was dead. There Sheriff Barclay said: "It is trite law that legitimate children are for a season under the joint care and custody of their parents. The father has the chief control, the mother having certain claims of custody. In case of a difference and a separation of the spouses, the Supreme Court has the sole power to decide as to the claims of custody, in which question the children's interests are chiefly taken in view. The sheriff may even in such cases interfere as to interim custody, and to prevent cruelty to the pupils. It is different in the case of illegitimate children. By a strange figure or fiction in law, they are held to have no father. The mother up to a certain age has the sole custody, and the law in all its jurisdiction, supreme as well as inferior, may interfere to support the mother's custody and protect the child. At certain ages the putative father can offer to take the custody or provide in future for the child. If the mother declines to give up the custody (she may still maintain the custody), the only penalty applicable to her refusal is a cessation of her claims for aliment. At no period can the putative father deprive the mother of her natural right of custody. It would be monstrous that in all cases of illegitimate children, the regulation of the custody could only be decided by the Supreme Court. This in effect would be to exclude the majority of such cases from justice. The mother has a paramount claim to the custody of her illegitimate offspring superior to the father, and more especially to strangers. She is entitled to defend the custody where she has it, and to insist on its restoration where she has lost it. It has been found that even where she has married and become mother of children by another man, this is no bar to her keeping the custody of her illegitimate children born before marriage. A case which occurred in this court in 1861, and is fully reported in Guthrie's Select Cases,11 gives all the details of prior decisions on the question of jurisdiction. In this case it is not the mother that is sought to be deprived of the custody of her child. She never had the custody except perhaps for the few months of nursing. She voluntarily parted with that custody to the putative father, who placed the child when born in the custody of

11 P. 260.

the wife of the pursuer's brother. The father and his child removed in the year 1879 to the house of the defender, where the child (now about four years old) has since and is now being brought up with the defender's other family. The putative father has left a testament in favor of his child, whereby it is said about £100 is her portion. The defender is the executor, and has therefore the charge of means of her support. No accusation is made against the mode in which the child is cared for. On the other hand, the pursuer has no house, and desires the child to be placed, as at first, in the care of her sisterin-law, but does not express any desire for the personal custody, which indeed she is prevented taking from her present position. The change of custody was made seemingly with the pursuer's consent, as well as that of Mrs. M'Intosh, the first custodier, and it appears harsh in the extreme once more to change the custody of the young child for no apparent benefit to her. It is possible that the circumstance of Kennedy having, very properly, left all his means for his child, may have influenced the maternal feeling in the pursuer's bosom, so long dormant. The defender being the custodier and administrator of the fund, points him out as being best fitted for the custody and upbringing of the beneficiary. The sheriff-substitute shudders at the notion of granting warrant to officers of a court to tear an infant from its accustomed associations and guardianship, and to have it forcibly removed to new quarters. He has often done so with brute animals, but it is wholly different with a little rational and sensitive being. Nevertheless, had the petitioner a proper and fitting place to exercise her care and charge, it might be possible to overcome these feelings so as to give her her right of custody."

Although it seems to be allowed, on the whole, that the mother of an il. legitimate infant has a paramount claim to its custody, not merely as against strangers, but even as against the father (as in Ex parte Knee), it seems questionable on the authorities, 12 whether such a claim could be maintained either by father or mother as a matter of right. "The question is not whether the mother is the legal guardian of the chill,"

12 In re White, 10 L. T. 319.

15

said Lindley, L. J., in The Queen v. Nash, it will be remembered; and neither was that the question, we submit, in the Irish case of In re Darcys, nor can we discover an indication of its being decided in that case, notwithstanding that the rubric to the official report 18 lays it down broadly that "the mother is entitled to the guardianship of her illegitimate child;" while in an unrevised report of the case,14 a passage will be found at the end of the judgment going rather to the effect that the mother would not have been there entitled to the custody of the children if illegitimate; sed quære. Yet inconclusive as that case seems to us to be, iti s to be regretted, perhaps, that it would appear not to have been mentioned, at all events, in In re Crowe.16 In M'Intosh v. M'Callum, it will be remembered the mother had voluntarily parted with the custody of the child to the putative father; the father, taking the child with him, with the mother's consent, went to reside with the defender; the father died, and left a legacy to the child, appointing the defender executor of his will; the child remained in the defender's custody; and the mother, not seeking for its personal custody, sought to have the custody of the child transferred to her sister-in-law. But, while refusing to do this, it was intimated that, even under such circumstances, the personal custody of the child might have been awarded to the mother, had she a proper and fitting place to exercise her care and charge, it being granted that she would have a claim paramount even to that of the father. In In re Crowe, on the other hand, the mother was dead; in pursuance of her dying wish, expressed to a clergyman, that the child should be brought up in her religion instead of in that of its putative father, the clergyman had assumed its custody; and it was as against him, a stranger, that the father asserted his claim.

The court allowed the father's claim; but, had the mother been alive, we do not think it could have been maintained as against her. As the facts were, however, it would have been going too far to have given effect to her wishes for the disposal of the child, in opposition to the claim of its natural blood relation surviving, especially having

13 11 Ir. C. L. R. 298.

146 Ir. Jur. N. S. 36. 15 In re Holahans, infra.

16 17 Ir. L. T. Rep. 72.

regard to the circumstances connected with its custody during and after the mother's lifetime, and also considering, to some extent, the manner in which it had been removed from that custody.17 For it appeared that during the lifetime of the mother, with whom it was living, the father maintained them and paid their house rent, and not only that, but had the child sent to school and paid for him there; and after the mother's death, the father had given the child in charge of another person, from whose custody it was taken, by a species of stratagem or deception (though it could hardly be said, in strictness, by force or fraud), under a promise that it would be restored. The court were, therefore, of opinion that the child had been in its father's custody. So in State v. Barney, 18 decided by the Supreme Court of Rhode Island, in January last, where a father had intrusted his legitimate child to the custody of its grandmother, it was held that such custody was in legal intendment that of the father. And though the writ of habeas corpus was originally designed to remove illegal restraint, 19 any unauthorised detention from legal custody is, for the purpose, an illegal restraint, so that the intention need not be active or forcible; 20 and there can be no doubt that, "as to children at least, the scope of the writ has been largely extended," as observed in the recent American case of Bullen v. Cant

well, 21 and "beyond the mere matter of forcible restraint or technically illegal confinement the courts will inquire whether the surroundings of the child are such as make for its highest welfare, and do for it that which such welfare compels in such cases." In that case, too (as in In re Crowe), the wishes of a dying mother were disregarded, while (as in M'Intosh v. M'Callum) a bequest made to the child, under particular circumstances, entered into consideration.

It appeared that after the father's death, the mother took the little girl in question,

17 Cf. In re Medley, 5 Ir. L. T. Rep. 60, which was not cited.

18 14 R. I.

19 Hurd. Hab. Cor. 450; Hottentot Venus, 13 East 195; R. v. Blake, 3 Burr. 1434; R. v. Delavel, 3 Burr. 1434; 1 W. Bl. 412; See re Holahans, note, by the present writer, to In re Byrnes, 21 W. Rep. 626.

20 Ex p. M'Clellen, 1 Dow. P. C. 81; Mercien v. People, 25 Wend. 64; Mayher v. Baldwin, 5 N. J. Eq. 454.

21 15 Cent. L. J. 369.

their legitimate offspring (born in England), to America with her, and during her last days, when reduced to extreme destitution, besought some sisters of charity to take care of the child after her death. They accordingly kept the child. But, sometimes afterwards, its paternal grandfather in England, made a will bequeathing a share in his property to the child, on the condition that she should be brought to England before attaining the age of seven years, and should not reside abroad thereafter, and that she should be brought up and remain in the Protestant faith and not marry a Roman Catholic. Probate of the will was taken out, and the grandmother was appointed, in England, guardian of the child; and at the grandmother's instance, a writ of habeas corpus was applied for, in order to obtain the custody of the little girl, who was six years of age. Gladly, if space allowed, would we transcribe in extenso the eloquent judgment pronounced by Brewer, J., in October last, granting the application. While holding that the grandmother would as such have no right to the custody,22 he considered solely what would be best for the child's highest welfare-regarding the matter as in fact the petition of the child; contrasted the life she would have to lead in an institution, if retained in America, with the home life of which she would have the advantage in England; held that she should have the opportunity of deciding for herself, when she came to maturity, whether she would accept or reject a property burdened with conditions "so foreign to the free and catholic spirit of today, that every true man must condemn them;" interpreted the desire of the dying mother, as contemplating merely what then seemed to be the nearest and surest succour for the helplessness of her child, and as in no way actuated by aversion to her husband's family; and scouted the contention that to send the child to England would be equivalent to expatriating an American citizen, denying that it would be so technically and in fact, but maintaining that, even were it so, it would be the duty of the court to do so in some cases, "as, for instance, where parents moving to a foreiga country and leaving their little child here for a while, come back to

22 So, see 2 Str. 1131; nor would a maternal aunt; In re Medley, 5 Ir. L. T. Rep. 60, Ir. R. 5 C. L. 84; cf. In re Blackhall, ante p. 423.

claim it, and are hindered by those who have it in possession." 23 In a case decided by the Scottish Court of Session on July 3, 1883,24 where a father, who was engaged in a profession which involved his residence in Africa, presented a petition in which he asked that his children, who were all in pupilarity, and resided in Scotland with their mother, should be removed from her custody and boarded and educated in the house of a person named by him, it was held that the father was entitled as a matter of right, without proof of disqualification of the mother, to regulate the place of residence and education of his children, and the petition was granted accordingly, notwithstanding the the non-residence of the father in the United Kingdom. "The rule that a father has the right to regulate the custody and education of his children, except where he is shown to be personally disqualified is an absolute rule," said Lord Mure, "unless it may be in the case of a child at its mother's breast." We have seen that in England an infant, eight months old, was taken from its mother's breast and given to the father,25 but, a greater latitude in favour of the mother has prevailed in America,26 and the right of the father, first modifled here by Talfourd's Act (2 & 3 Vic. c. 54), has been now greatly diminished by the Infants Custody Act, 1873 (36 & 37 Vic. c. 12). It was. held in the recent case of In re Smythe,27 after a good deal of debate, that, up to the age of 16, a female child has no right to withdraw herself from the custody of her father, and, in the event of his death, from the custody of her mother, and that if she do so the Queen's Bench has jurisdiction to order her to return, or to be restored to such custody, notwithstanding that she had originally been allowed to go away and take service with a third party. -Irish Law Times.

23 Cf., as to allowing residence abroad by wards of court, cases cited in 2 Seton, Decrees, 4th ed. 753. 24 Pagan, 20 Scot. Law Rep. 724.

25 R. v. De Manneville, ubi supra; and see Ex p. Skinner, 9 Moore, 218; Com. v. Briggs, 16 Pick. 204. 26 15 Cent. L. J. 28k.

27 Exclusively reported in 11 Ir. L. T. Rep. 122.

INSOLVENCY-PREFERRING CREDITORS.

SMITH V. CRAFT.

United States Circuit Court, District of Indiana, September 14, 1883.

1. An oral promise by a borrower to the proposed lender that he will secure him in case of his insolvency does not render such preference fraudulent.

2. Nor will the fact that the insolvent is employed to manage the property conveyed invalidate the pref

erence.

In equity.

Horace Speed, for complainants; McDonald & Butler and Herod & Winter. for respondents.

WOODS, J., delivered the opinion of the court: Craft, being insolvent, made a transfer of his goods in trust to Churchman in payment of his indebtedness to Fletcher & Churchman, his bankers. This is an action by other creditors of Craft to set the transfer aside, and to have Fletcher & Churchman declared trustees, and, as such, accountable for the value of the goods. There are two grounds upon which, in argument, it is claimed that the transfer was unlawful and invalid: First, because of the stipulation in the writing by which the agreement was effected for the employment of Craft by Churchman; and, second, because of the promise made by Craft to Fletcher and Churchman, when obtaining credit with them, "that he would protect the bank if anything ever occurred by which he was not able to pay his debts; that if he met with losses he would secure the bank, if the bank would loan him money from time to time."

As to the agreement for employment, it may be observed that it was for no definite time, and was liable to be terminated by either party at will. Besides, it does not appear at whose instance, nor for whose benefit, the stipulation was made. Fraud is not to be presumed, and for all that is shown, Craft may have passed by opportunities for employment on better terms, in order to aid Fletcher & Churchman to make the best of the stock of goods, which, it is shown, was inadequate to pay in full the debt upon which it was taken. The fact that Craft had failed in the management of the business as owner, is no evidence of the value of his services in the capacity in which he was employed. It can not, therefore, be said that this stipulation was extorted for Craft's benefit, and as a condition upon which the preference of Fletcher & Churchman over other creditors was granted.

As to the promise to secure the bank, it is insisted that this was in the nature of a secret lien, and that the tendency of the transaction was to give Craft a delusive credit, and that as the parties must all have known this tendency, they must all be held to have intended, indeed, to have contrived a fraud upon all who should thereafter deal with Craft upon credit. The argument is

plausible, but in my judgment not sound. In the first place, the promise to secure the bank had no force in law, and gave no additional sanction to the obligation of the debtor, beyond what was involved in the contracting of the debt; though there are some decisions under the bankrupt law which hold that a security given in fulfillment of a previous parol promise will make good a preference which otherwise would have been declared unlawful. Bump, Bankr. (9th ed.) 806; In re Wood, 5 N. B. R. 421. Such, indeed, seems to be the established English rule. See statement of Lowell, J., In re McKay, 7 N. B. R. 230-233; s. C., 1 Low. 561. Other cases, however, are to the effect that such an oral promise to give security is nugatory, and creates no obligation. Bump, supra, and cases cited. If of any binding or legal force between the parties, it is evident that the fulfillment of such a promise could not be deemed a fraud; but if of no force in law, then, except as it binds the individual conscience of the debtor, it can not affect the exercise of his right to prefer one creditor over others; it can operate only as a motive by which the debtor may or may not in the end be controlled. But in respect to the right to prefer, it is settled daw that the debtor's motive for his preference can not be inquired into.

In Grover v. Wakeman, 11 Wend. 195, decided in 1833, and often cited, it was said: "The right to perfer may originally have been sustained in part upon the supposition that just and proper grounds of preference did in most cases exist; and would be duly regarded by the debtor; but whatever may have been the reason or foundation of the rule, it is one of that numerous class of cases in which the rule has become absolute without any regard to the fact whether the reason on which it was founded exists or not in the particular cases.' And while in Riggs v. Murray, 2 Johns. Ch. 564, Chancellor Kent strongly condemns the inequalities and wrongs of preferences given sometimes "to the very creditior who is least entitled to it, because he lent to the debtor a delusive credit, and that, too, no doubt, under assurance, or a wellgrounded confidence, of priority of payment, and perfect indemnity in case of failure," he adds, in the same connection: "I do not question the legality, however I may doubt the policy, of the rule which sanctions such partialities."

In no case or book cited has it been decided or said that merely because the borrower, at the time of procuring a loan or credit, had made an oral statement or promise that he would secure or prefer the one who gave such credit over others he thereby disqualified himself from giving, and the creditor from receiving, the promised favor; and I am not able to agree that such is the law. If it be, then, instead of confiting their prayer for relief to the goods in queston, the plaintiffs might as well have asked that Fletcher & Churchman be held to account for all payments made to them upon their loans to Craft; for if the payment in goods was unlawful, payments in money were equally so, and, if necessary, should be brough

under the same trust which it is sought to fasten upon the goods.

Carried to its logical consequences, the doctrine contended for made it impossible that Fletcher & Churchman, as plaintiffs or other creditors of Craft in the same situation, could have lawfully accepted payment from Craft upon the loans which they made him, so long as he was unable to pay the plaintiff and like creditors in full; and this would be so irrespective of the good faith of the parties, and notwithstanding the validity of the debt, its full consideration, and every other feature of merit, except the fatal promise to prefer, the taint of which, once it had attached, it would seem, could in no manner be escaped. If it be the law that an express promise to secure or prefer a loan can not be performed, it must be that an implied promise, or tacit understanding, would have the same effect; and whether or not there was such an understanding in each case, as it arises, must be a question to be determined usually upon circumstantial evidence. Upon such an inquiry,the personal and business connections, and even the social and domestic relations of the parties, might be deemed significant; and so the facts which afford the best motives for a proper preference might be converted into proof that the preference was given in consummation of an unlawful understanding or assurance given when the credit was obtained. Such a doctrine, if established, instead of constituting a healthful restriction upon the right of preference, would amount to a practical denial of the right in the cases wherein, if in any, it may be meritoriously exercised.

I do not doubt that a promise to secure or to prefer a creditor, made at the time the credit is given, may be fraudulent, but it must be when a fraud is intended, or when the circumstances within the knowledge of the creditor are such that he must know that injury to others will probably result. But when, as in this case, the debtor was doing an apparently prosperous business, though largely on credit, and advances were made to him without a belief, or any imperative reason for the belief, that he was, or was likely to become, insolvent, it can not, in my judgment, be said that a promise to protect, if disaster should come, can not be performed. It may be true that such a loan gives a delusive credit, and is in the nature of a secret lien; but the loan itself, without the promise of protection, unless published to the world, gives a delusive credit; and while, as already shown, there is no lien in fact, because such a promise, especially when made in the general terms employed in this instance, has no legal force, the law by no means condemns every transaction in the nature of a secret lien. In this State conditional sales are upheld, and every factor, commission merchant, or bailee of goods, is clo:hed with the apparent ownership of property which is not his, and yet the secret rights of the real owner are protected.

A mortgage, if on real estate, may be kept off

the record for forty-five days, and a chattel mortgage for ten days, without impairment of the lien, unless done with a fraudulent intent, though the mortgagee in every instance must know that his failure to record may result in injury to others. As, in such cases of actual liens, the omission to record is not a fraud unless fraud was intended, much more is it no wrong to receive a mere promise of security, which may or may not be performed and give no notice of it, if done without active concealment and without fraudulent intent. This is the doctrine of Blennerhassett v. Sherman, 105 U. S. 100, as I understand the decision in that case, in so far as it is applicable to the present discussion. In the case of Hilliard v. Cable, 46 Miss. 309, which is urged upon my attention, there was such concealment of the trust deed as to justify the conclusion reached in the case; but, as it seems to me, neither the decision rendered nor the discussion upon which it is based is applicable with much, if any, force here. But while I have thus indicated my views upon the two propositions stated, I do not find it necessary to have decided upon either of them, because they are not embraced in the averments of the bill.

The substance of the charge of fraud contained in the bill is in the averment to the effect that, knowing Craft's insolvency, the defendants (including F. & C.) did not make it known, but concealed it from the plaintiffs and others, who became creditors of Craft; that they made a pretended sale of the stock of goods in payment of a pretended debt; that Craft continued in possession of the goods and made sales thereof, applying a part of the proceeds to his own use, and a part to the use of Fletcher & Churchman, with their consent and at their request; that the defendants, and each of them, knew that Craft's purchases of the plaintiffs and others were being made upon a credit, and upon misrepresentations by Craft as to his financial condition; that said pretended sale was without consideration, and was effected by the defendants with the intent to hinder, delay and defraud the plaintiffs and other creditors of Craft; and that if Craft was indebted to Fletcher and Churchman it was kept secret and concealed by them with the intent that Craft should have and retain credit with the plaintiffs and other dealers. These averments, as made, are not proven; or, to say the least, the evidence is not such as to warrant the court in setting aside the conclusion of the master that they are not proven, and they are not comprehensive enough to embrace the grounds upon which counsel for the plaintiffs predicates and presses their right of recovery. The bill contains no suggestion that the writing by which the transfer of stock was evidenced was void on account of any stipulation contained in it; nor is it indicated by any averment, or by the entire bill, that the sale was void because of the promise made to Churchman when credit was extended, that, in the event of disaster, the bank should be protected.

My conclusion is that the exceptions to the