In re Hull

• Decision Date: 17 May 1902
• Citation: 115 F. 858
• Court: U.S. District Court — District of Vermont
• Parties: In re HULL et al.

115 F. 858

In re HULL et al.

United States District Court, D. Vermont.

May 17, 1902

Clarke C. Fitts, for claimant.

John E Gale, for trustee.

WHEELER District Judge.

The claimant, Frisbee, sold a small stock of goods to the bankrupts, and long within the four months prior to the petition took a mortgage back of those and other goods and some exemptions, leaving power to sell and replace goods to be included in the mortgage. The whole have been sold, and the goods that came from the claimant brought $178.59; those formerly of the bankrupts, $92.78; and the exemptions, $25 and he claims the proceeds of the whole.

The validity and effect of chattel mortgages with such power of sale, by the mortgagors as to other creditors have long been the subject of much discussion and divergence of judicial opinion in England and this country. 5 Am.& Eng.Enc.Law (2d Ed.) 992. The United States supreme court has decided that such mortgages are fraudulent as a matter of general law, and void as to other creditors in bankruptcy proceedings. Robinson v. Elliott, 22 Wall. 513, 22 L.Ed. 758. The supreme court of Vermont has held that they are good and valid as against other creditors in state insolvency proceedings. Peabody v. Landon, 61 Vt. 318, 17 A 781, 15 Am.St.Rep. 903. This is a question of general law under the bankrupt act, rather than a rule of property under the state law, and the decision of the supreme court of the United States, which has final disposition of it, is, of course, to be followed here. Besides this, the present Bankr Act Sec. 70(5), vests in the trustee property of the bankrupt 'which prior to the filing of the petition he could by any means have transferred. ' This property, that did not come from the claimant, was so left by the mortgage that it might be transferred by the bankrupts.

The act saves liens in good faith for a present consideration from its operation; but this does not make good, nor add to the force of, mortgages that would not be valid as to any property at common law. In Peabody v. Landon it was said that possession by the mortgagee under the mortgage would, as to after-acquired goods, make the lien good as of the date of the mortgage, which in that case was prior to the limit of the state insolvent law, although the delivery was within it. But that is not in question here. This mortgage created a new debt, and a delivery of prior property to secure it would be a...