Bainbridge State Bank v. Tonge

PARDEE, Circuit Judge (after stating the facts as above). Ho appeal was taken from the decree adjudging the Steininger Mercantile Company bankrupt, and enjoining the sheriff from selling, under the foreclosure decrees, the property of the Steininger Mercantile Company, and appointing a receiver to take possession of and sell the property of said company, so that there is no question in this case but that the Steininger Mercantile Company committed an act of bankruptcy and was properly adjudged a bankrupt. The appellants are before the court insisting upon a mortgage lien on the property of the bankrupt. Section 67 of the bankrupt law of 1898 is, in part, as follows: “That all conveyances, transfers, assignments, or incumbrances of his property or any part thereof, made or given by a person adjudged a bankrupt under the provisions of this act subsequent to the passage of this act and within four months prior to the filing of the petition, with the intent and purpose on his part to hinder, delay, or defraud his creditors or any of them, shall be null -and void as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration; and all property of the debtor conveyed, transferred, assigned or encumbered as aforesaid shall, if he be adjudged a bankrupt, and the same is not exempt from execution and liability for debts by the law of his domicile, be and remain a part of the assets and estate of the bankrupt and shall pass to his said trustee, whose duty it shall be to recover and reclaim the same by legal proceedings or otherwise for the benefit of the creditors.” The question then presented is whether or not the Steininger Mercantile Company, in executing the mortgages to appellants, intended thereby to hinder, delay, or defraud creditors of said company. As the facts in this case show that the officers of the said company sent for counsel, who sat up all night executing mortgages in favor of favored creditors who were not pressing for payment nor asking for a mortgage, and the said mortgages so executed covered all the property of the mortgagors, and are conceded to have been with the intent that the debtors might thereby force indulgence from their creditors and further advances from those secured, this court is satisfied that the mortgages were executed with the intent to hinder, delay, or defraud some of the creditors of the company; and as this was the conclusion of the learned judge of the court below, and is made effective in the decree appealed from, the same is affirmed.