Stedman v. Bank of Monroe

• Decision Date: 28 July 1902
• Docket Number: 1,708.
• Parties: STEDMAN v. BANK OF MONROE.
• Court: U.S. Court of Appeals — Eighth Circuit

117 F. 237

STEDMAN v. BANK OF MONROE.

No. 1,708.

United States Court of Appeals, Eighth Circuit.

July 28, 1902

George Wambach, for appellant.

Carroll Wright, James P. Hewitt, and Craig T. Wright, for appellee.

Bankruptcy proceedings against William T. Sinnard, a retail clothing merchant of Monroe, Jasper county, Iowa, were instituted by the filing of creditors' petition June 4, 1900. On June 29, 1900, after adjudication, the matter was referred to S S. Ethridge, referee in bankruptcy, at Des Moines. On July 21, 1900, the Bank of Monroe filed with said referee its proof of secured debt, under oath, stating: 'That W. T Sinnard, the person against whom a petition for adjudication of bankruptcy has been filed, was at and before the filing of said petition, and still is, justly and truly indebted to said Bank of Monroe in the sum of $3,500, with interest at 6 per cent. per annum from April 2, 1900. That the consideration of said debt is as follows: Money loaned by said bank to said Sinnard at the following dates: $500 about January 1, 1900, and $3,000 April 2, 1900. That no part of said debt has been paid. That there are no set-offs or counterclaims to the same, and that the only securities held by the deponent for said debts are the following: A chattel mortgage upon his stock of merchandise then in Monroe, Jasper county, Iowa, dated April 2, 1900, and recorded April 3 1900, in Book 228, page 134, record of said county, and the said mortgage is hereto attached. To evidence the above debt said bank holds two notes, the first a renewal of the loan made about January 1, for $500; the second for $3,000 given for money loaned to said Sinnard at the time the said note and mortgage were given. Said notes are hereto attached. Said Bank of Monroe hereby waives and surrenders its security upon said $500, being the amount of the past indebtedness at the time the mortgage was executed, but insists upon and claims a first lien upon the stock of merchandise and its proceeds for the security and payment of said not of $3,000, dated April 2, 1900. ' Other creditors of said bankrupt, on July 23, 1900, filed with said referee objections to the allowance of this claim of the Bank of Monroe as a secured claim, alleging that at the time of the giving of said chattel mortgage Sinnard was indebted to said bank on another note for the sum of $1,500, for which the bank held as collateral a note belonging to said Sinnard, which was secured by a real estate mortgage, which note and mortgage were converted by said bank into money, and the 1,500 note thus extinguished; that at said times, and prior thereto, said sinnard was insolvent; and that the bank had reasonable cause to believe that said chattel mortgage was intended to give said bank a preference over any other creditor. Said bank thereafter, on September 28, 1900, filed anew the proof of its secured claim, withdrawing its waiver of security as to the $500 note. After hearing the testimony adduced, the referee, March 23, 1901, made his findings and decision as follows: 'I find that on the 2d day of April 1900, William T. Sinnard, the bankrupt herein, was a retail clothing merchant doing business at Monroe, Jasper county, Iowa. That on that date he gave to the Bank of Monroe a chattel mortgage on his entire stock of merchandise for the sum of $3,500, to secure the payment of $500 of pre-existing unsecured...