132 Ga. 100 | Ga. | 1909
The transaction assumed the nature of a loan and the pledge of collaterals to secure the same; and although the amount of the collaterals exceeded-the amount of the debt they were intended to secure, no such trust as is prohibited by the statute was thereby created. See: Carey v. Giles, 10 Ga. 10; Banks v. Clapp, 12 Ga. 514; Rowland v. Coleman, 45 Ga. 204; Lay v. Seago, 47 Ga. 82; Coulter v. Lumpkin, 88 Ga. 277 (14 S. E. 614).
This meaning is given to a preference in 10 Cyc. 295: “An unlawful preference can only arise when the transfer is made for an antecedent debt.” In the case of Armstrong v. Chemical National Bank (U. S. C. C.), 6 L. R. A. 229 (41 Fed. 234), in which the validity of the transfer of certain collaterals by the Fidelity Bank to the Chemical National Bank was attacked as being violative of section 5242 of the TI. S. Eevised Statutes, which prohibits all transfers by national banking associations after the commission of an act of insolvency, or in contemplation of insolvency, with a view to the preference of one creditor to another, to which statute our own embodied in section 1979 of the Code is analogous, Judge
In Tiffany v. Boatman Institutions, 18 Wall. 388 (21 L. ed. 868), the court says: “Neither the terms nor the policy of the bankrupt act are violated, if these collaterals be taken at the time the debt is incurred. His estate is not impaired or diminished in consequence, as he gets a present equivalent for the securities he pledges for the repayment of the money borrowed. Nor in doing this does he prefer one creditor over another, which it is one of the great objects of the bankrupt law to prevent. The preference at which the law is directed can only arise in the case of an antecedent debt.” It would seem that the very import of the word “ preference ” contemplates the relation of existing creditors, having equal or similar rights and equities, at the time of the conveyance or transfer, whereby the rights of one are advanced over those of another in the competition for assets.
The Atlanta Clearing-House Association delivered to' the Neal Bank clearing-house certificates at the time of the transfer of the collaterals, and whatever consideration passed was a present consideration. This being true, we do not think a preference was thereby created. Whether the clearing-house certificates which form the consideration of the notes or certificates of indebtedness executed by the Neal Bank to the Atlanta Clearing-House Association constitute a strictly legal consideration or not, the fact that they had value in the locality where they were in circulation and also the further fact that the Neal Bank got full Value for the clearing-house certificates it received must be recognized. In the case of Orchard v. Hughes, Orchard had given
Numerous cases can be found where bonds issued by corporations have been held to be void because the corporation in issuing them acted ultra vires, or in contravention of - law, but in which cases the courts have held that the purchasers of such bonds could sue and recover, from the corporation that issued them, the consideration it received either in money or property. See Louisiana v. Wood, 102 U. S. 294, 298, 299 (26 L. ed. 153); Parkersburg v. Brown, 106 U. S. 487-503 (1 Sup. Ct. 442, 27 L. ed. 328). In the case of Planters Bank of Tennessee v. Union Bank of Louisiana, the Planters Bank had sent the Union Bank Confederate bonds which it sold and credited to the account of the Planters Bank. The Planters Bank brought suit against the Union Bank-on the account, and among other defenses made by the Union Bank was that Confederate bonds were an illegal commodity and the transaction was illegal. The court held: “Nor should the court have charged that, in the circumstances of this ease, no action would lie for the proceeds of the sales of Confed
Under the evidence in the record, the court was authorized to hold that in the transaction between the Neal Bank and the Atlanta Clearing-House Association there is nothing to indicate any fraudulent intent upon the part of either party. The bank at the time needed currency to carry on its business, and the Clearing-House was endeavoring to supply this need by advancing its certificates which proved to be a valuable substitute. But it is perfectly clear that the Atlanta Clearing-House Association was not selling or dealing in clearing-house certificates for the purpose of speculation or with a view of making money, but simply to aid its members in the time of financial distress.
We can not agree with the plaintiffs in error in their contention that the fact that the Atlanta Clearing-House Association and the trustees knew the Neal Bank had guaranteed the whole of the clearing-house certificates issued and that the amount of its guaranty was in excess of all its resources was in itself sufficient to charge them with actual knowledge of the Neal Bank’s insolvency. Such liability would at most be contingent; and unless such contingent liability of the Neal Bank as guarantor of the clearing-house certificates, amounting to over one and a half million of dollars, was likely to become absolute, this guaranty by the Neal Bank could not be considered a liability in determining the question of solvency or insolvency at the time of the transfer of the collaterals. Ayers v. Howell, 111 Ga. 864 (36 S. E. 946). No circumstances appear in the record sufficient to suggest a reason for the apprehension of such a contingency upon
The law does require, however, that a person having at his command means of information which if pursued would lead to the discovery of the truth should exercise such diligence and make such use of such means of information, according to the circumstances, in finding out the truth, as would be expected to be exercised and used by persons of ordinary prudence under like circumstances.
The Neal Bank was an old institution, having been in the bank
The question then arises whether its creditors would have any more right to assail 'and set aside these contracts upon such grounds of illegality than the bank. “As a general rule, a contract which is illegal should not be enforced, nor should relief be granted therefrom in the interest of the creditors of one of the parties thereto any more than in the interest of such party. But if the contract partakes of the nature of an agreement in fraud of the rights of the creditors of one of the parties thereto, relief therefrom may be granted in the interest of the creditors of such
The acts of debtors with respect to assignments, transfers, convejrances, or other contracts made fraudulently against the rights of creditors, are clearly laid down and defined under the statutes of this State. When an assignment, transfer, or conveyance is made by a debtor of any of . his property in violation of the provisions of these statutes, the law makes the act void, and no injury need be shown by one standing in the relation of a creditor to the party. The principle may be safely stated, that, unless the' act complained of be made void with respect to the rights of creditors under the law, before creditors can successfully attack and set aside the transaction they must show that their rights were injuriously affected thereby. We fail to discover wherein the transfers of collaterals made by the Neal Bank to the Atlanta Clearing-House Association were fraudulent against creditors, under the statutes, for any of the reasons urged by the plaintiffs in error. But still assuming as correct the contention of plaintiffs in error, that the contracts under which the transfers were made were illegal for the other reasons urged, there is left for determination the question whether the creditors sustained injury by reason of such transactions.
It affirmatively appears from the record that at the time the Neal Bank used and put in circulation the clearing-house certificates which formed the consideration of the notes or certificates given to the Atlanta Clearing-House Association, which notes the collaterals in question were transferred to secure, the clear
- To allow the Neal Bank through its creditors to recover back from the trustees the collaterals of which it has had the full benefit in paying off and discharging more than one hundred and seventy thousand dollars of its debts, without taking into consideration this amount of indebtedness from which it has been relieved, would increase the assets of the Neal Bank in that amount, and place it in a far better condition of solvency that at the beginning of the transactions between it and the Atlanta ClearingHouse Association. The effect of allowing this done would be to
The question to be determined' is, not whether the creditors would be benefited by having the collaterals returned to the bank through a receiver, but whether they were injured by the transfers and such use of its collaterals made by the bank. Our conclusion is that no injury has been shown to have resulted therefrom, either to the bank or its creditors, and for, that reason the creditors have no more-right to attack the transactions upon such alleged grounds of illegality in the contract than the bank would; and that therefore, before they would be entitled under their petition to have a rescission of the contracts and to recover the choses in action and other collaterals pledged by the Neal Bank to the Atlanta Clearing-House Association, they must do equity by returning the certificates, or pay to the trustees the amounts yet due on the notes given by the Neal Bank to the Atlanta ClearingHouse Association.
We have passed upon all the questions made in the record that ■we deem necessary to decide for the purposes of this case. Upon a consideration of the whole case, we conclude that the court be
Judgment affirmed.