Appeal from the District Court of the United States for the Northern District of California.

Suit in equity by George P. Stanley as trustee of the estate of E. L. Newman, bankrupt, against the Pajaro Valley Bank. Decree for defendant and complainant appeals.

E. L. Newman was engaged in business, conducting a harness and saddlery «tore at Watsonville, Cal. On June 30, 1908, he borrowed of the Pajaro Valley Bank, the appellee herein, the sum of $300 on his representation that he wished to use the money to discount some bills, and that his stock was worth $3,800. The stock was inspected by an officer of the bank, and its valuation was roughly checked at the time when the loan was made. Newman executed a note to the bank payable one day after date. On August 31, 1908, he borrowed from the bank the further sum of $500 on a similar note, he stating to the bank at that time that this amount would pay all his creditors and leave him indebted only to the bank. At that time his stock of goods was practically in the same condition as when the first loan was made. Checks went through the bank using these moneys so loaned for the payment of bills of Newman due to wholesalers. In the latter part of October, 1908, the cashier of the bank went to Newman’s store to buy a set of harness, and he noticed that the stock had been very materially depleted since the time of the last loan. He made inquiries on the outside, and was informed that Newman had been shipping stock away, and was intending to remove to Honolulu. He immediately caused formal demand to be made on Newman for the payment of the notes. Newman failed to comply, but he at no time informed the bank or any of its agents that he had any creditors other than the bank. Neither the bank nor any of its agents ever had any information as to the existence of other creditors until bankruptcy proceedings were commenced on January 20, 1909, and they at all times up to the commencement of those proceedings believed there were no other creditors of Newman. On October 27, 1908, the bank without further warning to Newman commenced an action on its notes, and on the following day caused an attachment to be levied on his stock. For the purpose of saving the cost of keeper’s fees which were $6 per day, the bank’s attorneys proposed to Newman’s attorney to reduce the bank’s claim for attorney’s fees against Newman from $125 to $50 if Newman would go to trial immediately. This was agreed to, and on October 29th, Newman filed an answer. The case was tried the same day, and judgment was entered in favor of the bank for the amount of its debt, and $50 attorney’s fees and costs. Execution was immediately levied on Newman’s stock at the request of the bank, and the stock was sold at sheriff’s sale on November 5, 1908. On the following day the bank’s judgment was paid and satisfied, and the surplus of the proceeds of the sale, $5.14, was paid to Newman by the sheriff. The goods were sold for $1,050, which, it is stipulated, was their actual value. Newman was adjudged bankrupt 'upon the petition of his creditors, and thereafter, on March 23, 1911, his trustee brought a suit in equity in tiie court below against the appellee herein to recover the stock so sold under execution upon the judgment obtained by the bank. The trustee filed its answer, and the cause was tried by the court upon an agreed statement of facts, which are the facts hereinabove recited. Upon the agreed statement of the facts and the documentary evidence introduced on the trial, the court below found that the judgment of the appellee against the bankrupt was not collusive, and was not obtained by it for the purpose of hindering, delaying, or defrauding any creditor of the bankrupt, and that the appellee did not have, prior to the execution sale, reasonable cause to believe that the enforcement of such judgment would operate as a preference over other creditors of such bankrupt. Thereupon judgment was entered for the appellee.