Statement of the Case. no evidence whatever, of any actual fraudulent intent on the part of the firm, or either of the partners, to hinder and delay their creditors. They devoted all their property, partnership and individual, of every kind to the payment of their debts. Nothing whatever was kept back. It is true some creditors were preferred over others, but this is allowable in Virginia. From the case of Skipwith's Executor v. Cunningham, 8 Leigh, 271, decided in 1837, until now, such has been the recognized law of the State, and this was conceded in the argument. "It is a matter of no importance in this connection that the debt to the bank was created by fraud, or that the assignors were shareholders in the bank and liable, as such, to assessments by the Comptroller of the Currency to meet its debts. Fraud in the creation of an unpreferred debt is not ground for setting aside an assignment for the benefit of creditors which is otherwise valid, and the shareholder of an insolvent bank is no more prohibited from preferring creditors as against his liability in that capacity, than he is as against any one else that he owes. The assignment does not in any respect change the liability of the shareholders; that was fixed on the failure of the bank before the transfer was made. As has already been shown, so much of the property assigned as is charged with a trust in favor of the bank can be reached in the hands of the assignees. The promise not to assign with preferences against the bank does not of itself avoid such an assignment for fraud. "It is claimed, however, that the deed is fraudulent and void on its face-1, because it appropriates partnership assets to the payment of individual debts, in preference to the debts of the partnership; and, 2, because of the peculiar provision which is made for bidding by the creditors of the second class at any public sale that may be made of the assigned property. "As to the first of these objections it is sufficient to say that as early as 1837 the Supreme Court of Appeals of Virginia decided, in the case of McCullough v. Sommerville, 8 Leigh, 418, that a provision like that contained in this deed did not vitiate the assignment, but that a court of equity would, if required, so control the administration of the trust Statement of the Case. as to apply the partnership property to the payment of the partnership debts in preference to those of the individual partners, and the individual property to individual debts. This ruling was followed in Gordon v. Cannon, 18 Gratt. 387, decided in 1868, and its authority was recognized by all the judges, though there was some difference of opinion as to its applicability to the particular facts of the latter case. We see no reason to depart from what seems now to be the recognized rule of decision in the State, and we have no hesitation in saying that if there ever can be a case where such an assignment ought to be sustained it should be in this. "The evidence discloses such a mingling of partnership and individual assets, and of partnership and individual debts, as to make it difficult in some cases to separate the one from the other. After a long and careful investigation of the whole matter, a separation may now have been made which approximates correctness, but when the assignment was made it is not probable that this could easily have been done. All the property, including that of the firm and that belonging to the several partners individually, has been put into the trust, and in the administration may, if necessary, be so marshalled as to prevent the creditors of the individual partners from getting an illegal advantage over those of the partnership, and vice versa; at any rate, we find nothing which, under the circumstances of this case, viewed in the light of the decisions of the highest court of Virginia, will render the whole assignment fraudulent and void as to the bank, and subject the property to the payment of its debt in preference to all others, as it is claimed should be done. "It will be time enough to consider in what way the trust ought to be administered when a case is made for that purpose. "This brings us to the consideration of the bidding clause of which complaint is made, and as to this it may be said. there is no provision which can in any manner result to the advantage of the assignors in opposition to the creditors, for, until the creditors are all paid in full, the assignors can get nothing. If payment is made, it matters not to the creditors Statement of the Case. how it is done. In no event can any but the first and secondclass creditors be affected injuriously, and they are not here complaining. Although the bank is named as a creditor in each of the classes, the object of the present suit is, not to control the administration of this branch of the trust, but to set aside the assignment altogether. "The only question we have now to consider, therefore, is whether this particular provision is fatal to the whole assignment. There is nothing, whatever, in the instrument to show that if it had been supposed this direction to the assignees could not legally be followed, the assignment would not have been made in its present form with this provision left out. On the contrary, everything looks the other way, for the assignees are authorized to sell at either public or private sale, according to their discretion, and it is only when the sale is public that the bidding clause becomes operative. The evident purpose was to stimulate bidding, not to give one creditor an unconscionable preference over another, nor to secure any special advantage to the assignors. It is not such an essential part of the scheme of the trust as to make it vital. "At most it is a mere appendage which may be lopped off without injury to the main purpose of the instrument. Its only effect, so far as the deferred creditors are concerned, must be for their advantage, because the more the property sells for, the greater will be the chances of paying those preferred in full and leaving something for those who are unpreferred. "No creditor can have an assignment for the benefit of creditors set aside at his suit, except it be on the ground that he has been defrauded. If this particular provision operates as a fraud upon those who are affected by it, relief can undoubtedly be had in some appropriate proceeding for that purpose, but that is not, as has been seen, the purpose of the present suit. "Our conclusion is that the assignment is valid, but that the receiver is entitled to the surrender to him by the assignees of such of the property in their hands bought and paid for with the moneys of the bank as he elects to take." Citations for Plaintiff in Error. A decree in accordance with the opinion was thereupon entered, and from it the receiver and the trustees respectively appealed. The receiver assigned errors as follows: That the court erred (1) in refusing to set aside the deed of assignment of Bain & Bro. as fraudulent in fact; (2) in failing to declare the assignment void because executed in fraud of sections 5151 and 5234 of the Revised Statutes of the United States; (3) in holding that the receiver was entitled "to a surrender by the assignees. of such of the property which it is found had actually been purchased with the moneys of the bank, but of no other;" (4) in holding that the assignment "was made and executed without any actual fraudulent intent on the part of the said grantors or either of them to hinder and delay their creditors;" (5) in holding "that the said deed of assignment is not fraudulent and void on its face." The trustees assigned as error that the court erred (1) in finding that the trustees were to be considered as affected by constructive notice, as to certain of the property held by them, that it had been purchased with the money of the bank, and that the receiver was entitled to receive so much thereof as he elected to take, and was not, by making such election and receiving such property, estopped from receiving the benefit of the said deed of trust in favor of the Exchange National Bank; (2) in the amount of property decreed to have been traced; (3) in decreeing that as to property purchased with the money of the Exchange National Bank, and traced into such property, there was a resulting trust in favor of the bank, of which the trustees were to be considered as having had constructive notice; (4) in decreeing that the costs of the suit be paid out of the trust funds in the hands of the trustees. Mr. Theodore S. Garnett and Mr. William J. Robertson, for Peters, cited: Russell v. Wynne, 37 N. Y. 591; S. C. 97 Am. Dec. 755; Grover v. Wakeman, 11 Wend. 187; S. C. 25 Am. Dec. 624; Upton v. Tribilcock, 91 U. S. 45; Sanger v. Upton, 91 U. S. 56; Bowden v. Santos, 1 Hughes, 158; Adler v. Milwaukee Brick Co., 13 Wisconsin, 57; Hightower v. Thornton, Citations for Defendants in Error. 8 Georgia, 486; S. C. 52 Am. Dec. 412; Frith v. Cartland, 2 Hem. & Mill. 417; Ward v. Griswoldville Mfg. Co., 16 Connecticut, 593; Nevitt v. Bank of Port Gibson, 6 Sm. & Marsh. 513; Wood v. Dummer, 3 Mason, 308; Frelinghuysen v. Nugent, 36 Fed. Rep. 229; Pennell v. Deffell, 4 DeG. M. & G. 372; Knatchball v. Hallett, 13 Ch. D. 696; McLeod v. Evans, 66 Wisconsin, 401, and cases cited; Metzner v. Bauer, 98 Indiana, 425; National Bank v. Insurance Co., 104 U. S. 54; Newman v. Cordell, 43 Barb. 448; Boardman v. Halliday, 10 Paige, 223; Barnum v. Hempstead, 7 Paige, 568; Averill v. Loucks, 6 Barb. 470 ; Sheldon v. Dodge, 4 Denio, 217; Strong v. Skinner, 4 Barb. 546; Kercheis v. Schloss, 49 How. Pr. 284; Hyslop v. Clarke, 14 Johns. 458; Seaving v. Brinkerhoff, 5 Johns. Ch. 329; Austin v. Bell, 20 Johns. 442; S. C. 11 Am. Dec. 297; Gasherie v. Apple, 14 Abb. Pr. 64; Brigham v. Tillinghast, 15 Barb. 618; S. C. 13 N. Y. 215; A. & W. Sprague Mfg. Co. v. Hoyt, 29 Feď. Rep. 421 ; Shanks v. Klein, 104 U. S. 19; Allen v. Withrow, 110 U. S. 119. Mr. Richard Walke and Mr. James Alfred Jones, (with whom was Mr. Legh R. Page on the brief,) for Griffin, Old, and Jenkins, trustees, cited: Wickham v. Martin, 13 Grattan, 427; Evans v. Greenhow, 15 Grattan, 153; Garland v. Rives, 4 Randolph, 282; S. C. 15 Am. Dec. 756; Skipwith v. Cunningham, 8 Leigh, 271; S. C. 31 Am. Dec. 642; Lewis v. Caperton, 8 Grattan, 148; Phippen v. Durham, 8 Grattan, 457; Dance v. Seaman, 11 Grattan, 778; Sipe v. Earman, 26 Grattan, 563; Shurtz v. Johnson, 28 Grattan, 657; Williams v. Lord, 75 Virginia, 390; Gordon v. Rixey, 76 Virginia, 694; Foster v. Goddard, 1 Black, 506; McCullough v. Sommerville, 8 Leigh, 415; Gordon v. Cannon, 18 Grattan, 387; Cochran v. Paris, 11 Grattan, 348; Kevan v. Branch, 1 Grattan, 274; Brockenbrough v. Brockenbrough, 31 Grattan, 580; Young v. Willis, 82 Virginia, 291; Darling v. Rogers, 22 Wend. 483; Salmon v. Stuyvesant, 16 Wend. 321; Curtis v. Leavitt, 15 N. Y. 9; Parks v. Parks, 9 Paige, 107; Pigot's Case, 11 Rep. 27; Patterson v. Jenks, 2 Pet. 215; Mackie v. Cairns, 5 Cowen, 547; S. C. 15 Am. Dec. 477; Harrison v. Harrison, 36 N. Y. 543; Post v. Hover, |