OPINION
OLDHAM, C.
This
was a creditors' suit instituted in the district court
for Lancaster county, Nebraska, by Howard B. Raley, trustee
of Walter P. Hanley, a bankrupt, against Raymond Brothers
Clarke Co., 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, Nebraska.
He exchanged his stock of merchandise for some money and 160
acres of land in Butler county, Nebraska, 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 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
Brothers 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 Brothers Clarke Company, but whether said transfer
and assignment purported to be to Harry A. Tebbitts or to
Raymond Brothers 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 Brothers Clarke Company, and to be
collected and credited on the indebtedness owing by said
Walter P. Hanley to the said Raymond Brothers Clarke Company
when so collected, and since about July 14, 1900, a large
amount in the aggregate had been collected on said notes,
book accounts, accounts and evidences 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
Brothers 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 Brothers 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 Brothers Clarke Company and their
agents and employees, 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 his 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 reasonable cause
to believe that said notes and accounts were sold to this
defendant by said Hanley with any intent to give this
defendant a preference, nor did said Walter P. Hanley intend
said sale and transfer of said notes and accounts so made to
be a preference. Wherefore this defendant prays that it may
go hence without day and recover its costs herein expended,
but, if for any reason this court shall find that the said
sale of said notes and accounts is invalid, then this
defendant prays that its debt against said Hanley may be
revived against the estate of said Hanley, and that this
defendant may be adjudged entitled to its pro rata
share of the assets of said estate, and that in any...