George Shiras, Jr.

“ Under those principles a collusive transfer placing the property of a debtor out of the reach of his creditors while securing to him its beneficial enjoyment would be invalid. But an insolvent debtor may prefer a creditor, even though the latter has knowledge of such insolvency and the effect of the preference be to delay or disappoint his other creditors. ”

“ It overlooks, as we think, the legal right of creditors to secure themselves by legal remedies, even though they may result in hardship and loss to others. In stating that the rubber companies were guilty of fraud in fact, we think the circuit court of appeals was not borne out by the findings of the master and of the circuit court, nor by the facts as they appear to us; and in holding that, as against other creditors, they and the Metropolitan National Bank should not be allowed to share in the fund for distribution, there was error. ”

“ The right of an insolvent debtor to prefer one creditor to another exists in the state of Illinois to its fullest extent, and the giving of judgment notes is recognized as a legitimate method of preference. ”

“ On May 4, 1899, the circuit court, per Circuit Judge Grosscup, entered a decree setting aside the preferences complained of in the bill, as 'fraudulent in law (although not at the time believed by the parties to be such, but, on the contrary, believed to have been within their rights) as against the other creditors of C. H. Fargo & Company;' and directing the assets in the hands of the receiver, amounting to about $111,000, to be distributed pro rata among the creditors, including the defendants. ”

“ That the four employees of the Fargo Company who were on the board of directors, and also E. A. Fargo, should retire from the board and there should be elected in their places by the stockholders of the company five persons, to be nominated by said Beale, in whom he had confidence, one of whom should become secretary and treasurer, and that the directors so to be elected at Beal's nomination should not hamper or interfere with the proper carrying on of the ordinary business of the company. ”

“ That in case the Fargo Company should at any time find it necessary to suspend business it would assign as additional security all its accounts and bills receivable; that it should not give any judgment notes to other creditors which would impair the security to the Rubber Companies, and that the $50,000 advance should be used by the Fargo Company in reduction of its general indebtedness as it matured ”

“ Such a condition of things, when left uncontrolled, naturally resulted in great abuses. Under cover or pretense of paying or securing one set of creditors, property actually procured from another would be withdrawn from the reach of the latter. ”