ment was made and executed prior to any knowledge upon the part of appellee Mary C. Kingsley of any claim that appellant had against Alexander Kingsley. Said appellee learned of the claim a few days before the last conveyance. Had the deed been executed when the contract was made, there would have been no suggestion of fraud. From the time the marriage was consummated under the agreement Mary C. Kingsley became the equitable owner of said real estate. The fact that she intended, when she took the conveyance, that appellant was to have no part of the property, did not, although she knew of the pending suit, make her act fraudulent; for, under the evidence, the fact that she intended to prevent appellant from getting any part of the real estate would be immaterial. She was only securing what belonged to her."

In Mallow v. Eates, 179 Ind. 267, 100 N. E. 836, the court held that an antenuptial contract, executory in form, upon the marriage passes to the wife an equitable interest in the land thereby contracted to be conveyed to her. It thus follows that upon the marriage taking place Mrs. Robertson became the equitable owner of the property so contracted to be conveyed to her, and her husband a trustee, holding the legal title for her use, and that the conveyance of May 21, 1914, did not operate to pay Mrs. Robertson an unsecured debt, but invested her with the legal title to real estate which in equity was already hers, and had been from the time of her marriage nearly eight months before. In such case no question of preferential payment arises.

[5] 4. What is the effect of failure to record the deed in question until some days after filing the petition in bankruptcy? Section 47a of the Bankruptcy Act provides:

"And such trustees, as to all property in the custody or coming into the custody of the bankruptcy court. shall be deemed vested with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings thereon; and also, as to all property not in the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied."

In Bailey, Trustee, v. Baker Ice Machine Co., 239 U. S. 268, 36 Sup. Ct. 50, 60 L. Ed. 275, it was held that the time as of which, under section 47a, the trustee's lien or rights would attach as though he were a judgment creditor, is when the petition in bankruptcy was filed. On June 14, 1914 (the day of the filing of the petition in bankruptcy), what right would a then judgment creditor of Robertson have had to satisfy.his judgment out of this real estate of which Mrs. Robertson then held a deed which was not filed for record till two days thereafter? Registry of conveyances, and the effect thereof, is matter of state regulation. Section 3962, Burns' Ann. Stat. Ind., provides:

"Every conveyance or mortgage of lands or of any interest therein, and every lease for more than three years shall be recorded in the recorder's office of the county where such lands shall be situated; and every conveyance, mortgage or lease shall take priority according to the time of the filing thereof, and such conveyance, mortgage or lease shall be fraudulent and void as against any subsequent purchaser, lessee or mortgagee in good faith and for a valuable consideration, having his deed, mortgage or lease first recorded, the same to be in effect on and after January 1, 1914."

As early as 1845 the Indiana Supreme Court, passing on a statute similar as regards any such question, said:

"The claim of the other defendants, who have judgments against Durbin obtained subsequently to the mortgage to the complainant, but before it was recorded, must yield to that mortgage, though it was not recorded in time. A mortgage of real estate, though not recorded in season, is a valid conveyance, except so far as its validity may be affected by statute; and the statute on the subject renders such conveyances not recorded in time void only as to subsequent purchasers and mortgagees for value, whose deeds are first recorded. It has no relation to judgment creditors. Perhaps a bona fide purchaser at sheriff's sale under such judginent might be protected by the statute, but that is a different case. 4 Kent's Com. 173." Sparks et al. v. State Bank, 7 Blackf. (Ind.) 469.

In the same volume, page 510, Doe, etc., v. Hurd et al., the court said:

"The answer to this is that the deed to the defendants was recorded before the sheriff's sale. The circumstance that the judgment was rendered before the deed was recorded is not material. Deeds of real estate are not void for not being recorded in time, except as to bona fide purchasers for value whose deeds are first recorded. A judgment creditor cannot be considered as such a purchaser; nor can a purchaser under the judgment hold, who has notice by the record of the prior conveyance."

This has been followed in Orth v. Jennings et al., 8 Blackf. 420; Runyon v. McClellan et al., 24 Ind. 165; Pierce v. Spear et al., 94 Ind. 127, 130; Hutchinson, etc., v. First National Bank, 133 Ind. 271, 281, 30 N. E. 952, 36 Am. St. Rep. 537; State Bank v. Backus, 160 Ind. 682, 694, 67 N. E. 512. A judgment creditor, not being a "subsequent purchaser, lessee, or mortgagee," as against whom alone, under the statute, the prior unrecorded deed is "fraudulent and void," could not, for the want of its recording, avoid the conveyance; neither can the trustee in bankruptcy do so.

[6] 5. It is urged that Robertson's continued possession and management of this real estate, after the marriage, continuing as before to carry it on the books of his business as an asset, entering on the books the income and the outlay, and in conversations with his creditors and others referring to the property as his own, without suggestion by record or otherwise of any contractual interest of his wife. therein, constitutes not only a badge of fraud bearing on the good faith of the original transaction, but also raises an estoppel against Mrs. Robertson from asserting as against Robertson's creditors any interest under the contract. While it is quite true that such conduct would be consistent with an original fraudulent purpose in the making of the contract, such fact alone will not raise a presumption of fraudulent design. Besides, and as specially bearing on the contention of her estoppel, the record does not afford any proof that she had any knowledge of what appeared in his books nor of any statements regarding the property which since the marriage he made to his creditors or others. The fact alone that he, her husband, continued in the actual management of the property on her behalf, and had not during the eight months rendered her an account of the income therefrom was not so strange, unusual, or startling a circumstance as of itself to suggest to her that he was improperly representing the property as his own. She was of course chargeable with knowledge that the public records disclosed nothing to indicate any interest of her own in the property.

But this fact alone, unconnected with representations of conduct on her part, upon which others have to their substantial disadvantage been induced to act, would not raise an estoppel, State Bank v. Backus, 160 Ind. 682, 695, 67 N. E. 512. The bill was not drawn upon any theory that Mrs. Robertson by her conduct estopped herself as against Robertson's creditors from asserting title in this property, nor upon the theory that through the conduct or upon the representations of either or both of them after the marriage the creditors were misled to their material detriment; neither does the record disclose evidence which would support allegations so predicated.

We conclude, therefore, the record herein establishes (a) that the antenuptial contract was in good faith and without intent to defraud the creditors of the bankrupt entered into by appellant Alma Maud Robertson; (b) that thereby she became the equitable owner of the real estate here in question; (c) that the deed to her from the bankrupt was made in pursuance of such antenuptial contract and merely vested in her the legal title of real estate which was equitably her own; (d) that as against appellee she is entitled to hold the real estate so conveyed to her by the deed from her husband, of May 21, 1914.

The decree is reversed, with direction to dismiss the bill.

BOARD OF TRADE OF CITY OF CHICAGO v. WESTON.
In re GLAVIN.

(Circuit Court of Appeals, Seventh Circuit. April 10, 1917.)

No. 2396.

1. BANKRUPTCY 3-STATUTORY PROVISIONS-VALIDITY.

Assuming that Congress, in passing a bankruptcy law, is without power to define property, or to declare what elements must be present to make property, Bankr. Act July 1, 1898, c. 541, § 70a, 30 Stat. 565 (Comp. St. 1916, § 9654), providing that the trustee shall be vested by operation of the law with the title of the bankrupt to all property which the bankrupt could by any means have transferred, or which might have been sold under judicial process against him, does not attempt to make property out of things which are not such, but enumerates property having certain characteristics as subjects of devolution and administration in bankruptcy.

2. BANKRUPTCY 143(4)-PROPERTY PASSING TO TRUSTEE-MEMBERSHIP IN BOARD OF TRADE.

The rules of a Board of Trade provided for the suspension and reinstatement of members for failure to comply with business operations, or with any award under the rules and regulations of such Board, and provided that all applications for membership should be referred to a committee, and that any male person of good character and credit and of legal age might be admitted to membership upon approval by the board of directors, and upon the payment of an initiation fee of $10,000, or on presentation of an unimpaired or unforfeited membership, duly transfer red, and by signing an agreement to abide by the rules of the Board, and that every member should be entitled to receive a certificate of membership, and if he had paid all assessments due, and had against him no outstanding unadjusted, or unsettled claims or contracts held by members of the association, and the membership was not in any way impaired or For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

forfeited, it should, upon payment of $100, be transferable on the books of the association to any person eligible to membership, and approved by the board of directors. Held, that a membership in such Board of Trade, having a value of about $4,000, was property passing to the member's trustee in bankruptcy, under Bankr. Act, § 70a, though other members of the Board of Trade held outstanding, unadjusted, and unsettled claims against him, aggregating about $35,000, and protested or objected against the transfer of his membership.

3. BANKRUPTCY

305-PROCEEDINGS BY OR AGAINST TRUSTEE-Decree. In a decree adjudging that such membership was property, and that the right, title, and interest of the bankrupt had passed to the trustee, a provision that, in order to enable the trustee to sell and dispose of such membership for the benefit of the estate, the Board of Trade should issue to him, as trustee, a membership certificate, was not objectionable, as giving the trustee membership, regardless of the rules of the Board as to membership, as it was merely intended to invest the trustee with membership for the purposes of sale, and his membership would not carry with it the privileges ordinarily inherent in such a membership.

Appeal from the District Court of the United States for the Eastern District of Wisconsin; F. A. Geiger, Judge.

In the matter of Charles F. Glavin, bankrupt. From a decree in favor of Thomas C. Weston, trustee, the Board of Trade of the City of Chicago appeals. Affirmed.

The following is the statement and opinion of Geiger, District Judge. in the lower court:

The bankrupt held a membership or seat in the Board of Trade of the City of Chicago. Its value is conceded to be about $4,000. Weston, trustee in bankruptcy, has filed a petition, asserting his succession to Glavin in and to said membership as property or a property right, and asking recognition thereof by the Board of Trade. The latter resists, on the ground that such membership or seat does not pass to a bankruptcy trustee. The jurisdiction of the court over the Board of Trade has been conceded, and, as I understand, no exception is taken to the procedure; the parties being desirous of litigating and obtaining an adjudication upon the merits of the question presented. There are no facts in dispute.

The respondent, Board of Trade, is a body corporate, by virtue of a special charter granted by the Illinois Legislature in 1859 (Priv. Laws 1859, p. 13), to enable its grantees and their associates and successors to establish and maintain a grain market in Chicago. It is empowered by such charter to admit or expel members in the "manner to be prescribed by the rules, regulations, and by-laws thereof." Among rules so in fact adopted and in force during the bankrupt's membership, and at the time of adjudication (it is admitted that at the date of adjudication the bankrupt was a member in good standing), are these:

Rule 4, Section 7: "When any member of this association has been duly convicted of failure to comply with the terms of any business obligation, or with the award of any committee of arbitration or committee of appeals, made in conformity with the rules and regulations of this association, he shall be suspended from all privileges of the Board of Trade of the City of Chicago until all his outstanding obligations to members of said Board of Trade shall have been settled, when he may, upon application to the board of directors, and upon stating under oath that he has settled all such outstanding obligations, be reinstated. Notice of all applications for reinstatement shall be posted upon a properly designated bulletin in the Exchange Hall for at least fifteen (15) days prior to the hearing of such application by the board of directors."

"Such reinstatement shall be a bar to any further discipline by the board of directors of the said Board of Trade on account of claims against such member maturing prior to his reinstatement."

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

Rule 10, Section 1: "All applications for membership in the association shall be referred to the committee on membership, who shall hold regular stated meetings for examining such applicants and their sponsors in person, under such rules and regulations as may be made by the board of directors. Any male person of good character and credit, and of legal age, on presenting a written application, indorsed by two members, and stating the name and business avocation of the applicant, after ten days' notice of such application shall have been posted on the bulletin of the Exchange, may be admitted to membership upon approval by at least ten (10) affirmative ballot votes of the board of directors: Provided, that three negative ballot votes are not cast against such applicant, and upon the payment of an initiation fee of ten thousand dollars, or on presentation of an unimpaired or unforfeited membership, duly transferred, and by signing an agreement to abide by the rules, regulations, and by-laws of the association and all amendments that may be made thereto."

Section 2: "Every member shall be entitled to receive a certificate of membership, bearing the corporate seal of the association and the signatures of the president and secretary; and if the member in whose name said certificate stands has paid all assessments due, and has against him no outstanding, unadjusted or unsettled claims or contracts held by members of the association, and said membership is not in any way impaired or forfeited, it shall, upon the payment of one hundred dollars ($100), be transferable on the books of the association to any person eligible to membership who may be approved by the board of directors, after due notice, by posting, as provided in section 1 of this rule. The membership of a deceased member shall be transferable on the books in like manner, by his legal representative. Prior to the transfer of any membership, application for such transfer shall be posted upon the bulletin of the Exchange for at least ten days, when, if no objection is made, it shall be assumed the member has no outstanding claims against him."

These are the only rules pertinent to the question presented. No rule exists giving to the respondent or its members the right to compel sale or other disposition of memberships, to pay debts of particular members, or reserving to respondent or its members any right of application of a membership against the will of a member, for the benefit of his creditors. Certain members of respondent, creditors of the bankrupt, who held "outstanding, unadjusted, and unsettled claims" (see rule above) against him arising out of Board transactions, and which claims aggregate about $35,000, have filed such claims with respondent, and with the same their objections or protest against the transfer of the bankrupt's membership. The claims are valid. Each of such creditors, save one, has also filed his claim in these bankruptcy proceedings. They, however, filed these claims, with a reservation of any rights possessed by them as members of the respondent, under the rules above quoted.

The Bankruptcy Act (Section 70a) declares that a trustee "shall be vested by operation of law with the title of the bankrupt" as of the date of adjudication, to all (1) property which prior to the filing of the petition he (the bankrupt) could by any means have transferred, or (2) which might have been levied upon and sold under judicial process against him. It may be taken for granted that, upon general principles, as well as upon the construction given by the Illinois courts to its charter, a seat or membership in the respondent Board of Trade is not property such as is ordinarily subject to levy, or to other compulsory process. But is it property which is the subject, by any means, of transfer by the bankrupt? Now, in arguing a negative answer to this, it is suggested by counsel, among other things, that the constitutional authority to enact bankruptcy laws must be exercised subordinately to the power of states to regulate intrastate commerce; that it is no part of such legislation "to create property or to * declare the limits of property"; that the authority is limited to providing for a distribution of what is otherwise property; again, that "the right to declare what shall, within the statute, be deemed property, and what shall be the qualities and elements constituting that property, as respects any particular subject-matter, is essentially a part of the right to regulate intrastate commerce, and is ex