of legal process, might make proof of his debt and be paid out of such surplus, for as between the bankrupt and himself he was entitled to the money." "If under the 23rd section the preferred creditor were allowed to surrender to the assignee the property received in preference, even after it had been recovered back by the assignee, as mentioned in the 39th section, so as to be able to prove his debt, no creditor taking a preference would ever be debarred from proving his debt. . . . The creditor who claims to retain the property makes himself conclusively a party to the fraud against the act by the claim of the assignee to recover the property, in case the assignee is successful; but that where the creditor avails himself of the locus penitentiæ given to him by the 23rd section by voluntarily surrendering the property to the assignee he ceases to be a party to the fraud, and may prove his debt in bankruptcy and receive dividends on it." This view is concurred in by LONGYEAR. J., In re Scott, 4 N. B. R. 139; In re Kipp. 4 Id. 190; by DEADY. J., In re Walton, Deady's Reps. 445-607; by HOPKINS, J., In re Stephens, 3 Biss. 187, and by DILLON, J., In re Richter, 1 Dillon, 544; Black on Bankruptcy, 178; Blumenstiel on Bankruptcy, 335; In re John F. Lee, 14 N. B. R. 91; In re Schoenberger, 15 Id. 312; In re John Riordan, 14 Id. 335; In re S. Leland, 9 Id. 209. For W. P. Reese, M. W. Acheson, Jr., and Robert K. Aiken. Report and opinion of the referee sur claim of W. P. Reese. Filed December 4, 1899. The claimant in this case on October 14, 1899, filed his proof of debt showing his claim to be founded on a judgment entered in the Court of Common Pleas of Lawrence county, Pennsyl- cess it was. On September 4, 1899, the court of vania, for the sum of twenty-one hundred dol- Lawrence county entered the following order: lars and attorney's commissions upon a judg-Now, September 4, 1899, it is ordered and diment note signed by Vinton. On November rected that Charles Matthews, sheriff of Law14, 1899, Reese filed a written release and sur- rence county, pay to Richard F. Dana, trustee render of all claim to preference or priority of in bankruptcy of William T. Vinton, the money payment by reason of said judgment or the in his hands, less the costs, and that the trus execution issued thereon and levied on the tee, Richard F. Dana, receive the same subject bankrupt's property and asked allowance of to the rights and privileges of the execution his claim as an unsecured debt. To the allow creditors, if any, on the final distribution,” ance of this claim objections were filed on be- accompanied by the opinion of Hon. W. D. half of certain creditors alleging that the release WALLACE, president judge [47 PITTSBURGH and surrender were filed too late, because the LEGAL JOURNAL. 97 ] By the Act of Congress, claimant had already asserted his lien and per-approved July 1, 1898, it is provided by section sisted in his assertion until the Court of Common Pleas of Lawrence county had decided and entered a decree against him. From the evidence taken the referee finds the facts to be as follows: | 57, clause g, as follows: "The claims of creditors who have received preference shall not be allowed unless such creditors shall surrender their preferences." It is urged by counsel for creditors opposing the allowance of Mr. Reese's claim, in view of the facts already stated, that after the filing of Judge WALLACE's opinion and the entry of the order by him on September 4, 1899 Mr. Reese had nothing to surrender and the release filed November 14, 1899, was too late, and his claim should not be allowed at all under section 57, clause g of the Act of Congress above mentioned, and counsel cite in support of their position many cases under the former bankruptcy laws of 1867, namely: In re John F. Lee, 14 N. BR 191; In re Schoenberger. 15 Id. 312; In re Riordan, 14 Id 335; In re Leland, 9 Id. 209. In these cases and others cited to the same effect the proposition was repeatedly asserted and distinctly held that under the Act of 1867 a voluntary surrender of all preference was a sine qua non to an allowance of a creditor's claim against the bankrupt's estate. On August 15, 1896, a judgment was entered in the Court of Common Pleas of Lawrence county, Pennsylvania, in favor of the claimant, Reese, against W. T. Vinton, the bankrupt in this case, and execution was issued thereon and a levy was made by the sheriff on the bankrupt's goods. On September 15, 1898, a petition of C. B. Rouss, another execution creditor of W. T. Vinton, was filed praying that Reese's execu tion be postponed to the lien of the execution of petitioner. Vinton, shortly after the levy on the execution, made an assignment for creditors, and it was subsequently arranged that the assignee should proceed to sell Vinton's goods and pay the net proceeds to the sheriff, with same effect as if the sheriff had sold them under execution. This was done. On November 30, 1898, on a petition filed by said Rouss and others (not including Reese) Vinton was ad The question, when it is too late for a creditor judged to be a bankrupt, and Richard F. Dana who has received a preference to surrender was appointed receiver and subsequently trus- same, gave rise to many controversies reported tee of said estate. At or shortly after the peti- in the books, some of which are mentioned tion in bankruptcy was filed an application was above. After examination of the various cases made to the United States District Court, sitting in which the question is considered, the master in bankruptcy, to order the fund produced by is of opinion that the creditor has the right to the sale of the bankrupt's property, as above surrender at any time prior to the entry of an stated, to be transferred to the receiver of that adjudication against him, finding that he has court, but this application was refused by the no preference to surrender; in other words, court of bankruptcy which declined to interfere that he has the right to surrender so long as with the jurisdiction of the Court of Common he has a preference to surrender, which, as the Pleas of Lawrence county, and referred its re- referee understands the cases, is until there is ceiver to that tribunal. Subsequently a peti- an adjudication that he has no preference. tion was presented to the court of Lawrence | Considering now the order of Judge WALLACE, county by the receiver praying that the fund the referee is of opinion that it cannot be reaforesaid be paid over to him. An answer to garded as an adjudication against claimant's this petition was filed by Reese resisting the lien so as to deprive him of the right to surprayer of the petitioner, claiming that his exe- render and prove his claim without doing vio cution was a valid lien and should receive the lence to the express words used by the learned proceeds at the hands of the court whose pro-judge "subject to the rights and privileges of" |