Seager v. Lamm
| Decision Date | 30 June 1905 |
| Docket Number | Nos. 14,328 - (155).,s. 14,328 - (155). |
| Citation | 95 Minn. 325 |
| Parties | J. W. SEAGER and Others v. LEO S. LAMM.<SMALL><SUP>1</SUP></SMALL> |
| Court | Minnesota Supreme Court |
J. L. Lobben, for appellants.
A. E. Clark, for respondent.
The plaintiffs, as trustees in bankruptcy of the estate of Moses K. Armstrong, brought this action in the district court of the county of Watonwan to set aside as preferences certain real estate mortgages executed by him to the defendant's testate, Stephen Lamm. The here material facts and conclusions of law as found by the trial court are to the effect following, namely: On different dates between August 27, 1896, and December 5, 1902, Moses K. Armstrong duly made and delivered to Stephen Lamm the several mortgages here in question upon land then owned by him, and which he continued to own until he was adjudged a bankrupt. Each of the mortgages was given to secure a loan of money to the full amount thereof made at the time of its execution and delivery. The mortgages were recorded in the office of the register of deeds of the proper county on October 29, 1903, and not before. On November 24, 1903, Moses K. Armstrong, the mortgagor in the several mortgages, was duly adjudged a bankrupt, and on December 21 following the plaintiffs were duly appointed trustees of his estate. The trial court in its original findings found, in effect, that Mr. Armstrong was insolvent to the knowledge of Mr. Lamm at the time the mortgages were recorded, and that he caused them to be recorded with the intention of gaining, and did thereby gain, a preference over the other creditors of the mortgagor; and as a conclusion of law that the mortgages be set aside as preferences. This finding, however, upon the defendant's motion to amend the findings, was stricken out, and as a conclusion of law judgment was directed for the defendant dismissing the action upon the merits. The plaintiffs appealed from an order denying their motion for a new trial.
No claim is or can be made under the evidence that the mortgages were not given in good faith in the ordinary course of business upon a new and full consideration at a time when the mortgagor was solvent, and none of them were given to secure any pre-existing indebtedness. Nor was there any evidence that any creditor of the mortgagor had acquired any lien on the mortgaged premises before the mortgages were recorded. If, then, as claimed by the defendant, the question whether the mortgages constituted preferences within the meaning of the bankruptcy act is to be determined by the facts existing at the time they were made and delivered — that is, by the character of the original transactions — it is clear that none of them constitutes a preference, and that the conclusions of law of the trial court were right whether the mortgagor was or was not insolvent when the mortgages were recorded. This necessarily follows from the definition of a preference as defined in section 60 of the bankruptcy act (Act July 1, 1898, c. 541, 30 St. 562 [U. S. Comp. St. 1901, 3445]), which, so far as here material, is as follows:
(a) A person shall be deemed to have given a preference if, being insolvent, he has, within four months before the filing of the petition, or after the filing of the petition and before the adjudication procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class. (Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of the recording or registering of the transfer, if by law such recording or registering is required.) (b) If a bankrupt shall have given a...
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