In re Thweatt

• Decision Date: 29 August 1912
• Docket Number: 532.
• Citation: 199 F. 319
• Parties: In re THWEATT. v. JOHNSON. DISMUKES
• Court: U.S. District Court — Northern District of Georgia

199 F. 319

In re THWEATT.

DISMUKES v. JOHNSON.

No. 532.

United States District Court, N.D. Georgia, Western Division.

August 29, 1912

Slade &amp Swift, Love & Fort, and Dismukes & Worsley, all of Columbus Ga., for trustee.

Hatcher & Hatcher, of Columbus, Ga., for claimant.

NEWMAN District Judge.

This is a case similar to that of In re Walden Bros. Clothing Company, 199 F. 315, just decided. The principal difference in the two cases is that in the Case of Walden Bros. Company the company mortgaged its entire stock of merchandise, as well as all its choses in action, notes, and accounts due it; in this case the bankrupt mortgaged the whole of his two stocks of merchandise in Columbus, Ga Thweatt, the bankrupt, used all of the $6,000 received from Johnson, except a trifling amount, to pay immediately his bank and his kinsman debts due them. He left a large number of creditors, as shown by his schedule in bankruptcy, wholly unprotected and unprovided for in any way. Thweatt was clearly insolvent at the time of this transaction, and he knew-- must have known-- that the effect of what he was doing was to delay, if not to hinder and defraud, all his other creditors, except the two he paid. This much is perfectly clear from the evidence.

As to Johnson, these are the facts as developed by the evidence: He was approached to lend Thweatt $6,000 and take a mortgage on his two stocks of merchandise on Broad street in Columbus, Ga., as security for the same. Johnson then went to the courthouse, and with the help of his brother ascertained that there were no incumbrances on either stock of goods. He then went to each store and casually examined the stocks of goods; that is, he made no full or thorough examination at all, but simply looked over the stock. He satisfied himself, however, that the goods on hand made good security for the loan. He made no further inquiry or examination whatever into Thweatt's affairs, or his purpose in obtaining the money. When interrogated on this subject on the witness stand, the following occurred:

'Q. You knew that he (Thweatt) owed for goods? A. No, sir. Q. You did not investigate to see? A. No, sir. Q. You did not know whether it (the merchandise) was paid for or not? A. That was none of my business. Q. You did not know, and you did not care? A. No, sir.'

Johnson's idea, apparently, was that, if the goods mortgaged were free from incumbrances and of sufficient value to make his loans secure, he could shut his eyes to everything else. In this he...