Shimer v. Huber

BUTLER, District Judge. Three questions are presented by this case: First, did the agreement of March 29, 1879, between the partners, Huber. & Mohr, transfer the firm property to Huber as against the firm creditors? Second, were the seizures under the executions of Walter Huber, Mrs. Wagner, and Mr. Cooper, procured by the debtor, Lewis Huber? Third, is the judgment of the Coopersburg Savings Bank, of April, 1877, valid, and, if so, was the seizure under it procured bv the debtor? The first question is one of good faith, simply. If the transaction was honest — designed for the purpose stated in the agreement signed — it transferred Mohr’s interest to Huber; and the firm creditors, having no lien on the property, or equity in respect thereto, independent of the partners, cannot complain. The insolvent condition of the firm at the time is unimportant, except as the fact may bear on the question of good faith. T. Pars. Partn. 502, note L; Liudl. Partn. *535; McNutt v. Strayhorn, 3 Wright [39 Pa. St.] 269; Doner v. Stauffer, 1 Pen. & W. 198; Baker’s Appeal, 9 Harris [21 Pa. St.] 82; Walker v. Eyth, 1 Casey [25 Pa. St.] 216; Siegel v. Chidsey. 4 Casey [28 Pa. St.] 279; Turk Co. Bank’s Appeal, 8 Casey [32 Pa. St.] 446; Cope's Appeal. 3 Wright 39 Pa. St.] 284; Vandike's Appeal, 7 P. F. Smith [57 Pa. St.] 9; Lefevre’s Appeal, 19 P. F. Smith [69 Pa. St.] 122; Potter v. Hicks [Case No. 11,328], Cir. Ct. E. D. Pa. 1878. An examination of the evidence has satisfied us that the transaction was honest; that Mohr sold his Interest to Huber in good faith for the consideration stated in the agreement. The firm was insolvent, according to the sense in which this term is used in the bankrupt law, we have no doubt; they could not meet their ordinary business obligations. But Huber, a hopeful, energetic, visionary man, believed his individual resources equal to all contingencies, and supposed he could prosecute the business successfully. In this opinion Mohr (who believed Huber had considerable separate property) fully concurred. Huber went to work earnestly, borrowed money, involving his father-in-law to a considerable amount; but the burden was too heavy, and veiy soon he sank under it. Second, were the executions of Walter Huber, Mrs. Wagner, and Mr. Cooper, procured by the debtor, Lewis Huber? The judgments on which the executions issued having been entered in pursuance of warrants signed and delivered a year before the petition in bankruptcy was filed, are valid; and the hold on the property under them is good, unless the debtor actively interfered to have the seizures made. An examination of the evidence has satisfied us that he did so interfere. The burden of proof is on the plaintiff; and we approached the case with a natural inclination in favor of the execution creditors, whose judgments are not only honest, but for money loaned; but the testimony tending to show an arrangement that the debtor should interfere to save these creditors, if danger threatened, at the expense of others, is too strong to be disregarded. That he should be inclined to prefer them, may bo presumed; they were his near relations; that he informed them of his condition, and that they, in consequence, and in a body, seized his property, is clearly proved. In the absence of repelling evidence, an inference that his motive in thus informing them was to induce the action they took, and that he did it in pursuance of an understanding, would be justified. But there is more in the case. Mr Deck, a creditor, testifies that Huber told him. when pressing for payment, months before, “that suing would do no good; that he had money of his brother, sister and father-in-law; that he would not leave them out in the cold.” Mr. Wood, who called about a claim, as counsel, testifies that Huber told him substantially the same; “that his sister, brother and father-in-law, had judgments; that his creditors could gain nothing by pushing; that if they pushed he would have his relations sell him out; that they would use up the whole stock: that these debts were sacred,' and he thought it his duty to protect them' first.” And Walter Huber, one of the execution creditors, says he would have entered his judgment earlier had it not been for [1313] Lewis’ statement that it would injure him, and a promise to tell him when danger approached. *'1 relied on this; that is the reason I did not enter it sooner; I entered it the next morning after he told me he. was going to make an assignment.” The business connected with these claims was attended to by Walter Huber and Mr. Cooper. They resolved to issue all the executions, immediately upon learning the debtor’s condition, and did issue them. It is unimportant that Lewis may not have communicated directly with Mrs. Wagner. We cannot regard the denials of the parties to the transaction as a sufficient answer to this evidence. Third, is the judgment of the Coopersburg Savings Bank valid, and, if so, was the execution . which issued on it procured by the debtor? The warrant on which this judgment was confessed was signed within a month of filing the petition in bankruptcy. That the debtor was then “insolvent,” as before remarked, cannot be doubted. Knowledge of this fact on his part, and an intention to prefer the bank in confessing the judgment. may, therefore, justly lie inferred. But i we fail to discover any evidence to warrant ■ a conclusion that the bank had reasonable cause to believe him insolvent, or knowledge that his act was in fraud of the bankrupt law. without which the insolvency and improper motives of the debtor, are unimpor- • taut. Mere suspicion of insolvency or fraud j will not answer. Grant v. National Bank, 97 U. S. 80. The officers say they believed ! him to be solvent, and the fact that they dis- ' counted his note at this time, supports their , statement. The judgment must therefore be : regarded as valid. And we find no evidence ' whatever that the debtor procured the exe- ¡ cution which issued upon it. He had no motive to do so, such as existed in the other cases; and the testimony before referred to j as applying there, is Inapplicable here. A decree will therefore be entered, enjoin- I ing and restraining Milton Cooper. Walter j Huber, and Rebecca Wagner, their respec- ■ five agents, servants and attorneys, from pro- ! ceeding under their aforesaid executions ! against the property of C. Lewis Huber, seized I as before mentioned, or in anywise interfering or intermeddling with the same, or the : proceeds thereof, as prayed for. and dismiss- ■ ing the bill as respects the Coopersburg Sav- ! ings Bank.