This is an action by the trustee in bankruptcy of a corporation named the Fair Bag Company *25to recover an alleged fraudulent preference amounting to $800. A few days before October 21, 1933, the corporation and one Godfrey engaged in the exchange or "kiting” of worthless checks. The check which Godfrey drew on a bank in Connecticut and gave to the corporation was deposited by the latter in the defendant bank, which credited the amount to the corporation, permitted the corporation to draw against it, and paid the checks so drawn. Godfrey’s check was returned unpaid to the defendant bank.
The defendant bank at once demanded reimbursement. The corporation had no money, but gave the bank its note for $800, dated October 21, 1933, secured by an assignment of accounts receivable, upon which, between that date and December 20, 1933, the bank collected $800 in satisfaction of the note. When the note was given and at all later times the corporation was insolvent (Jump v. Bernier, 221 Mass. 241, 247), and the bank had reasonable cause to believe that the corporation was insolvent and that the transfer of the accounts receivable, if enforced, would effect a preference. Putnam v. United States Trust Co. 223 Mass. 199, 205. Wasserman v. Hollidge, 267 Mass. 460, 470, and cases cited. Brown v. Palmer Clay Products Co. 290 Mass. 108. An involuntary petition in bankruptcy against the corporation was filed on December 9, 1933, and it was adjudicated a bankrupt on February 5, 1934.
The judge ordered judgment for the plaintiff for $800 and interest, and the defendant bank appealed. This was proper practice. Royal Paper Box Co. v. Munro & Church Co. 284 Mass. 446, 449. Gagnon v. Ainsworth, 283 Mass. 488. Since the case was presented on the report of an auditor whose findings of fact were to be final, the requests for rulings are unimportant, and need not be discussed. Howland v. Stowe, 290 Mass. 142, 146. The only question is, whether the order for judgment was right upon the facts found. That depends upon whether the transaction was a preference.
Under § 60a of the bankruptcy act (U. S. C. Title 11, § 96a) "a person shall be deemed to have given a preference if, being insolvent, he has, within four months before the *26filing of the petition, or after the filing of the petition and before the adjudication, . . . made a transfer of any of his property, and the effect of the enforcement of such . . . transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.” If a preference is given, it may be avoided by the trustee and the property or its value recovered, if "the person receiving it or to be benefited thereby, or his agent acting therein, shall then have reasonable cause to believe that the enforcement of such . . . transfer would effect a preference.” An intent to prefer is not essential to a preference. Rogers v. American Halibut Co. 216 Mass. 227. See Wilson v. Mitchell-Woodbury Co. 214 Mass. 514, 517, 518. This case does not involve § 67e of the bankruptcy act (U. S. C. Title 11, § 107 [e]), dealing with fraudulent transfers. Coder v. Arts, 213 U. S. 223. Van Iderstine v. National Discount Co. 227 U. S. 575. Dean v. Davis, 242 U. S. 438. Adams v. Champion, 294 U. S. 231, 235. Baker v. Chisholm, 268 Mass. 1, 3, 4.
The essence of a preference is a diminution of assets which, unless corrected, would result in unequal distribution. Baker v. Chisholm, 268 Mass. 1, 4, 5. Comparone v. M. J. Caplan Co. Inc. 270 Mass. 74, 79. Citizens’ National Bank of Gastonia v. Lineberger, 45 Fed. Rep. (2d) 522, 526. Consequently a fair exchange of assets, like a loan to an insolvent upon security, is not of itself a preference. Tiffany v. Boatman’s Institution, 18 Wall. 375. O’Connell v. Worcester, 225 Mass. 159, 162. Cunningham v. Commissioner of Banks, 249 Mass. 401, 417. Hanford v. Codman, 266 Mass. 93, 96. Beacon Trust Co. v. Dolan, 27 Fed. Rep. (2d) 247. In re Metropolitan Dairy Co. 224 Fed. Rep. 444, 445.
If an insolvent has obtained money or property by fraud or other tort, that money or property is not properly part of the assets of his estate, and may be reclaimed from the trustee in bankruptcy. Bussing v. Rice, 2 Cush. 48. Watson v. Silsby, 166 Mass. 57. Donaldson v. Farwell, 93 U. S. 631. In re New York Commercial Co. 228 Fed. *27Rep. 120. In re Horigan Supply Co. 2 Fed. Rep. (2d) 791. Manly v. Ohio Shoe Co. 25 Fed. Rep. (2d) 384, 59 Am. L. R. 413. California Conserving Co. v. D’Avanzo, 62 Fed. Rep. (2d) 528. Sternberg v. American Snuff Co. 69 Fed. Rep. (2d) 307. Likewise, if the insolvent restores it before bankruptcy occurs, there is no preference, for there is no diminution of assets. Montgomery v. Bucyrus Machine Works, 92 U. S. 257. Hough v. Atchison, Topeka & Santa Fé Railway, 34 Fed. Rep. (2d) 238, 240, 241. Fisher v. Shreve, Crump & Low Co. 7 Fed. Rep. (2d) 159.
But that principle applies only so long as the money or property can be traced and found, either in its original or in an altered form, in some particular assets. When that can no longer be done, the claim of the person who has been deprived of money or property by fraud or other tort (Schall v. Camors, 251 U. S. 239, 251; Lewis v. Roberts, 267 U. S. 467), ranks no higher than the claims of ordinary creditors. If, after the identity of the money or property has been lost, an insolvent satisfies or secures the claim by a transfer of other assets to one who takes with reasonable cause to believe that the transfer will effect an unequal distribution, the transfer is a voidable preference. Clarke v. Rogers, 228 U. S. 534. National City Bank of New York v. Hotchkiss, 231 U. S. 50. Cunningham v. Brown, 265 U. S. 1, 11, 12. Bush v. Moore, 133 Mass. 198. Yesner v. Commissioner of Banks, 252 Mass. 358. Downing v. Cunningham, 256 Mass. 285. Worcester Bank & Trust Co. v. Nordblom, 285 Mass. 22, 25, 26. Atherton v. Green, 179 Fed. Rep. 806. Burgoyne v. McKillip, 182 Fed. Rep. 452, 454. In re Dorr, 196 Fed. Rep. 292, 298. Wuerpel v. Commercial Germania Trust & Savings Bank, 238 Fed. Rep. 269, 272, 273. Watchmaker v. Barnes, 259 Fed. Rep. 783, 788. Ross v. H. Michaelyan, Inc. 57 Fed. Rep. (2d) 674.
In the present case there is no suggestion that the money wrongfully obtained from the defendant bank existed among the assets of the corporation on October 21, 1933, or at any later time. On the contrary, it had been paid out upon checks drawn by the corporation, apparently in favor of its creditors. The defendant accepted a note for *28its claim. The facts gave the defendant bank no status superior to that of other creditors. The judge was right in deciding that there was a voidable preference, and in ordering judgment for the plaintiff. The case resembles Walser v. International Union Bank, 21 Fed. Rep. (2d) 294.
Order for judgment affirmed.