and can only be sustained by imputing to the general scope of the bankrupt act a harsh and illiberal purpose, at variance with its true spirit and with the policy which prompted its enactment." The principles of this case were approved and applied in Clark v. Iselin, 21 Wall. 360, 22 L. ed. 568, where it was held that the giving by a debtor, for a consideration of equal value, passing at the time, of a warrant of attorney to confess judgment, is not an act of bankruptcy, though such warrant or confession be not entered of record, but be kept as such things usually are, in the creditor's own custody, and with their existence unknown to others; that the creditor may enter judgment of record thereon when he pleases, even upon insolvency apparent. and issue execution and sell; and that his action is valid and not in fraud of the bankrupt law, unless he is assisted by the debtor. The facts of that case were, in respect to the question before us, similar to those of the present. In the opinion Mr. Justice Strong, after citing with approval Wilson v. City Bank, said: or intended an unlawful preference at a later time, at the time when the creditor sees fit to cause the judgment to be entered. For, we repeat, it is a fraudulent intent existing in the mind of the debtor at this later time which the act of Congress has in view. The preference must be accompanied by a fraudulent intent, and it is that intent that taints the transaction. Without it the judg ment and execution are not void. "It has been suggested, in opposition to the view we have taken, that if a creditor may hold a confession of judgment by his debtor, or a warrant of attorney to confess a judgment, without causing it to be entered of record until the insolvency of the debtor appears, the debtor may thereby be able to maintain a false credit. If this be admit [210] ted. it is not perceived that it has any legitimate bearing upon the question before us. The bankrupt act was not aimed against false credits. It did not prohibit holding judgment bonds and notes without entering judgments thereon until the debtors became embarrassed. Such securities are held in some of the states, amounting to millions upon millions. The bankrupt act had a very different purpose. It was to secure equality of distribution of that which insolvents have when proceedings in bankruptcy are commenced, and of that which they have collusively with some of their creditors attempted to withdraw from ratable distribution with intent to prefer some creditors over others." Similar views prevailed in Tenth Nat. Bank v. Warren, 96 U. S. 539, 24 L. ed. 640, where it was held that the mere nonresistance of a debtor to judicial proceedings in which a judgment was rendered against him, when the debt was due and there was no valid defense to it, it is not the suffering and giving a preference under the bankrupt act, and that the judgment is not avoided by the facts that he does not file a petition in bankruptcy, and that his insolvency was known to the creditor. "Now, in a case where a creditor holding a confession of judgment perfectly lawful when it was given causes the judgment to be entered of record, how can it be said the debtor procures the entry at the time it is made? It is true the judgment is entered in virtue of his authority, an authority given when the confession was signed. That may have been years before, or. if not, it may have been when the debtor was perfect[209]ly *solvent. But no consent is given when the entry is made, where the confession becomes an actual judgment, and when the preference, if it be a preference, is obtained. The debtor has nothing to do with the entry. As to that he is entirely passive. Ordinarily he knows nothing of it, and he could not prevent it if he would. It is impossible, therefore, to maintain that such a judgment is obtained by him when his confession is placed on record. Such an asser- As, then, the power of attorney given by tion, if made, must rest on a mere fiction. Nelson to Mrs. Johnstone was a valid securiAnd so it has been decided by the supreme ty, customary under the law of Wisconsin, court of Pennsylvania. Sleek v. Turner, Le- as it was given long before the passage of gal Intelligencer, Sept. 25, 1874 [76 Pa. 142]. the bankrupt act of 1898, and therefore nec"More than this, as we have seen, in or-essarily without regard to the provisions of der to make a judgment and execution that act and without any intention to preagainst an insolvent debtor a preference vent or defeat their operation, and as the fraudulent under the law, the debtor must entry of the judgment and the levy of the have procured them with a view or intent execution are conceded to have been without to give a preference, and that intent must the knowledge or consent of Nelson, it is have existed when the judgment was undeniable that, under the provisions of the tered. But how can a debtor be said to in-bankrupt act of 1867, and within the printend a wrongful preference at the time a ciples laid in Buckingham v. McLean, Wiljudgment is obtained against him, when he son v. City Bank, Clark v. Iselin, and knows nothing of the judgment? That Tenth Nat. Bank v. Warren, Nelson was unyears before he may have contemplated the der no obligation, legal or moral, to bring possibility that thereafter a judgment might upon himself the ruin necessarily be obtained against him; that long before sioned by a decree of bankruptcy, by filing he may have given a warrant of attorney to a voluntary petition, and that the questions confess a judgment, or by a written confes- certified to us by the circuit court of apsion, as in this case, have put it in the pow-peals should be answered in the negative. er of his creditor to cause a judgment to be entered against him without his knowledge or subsequent assent, is wholly impertinent to the inquiry whether he had in view en occa But it is claimed that, having regard to the phraseology of the act of 1898, and although the warrant to confess judgment was given [211] by the debtor before the passage of that act, yet, being irrevocable and continuing in be adjudged a bankrupt." In Anderson's 939 Independently of dictionary definitions, it may be safely said that, in common usage and understanding, the word "act" signifies something done voluntarily, or, in other words, the result of an exercise of the will. Black's Law Dictionary describes "an act" Such a contention, in view of the various as follows: "In a more technical sense, it decisions of this court and hereinbefore means something done voluntarily by a cited, could not have been heretofore main-person, and of such a nature that certain tained, and it is therefore imperative that legal consequences attach to it. Thus, a those who now urge it should be able to grantor acknowledges the conveyance to be 'his point to some clear and unmistakable dec- act and deed,' the forms being synonymous.' laration in the existing statute. So important a change in the policy of the bankrupt law must be manifested by explicit language, and cannot be, safely and with due regard to sound principles of interpretation, made to depend upon conjecture and inference based upon a mere difference in phraseology between the present and prior acts of bankruptcy. In other words, the question before us must be decided by a consideration of the language actually used in the act of 1898, interpreted in the light of the previous decisions of this court. We are concerned in the present case with § 3 of the act of 1898, which deals with and describes acts of bankruptcy. The section is headed "Acts of Bankruptcy," and then sets forth what are deemed to be the acts of bankruptcy, as follows: In view, then, of the plain meaning of the language of the clause and of its association, in the section, with other acts which require affirmative and voluntary proceedings on the part of the debtor, it would seem to be clear that mere failure by a debtor, even if insolvent, to file a voluntary petition in bankruptcy, is not in itself, under the facts conceded to exist in this case, an "act of bankruptcy." tions of the earlier laws. Those changes ACT OF 1867: bankrupt or insolvent. cure or suffer his prop ACT OF 1898: Indeed, it seems quite clear that if § 3 of the act of 1898 had been the first enactment by Congress on the subject, no one would ever have suggested the contrary "Acts of bankruptcy by a person shall view. The contention is mainly, if not[213] consist of his having (1) conveyed, trans- wholly, founded on the omission of several ferred, concealed, or removed, or permitted words used in the previous statutes, or rath to be concealed or removed, any part of his er in the substitution of different words in property with intent to hinder, delay, or de$3 for those used in the corresponding sec fraud his creditors, or any of them; or (2) transferred, while insolvent, any portion of his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (3) suffered or permitted. while insolvent, any creditor to obtain a preference through legal proceedings, and not having, at least five days before a sale or final disposition of any property affected by such preference, vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground." [212] *It is obvious that Congress here had in view voluntary acts of the debtor,-"acts of bankruptcy by a person." Concededly clauses 1, 2, 4, and 5 require an affirmative and voluntary act. It would naturally be presumed that the same quality of act would be required by clause 3. The section consists of a single sentence in which the several clauses all depend upon the leading phrase, "acts of bankruptcy shall consist of having done the several things enumerated in the dependent clauses." An act is defined in the Century Dictionary as "an exertion of energy or force, mental or physical; anything that is done or performed; a doing deed: an operation or performance." And in the same work "an act of bankruptcy" is defined to be "an act the commission of which by a debtor renders him liable to or give a preference to or more of his the intent by such dis- shall be deemed to have com- ruptcy. Sec. 35. That if any person, being insolvent or in contemplation of insolvency, within four months before the filing of the petition by or against him, with a view to give a preference to any creditor claim against him, or or person having a who is under any liability for him, pro erence. Sec. 60. A person transfer of any of his cures any part of his makes any payment, transfer, or convey. ance of any part of [214] his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, assignment, transfer or conveyance, or to be benefited thereby, or by such attachment [payment, pledge, assignment or conveyance], reasonable having cause to believe such is had reason tles of bank templation and permitted in fraud this act.... That all levies, judgments, attachments, or other liens obtained through legal proceed ings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt. tary act, and that, this being so, the deci- Arguments based on supposed differences The case of Pirie v. Chicago Title & T. Co. 182 U. S. 438, 45 L. ed. 1171, 21 Sup. Ct. Rep. 906, the most recent decision of this court under the act of 1898, arose under another clause of the act, and is not directly applicable to the question we have here considered, but, so far as it has any bearing, sustains the views herein expressed. The question there was under § 60, and it was held that where a payment or transfer was made by an insolvent debtor, within four months prior to the filing of a petition in bankruptcy, to a creditor who did not have cause to believe that an unlawful preference was intended, the creditor may keep the *payment or transfer, even though the [216] amount of such payment or transfer was thereby withdrawn from the administration of the bankrupt court and satisfaction in full was received by the creditor, but that if such payment was only a partial discharge of his debt the creditor cannot prove, under the distribution in bankruptcy, for the balance of his debt, unless he first surrenders to the trustee the amount of the partial payment. The conclusion warranted by the words of the statute, interpreted in this light of our previous decisions, is that the questions certified to us by the circuit court of appeals should be answered in the negative. The Chief Justice, Mr. Justice Brewer, and Mr. Justice Peckham concur in this dissent. It having been repeatedly ruled in the cases cited that, under these provisions of the act of 1867, no person shall be deemed guilty of an act of bankruptcy except by reason of some affirmative and intentional act intended to defeat the purposes of the act, and that failing to file a voluntary petition [215] in *bankruptcy where a creditor is pursuing, in a state court, a lawful remedy on a lawful security given and received before the act of bankruptcy was passed, and without any knowledge or consent by the debtor to such suit or proceeding, is not an act of bankruptcy, it is now contended that a dif- OCONTO CITY WATER SUPPLY COM ferent conclusion must be reached under the Examination and comparison of the above NATIONAL FOUNDRY & PIPE WORKS, v. PANY. court was denied by the action of the court below in sustaining a plea of res judicata pre dicated on a decree of such Federal court, where a determination whether the court correctly applied the plea necessitates deciding whether by sustaining such plea rights were denied which were vested under another decree of the Federal court. entered after receiving the mandate of the decided. missing an action to establish priority of See same case below, 105 Wis. 48, 81 N. Statement by Mr. Justice White: 2. Resort may be had to the pleadings and *In January, 1890, the city of Oconto[217] opinions in determining what was decided by adopted an ordinance authorizing the Ocona final decree of a United States circuit court to Water Company, its successors and ascircuit court of appeals reversing its prior designs, to construct and operate waterworks cree and remanding the case with instructions in said city. Said Oconto Water Company to dismiss the bill, where from such decree is hereafter referred to as the water comthere is uncertainty as to what was really pany. The water company commenced the construction of its plant. On August 28, 1890, it contracted with the plaintiff in error, the National Foundry & Pipe Works, Limited,-hereafter styled the pipe works,— for a supply of pipe to be used in said water plant, the pipe to be delivered at intervals, and to be paid for partly in cash and partly on credit. 8. A final decree in a controversy between a judgment creditor of a waterworks company and the latter's mortgagees and their assigns, in which the validity of the mortgage and the foreclosure sale under it was assailed and a mechanics' lien asserted by such creditor, which decree determines that the mortgagees were lawfully in possession of the mortgaged property by virtue of such sale, and that there was no mechanics' lien in favor of such creditor, as against the mortgagees or their assigns, upon the waterworks plant and franchise, arising either from the laws of the state, the recording of the alleged lien, or a decree recognizing such lien as against the waterworks company,-is a bar to a claim in a suit between the same parties that by vir tue of a sale made under the decree recog nizing such lien the judgment creditor became the owner of the waterworks plant, entitled to the possession of the same, or, if not the owner, had been vested with a paramount lien, or that in any event there remained in the judgment creditor a right to redeem from the sale under foreclosure. 4. Whether the pleadings in the cause justified a grant of affirmative relief, considered as a mere question of practice, presents no Federal question. 6. in a Federal court of a suit to enforce a me a While the pipe was being delivered and placed in position, the water company, by an instrument in writing of date September 13, 1890, agreed with a firm known as Andrews & Whitcomb, whose members were domiciled in the state of Maine, in substance as follows: In consideration of cash advances to aggregate $40,000. to be made by said firm from time to time for the completion of the waterworks, the water company was to execute its promissory notes for the amount of each advance. The water company agreed as to collateral security as follows: "To make an immediate transfer, in trust, to said parties of the first part (Andrews & Whitcomb) of the Oconto Waterworks *franchise as issued to said Oconto Water[218] A contention that by reason of the pendency Company, together with the entire one hundred thousand ($100.000.00) dollars of chanics' lien upon the plant of a waterworks stock of said Oconto Water Company; and company when proceedings to foreclose further agrees to make an immediate issue mortgage executed by such company were in- of one hundred thousand ($100,000.00) dolstituted in the state court, the Federal court lars in the first mortgage bonds of the said bad exclusive jurisdiction of the res, and the Oconto Water Company, the same to be sestate court was without power in the prem-cured by deed of trust on the entire Oconto ises, must be raised in a controversy between the lienor and the mortgagees and their assigns in which the validity of title claimed by the latter to have resulted from a sale under foreclosure is in issue and decided, or It will be deemed waived and concluded and foreclosed by the judgment rendered on such issue. [No. 33.] Argued and Submitted March 22, 1901. cided January 6, 1902. IN waterworks franchise and all of the rights About contemporaneously with the execu- N ERROR to the Supreme Court of the State of Wisconsin to review a judgment affirming a judgment of the trial court disS. 267 and Kipley v. Illinois ex rel. Akin, 42 L. ed. U. S. 998. As to what is a Federal question; when considered--see note to Re Buchanan, 39 L. ed. U. 8. 884. On the opinion of the court below as part of the record on appeal to the Supreme Court of the United States-see note to Loeb v. Columbia Twp. 45 L. ed. U. S. 281. On conclusiveness of judgments generally This mortgage was not at once placed on see notes to Sharon v. Terry (C. C. N. D. Cal.) drews & Whitcomb of the stock and bonds | ferred, and set over or pledged to the plainprovided for in the agreement previously referred to. In the meanwhile all the pipe contracted for was delivered, and the same had been used in connection with the waterworks plant. Although the water company was during this time obtaining money from Andrews & Whitcomb, it failed to use the money in payment for the pipe. In consequence the pipe works on September 15, 1890. recorded a claim for a lien on the plant of the water company. After the recording of this lien, and on January 13. 1891. the mortgage in favor of Andrews and Whitcomb, which, as already stated, had been executed on or about September 13, 1890, was placed on record. On January 30, 1891, the pipe works filed its bill in the circuit court of the United States for the eastern district of Wisconsin to foreclose its asserted lien, and to procure a sale thereunder of the plant of the waterworks company and of the interest of that company in certain real estate upon which the company had constructed its pump and water wells, the legal title to the real estate being in the city, but the company having taken possession, under an agreement by which it secured the right to obtain a con[219] veyance, from the city. upon compliance* with certain conditions. To this bill the water company was alone made defendant. The lien asserted was contested by the defendant. This litigation will be hereafter referred to as the mechanics' lien suit. tiffs by the defendant in trust and as collateral security for the repayment of the sums loaned and advanced the defendant by the plaintiffs under the contracts set forth in the complaint." Under this decree a sale was made at publie auction to Andrews & Whitcomb, of the rights, privileges, immunities, franchises, and powers granted to the water company by the ordinance of July 9, 1890, and the stock and bonds pledged as aforesaid. The sale was confirmed by the court, and possession of the waterworks plant was taken by[220] Andrews & Whitcomb. At the offering a representative of the pipe works notified those present that the pipe works claimed a paramount lien upon the property proposed to be sold, and that the purchaser would take subject to its rights. Pending the mechanics' lien suit and the sale and purchase by Andrews & Whitcomb, the pipe works brought an action at law against the water company in the circuit court of the United States for the eastern district of Wisconsin, making also defendants thereto Andrews & Whitcomb, sued as garnishees. A judgment for the amount due was obtained on January 2, 1892. as against the water company, but the action was never prosecuted to a termination as against the garnishees. On January 11, 1892, the pipe works filed in the circuit court of the United States a creditors' bill based upon its judgment at law and the return of execution thereon unsatisfied. This litigation will be here Andrews & Whitcomb having made the advances provided in the contract of Sep-after referred to as the creditors' suit. The tember 13. 1890, and additional advances being required, they were made by Andrews & Whitcomb under contracts executed on March 13 and May 16, 1891, of tenor like unto the September agreement, the collateral security provided under that contract being made liable for the new advances. No independent mortgage was executed. water company, Andrews & Whitcomb, an alleged corporation styled the Oconto City Water Supply Company, to be hereafter referred to as the water supply company, as well as various parties whom it was claimed were liable as stockholders for unpaid subscriptions, and others, were made defendants. It would seem that in the original The water company not having performed bill the water supply company was averred the stipulations made in its contracts with to be a corporation and a resident or citiAndrews & Whitcomb, on June 17, 1891, zen of Wisconsin, but Andrews & Whitcomb that firm commenced proceedings in a court denied such averment. Thereafter, in an of the state of Wisconsin to foreclose an as- amendment to the creditors' bill it was al serted lien which it claimed was created leged that subsequently to the filing of the upon the franchise and property by the bill the water supply company had been ormortgage and contracts to which we have al-ganized, and that it claimed to have deready referred. This litigation will be hereafter referred to as the mortgage foreclosure suit. To this suit the water company was alone made defendant. On August 13. 1891, a personal judgment was entered for $63,889.23 and costs, and a sale was decreed to enforce the lien declared in the following clause of the conclusions of law of the court: "Third. In addition to such personal judgment, the plaintiffs are entitled to a further judgment decreeing, adjudging, and declaring the amount thereof, together with the proper costs for the enforcement of the same, a lien upon all of the property shown by the complaint in this action and the proofs adduced by the plaintiff herein in support thereof to have been sold, assigned, trans rived, through Andrews & Whitcomb, title to the rights and property of the water company, but that said claim was subordinate to the lien of the plaintiff. Whether at the time of this amendment the water supply company had acquired the waterworks plant, or such acquisition was made subsequently thereto, does not appear, nor is it stated in the record that it was ever served with process. A full statement of the grounds for the equitable relief asked for in the creditors' bill is contained in the opinion in Andrews v. National Foundry & Pipe Works, report. ed in 36 L. R. A. 139, 22 C. C. A. 110, 46 U. S. App. 281,76 Fed. 167. It suffices here 2211 to say that the bill assailed the validity of the mortgages to Andrews & Whitcomb and |