In re Kullberg
| Decision Date | 01 October 1909 |
| Citation | 176 F. 585 |
| Parties | In re KULLBERG. |
| Court | U.S. District Court — District of Minnesota |
Stevens & Stevens, for creditors.
Dougherty & Dahl, for bankrupt.
The bare fact that a preference resulted from this transaction does not make the mortgage void under the provisions of section 67e of the bankrupt act (Act July 1, 1898, c. 541, 30 Stat. 564 (U.S. Comp. St. 1901, p. 3449)).
Judge Sanborn, speaking for the Circuit Court of Appeals, Eighth Circuit, in the case of Coder v. Arts, 152 F. 943 947, 82 C.C.A. 91, 95 ( ), said:
'A transfer made in good faith to pay or to secure an honest antecedent debt by an insolvent within four months of the filing of the petition in bankruptcy by or against him constitutes no evidence of an intent on his part to hinder delay, or defraud other creditors, within the meaning of section 67e of the bankrupt law, notwithstanding the fact that its necessary effect is to hinder and delay them, and to deprive them of the opportunity they might otherwise have had to collect their claims in full.'
Having been given for a present consideration, the mortgage in question is valid under the provisions of section 67d if it was made in good faith, and not in contemplation of or in fraud of the act.
The fact that the mortgagee knew that the proceeds were to be used to pay existing creditors does not make the mortgage void. This has been held by the Circuit Court of Appeals of this circuit in Stedman v. Bank of Munroe, 117 F. 237, 54 C.C.A. 269. It has also been held in the Circuit Court of Appeals for the Sixth Circuit in Re Soudan Manufacturing Company, 113 F. 804, 51 C.C.A. 473. Anything which may have been held to the contrary, in Re Pease (D.C.) 129 F. 446, relied upon by the trustee, cannot prevail against the ruling of the Circuit Court of Appeals of this circuit.
No fraud upon the act could have been contemplated unless Hassinger had reasonable cause to believe at the time the mortgage was made that Kullberg was insolvent, and this is the real question in the case. It is a question of fact upon which the referee found in favor of the validity of the mortgage. The evidence presented before him was not, in my opinion, stronger than the evidence presented in other cases where it has been held by the Circuit Court of Appeals of this circuit, and in the Circuit Court of Appeals of other circuits, that the creditor did not have...
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Cauthorn v. Burley State Bank
...cause to believe that the debtor is insolvent, for this is one of the elements of preference." (Thomas v. Adelman, 136 F. 973; In re Kullberg, 176 F. 585.) person is always presumed to intend what is the necessary consequence of his act." (Western Tie & Timber Co. v. Brown, 196 U.S. 502, 25......
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