125 F. 974 | N.D. Ala. | 1903
The specific act of bankruptcy alleged in the petition to have been committed by the defendant, the Anniston Rolling Mill Company, by which it is claimed it gave a preference to the Alabama National Bank of Birmingham, Ala., over its other creditors, is that the said defendant did, within four months next preceding the filing of the petition, transfer and assign to said bank a large amount of accounts due to it by a number of its debtors. A further act of bankruptcy alleged is that within said four months the defendant made a general assignment for the benefit of its creditors.
It appeared from the evidence in the case that on the 6th day of December, 1902, the Alabama National Bank of Birmingham, Ala., loaned to the defendant $8,000, for which the latter executed and delivered to the former its promissory note, payable on demand, and at the same time, as security for the payment of said note, executed and delivered to said bank a pledge of a large quantity of material,'consisting of wrought, cast, and steel scrap pig iron, iron ore, etc., being all of the material then on hand at defendant’s mill; that prior to this transaction, to wit, on Novémber 6, 1902, the defendant made a lease to said bank of a certain part of the land on which defendant’s mill plant was located, for the deposit of any material the defendant might from time to time pledge to said bank, and that the material covered by the aforesaid pledge was so deposited; that, at or about the time of the execution'of said note and pledge, it was understood and agreed between the defendant and said Alabama National Bank, by their respective presidents, that the defendant should have the privilege to sell or use any or all of said material, as might be needed by it in the operation of its mill, and
The first question presented is whether the transfer of the accounts by defendant to the Alabama National Bank on the 28th day of February, 1903, was a preference given to said bank over the other creditors of the defendant, within the purview of the bankrupt act, although said transfers were made in compliance with the agreement to that effect theretofore made between the parties.
The said material was used and sold with the consent of the bank, but there was no agreement that it was to be used or sold for the benefit of the bank, and there was no covenant to account to the bank for the proceeds thereof. If there had been, there is no identifying the specific accounts representing such proceeds, and no such description of them' that they can be identified. The accounts were not substituted or exchanged for the material, as security for the debt to the bank, contemporaneously with the use and sale of the material. They were never actually pledged to the bank until the transfer on the 28th day of February, 1903. Before that time there was a mere agreement to pledge. The accounts were never delivered to the bank, or set apart and treated as its property, until that day. The pledge was not completed until the date of the transfer. Besides, under the agreement, the defendant had the option to pay to the bank the cash, or to transfer and deliver to it the equivalent in good accounts. The defendant did not exercise this option until the 28th day of February, 1903. Until the transfer of the accounts on that day, they were the property of the defendant.
The contention of the defendant is that, by the transfer of the accounts, they took the place of the material, as an exchange of securi
My opinion is that the general assignment for the benefit of creditors alleged in the petition as an act of bankruptcy has not been maintained. A direct transfer to creditors, without the intervention of a trustee duly appointed, is not an assignment for the benefit of creditors. May v. Tenney, 148 U. S. 66, 13 Sup. Ct. 491, 37 L. Ed. 368; Davis v. Schwartz, 155 U. S. 631, 15 Sup. Ct. 237, 39 L. Ed. 289. An assignment directly to creditors, and not upon trust, is not a voluntary assignment for the benefit of creditors. Burrill on Assignments, § 122.
A decree declaring and adjudging the defendant a bankrupt is herewith made and filed.