Ward Hunt

“ The right of an insolvent person before proceedings are commenced against him to pay a just debt, honestly to sell property for which a just equivalent is received, to borrow money and give a valid security therefor, are all recognized by the Bankrupt Act, and all depend upon the same principle. In each case the transaction must be honest, free from all intent to defraud or delay creditors, or to give a preference, or to impair the estate. [3]
If there is fraud, trickery, or intent to delay or to prefer one creditor over others, the transaction cannot stand. ”

“ The thirty-fifth section of the Bankrupt Act provides that a transaction like the one under consideration here 'shall be void, and the assignee may recover the property or the value of it from the person so receiving it or so to be benefited.'
The language of the statute authorizing the assignee 'to recover the property, or the value of it, from the person so receiving it or so to be benefited,' does not create a qualification or limitation of power. There is no implication that the party paying is not also liable. ”

“ The bankrupt perhaps could take no action to avoid this agreement, but his assignee has undoubted authority to do so. When the assignee sets up this illegality and sustains it by proof of the facts referred to, the whole foundation of the defence falls.
It is well settled that a debtor may pay a just debt to his creditor at any time before proceedings in bankruptcy are taken. It is also true that a valid agreement to substitute another person as creditor may be made, and may be pleaded as a discharge of the debt in the nature of payment. ”