Mercantile Trust Co. v. Olsan

TRIEBER, District Judge (after stating the facts as above). Although there are a number of assignments of error, there is in fact only one issue of law involved, namely: Did the court eir in instructing the jury “that these men (referring to the Olsan Bros.) as stockholders in said bank, had the right to guarantee the paper to protect their interests in the bank”? If the court committed no error in this part of the charge, and the evidence justifies it, the verdict was right, and the judgment must be affirmed, in view of section 269, Judicial Code, as amended by the Act of February 26, 1919, 40 Stat. 1181 (section 1246, U. S. Comp. St. Ann. Supp. 1919), which provides: “On tlie hearing of any appeal, certiorari, writ of error, or motion for a new trial, in any case, civil or criminal, the court shall give judgment after an examination of the entire record before the court, without regard to technical errors, defects, or exceptions which do not affect the substantial rights of the parties.” See Horning v. District of Columbia, 254 U. S. 135, 139, 41 Sup. Ct. 53, 65 L. Ed. 185; Harrington v. United States (8th C. C. A.) 267 Fed. 97; Wright v. United States ex rel. (4th C. C. A.) 277 Fed. 768: United Verde Extension Mining Co. v. Littlejohn (9th C. C. A.) 279 Fed. 223; Hines v. Martin (5th C. C. A.) 286 Fed. 653. It may be conceded that, when the Olsans transferred their Magna shares for the purpose of guaranteeing the payment of the liabilities of the American Bank, they became insolvent; still, if they acted in good faith, under an honest belief that, by this act, they couM not only save a part of their holdings in the bank, and escape the liability imposed by the National Banking Act on shareholders of an insolvent bank, but discharge a moral liability to the depositors of the bank, and also escape the liability of managers of the bank in making these bad loans, which caused its insolvency, it certainly cannot be held as a matter of law, as insisted on by counsel of plaintiff, that their acts were fraudulent. That they acted in good faith, without any intent to defraud other creditors is shown by the practically undisputed evidence. The numerous authorities cited by counsel, as to a surrender by an insolvent debtor of all his property for the benefit of some creditors, have no application to the facts in the instant case. Under the laws of Oklahoma, an insolvent debtor may lawfully prefer some of his creditors. Section 2901, Rev. Laws of Oklahoma, 1910. Besides the law of the state of Oklahoma (Rev. Laws of Oklahoma, 1910) provides: “Sec. 2898. Fraud Avoided, How. A creditor can avoid the act or obligation oí his debtor for fraud only where the fraud obstructs the enforcement, by legal process, of his right to take the property affected by the transfer or obligation. “Sec. 2899. Fraudulent Intent a Question of Fact. In all cases arising under the following section, or under the provisions of this chapter, except as otherwise provided in the second preceding section, the question of fraudulent intent is one of fact and not of law; nor can any transfer or charge be adjudged fraudulent solely on the ground that it was not made for & valuable consideration.” [52] These provisions were originally enacted as a part of the Civil Code of California, later taken from that state by the state of Minnesota, still later by the territory of Dakota, and the states of North and South Dakota, after the admission of those states, and finally enacted by the state of Oklahoma. The Supreme Courts of California and Minnesota had, long before the enactment of these acts by Oklahoma, construed them, and have uniformly held that under a statute like section 2899 the question of fraud must be submitted to the jury and cannot be determined as a question of law by the court. Miller v. Stewart, 24 Cal. 504; Janison v. King, 50 Cal. 132; Bull v. Bray, 89 Cal. 286, 26 Pac. 873, 13. L. R. A. 576; Knox v. Moses, 104 Cal. 502, 38 Pac. 318; Greenleaf v. Edes, 2 Minn. 265 (Gil. 226); Truitt Bros. v. Caldwell, 3 Minn. 364 (Gil. 257), 74 Am. Dec. 764; Hathaway v. Brown, 18 Minn. 414 (Gil. 373); Filley v. Register, 4 Minn. 391 (Gil. 296), 77 Am. Dec. 522. This construction of a statute before the adoption thereof by another state is a part of the statute. Willis v. Eastern Trust & Banking Co., 169 U. S. 295, 18 Sup. Ct. 347, 42 L. Ed. 752; J. M. Robertson & Co. v. Bilt, 100 Fed. 718, 40 C. C. A. 664, affirmed 187 U. S. 41, 23 Sup. Ct. 16, 47 L. Ed. 65; Blaylock v. Town of Muskogee, 117 Fed. 125, 54 C. C. A. 639. Counsel for plaintiff relies on Hall v. Feeney, 22 S. D. 541, 118 N. W. 1038, 21 L. R. A. (N. S.) 513, construing a statute like this. That case was decided after the adoption of it by Oklahoma. Such .a construction has not the same conclusive effect as a construction before the adoption. Besides, the facts in that case were so different from those in the instant case that it can have no bearing whatever ón it. The undisputed evidence shows that the debtor, while insolvent, conveyed a stock of goods to his son; that the only alleged consideration was that the son was to pay some of. his debts, but was in fact in secret trust for himself, as the money realized by the son from the daily sales of the merchandise was not paid to a single creditor, but to the father; that there was no assumption by the son of any of the debts, which it was claimed the son was to pay, so that no creditor of the father could sue him; that the father had divested himself of all his property, which creditors could seize under execution. Upon these facts it may be conceded that, there being no disputed facts, it was proper for the court to direct a verdict. For the court below to have directed a verdict for plaintiff, as requested and now -insisted on, would have been clearly in violation of the law of Oklahoma. A careful examination of the evidence satisfies that there was substantial evidence requiring the submission of the case to the jury under the laws of that state, and that upon the entire evidence the verdict of the jury was right, and that the court committed no prejudicial error, which would warrant this court to reverse the judgment in view of the act of Congress amending section -269 of the Judicial Code. The judgment is affirmed.