Telford v. Henrickson
| Decision Date | 07 February 1913 |
| Docket Number | Nos. 17,790-(164).,s. 17,790-(164). |
| Parties | W. S. TELFORD v. MARIUS HENRICKSON.<SMALL><SUP>1</SUP></SMALL> |
| Court | Minnesota Supreme Court |
Action in the district court for St. Louis county by the trustee of the estate of Henry C. Henrickson, bankrupt, to recover $9,000. The answer denied all the allegations of the complaint, except those in regard to the appointment of plaintiff's trustee and the business occupation of the bankrupt. The case was tried before Cant, J., who made findings and ordered judgment in favor of plaintiff for $5,765.25.
Note. — As to when local law deemed to require the registering or recording of a transfer, within the meaning of § 60a of the bankruptcy act of 1898 as amended by the act of 1903, see notes in 5 L.R.A.(N.S.) 148 and 18 L.R.A.(N.S.) 1233; and the relation of the bankrupt law to assignments and insolvency proceedings under state laws is the subject of a note in 45 L.R.A. 177.
From an order denying defendant's motion for a new trial, he appealed. Reversed.
R. R. Briggs, for appellant.
Thomas J. Davis, W. S. Telford and J. A. P. Neal, for respondent.
The complaint after alleging the filing on February 4, 1910, of a voluntary petition in bankruptcy by Henry C. Henrickson, a building contractor to whom we will hereafter refer as the bankrupt, the granting thereof on February 28, 1910, and the due appointment and qualification of the plaintiff as trustee, charged that the bankrupt was insolvent at the time of the filing of his petition, and had been for a long time prior thereto, and for a first cause of action alleged that on November 17, 1909, within less than 90 days prior to the filing of the petition, the bankrupt unlawfully paid and caused to be transferred out of his assets to the defendant, who unlawfully received the same, over $4,000, wholly without consideration. For a second cause of action the plaintiff set out that on the same day and within the same period the bankrupt paid and caused to be transferred out of the assets of his estate to the defendant, who was then a creditor whose claim was unsecured, over $4,000, with intent thereby to give the defendant a preference over the bankrupt's other creditors, and that the defendant thus obtained a greater percentage of his debt than any other creditor of the same class. The complaint then, after reciting formal matters, further alleged that the defendant, at the time he received such payment, knew that the purpose was to give him preference, and also that the bankrupt was then, and for a long time had been, insolvent. The answer denied all of the allegations of the complaint save those relating to the defendant's business and bankruptcy.
The trial was without a jury, and findings were made to the following effect:
The bankrupt entered into a contract with a school district in St. Louis county, on October 8, 1908, for the erection of a schoolhouse for the sum of $58,300, and proceeded to construct the building. On August 24, 1909, the bankrupt, being indebted to his brother, Marius Henrickson, this defendant, in the sum of $4,636.97 on open account, and also primarily liable on a promissory note due September 24, 1909, and the defendant being secondarily liable thereon, the bankrupt executed to the defendant an assignment in writing, for the stated consideration of $1, purporting to transfer to him all moneys due or to become due under the contract with the school district. The true consideration of the assignment, however, was the bankrupt's indebtedness referred to, together with an agreement on the defendant's part to assume and pay certain claims owed by the bankrupt to his creditors, aggregating $3,225.75, which latter convention was executed before the bringing of this action. On November 17, 1909, the school district paid to the defendant, pursuant to the assignment, the sum of $8,991.
The court further found, in substantially the following language: That at the time of the execution of the assignment the defendant had reason to believe, and in fact knew, that the bankrupt was insolvent, and knew that thereby he was obtaining a preference over the other creditors of the bankrupt of the same class; that the assignment was not given in good faith, and was never filed with the clerk of the municipality in which the assignor resided; and that the total consideration paid by the defendant in reliance upon the instrument was the sum of $3,225.75.
The court's conclusions of law were to the effect that the assignment was invalid, and that the payment to the defendant by the school district constituted an unlawful preference. The court allowed the defendant to retain the sums referred to as paid out by him, namely, $3,225.75, and ordered judgment against him for $5,765.25, with interest from November 17, 1909; and, having denied the defendant's motion for a new trial, he appealed from the order.
1. Upon these findings, the first attack upon the transfer here involved is that the assignment of date August 24, 1909, was fraudulent as against the assignor's creditors, without reference to any specific provision of the bankruptcy act. This ground of attack, however, is not available in this case; for, while under section 70e of the bankruptcy act the trustee may avoid any transfer which the bankrupt's creditors might have avoided, even though the same was made more than four months prior to the filing of the petition in bankruptcy (Underleak v. Scott, 117 Minn. 136, 140, 134 N. W. 731), no question of actual fraud is raised by the record before us.
The respondent's first cause of action, which is predicated upon a lack of consideration, is manifestly not sustained by the findings, and his second cause of action must be held to be based entirely upon the theory that the assignment constituted a preferential transfer under section 60, subds. "a," "b," of the bankruptcy act. We will therefore pass to this latter contention, for upon its...
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