Page images
PDF
EPUB

Opinion of the court.

got everything but the logs, and these, as it turns out, Blake had no interest in.

If there were any reasonable doubt about the intention of the defendants not to abandon the contract of January 25th, it is set at rest by the consideration that when the bill of sale was executed and delivered there was no agreement to cancel it, nor was it, in fact, cancelled, but was held and retained by the defendants. Naturally, if they had intended to rest their right to the logs exclusively on the bill of sale, they would have surrendered the former security. It is, therefore, not a case where an old security is abandoned and given up, and a new one taken as a substitute for that which previously existed. If, then, the contract of 25th January was not merged in the contract of 25th May, the latter one cannot operate an extinguishment of the former, the fairness of which has not been denied. This would not be the case if both contracts were valid, unless by express agreement, and it would be singular if such an effect could be produced, where one of them could be avoided by creditors as against the policy of the law. The creditors having elected to avoid the fraudulent conveyance, take the property as though it had never been made, and subject to all lawful liens upon it. The assignee, standing in the place of the bankrupt, acquired no greater rights than he possessed, and the defendants neither gained nor lost any rights because of the bill of sale.

These general views are sustained by authorities which seem decisive of the point at issue.*

One of these authorities, While v. Gainer,t was trover by the assignee of a bankrupt. The defendant, a maker of

* In re Kahley, 4 Bankrupt Register, 124; Ladd v. Wiggin, 35 New Hampshire, 428; Towle v. Hoit, 14 Id. 63; Stedman v. Vickery et al., 42 Maine, 136; Hoyt v. Dimon, 5 Day, 483; Britt v. Aylett, 6 English, 475; Mead v. Combs, 4 C. E. Green (New Jersey), 112; Ripley v. Severance, 6 Pickering, 474; Sawyer v. Turpin, 5 Bankrupt Register, 339; Eastman v. Porter, 14 Wisconsin, 39; Stokoe v. Cowan, 29 Beavan, 637; Meshke v. Van Doren, 16 Wisconsin, 319; White . Gainer, 2 Bingham, 28. † 2 Bingham, 28.

Opinion of the court.

cloth, who had a lien on some cloth in his possession, purchased it of the bailor, together with several other pieces, after he became bankrupt, and when the cloth was demanded of him by the assignees of the bankrupt, refused to give it up, saying, "I may as well give up every transaction of my life."

It was contended at the trial that the lien was merged in the purchase, and that, at all events, it was waived, because not set up when the cloth was demanded. The judge directed the jury that the demand should have been accompanied with a tender of the amount due for the workmanship on the cloths, but reserved the point as to the merger

of the lien.

On deciding the motion for a rule nisi to set aside the verdiet, Best, C. J., said: "It has been urged that he (the defendant) bought the cloths after the bankruptcy. If that were so, he stands in the same situation as every other purchaser, under the same circumstances; the purchaser is liable to restore them to the assignees, but the assignees must take them subject to such rights as had accrued previously to their claim, and the bankruptcy of the bailor will not deprive the defendant of the right to which he is entitled,-the right of lien. It might have been otherwise, if the defendant, when called on to surrender the goods, had relied on the purchase; but this was not the case, and the verdict must stand."

The rule laid down by Chief Justice Best is applicable here.

The assignee of Blake had no right to the property until he had tendered the advances upon it, and there is no evidence that the defendants placed their refusal to deliver the property upon any particular ground. In the absence of this evidence it is a reasonable presumption that the lien, if not asserted in terms, at least, was not when demand was made, waived. It is true the defendants claimed, after the execution of the bill of sale to the creditors of Blake and other persons, to be the absolute owners of the property conveyed to them, but so far as the logs were concerned,

Opinion of the court.

this claim was doubtless founded on the belief that the price of lumber would not advance, and if it did not, according to the estimates which were made, Blake had no interest in them. If so, although the claim of absolute ownership might not be legally correct, it had a basis of fact to rest upon, and does not prove that the defendants intended to abandon their lien. Indeed, it would be a harsh rule to infer the abandonment of a lien to the extent of this one, contracted in good faith in the prosecution of a legitimate business, unless the evidence on the subject left no other alternative.

It is said that after the execution of the bill of sale the lumber was not sold on joint account, and, therefore, the lien was waived. The answer to this is that the contract by which the lien was secured did not require the lumber to be sold on joint account. If the defendants sent the lumber to market, sold it to best advantage, and divided the proceeds, the contract on their part was complied with. They had entire control over it, and the manner of sale is immaterial and cannot affect the rights of the parties.

The leading purpose of the Bankrupt law is to secure an equal distribution of the bankrupt's property among his creditors. This purpose was accomplished in this case when the bill of sale was set aside, but the assignee seeks to go further and increase the estate more than seventy thousand dollars by relieving the bankrupt from the performance of a pre-existing valid contract. This he cannot do, unless ou the clearest proofs that the defendants intended to abandon this contract and rely wholly on the bill of sale. As these proofs are wanting, the judgment is

AFFIRMED.

Statement of the case.

MAYS v. FRITTON.

1. Where the consideration of a question is prima facie within the jurisdiction and control of a State court-such as determining to whom the surplus of a fund raised by the foreclosure of a mortgage belongs—if the person who gave the mortgage becomes bankrupt and his assignee goes into the State court, submits to its jurisdiction, and nowhere asserts, in any way, the rights of the Federal courts in the matter-he cannot, after taking his chance for a decision in his favor, and getting one against him, raise in this court the point of want of jurisdiction in the State court.

2. To authorize the assignee to recover the money or property under the thirty-ninth section of the Bankrupt Act, it is necessary that he should establish the act of the bankrupt, not only of which he complains, but also that it was done with a view to give a preference over other creditors, and that the other party to the transaction had reasonable cause to believe that such person was insolvent. Wilson v. City Bank (17 Wallace, 473), affirmed. The statute assumes that there may be cases where the various acts of conveyance and disposition may be made, which would not amount to giving a preference.

3. Where, on a feigned issue directed to a jury, both of the necessary facts abovementioned have been found against the assignee, and this court has not the evidence before it, it must assume that the verdict of the jury is right.

ERROR to the Supreme Court of Pennsylvania; the case being thus:

In the year 1862, one Born executed a mortgage to Doll and others, on real estate which he then owned. Some years afterwards, that is to say, on the 16th of January, 1868, he gave to a Mrs. Fritton a bond for $4000, payable in one year, with warrant to confess judgment. On this warrant Mrs. Fritton caused a judgment to be entered on the day on which it was given.

On the 31st day of the same month, a petition was presented by a creditor of Born alleging that various acts of bankruptcy had been committed by him on the 1st, 3d, and 4th of the same month, and praying that he might be declared a bankrupt. On the 28th day of February, 1868, he was accordingly adjudged a bankrupt, and on the 18th of March one Mays was appointed assignee.

Statement of the case.

On the 6th of July, 1868, Doll, the mortgagee, already mentioned, foreclosed his mortgage in one of the county courts of Pennsylvania, and he having received from the sheriff the amount of it (no question as to the validity of his lien having existed), there remained a sum of $5192 above that amount, which the court referred to an auditor to distribute. Going before the auditor, Mrs. Fritton insisted that her judgment was a lien upon the proceeds of the property sold, and that she was entitled to the proceeds.

The assignees appeared by their counsel and claimed the entire fund, on the grounds:

First. That it was the property of a bankrupt, and that, by reason of the bankruptcy, all his estate passed to the assignees.

"Second. That Mrs. Fritton's judgment was given in fraud of the Bankrupt law," and was void for various other reasons set forth.

The Bankrupt Act enacts:

"SECTION 35. If any person, being insolvent or in contemplation of insolvency, and within four months before the filing a petition by or against him, with a view to give a preference, procures his property to be attached or seized on execution, or makes any payment, pledge, transfer, or who shall within six months make any sale, transfer, conveyance, or other disposition of his property to any person having reasonable cause to believe that such person is insolvent and such payment, &c., is made in fraud of the provisions of this act, the same shall be void, and the assignee may recover the property, &c., from the person so to be benefited."

Mrs. Fritton denied the abovementioned allegations of fact made by the assignees, and on her affidavit that they were untrue, a jury was demanded and granted, in pursuance of the practice in such cases in Pennsylvania. The jury found that at the time of giving the bond and warrant Born was insolvent, but that Mrs. Fritton had not reasonable cause to believe that he was, and that the judgment was given to secure a prior debt, but was not given to enable Mrs. Fritton to obtain a preference over other creditors.

« ՆախորդըՇարունակել »