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Argument for Appellant.

231 U. S.

fected before such insolvency is not affected. In re Wittenberg Veneer Co., 108 Fed. Rep. 593; aff'd sub nom. McDonald v. Daskam, 116 Fed. Rep. 276.

Where quotations vary enormously in a few moments, as in "panicky" times, the law will recognize the fraction of a day and the rule that the law takes no notice of the fraction of a day is inapplicable. Upson v. Mount Morris Bank, 103 N. Y. App. Div. 367.

The adjudication of bankruptcy did not relate back to the filing of the petition and is not evidence of insolvency prior to such filing. Tumlin v. Bryan, 165 Fed. Rep. 166; In re Chappell, 113 Fed. Rep. 545; In re Alexander, 102 Fed. Rep. 464; In re Rome Planing Co., 96 Fed. Rep. 812. The payment did not enable the bank to obtain a greater percentage of its claims than any other creditor of the same class.

There being no other creditor of this class there could be no violation of the statute. Swarts v. Fourth National Bank, 117 Fed. Rep. 1; Crooks v. People's Bank, 46 N. Y. App. Div. 335.

The debtor making such payment must have intended to give such a preference. Alexander v. Redmond, 180 Fed. Rep. 92; Hardy v. Gray, 144 Fed. Rep. 922; Kimmerle v. Farr, 189 Fed. Rep. 295; In re Leech, 171 Fed. Rep. 622; Tumlin v. Bryan, 165 Fed. Rep. 166; Debus v. Yates, 193 Fed. Rep. 427.

Silence as to one's financial condition cannot be construed as an admission of insolvency. Wilson v. City Bank, 17 Wall. 473; Re Jackson Mfg. Co., Fed. Cas. No. 7153; Sawyer v. Turpin, 91 U. S. 114; Clark v. Iselin, 21 Wall. 360; Watson v. Taylor, 21 Wall. 378; Cook v. Tullis, 18 Wall. 322; Remington on Bank., § 1829.

The creditor receiving the payment must have knowledge or have had reasonable cause to believe he was receiving a preference. Collett v. Bronx Nat'l Bk., 200 Fed. Rep. 111; Re Klein, 197 Fed. Rep. 241; Re The Leader,

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190 Fed. Rep. 624; Re Pfaffinger, 154 Fed. Rep. 523; Collier on Bank. (9th ed.), 816.

Mere suspicion of insolvency is not sufficient to satisfy the statutory requirement. Grant v. National Bank, 97 U. S. 80; Powell v. Gates City Bank, 178 Fed. Rep. 609. See, also, Stucky v. Masonic S. Bank, 108 U. S. 74; Barbour v. Priest, 103 U. S. 293; Sparks v. Marsh, 177 Fed. Rep. 739; First National Bank v. Abbott, 165 Fed. Rep. 852; In re Pfaffinger, 154 Fed. Rep. 523; Off v. Hakes, 142 Fed. Rep. 364; In re Eggert, 102 Fed. Rep. 735.

The insolvent's estate was not diminished as a result of the transaction. N. Y. County Bank v. Massey, 192 U. S. 138, 147; Continental Trust Co. v. Chicago Title Co., 229 U. S. 435; Newport Bank v. Herkimer Bank, 225 U. S. 178; Wild v. Provident Trust Co., 214 U. S. 292; Jaquith v. Alden, 189 U. S. 78; In re Sagor, 121 Fed. Rep. 658; Gans v. Ellison, 114 Fed. Rep. 734; Dressel v. North State Lumber Co., 107 Fed. Rep. 225; Remington on Bank., § 1296; Collier on Bank. (9th ed.), 802.

Appellees as trustees in bankruptcy acquired no greater rights than had the bankrupts. Zartman v. First Nat'l Bank, 216 U. S. 134, 138; Hurley v. Atchison &c. Ry. Co., 213 U. S. 126; Thomas v. Taggart, 209 U. S. 385; Richardson v. Shaw, 209 U. S. 365; Security Warehousing Co. v. Hand, 206 U. S. 415; York Mfg. Co. v. Cassell, 201 U. S. 344; Thompson v. Fairbanks, 196 U. S. 516.

Mr. Daniel P. Hays, with whom Mr. Edwin D. Hays was on the brief, for appellees.

MR. JUSTICE HOLMES delivered the opinion of the court.

This is an appeal from a decree of the Circuit Court of Appeals reached upon the same opinion that disposed of The National City Bank v. Hotchkiss, just decided, ante, p. 50. (The judgment of the District Court will be found VOL. CCXXXI-5

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in 200 Fed. Rep. 295.) This case arose at the same time and differs but little from that in its facts, as to which, as in the other case, the master, the District Court and the Circuit Court of Appeals all agree.

The advance in this case was made at about ten on the following note to the firm signing it "Please loan us today $400000. Crediting this amount to our account and oblige. J. M. Fiske & Company." This sum was credited on the firm's deposit account, on which there was already $36,239.47. Before noon the bank certified and afterwards paid checks for $276,679.67. Between 11 and 12 the cashier, hearing that there was trouble in the stock market and with J. M. Fiske & Co., ordered that no more checks should be paid or certified. He then went to the brokers' office; saw Mr. Sherwood, a member of the firm, at about twelve and after getting an evasive answer to an inquiry as to the rumor, said that the firm had made no deposits on that day, and was told that one was on its way. ($54,048.08 were in fact paid in after the cashier's order to stop payment.) He then told Mr. Sherwood that he had better give him some securities, that he ought to give additional securities on the bank's loans, and after consultation Mr. Sherwood did so and the cashier returned to the bank. We may assume for purposes of decision that the securities with a small exception were obtained by the use of the clearance loan.

At forty minutes after twelve the brokers gave notice to the stock exchange that they were unable to meet their obligations and an involuntary petition in bankruptcy was filed against them at twenty-five minutes past three. This suit is for the proceeds of the securities, (which were sold by the bank), and for the sum deposited as we have stated. In view of our decision in the other case only one or two matters need mention. It is somewhat more pressed that the bank had not reasonable ground to believe that the brokers' property at a fair valuation would be in

231 U.S.

Opinion of the Court.

sufficient to pay their debts, and therefore had not ground to believe that the brokers were insolvent within the meaning of the Bankruptcy Act of July 1, 1898, c. 541, § 1 (15), 30 Stat. 544. We think it too plain to need argument that the findings below that the firm was insolvent, knew that it was insolvent and intended a preference, were correct. These brokers were ruined by the collapse of the pool mentioned in the other case, and apart from any knowledge that the bank may have had as to their interest in the stock concerned, the entirely unusual course of the cashier in leaving his bank to get additional security (not merely proceeds of the clearance loan upon a claim of lien) and the circumstances are sufficient to prevent our going behind the findings below. Really no other conclusion could have been reached.

On the question of lien the evidence does not differ enough from that in the other case to need further discussion. The bankrupts were under an agreement with the bank, of the usual sort, giving the bank a general lien on all securities in its hands for all liabilities of the firm and a right to require additional approved securities to be lodged with it, &c. But a general promise to give security on demand puts the creditor in no better position than an agreement to pay money. Sexton v. Kessler, 225 U. S. 90, 98.

The so-called deposit of $54,048.08 was paid in after the cashier had forbidden the payment of checks against the deposit account and therefore rightly was held to be a payment and a preference. A set-off properly was denied.

Decree affirmed.

Statement of the Case.

231 U. S.

BALTIC MINING COMPANY v. COMMONWEALTH OF MASSACHUSETTS.

S. S. WHITE DENTAL MANUFACTURING COMPANY v. COMMONWEALTH OF MASSACHUSETTS.

ERROR TO THE SUPREME JUDICIAL COURT OF THE STATE OF MASSACHUSETTS.

Nos. 30, 353. Argued April 29, 30, 1913-Decided November 3, 1913.

While a State may not burden interstate commerce or tax the carrying on of such commerce, the mere fact that a corporation is engaged in interstate commerce does not exempt its property from state taxation.

While interstate commerce itself cannot be taxed, the receipts of property or capital employed therein may be taken as a measure of a lawful state tax.

A State may, so long as it does not violate any principle of the Federal Constitution, exclude from its border a foreign corporation or prescribe the conditions upon which it may do business therein. Where a foreign corporation carries on a purely local business separate from its interstate business, the State may impose an excise tax upon it for the privilege of carrying on such business and measure the same by the authorized capital of the corporation.

The excise tax, imposed by Part III of c. 490 of the Statutes of Massachusetts of 1909, on certain classes of foreign corporations, which excise is measured by the authorized capital of such corporations but limited to a specified sum, is not an unconstitutional burden on interstate commerce, nor does it deprive such corporations of their property without due process of law or deny them the equal protection of the law. Western Union Telegraph Co. v. Kansas, 216 U. S. 1; Southern Railway Co. v. Green, 216 U. S. 400, distinguished. 207 Massachusetts, 381; 212 Massachusetts, 35, affirmed.

THE facts, which involve the validity under the commerce, due process and equal protection clauses of the Federal Constitution of an act of the Commonwealth of

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