Raley v. Raymond Bros. Clarke Co.

• Decision Date: 05 April 1905
• Citation: 103 N.W. 57,73 Neb. 496
• Parties: RALEY v. RAYMOND BROS. CLARKE CO. ET AL.
• Court: Nebraska Supreme Court

73 Neb. 496

103 N.W. 57

RALEY

v.RAYMOND BROS. CLARKE CO. ET AL.

Supreme Court of Nebraska.

April 5, 1905.

Syllabus by the Court.

1. When an insolvent debtor, within four months of the adjudication of his bankruptcy, transfers to one of his creditors with notice of such insolvency sufficient property to satisfy the debt in full, a preference will be presumed, because such is the natural and logical result of the transaction.

2. Under subdivision “e,” § 67, Bankr. Act July 1, 1898, c. 541, 30 Stat. 564 [[[U. S. Comp. St. 1901, p. 3449], all conveyances, transfers or assignments of property of a bankrupt made within four months of the filing of the petition for an adjudication in bankruptcy for a past consideration and with the intent and purpose on the part of the bankrupt to hinder, delay, and defraud any of his creditors, is void as against the creditors.

3. An amendment is permissible which does not change the cause of action, but merely sets forth a new assignment or breach springing from the original cause of action.

4. In an appeal in equity in this court an amended petition may be filed in conformity with the facts proven in the record.

Commissioners' Opinion. Appeal from District Court, Lancaster County; Holmes, Judge.

Action by Howard B. Raley, trustee of Walter P. Hanley, bankrupt, against Raymond Bros. Clarke Company and Harry A. Tebbitts. Judgment for defendants, and plaintiff appeals. Reversed.

Robert Ryan and Geo. H. Hastings, for appellant.

H. H. Wilson and A. W. Field, for appellees.

OLDHAM, C.

This was a creditors' action instituted in the district court of Lancaster county, Neb., by Howard B. Raley, trustee of Walter P. Hanley, a bankrupt, against Raymond Bros. Clarke Company, a corporation, for the purpose of setting aside the transfer of the notes and book accounts of the estate of Walter P. Hanley, and for an accounting of the amount collected by the defendant corporation from such notes and accounts. The facts underlying the controversy, briefly summarized, are that in July, 1900, Walter P. Hanley was engaged in the mercantile business in Dorchester, Neb. He exchanged his stock of merchandise for some money and 160 acres of land in Butler county, Neb., and on July 18, 1900, he transferred to Harry A. Tebbitts, the collecting agent of the defendant, $580 in cash and all his accounts and promissory notes, amounting in gross to about $5,385.39, in the alleged payment and satisfaction of an account owed to defendant for merchandise of about $1,900. On August 21, 1900, Hanley was adjudged a bankrupt, and Howard B. Raley was duly appointed and qualified as trustee of his estate. The lands received by Hanley in exchange for his goods were seized by the trustee, and sold, and from their proceeds a 17 per cent. dividend was paid on the debts of the bankrupt. The amount of indebtedness proved against his estate aggregates the sum of $10,097.95. Immediately after the transfer of the notes and book accounts to defendant's agent, Hanley absconded, leaving no property except the 160 acres of land in Butler county for the satisfaction of any of the claims against his estate. The petition filed in the court below alleged, in substance, that Hanley, until about the middle of July, 1900, was doing a retail merchandise business in Dorchester; that about the date last mentioned, and in less than four months of the filing of the petition on which he was adjudged a bankrupt, Hanley had disposed of all his real and personal property for the purpose of defrauding his creditors, and had absconded from the state of Nebraska; that he was duly adjudged a bankrupt, and that plaintiff was appointed and qualified as trustee of Hanley's estate; that Hanley is wholly insolvent (setting out the proximate amount of his indebtedness), and a dividend of only 17 per cent. had been declared; and that all assets of the estate, except the claim sued on herein, had been collected. The petition also alleged the order by the referee in bankruptcy for the prosecution of this suit. The petition further alleges as follows: “That on or about July 14, 1900, and within four months before the filing of the petition as aforesaid for an adjudication of bankruptcy against Walter P. Hanley, the said Walter P. Hanley, by an agreement between himself and the said Harry A. Tebbitts, for the purpose of defrauding the creditors of said Walter P. Hanley, transferred all his promissory notes, books, books of account and indebtedness due him for goods and merchandise to said Harry A. Tebbitts, but the exact nature of said notes, accounts, and evidence of indebtedness, and by whom owing, your petitioner is unable to describe more fully than as above set forth. Your petitioner alleges that said transfer was made for the benefit of the said Raymond Bros. Clarke Company, and to enable said corporation to obtain the proceeds of the collection thereof to apply on the aforesaid indebtedness owing by said Walter P. Hanley to said Raymond Bros. Clarke Company, but whether said transfer and assignment purported to be to Harry A. Tebbitts or to Raymond Bros. Clarke Company your petitioner is unable to state, but your petitioner alleges that such books, promissory notes, accounts, books of account and other indebtedness owing to Walter P. Hanley were, on or about July 14, 1900, by him transferred for the use and benefit of said Raymond Bros. Clarke Company, and to be collected and credited on the indebtedness owing by said Walter P. Hanley to the said Raymond Bros. Clarke Company when so collected, and since about July 14, 1900, a large amount in the aggregate has been collected on said notes, book accounts, accounts, and evidence of indebtedness, which prior to about July 14, 1900, had been owing to said Walter P. Hanley; the amount of which collections is to your petitioner unknown. Your petitioner respectfully represents that, though said collections for the benefit of Raymond Bros. Clarke Company have been made, they have not been reported and turned over to apply on the indebtedness proved or to be proved against the estate of said bankrupt, but have been kept concealed in fraud of the rights of creditors of Walter P. Hanley, and have been applied to the sole use and benefit of Raymond Bros. Clarke Company. Your petitioner further represents that the concealment of the nature of the transaction between Walter P. Hanley and Harry A. Tebbitts and the concealment of the proceedings and acts of said Harry A. Tebbitts and Raymond Bros. Clarke Company and their agents and employés render it impossible for your petitioner to state with sufficient definiteness the facts to entitle your petitioner to maintain an action at law, for which reasons your petitioner invokes the equitable powers of this court that your petitioner may have a discovery of the facts on which your petitioner is entitled to relief, and that thereupon this honorable court may grant fully such relief as the proofs shall show your petitioner entitled to.” The prayer is that the transfer be declared null and void, and that the defendants be decreed trustees for their own wrong for Walter P. Hanley, bankrupt, and for an accounting.

The answer of defendants, after admitting its incorporation, that it was engaged in the wholesale mercantile business, and that Hanley had been engaged in the retail merchandising business, as charged in plaintiff's petition, denied that it received the assignment of the accounts alleged against with any fraudulent intent, and, further answering, said: “And this defendant, further answering, alleges that on the 14th day of July, 1900, the said Walter P. Hanley was indebted to this defendant in the sum of $1,318.51 for goods and merchandise theretofore sold and delivered to said Hanley by this defendant, and that on said date the said Walter P. Hanley, in full payment of said indebtedness, sold and delivered to this defendant the notes and accounts mentioned in plaintiff's petition, which notes and accounts did not exceed in value the amount then due and owing to this defendant from the said Hanley. And this defendant alleges that in all things connected with the purchase of said notes and accounts the defendant Harry A. Tebbitts acted as the agent of this defendant. Further answering, this defendant says that all this time said notes and accounts were so sold and delivered by said Hanley to this defendant neither this defendant nor its agent, Harry A. Tebbitts, knew or had reason to believe that the said Walter P. Hanley was insolvent, nor did they or either of them believe, or have...