UNITED STATES SUPREME COURT DECISIONS ON-LINE

Payments on a running account, in the usual course of business, by a person whose property had actually become insufficient to pay his debts, where new sales succeeded payments and the net result was to increase his estate, and the seller had no knowledge or notice of the insolvency and no reason to believe an intention to prefer, are not preferences, which must be surrendered as a condition to the allowance of proof of claim under the Bankruptcy Act of 1898.

Pirie v. Chicago Title and Trust Company, 182 U. S. 438, in which the decision proceeded on the finding of facts made pursuant to clause 3 of General Orders in Bankruptcy, XXXVI, distinguished.

F. N. Woodward et al. filed their petition in bankruptcy, and were adjudicated bankrupts November 26, 1901. They had become insolvent August 15, and on that day were not indebted to G. Edwin Alden, who afterwards, in ignorance of the insolvency, made sales to Woodward et al. and received payments from them therefor in the regular course of business, clubjuris

Page 189 U. S. 79

and without any idea or intention on the part of Alden of obtaining a preference thereby, the sales and payments being as follows:

Sales

Aug. 17, 1901 Rubber . . . . . . . . . . . . . . $289.46

" 28, " " . . . . . . . . . . . . . . 657.89

Sept. 30, " " . . . . . . . . . . . . . . 644.28

Oct. 18, " " . . . . . . . . . . . . . . 535.99

Oct. 18, " Cartage. . . . . . . . . . . . . . .50

" 31, " Asbestine. . . . . . . . . . . . . 10.40

Payments

Sept. 4, 1901 Payment of bill Aug. 17. . . . . . $289.46

Sept. 28, 1901 Payment of bill Aug. 28. . . . . . 657.89

Oct. 29, 1901 Payment of bill Sept. 30 . . . . . 644.28

The merchandise sold Woodward et al. was manufactured by them, and the result of the transactions was to increase their estate in value. Alden petitioned to be allowed to prove his claim of $546.89.

The referee disallowed the claim unless at least the amount of $633.88 was surrendered to the estate. The district judge reversed the judgment of the referee and allowed the claim, and the decree of the district court was affirmed by the circuit court of appeals, 118 F.2d 0, on the authority of Dickson v. Wyman, 111 F.7d 6. Thereupon an appeal to this Court was allowed and a certificate granted under section 25, b, 2.