In re Wolf

• Decision Date: 11 December 1899
• Citation: 98 F. 84
• Parties: In re WOLF.
• Court: U.S. District Court — Northern District of Iowa

98 F. 84

In re WOLF.

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

December 11, 1899

Deacon & Good, for trustee in bankruptcy.

Charles B. Kepler, for creditor.

SHIRAS District Judge.

From the facts certified to the court, it appears that the bankrupt, Wolf, being indebted to Julius Arkin, on the 15th day of May, 1899, executed and delivered to him, as evidence of his indebtedness, a promissory note for $200, payable in 90 days from date. On the 22d day of July, 1899, the bankrupt borrowed of Arkin the sum of $100, giving his note therefor payable in 30 days from date; and to secure this indebtedness, as well as that evidenced by the note dated May 15, 1899, the bankrupt executed and delivered to Arkin a chattel mortgage on his stock of goods in Lisbon, Iowa,-- it appearing that Arkin would not advance the loan of $100 unless the bankrupt would give security to cover, also, the pre-existing indebtedness. Shortly after the execution and recording of this mortgage, Wolf, the mortgagor, was adjudged to be bankrupt, and his stock in trade was taken possession of and was sold by the trustee; and the mortgagee filed his intervening petition before the referee praying that he be held to have a valid lien on the stock of goods as security for the indebtedness due him. Upon the hearing before the referee, it was held that the mortgage security was void as to creditors, in that it was a preference, and taken under circumstances rendering it invalid as against the creditors represented by the trustee.

Viewed as a security given to secure the payment of the pre-existing indebtedness evidenced by the note dated May 15th, the holding of the referee that the mortgage was invalid, because thereby a preference was intended to be created in favor of the creditor, is sustained. Viewed, however, as a security for the sum of $100, money advanced to the bankrupt at the time of the execution of the mortgage, there is nothing shown in the evidence which required the holding that the security given for this loan is not valid. As the security was given for a debt then created, it was a present security, and not a preference which was created by the mortgage; and the case comes within the rule announced by Judge Dillon in Darby v. Institution, 1 Dill. 144, Fed.Cas.No. 3,571, wherein it is said that:

'An insolvent person may properly make efforts to extricate himself from his embarrassments, and

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