
    Thomas S. Nelson and James S. Sturges, Trustees, &c., Plaintiffs, v. Isaac B. Wellington, Defendant.
    1. Where an Insurance Company, .in order to raise money for the immediate purposes of its business, borrowed notes from its friends and they yere discounted and the money paid over and so used, and by the agreement the Company were to pay such notes and to secure that payment were to deposit and did deposit with tire plaintiffs, as Trustees, certain negotiable notes received in its business as collateral security, with authority to sell such collateral securities or any portion thereof at public or private sale at the option of the Trustees: Held, that a sale was not the only mode in which the securities could be rendered available. The power so given was not exclusive of every other authority. The Trustees had a right to receive payment of such collateral notes and to enforce payment by action.
    2. Where promissory notes are pledged as security, the transaction ex vi termini imports authority to collect. Superadding a power to sell, which without express agreement would not exist, does not take away the right to receive and to compel payment.
    3 Where negotiable notes are by express agreement pledged as collateral security to secure the payment of money by the pledgor which he agrees to pay, the pledgee may sue in his own name on such notes, although the indorsement made thereon to carry the agreement into effect is in terms “pay to A. B.” (the pledgee) “for account of 0. D.” (the pledgor.) Such an indorsement is not inconsistent with the lien of the pledgee and the right of the latter to collect the notes and to apply them to the account of the pledgor by discharging the debt they were pledged to secure.
    4. Where a note is given to an Insuranie Company for the nominal premium upon an open policy, which policy was to attach to all risks that might thereafter be indorsed thereon and risks on which the agreed premium amounted to one-third of the note were so indorsed, and afterwards another risk at an agreed rate of premium on all goods shipped by the maker by a vessel named and for a specified voyage, was indorsed on the policy, the maker agreeing afterward to report the amount of the invoice; such note is a note for valuable consideration, and in the absence of any evidence of the amount of the shipment last mentioned the maker is liable for the full amount of the note.
    5. A transfer by a moneyed corporation of negotiable notes, as collateral security to secure a present loan to be used in due course of business, is not a transfer with intent to give a preference to one creditor over others, within the act forbidding such transfers by a moneyed corporation when insolvent. And therefore upon that state of facts it is not error to reject evidence that at the time of the loan the corporation was insolvent.
    
      6. See decision in Holbrook v. Basset, (ante p. 147,) which involved many points also decided in this case.
    (Before Bosworth, Oh. J., and Woodruff and Moncrief, J. J.)
    Heard, June 15;
    decided, July 9, 1859,
    This action was brought to recover from the defendant, as maker, the amount of a promissory note dated November 24th, 1855, for $351.25, payable eight months after date, to the order of The Atlas Mutual Insurance Company. And the plaintiffs sued as Trustees of an express trust under the agreement made on the 15th of January, 1856, between the Company and Nelson, Sturges, Massey, Smith and others, set out in the foregoing report of the case of Holbrook v. Basset, (pp. 152,153,) and averred that the parties to that agreement made and loaned their notes to the Company which were used as required in the agreement, and that the note in suit was transferred to the plaintiffs as collateral security in pursuance of that agreement. That before the maturity of the notes loaned by the parties thereto, the Company failed and became insolvent and did not pay or take up the same, and that there is still due to the said parties and unpaid a sum-greater than the amount of the note of the defendant in suit.
    The defendant by bis answer denied that the plaintiffs are lawful holders and owners, and all allegations in relation to the trust, and denied that anything was due or unpaid by the Company as alleged.
    For a further answer he alleged that the note in suit was given to the Company “as a memorandum of premiums in advance upon an open policy of insurance ” upon merchandise to be shipped from New York to San Francisco, when said risks should be thereafter reported to the Company and indorsed on the policy or otherwise accepted; and that after the policy was issued no premiums were earned and the same was and is without consideration, of which the plaintiffs had notice when they took the note. And further that the Atlas Insurance Company was insolvent when the plaintiffs received the note, and the transfer was made in violation of the statute to prevent the insolvency of moneyed corporations, and with a view to give a preference to Massey and other officers and creditors of said corporation over other creditors of the corporation.
    
      The cause was tried on the 21st day of October, 1858, before Mr. Justice Woodruff and a jury.
    It appeared, on the trial, that the plaintiffs acquired title to the note under the same agreement and by the same action of the Board of Directors as are fully stated in the report of the case of Holbrook v. Basset, (ante 147, et seq.) That agreement was produced and admitted in evidence, by consent, in the terms there stated. But the note itself was given to the Atlas Insurance Company for the nominal premium upon an open policy. That the course of dealing and understanding in such cases was, that the open policy covered risks which were indorsed thereon. When application was made for an indorsement, sometimes the amount of the goods covered was stated and the premium settled, and so the precise amount of premium earned ascertained. And sometimes the amount of the goods was not stated, but the name of the vessel, the nature of the cargo, and the voyage, were stated, and the rate of premium was fixed; in which case, the whole invoice of the shipment by that vessel would be covered. And afterwards, when the insured ascertained the amount of the shipment by that vessel, he would report it to the Company, and the amount of the premium earned could then be computed.
    That the defendant had indorsed on his open policy two risks, the premiums on which amounted to $102.75, and a third risk on a shipment “per Beporter,” from New York to San Francisco, at three and a half per cent premium, 27th November, 1855, the amount of which shipment the defendant had never reported to the Company.
    On the trial, the defendants’ counsel inquired, “ Does the Company owe Mr. Wellington for losses now?” This was objected to, the objection sustained by the Court, and the defendants excepted.
    The defendants also put several questions respecting the solvency of the Atlas Insurance Company on the 15th of January, 1856, with a view to prove its insolvency at that time; which were also objected to and excluded, and the defendants excepted.
    When the note in suit was produced by the plaintiffs and read on the trial, the indorsement of the payees thereon appeared in the following form:
    
      “ Ray................... for account of the Atlas Mutual
    Insurance Company.
    “ George H. Tract, Secretary
    
    The defendant moved for a nonsuit on the following grounds:
    1 1st. That the plaintiffs have no right to sue.
    2d. That the transaction, as it appears, was contrary to the statute.
    3d. That it was not within the powers of the corporation to make such a trust as this one on which plaintiffs rely.
    4th. That, by the indorsement on the note, no title passed.
    The motion was denied, and the defendant excepted.
    When the parties respectively had closed, (but under what instructions, by way of charge, the Case does not state,) the Court directed the jury to find a general verdict, and also to find a special verdict; and the jury thereupon rendered a general verdict for the plaintiff for $404.55; and they found specially as follows:
    “ The jury find specially the amount of premiums earned upon the open policy upon which this note in question was given and indorsed on such policy, with the interest thereon, is $118.80. They also find specially that on the 27th November, 1856, the Atlas Insurance Company agreed further to insure and did insure a shipment of goods made by the defendant from New York to San Francisco, at the rate of three and a half per cent premium upon the amount of the shipment, which insurance was indorsed on that date upon the said policy, upon the agreement that the defendant would, as soon as his account of the shipment was made up, report such amount to the Company, and the amount of the premium should then be fixed by computation, and that the defendant never reported the amount to the Company, and there is no evidence that the amount was ever demanded of him. Under the proofs given in relation to the. facts thus specially found, and all other matters in issue, they find for the plaintiff, and assess his damages at the sum of $404.55.”
    The parties respectively in open Court stipulating and consenting that the General Term shall dismiss the complaint, if of opinion that the defendant’s motion therefor at the trial ought to have been granted, or reduce the amount of the verdict to $118.80, if of opinion that the plaintiffs are entitled to recover that sum only —the Court ordered the exceptions to be heard at the General Term in the first instance, the judgment to be in the meantime suspended.
    
      G. Dean, for defendants.
    I. The same question arises in this case that was argued in Holbrook v. Basset and others, as to the validity of the transaction called the trust, of which the plaintiffs were the special Trustees, and the points urged in that case are here insisted upon. (Ante, p. 166.)
    TT, The indorsement on this note was restrictive, and passed no title to the note in suit.
    III. The plaintiffs being Trustees of the Atlas Insurance Company, and having advanced no money on this note, can recover only the earned premium, if entitled to recover.
    1. This was $102.75.
    2. The premium on the shipment by the “ Reporter” cannot be charged against this note, because there is no data for calculating its amount.
    3. Plaintiffs could have called on defendant for amount, or could have examined him as a witness. It is a clear case of “ not proven.”
    TV. The Court erred in excluding the testimony in reference to the insolvency of the Atlas Insurance Company.
    The complaint should now be dismissed, with costs.
    
      W. Britton, for plaintiffs.
    I. The motion to dismiss the complaint was properly denied; for,
    1. Plaintiffs sue as Trustees of an express trust, and had a right to sue as such; for,
    
      (a.) The indorsement, together with delivery by virtue of the trust agreement of January 15, transferred the note to the plaintiffs, for the purposes of the trust. The indorsement, whether restrictive or otherwise, gave the right to collect, and the agreement made plaintiffs the real parties in interest till they were paid the amount of their loan. (Brouwer v. Hill, 1 Sandf., 648.)
    
      (5.) The right, expressly given by the agreement, to sell does not exclude the right to collect. The latter right is incident to the note itself—to its very nature; and it cannot be presumed to have been the intention of the parties to divest the plaintiffs of the right implied by the very nature of the note itself, without an express declaration to that effect. The object evidently was to give the additional right to sell, &c., which, without express agreement, the plaintiffs could not have had. (Wheeler v. Newbould, 16 N. Y. R., 392.) The right to present for payment, and receive the money when due, it will hardly be contended, was not in plaintiffs, and this right is not expressly given. The right to collect and receive without suit would seem to imply the1 right to collect by suit. It is merely a mode of collection. “Expressio unius eccclusio alteriusf does not apply to such a case. (Smith’s Com., 655.)
    The sale of the note without the right to collect in the purchaser, would be an absurdity, and no right of collection would have been in the purchaser from plaintiffs, as such purchaser could have taken no rights which the plaintiffs did not have. Moreover, the indorsement in writing was made at the same time, and that is to be taken as part of the contract, and, clearly, authority to collect is given by its terms. (Waldron v. Willard, 17 N. Y. R., 467.)
    2. There was no violation, on the part of the Company, of part 1, chapter 18, title 2, article 1, section 8 of the Revised Statutes; for,
    (a.) That section is in conflict with the 12th section of the charter of the Atlantic Company, made a part of the charter of the Atlas, and the charter having been last enacted, the Revised Statutes must yield. (Howland v. Myer, 3 Comst., 293.)
    
      (b.) But if that section of the Revised Statutes does apply,
    ' the resolution passed January 14, (appearing in minutes of 29th,) authorized the transaction.
    
      (c.) If not authorized by the resolution, it is only invalid as against the Company, its Receiver, or judgment creditors; defendant is not in a position to set it up. (Nelson v. Eaton, 15. How. Pr. R., 305; Tracy v. Talmage, 4 Kern., 162; Curtis v. Leavitt, 15 N. Y. R., 242, 106, 107; City Bank of Columbus v. Bruce, 17 id., 515.)
    
      
      {d.) Moreover, the Company, by accepting the benefits of the transfer, ratified the act, which ratification, in its legal effect, is equivalent to previous authority. (Curtis v. Leavitt, 15 N. Y. R., 48-50; Reuter v. Electric Tel. Co., 88 C. L. R., 341; Palmer v. Yates, 3 Sandf., 138.)
    3. The transaction of January 15 was valid; for,
    
      (a.) It was but a loan by the parties thereto, for whom Nelson & Stages acted, to the Company, and taking collateral security thereto, which was clearly legal. (Charter Atlas Co., §12, “Atlantic;” Barker v. Mechanics' Ins. Co., 3 Wend., 96; Munn v. Commission Co., 15 Johns., 44; Attorney-General v. Life Ins. Co., 9 Paige, 470; Moss v. Oakley, 2 Hill, 265; Barry v. Mer. Ex. Co., 1 Sandf. Ch., 280; Beers v. Phoenix Glass Co., 14 Barb., 358; Curtis v. Leavitt, 15 N. Y. R., 62-65; King v. Merch. Ex. Co., 1 Seld., 547; Furniss v. Gilchrist, 1 Sandf., 53.)
    (6.) If a trust by the Company, it was competent for the Company to make such a trust. (Angell & Ames on Corp., § 241; Curtis v. Leavitt, 15 N. Y. R., 62-65; De Ruyter v. St. Peters Church, 3 Comst., 238; Nelson & Sturges v. Eaton, 15 How. Pr. R., 305; Barry v. Merch. Ex. Co., 1 Sandf. Ch., 280; Leavitt v. Blatchford, 17 N. Y. R., 534, et seq.)
    
    
      {c.) If not valid in toto, there is no invalidity in any portion under which plaintiffs claim. The maxim, “ void in part, void in toto," is not, in general, law, and this is not an exceptional case. (Curtis v. Leavitt, 15 N. Y. R., 96, 97.)
    IT. The ruling by the Court, excluding the questions by defendant, was proper; for,
    1. Whether the Company owed defendant for losses, on the day of trial, was wholly irrelevant. (Furniss v. Gilchrist, 1 Sandf, 53.)
    2. The balance of the questions were put with a view to prove insolvency on the 15th day of January, 1856, when the trust agreement was made, and are summed up in the last. Whether the Company was solvent or not was wholly immaterial; for,
    (a.) Part 1, chapter 18, title 2, article 1, section 9 of the Revised Statutes does not apply. This transfer was not “with the intent of giving a preference to any particular creditor, but was to secure a loan, made at the time, of money used in the regular and legitimate business of the Company. (Curtis v. Leavitt, 15 N. Y. R., 109, 139, 198; Leavitt v. Blatchford, 17 id., 525.)
    
      (5.) If it does apply, defendant could take no advantage of it. Pla.-mt.vffH would be obliged to account to “ its creditors, stockholders or trustees,” and them only. Defendant is in no position to set it up.
    (c.) At common law, the Company, whether insolvent or not, would have an undoubted right to pay any creditors whatever until declared insolvent or enjoined by a competent Court, or a right to transfer its assets, as collateral to a loan. (Barry v. Mer. Ex. Co., 1 Sand. Ch., 280; Curtis v. Leavitt, 15 N. Y. R., 52-65.)
    III. The judgment should be for plaintiffs for the full amount found by the jury; for,
    1. It is clear that $118.80 was earned and adjusted.
    2. The premium on the risk taken by the Company on the 27th November, 1855, in the absence of any proof as to its amount, should be computed at the amount of the balance of the note; for,
    
      {a.) It being clear that a risk was actually taken, it was the duty of the defendant to report such amount, which the Company could only know through him, and on failure to perform that duty it should be presumed most strongly against him.
    (5.) It was competent for the defendant to have shown the amount of the premium at the trial, which was a fact within his exclusive knowledge, and his silence on the subject raises the presumption against him.
    IV. Nor does the 7th section of the statute, “relating to moneyed corporations,” defeat this action; for,
    1. The section, if applicable to this Company at all, has no application to a transaction of this nature. The notes borrowed by the Company were not “ effects ” within the meaning of the statute; and if they were, no such consequence follows, as that this note, transferred by the Company as collateral to those loaned to it, and on which the Company received the money, which was applied to the payment of its just debts, becomes void in the hands of the plaintiffs. There is no failure of consideration, and no maldfides.
    
    2. But if it does apply, this defendant cannot set it up. The note has been used precisely for the purpose for which he gave it to the Company—to pay its just debts; it has been converted into money, which money has been so used. No equities are
    
      pretended, and defendant has been in no respect prejudiced. (Aspinwall v. Meyer, 2 Sandf., 180, 188; affirmed, 3 Comst., 290.)
    3. The charter of the Company provides that “ all the corporate powers of the Company shall be exercised by a Board of Trustees, and such clerks and agents and other persons as said Trustees may appoint from time to time.” (Charter Atlantic, § 3.)
    Nelson & Sturges were “ such agents or other persons.” (4 Duer, 1.) ,
    The plaintiffs should have judgment on the verdict.
   By the Court—Woodruff, J.

So far as the questions involved in this case were considered in Holbrook v. Basset et al., now decided, the opinion of the Court in that case may be taken as our opinion in this. We there hold that the agreement, in pursuance of which the plaintiffs received a transfer of the note in question, is not void as a violation of the statute forbidding a transfer of effects for the use or benefit of a moneyed corporation, unless it be made to the corporation directly and by name; that the due transfer of collateral securities, valid in the hands of the Company, made to the plaintiffs in performance of that agreement, was good, and entitled the plaintiffs to collect the same; that a transfer of collateral security, made in good faith to secure a present loan to such a corporation, to be used, and in fact used, in due course of business, is not a transfer with intent to give a preference within the act (§ 9) forbidding transfers when insolvent with intent to give a preference to one creditor over another; that such transfer in the present case was not void for want of power in the Atlas Insurance Company to borrow the notes to secure the payment of which the transfer was made; and that the transfer was not void on the ground that it was not sufficiently authorized by the Board of Directors.

Other considerations, which were not suggested by the facts in the former case, are urged in this. In the present action, as in that, the note in suit was a valid, binding note, in the hands of the Atlas Insurance Company, subject only to the question whether any greater sum than the amount of the premiums for risks indorsed on the defendant’s open policy could be collected by the Company thereon. In this case, moreover, I think it must be conceded that the plaintiffs took no better title than the Company itself had, as they were themselves officers or trustees of the Company, and must be deemed to have had knowledge of the title of the Company to the note.

1. It is suggested that, as the agreement in pursuance of which the transfer was made gave the plaintiffs authority to sell the collateral securities, or any part thereof, at public or private sale, the plaintiffs had no authority to use them in any other manner, or attempt, by any other mode, to make them available for the purpose for which they were transferred, and that, therefore, they have no power to sue for and collect them; that the agreement Raving pointed out a mode in which those collateral securities may be appropriated so as to indemnify those who were secured thereby, there is, by construction, an implied exclusion of any other power or control over those securities.

We think this is doing violence to the evident intent and meaning of the agreement. The liability of the parties was to be fully secured by collateral securities placed in the hands of the plaintiffs. The deposit of promissory notes for such a purpose in its nature imports authority to receive payment thereof, if payment be offered, and to collect them if not voluntarily paid. Such authority and power is incident to the very nature of the transaction or implied in it. A power to sell such securities, however, is not implied "in any such deposit: on the contrary, that no such power exists is settled. (Brown v. Ward, 3 Duer, 660; Wheeler v. Newbould, 5 id., 29, affirmed, 16 N. Y. R., 392.) Hence, for the more effectual and easy indemnity of the parties, an express power to sell was inserted in the agreement under consideration, not for the purpose of restricting or curtailing the authority of the plaintiffs, but of enlarging it—not for the purpose of making the hypothecation less advantageous, but of making it more effectual.

2. It is urged here that the indorsement upon the note in suit was such that it does not entitle the plaintiffs to sue; that they have acquired no title to the note by such an indorsement; that an order by the Atlas Insurance Company on the maker to pay to................... for account of the Atlas Insurance Company, does not divest their title. It is quite clear, we think, that, before the adoption of our Code of Procedure, no such objection to a plaintiff’s right to sue would have been seriously suggested. The holder is at liberty to insert his own name in the blank, and the legal title is thereby vested in him. Before the Code, any mere holder, if the form of indorsements on the note was such as to enable him to assert a legal title, could maintain an action on a negotiable note, and, notwithstanding he held it for collection merely for the account of another party who was the real owner, it was enough that the plaintiff showed a legal title. Mere possession, with the owner’s consent to the collection, was often sufficient to enable him to maintain the action in his own name. What, then, is the substance of the present objection? The Code requires that every action be prosecuted in the, name of the real party in interest, except that trustees of an express trust are still authorized to sue in their own names. The real nature and character of the transfer is to be gathered from the agreement in pursuance of which it was made; and that declares that the transfer is to the plaintiffs as trustees, to secure the payment of the notes lent by the various parties thereto. If, therefore, there had been no indorsement whatever upon the defendant’s note, and it had been merely delivered to the plaintiffs in performance of that agreement, they would have acquired an equitable title to the note, and would, in equity, have been entitled to hold and to collect it for the purposes for which it was placed in their hands. The special indorsement put upon the note does not impair that title. It is an express order on the defendant to pay the plaintiffs the amount. Its further statement, that such payment is to be for account of the Atlas Insurance Company, is to be construed with reference to the purpose for which it was transferred to the plaintiffs, and in subordination to the agreement for such transfer already considered; and, in the light of the transaction between the Company and the parties to that agreement, the meaning of the indorsement is entirely consistent with the clear right of the plaintiffs, both as against the Company and the defendant, to have the note paid to them as ordered. Sundry parties had lent their notes to the Company under an agreement that they should be folly secured. The Company had agreed to pay those notes, and agreed to deposit, and did deposit, with the plaintiffs, the note in question, and others, to secure their performance of the agreement. Now, if the Company did not otherwise pay those borrowed notes, the collection of the note in suit, and its application to such payment by the plaintiffs, would be in exact conformity with the rights of the parties under the agreement; and yet, the payment of the note in suit to the plaintiffs would be, in a just sense, a payment to them for account of the Company, because the proceeds were to be immediately applied to discharge an express obligation of the Company. The payment, therefore, by the defendant was to be (whether so in terms expressed in the indorsement or not) a payment for account of the Company; but the Trustees were to make the collection as a security to those who had lent their notes, to the end that the proceeds, though applied for account of the Company, should be applied in a particular manner agreed upon, which should operate to relieve them of liability upon the lent notes.

In short, the indorsement expressed no more than may truthfully be expressed whenever the payee of a note indorses it as a security for the payment of his own debt to another person. He appoints the payment to such other person, but for his own account, because it is both the right and duty of the indorsee to apply the proceeds directly and immediately to the discharge of his indebtedness. So a lien may be created upon promissory notes and bills of exchange deposited for collection, in such manner that although every note or bill may be made payable and may be paid “for account of” the depositor, still that lien may entitle the Bank to require the payment, and make the application of the moneys received for account of the depositor, so as to discharge the lien. The plaintiffs were created Trustees for the very purpose of carrying into effect the arrangement which could not otherwise be conveniently managed, by reason of the number of parties interested.

We are clear not only that the form of indorsement presents no obstacle to the recovery herein, but that it is not inapt to express the relation of the parties to the subject, in entire consistency with the trust vested in the plaintiffs, to be executed for the benefit of all the parties.

3. It is claimed that the whole consideration of the note was not earned, and therefore the note was without consideration. The jury found specially that the note was given as and for the premium upon an open policy of insurance. This, then, is consideration enough to sustain the note., So long as the Company was able and willing to insure according to the terms of the policy, the defendant could not demand a return of his note without making a surrender of his policy. But, conceding that the plaintiffs are in no better position than the Company itself were in this respect, and also that the maker of a noté for the premium, upon an open policy, may lawfully refuse to pay such proportion thereof as by the indorsements on his policy appears not to have been used, (Elwell v. Crocker, 4 Bosw., 22,) still, in this case, the defendant fails to show that he is not liable for" the full amount. So far as risks have been actually assumed, and indorsed upon his policy, the defendant is liable, and would be liable if the Company were^plaintiff. The jury find that the amount of $118.80 is due fór risks indorsed and premiums earned, and that a further insurance is indorsed, which was made in all respects binding, at the rate of three and a half per cent upon a shipment, the amount of which he agreed to report to the Company.

Neither by report to the Company, nor by any proof on the trial, did he show that the premiums upon that risk did not more than equal the residue of the note, and we are clearly of opinion that the plaintiffs, under those circumstances, have-a right to rely on the note itself as due in full. If the plaintiffs have not a right to collect the note, whether the consideration has been earned or not, (vide, Central Bank of Brooklyn v. Lang, 1 Bosw., 202,) we are clear that they showed enough, by producing the note, to put the defendant to show that it was without consideration, or to what extent the consideration was deficient, and that he not only failed to do this, but the proof warranted the presumption that the full amount was earned.

4. It only remains to notice the exceptions to the rejection of testimony. As to the inquiry whether anything was due from the Atlas Insurance Company to the defendant, at the time of the trial, for losses, it is obvious that no answer to that question conld affect the right to recover. If a set-off could be permitted, it must have been set up in the pleadings. No such claim is made in the answer. Besides, the note in suit was transferred to secure parties actually advancing their notes upon the faith and credit of that transfer. No set-off arising after that transfer could affect them or the right of the plaintiffs to collect - the full amount of the note. It is not by this disposition of the exception intended to admit by implication that any set-off could have been allowed to the defendant, if pleaded, whensoever it accrued to him, the plaintiffs having received the note before its maturity, and to secure the parties who, at the time, advanced their notes, as already stated.

The other exception arises on the exclusion of evidence designed to show that the Company was insolvent when the agreement was made, in pursuance of which" the note was transferred to the plaintiffs. Such proof would not invalidate the transfer. No statute and no rule of law forbids a moneyed cor- ■ poration to transfer a note merely because it is insolvent. If we understand the claim of the defendant’s counsel, he does not insist that mere insolvency makes such a transfer invalid. The only provision which can be supposed to be material to the question, is the one already noticed as section 8 of the statute, forbidding a transfer with intent to give a preference to one creditor over another. Here the transfer was not for the purpose of giving any preference to anybody; it was to secure the repayment of a then present loan. The money was thereby raised and received by the Company. Such a transfer could not operate as a preference. The Company borrowed the money and secured its repayment, and that is all.

If it were material to inquire what use the Company made of the money so obtained, the proof is unqualified and uncontradicted that “ it was used by the Company in its general business, the payment of losses and expenses.” So that if it had been shown that in truth the Company was at that date insolvent, it could in no wise affect the validity of the transfer. So far from any preference being gained by the transfer of the notes under the agreement, the parties lending their notes thereby assumed a hazard of loss in the very transaction itself, without the chance of gain. It seems to us that discussion cannot make it more plain that such a transfer was not, and could not be, from its very nature, a transfer with intent to give a preference to one creditor over another. Until after the transfer, the parties were not creditors.

Had there been any claim that the money was raised and applied in order to pay favored creditors, and that the whole arrangement to raise money was entered into with that view, there might be some plausible foundation for insisting that it might be shown that the plaintiffs were parties to the scheme, and so the whole transfer was invalidated; but no such claim was made; no such purpose or design appeared at the trial, and if the state of the pleadings would admit of such proof, none such was proposed or offered.

The plaintiffs should have judgment upon the verdict for the amount of the note and interest.

Judgment for the plaintiff accordingly.  