Sec 378

An agent is not allowed to make profit out of his agency, beyond his fixed salary or commissions, to his principal's detriment; and hence any contracts by an agent for purchase of principal's property or for investment of principal's assets enure to the principal's benefit, or may be repudiated so far as concerns the agent and parties with notice, at the principal's election, unless it should appear that the purchase or investment was made with the principal's full approval, on a full knowledge of the facts.3 A contract which creates an interest ad-verse to the interest of the cestui que trust is void as against public policy.4 And, as a general rule, it is against public policy to allow persons occupying fiduciary relations to be placed in positions in which their interests and that of the trust would come in collision.5

Sec 379

The object of the bankrupt statutes being the equal distribution of the bankrupt's estate among all his creditors, any agreement with any particular creditor, by which, in consideration of acts done by him, he is to obtain a covert preference over other creditors, is void.1 Hence a security taken by a creditor, in view of the debtor's bankruptcy, to be valid only in case of bankruptcy, will not be sustained;2 and so where the device used was the attornment of the debtor to his mortgagee at an exces-sive rent,3 and so of other contrivances to give any particular creditor an unfair preference in distribution.4 Contracts to remove goods from the bankrupt's creditors are also void.5 It has been held in England, also, that the assent of a majority of creditors to a composition, must, in order to bind the minority, be bona fide.6 And in this country a state court will not enforce an executory contract in violation of the federal bankrupt law.7

Contract of an agent to his private profit void against the principal.

1 Supra, sec 340; Petre v. Espinasse, 2 My. & K. 496; Chapin v. Pease, 10 Conn. 69; Hubbell v. Currier, 10 Allen, 333; Bonslough v. Bonslough, 68 Penn. St. 495.

2 Curtiss v. Price, 12 Ves. 103; Drink-water v. Drinkwater, 4 Mass. 354; Jackson v. Garnsey, 16 Johns. 189: Reichart v. Castator, 5 Binn. 109; Harmon v. Harmon, 63 111. 512; Clemens v. Clemens, 28 Wis. 637.

3 Wh. on Agency, sec 231, 573, 760; Lees v. Nuttall, 2 Myl. & K. 819; Low-ther v. Lowther, 13 Ves. 95; Dunne v. English, L. R. 18 Eq. 524; Mollett v. Robinson, L. R. 5 C. P. 653; Provost v. Gratz, 6 Wheat. 481; Marsh v. Whitmore, 21 Wall. 178; Ringo v. Binns, 10 Pet. 269; Baker v. Humphrey, 101 U. S. 494; Mott v. Harrington, 12 Vt. 199; Smith v. Townsend, 109 Mass. 500; Taussig v. Hart, 58 N.

Y. 428; Fulton v. Whitney, 66 N. Y. 548; Lorillard p. Clyde, 86 N. Y. 384; Condit v. Blackwell, 22 N. J. Eq. 486; Myers' Ap., 2 Barr, 463; Everhart v. Searle, 71 Penn. St. 256; Piatt v. Long worth, 27 Oh. St. 159; Kruse v. Steffens, 47 111. 112; Eldridge v. Walker, 60 111. 230; Mason v. Bauman, 62 111. 76; Ackenburgh v. McCool, 36 Ind. 473; Firestone v. Firestone, 49 Ala. 128; Gaines v. Allen, 58 Mo. 541. See supra, sec 161, where the subject is examined in its relation to undue influence.

4 Bowers v. Bowers, 26 Penn. St. 74; Foil's Ap., 91 Penn. St. 434.

5 Aberdeen R. R. v. Blaikie, 1 Macq. H. L. 461; Risley v. R. R., 62 N. Y. 240; Barnes v. Brower, 80 N. Y. 527; Gardner v. Butler, 30 N. J. Eq. 703. As to sales or other provisions of trusts, see infra, sec 408.

Agreements in fraud of bankrupt law void.

1 Leake, 2d ed. 730; Mare v. Sand-ford, 1 Giff. 288; McKewan v. Sanderson, L. R. 20 Eq. 65; Elliott v. Richardson, L. R. 5 C. P. 744; Wilson v. Prewett, 3 Woods, 631; Wilson v. Jordan, 3 Woods, 642; Sawyer in re, 14 N. Bank. Reg. 24; Whitney in re, 14 N. Bank. Reg. 3. That evasions of bankrupt law invalidate, see supra, sec 362. '.

"A mortgage executed by an insolvent debtor, with intent to give a preference to his creditor, who has reasonable cause to believe him to be insolvent, and knows it to be made in fraud of the provisions of the bankrupt act, and who, for the purpose of evading the provisions of that act, actively conceals and withholds it from record for two months, is void under the bankrupt act, notwithstanding the fact that it was executed more than two months before the filing of a petition in bankruptcy by or against the mortgagor.

" If the mortgage had been executed within the period of two months next before the filing of the petition in bankruptcy, it would have been void under the letter of the bankrupt act. Where all the other circumstances necessary to render the mortgage void concur, the device of concealing it until the two months have elapsed cannot save it. It is, notwithstanding the lapse of time, a fraud on the policy and objects of the bankrupt law, and void as against its spirit." Woods, J., Blen-nerhasset v. Sherman, Sup. Ct. U. S. 1882. This was so under the United States Bankrupt Act of 1867, Rev. Stat. sec 5132.

2 Mackay ex parte, L. R. 8 Ch. 643.

3 Jackson ex parte, L. R. 14 Ch. D. 725.

4 Gomersall in re, L. R. 1 Ch. D. 137.

5 Heymann v. R., L. R. 8 Q. B. 102; 12 Cox, C. C. 383; U. S. v. Bayer, 4 Dill. 407.

6 Cowen ex parte, L. R. 2 Ch. 563; Cobb ex parte, L. R. 8 Ch. 727; Lins-ley ex parte, L. R. 9 Ch. 290; Page ex parte, L. R. 2 Ch. D. 323.

7 Blaisdel v. Fowle, 120 Mass. 447; Austin v. Markham, 44 Ga. 161; Claf-lin v. Torlina, 56 Mo. 369; Lowtham v. Stillwell, Sup. Ct. Mo. 1882.