Wilson v. City Bank
Decision Date | 01 October 1873 |
Citation | 21 L.Ed. 723,17 Wall. 473,84 U.S. 473 |
Parties | WILSON v. CITY BANK |
Court | U.S. Supreme Court |
ON certificate of division in opinion between the judges of the Circuit Court for the District of Minnesota; the case being thus:
The Bankrupt Act of 18671 provides in the earlier part of it, that if any persons residing within the jurisdiction of the United States, shall apply by petition to the judge of the judicial district in which he has resided, &c., setting forth 'his inability to pay all his debts in full, his willingness to surrender all his estate and effects, for the benefit of his creditors,' and his desire to obtain the benefits of the act, he may, after certain proceedings mentioned, and with certain excepted cases, obtain 'a discharge from all his debts.' A subsequent part of the same act provides for proceeding by creditors to obtain a decree of bankruptcy against their debtor, who has not made any such voluntary application.
After the enactment relating to the first case contemplated that is to say, of the debtor, himself, voluntarily applying to be decreed a bankrupt, the act in its thirty-fifth section thus proceeds:
'And if any person being insolvent or in contemplation of insolvency or bankruptcy, within six months before the filing of the petition by or against him, makes any payment, sale, assignment, transfer, conveyance, or other disposition of any part of his property to any person who then has reasonable cause to believe him to be insolvent, or to be acting in contemplation of insolvency, and that such payment, sale, assignment, transfer, or other conveyance is made with a view to prevent his property from coming to his assignee in bankruptcy, or to prevent the same being distributed under this act, or to defeat the object of, or in any way impair, hinder, impede, or delay the operation and effect of, or to evade any of the provisions of this act, the sale, assignment, transfer or conveyance shall be void, and the assignee may recover the property, or the value thereof as assets of the bankrupt.
'And if such sale, assignment, transfer or conveyance is not made in the usual and ordinary course of business of the debtor, the fact shall be prim a facie evidence of fraud.'
The thirty-ninth section, which relates to 'involuntary bankruptcy,' enacts thus:
These enactments being in force, one Wilson, assignee in bankruptcy of the firm of Vanderhoof Brothers, lately merchants at the city of St. Paul, filed a bill against the City Bank of the said city to determine which of the parties, complainant or defendant, was entitled to the stock of goods of the bankrupts, or the proceeds thereof. The facts of the case, about which there was no dispute, were thus found by the court:- 'On the 26th of February, 1870, judgment by default was rendered by one of the District Courts of the State of Minnesota in favor of the bank against Vanderhoof Brothers for the sum of $2130. On the same day execution was issued, and the sheriff immediately made a levy upon the whole stock of goods of the debtors, which was sold by him for $2385, which is now in the hands of the bankrupt court to await the determination of this suit. The suit by the bank was brought on promissory notes, commercial paper made by the debtors Vanderhoof Brothers to the City Bank of St. Paul, one of which notes was more than fourteen days past due when suit was brought thereon by the bank.
On this case the following questions arose at the trial, in relation to which the judges were opposed in opinion:
'1st. Whether or not an intent on the part of said debtors, Vanderhoof Brothers, to suffer their property to be taken on legal process, to wit, the said execution, with intent to give a preference to said bank, or with intent thereby to defeat or delay the operation of the Bankrupt Act, can be inferred from the foregoing facts?
'2d. Whether, under said facts, the said bank in obtaining said judgment and making the said levy had reasonable cause to believe that a fraud on the Bankrupt Act was intended?
The questions were accordingly certified here for decision.
Mr. E. G. Rogers, for the assignee in bankruptcy:
I. Being insolvent, the Vanderhoofs suffered their entire stock of goods to be seized on execution on the judgment by default, obtained against them by the bank, with intent to give a preference to the bank over their other creditors, and in fraud of the thirty-fifth and thirty-ninth sections of the Bankrupt Act.
(1.) They suffered their property to be seized on execution.2
(2.) This was a transfer of the property, within the meaning of the thirty-fifth and thirty-ninth sections of the act.3
The bank stands in no better position than if the Vanderhoofs had paid the debt in money or in goods.4
(3.) It was a transfer out of the usual and ordinary course of Vanderhoof Brothers' business, and, therefore, prim a facie fraudulent.
(4.) The necessary...
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