A preference by a bank in an assignment for creditors is permissible, unless forbidden by law.1 Such is the great weight of authority in spite of the protests of some courts and text writers. But preferences may be created by other means than an assignment for creditors general in its nature. Statutes are numerous which forbid any preference in contemplation of insolvency.2 The national bank act has fixed the rule for national banks that all such preferences and all acts that amount to preferences are void. That act does not preserve the rights of boriafide transferees, but other acts do.3 There is no question under these statutes that any transfer to a transferee with or without notice of insolvency, if it be made by the bank with an intent to prefer, is absolutely void,4 and if void the assignee receives no title.5 Thus transfers to a director by the bank for his stock after he had heard rumors of insolvency are void;6 or transfers to a creditor not in the ordinary course of business, being notice to him from the nature of the transaction, are void.7 Payments to depositors or others, if made in the regular course of business to persons who have no notice of the insolvency of the bank, are not preferential.8 So it was held under the national bank act even where the depositor was a director.9 But difficult cases arise where "runs" are made upon banks. The very fact that a "run" is made is proof positive that doubts as to the solvency of the bank are abroad. Every depositor who draws his money does it because he thinks the bank unsafe. If the bank fails, can depositors who have drawn their money be required to repay to the bank's representative on the ground of a fraudulent preference? The bank may not have been insolvent when the "run" upon it began, but sometime during the course of the run the bank became insolvent. How is that particular time to be fixed? Not one of the depositors could say that he had no notice of the insolvent condition, and he certainly secured his deposit in contemplation of insolvency. The question is one of the greatest difficulty. This much seems plain. If the bank was really insolvent when the "run" began, all payments made were in violation of the statute. It was the duty of the bank officers to close its doors. If, however, the bank was solvent when the "run " was initiated, the fair rule would seem to be that as long as the bank officers keep open its paying teller's window and pay checks or depositors, relying in good faith upon the bank's capacity to withstand the " run," all payments ought to be treated as payments in due course of business and not preferential.10 The last depositor paid before the window was closed ought to be in the same condition as the first depositor paid during the run. But all payments made to depositors, upon withdrawals from intimations by the bank officers are, of course, fraudulent preferences. An instance occurred in a western state which permits preferences, where a bank had large deposits; all the bank officers as well as the other large depositors withdrew their deposits. An assignment was then made and the bank was found to have but nine dollars in cash. Yet, miraculous as it may appear, no one was sued by the assignee. The small depositors, with but few exceptions, bore the whole loss. One of the great advantages of the national banking system is that such assignees are impossible. The excuse of an assignee, in the above case, would be that the bank could prefer creditors in that way as well as by assignment.

L. J. Ch. 795; Stein v. Richardson, 37 L. J. Ch. 369.

1Ringo v. Trustees of Bank, 13 Ark. 563; Arthur v. Commercial Bank, 9 Smedes & M. 394; Catlin v. Eagle Bank, 6 Conn. 233. See note 2 to Sec. 325.

2 See Gillett v. JVloody, 3 N. Y. 479; Leavitt v. Tyler, 1 Sandf." Ch. 207; Hdl v. Western R. Co., 86 Ga. 284; Exchange Bank v. Knox, 19 Grat. 739.

3 See Hill v. Western R Co., 86 Ga. 284.

4 Case v. Citizens' Bank, 2 Woods, 23; Nat. Security Bank v. Price, 129 U. S. 223; Stone v. Jenison, 70 N. W. R. 149.

5 Brighton v. White, 128 Ind. 320.

6 Roan v. Winn, 93 Mo. 503. In this, case there was no statute. Other states permit a preference to a director under some circumstances. Thus it was so held as to a transfer to a corporation whose officer had knowledge. O'Brien v. Bridge Co., 55 N. Y. Supp. 206.

7 Atkinson v. Rochester Printing Co., 114 N. Y. 168; Lamb v. Cecil, 25 W. Va. 288. A transfer to secure a loan to a creditor without knowledge is good as to the loan though it is also security for past advances. Stapylton v. Stockton, 91 Fed. K 326 (C. C. A.).

8Dutcher v. Imp. & Trad. Nat Bank, 59 N. Y. 5; Hayden v. Chemical Nat Bank, 84 Fed. R 874 (C. C. A.), a transmission of remittances in ordinary course of business. And see McDonald v. Williams, 174 U. S. 397.

9Hayes v. Beardsley, 136 N. Y. 299.

10Stone v. Jenison, 70 N. W. R 149. See also McAfee v. Bland, 11

S. W. R 439. It. was curiously enough held that a transfer by a cashier and a stockholder to a creditor was void because not for the benefit of all the creditors, on the singular ground that it would give a right of set-off against the bank. Gatch v. Fitch, 34 Fed. R 566. The decision represents an aberration of an exceedingly able lawyer.