In re Clifford

• Decision Date: 11 February 1905
• Citation: 136 F. 475
• Parties: In re CLIFFORD.
• Court: U.S. District Court — Northern District of Iowa

136 F. 475

In re CLIFFORD.

United States District Court, N.D. Iowa, Cedar Rapids Division.

February 11, 1905

Baker &amp Ball, for petitioners.

Dutcher & Davis, for Sanders.

From the certificate of the referee it appears that on January 25 1904, the bankrupt purchased of Sanders 24 head of cattle at the agreed price of $395, and at the same time, and as a part of the same transaction, he made to Sanders a chattel mortgage upon such cattle to secure the payment of such purchase price and a prior debt of $126.15 that the bankrupt was then owing to Sanders; the mortgage being for the sum of $521.15. The mortgage was not filed for record until May 11 1904, which was within the four months next preceding the filing of the petition upon which Clifford was adjudged bankrupt, which petition was filed more than four months after the date of the mortgage. Sanders made proof of his debt and mortgage, and claimed priority for the entire amount thereof upon the cattle which has passed to the custody of the trustee in bankruptcy. The trustee and two creditors filed objections to allowing Sanders priority as to any part of his claim. The referee allowed him priority as to the claim for the purchase price of the cattle, viz., $395, but denied it as to the balance of the claim; and the trustee and objecting creditors petition for review of such order.

REED District Judge.

The petitioners contend that by the mortgage a preference was given by the bankrupt to Sanders for the purchase price of the cattle, as well as for the antecedent debt, and that, inasmuch as the mortgage was not recorded until within the four months next preceding the filing of the petition in bankruptcy, the lien thereof dates from the time of the filing of the mortgage, under section 60a of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 562 (U.S.Comp.St. 1901, p. 3445)), and not from the date of the mortgage. Whether or not the mortgage, as to the $126.15, dates only from the time of filing the same, as against the petitioners, need not be determined, for the referee held in favor of them as to this part of the debt, and Sanders does not ask for a review of such order. Section 60a of the bankruptcy act, as amended, is as follows:

'A person shall be deemed to have given a preference if, being insolvent, he has, within four months before the filing 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. Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of the recording or registering of the transfer, if by law such recording or registering is required.'

The purpose of this section is to prohibit the giving of a preference by a bankrupt to existing creditors, and it does not apply to transactions whereby the bankrupt receives a present consideration for the transfer. Such a transaction is covered by section 67d (30 Stat. 564 (U.S.Comp.St. 1901, p. 3449)) of the act, which is as follows:

'Liens given or accepted in good faith, and not in

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