11 F.2d 540 | W.D. Mich. | 1926
On September 29, 1924, bankrupts gave to Jacob Ryskamp, one of the members of the firm of Ryskamp Bros., a note secured by chattel mortgage in the sum of $1,098. This mortgage covered all of the stock, fixtures, supplies, furnishings, equipment, leases, good will, accounts receivable, and all other property and effects then owned or thereafter acquired by mortgagors in connection with their restaurant business, and was given.for the purpose of securing the payment of an indebtedness due to said firm of Ryskamp Bros, from the copartnership.
On November 25, 1924, a voluntary petition in bankruptcy was filed, the schedules disclosing indebtedness of .$3,173.61 and as
The matter is before the court on petition to review findings of the referee. It is the law that upon review of the referee’s order only manifest error will justify reversal on -the facts, for the reason that the referee is in better position to judge of the testimony and to give it due weight. In the case of Ohio Valley Bank Co. v. Mack, 163 F. 155, 158, 89 C. C. A. 605, 608, 24 L. R. A. (N. S.) 184, the rule with reference to the weight to be attached to such findings is stated as follows:
“No arbitrary rule can be laid down for determining the weight which should be attached to a finding of fact by a bankrupt referee. His position and duties are analogous, however, to those of a special master directed to take evidence and report his conclusions, and the rule applicable to a review of a referee’s finding of fact must be substantially that applicable to a master’s report. * * * Much in both cases must depend upon the character of the finding. If it be a deduction from established fact, the finding would not carry any great weight, for the judge, having the same facts, may as well draw inferences or deduce a conclusion as the referee. But, if the finding is based upon conflicting evidence involving questions of credibility and the referee has heard the witnesses, much greater weight naturally attaches to his conclusion, and the weight of authority is that the district judge, while scrutinizing with care his conclusions upon a review, should not disturb his finding unless there is most cogent evidence of a mistake and miscarriage of justice.”
An examination of the testimony leads to the conclusion that there is no sufficient reason to disturb the referee’s findings of fact in this matter. The record shows clearly that during the two years bankrupts were in business there was no time when they were not indebted to claimant’s firm. At the time the chattel mortgage was given, claimant was so suspicious of the condition of bankrupts’ affairs that he stated that he could not extend any more credit, even after the mortgage was given, and it appears that the sole reason that more eredit was given was in order to keep the business in operation until it could be sold. Before taking the mortgage, claimant was fully advised of the existence of another past-due obligation in excess of $1,100, and was informed that this claim was about to be put into the hands of attorneys for enforcement.
It has been repeatedly pointed out by the authorities that it is not necessary that the preferred creditor shall have had actual knowledge, either of insolvency or that the effect of the transfer would be to effect a preference. It is sufficient to prove that the circumstances, taken together, were such as would naturally have led an ordinary business man to the true belief as to debtors’ actual condition and as to the effect of the transfer. The test is: What inference would the ordinarily intelligent business man draw from the facts ? There can be no question in this case that only by closing his eyes to known and obvious facts could claimant conclude otherwise than that bankrupts’ condition at the date of the mortgage was that of insolvency, and that the giving of the mortgage would result in a preference in event of failure to promptly make a sale of the assets at a price much in excess of their true value.
Claimant, insists, however, that, even if the mortgage be held preferential and therefore voidable by the trustee, nevertheless the mortgage is good as a secured claim to the amount of the statutory trade exemptions of the two partners of $250 each, as provided by section 12858 (8) of the C. L. of Michigan of 1915. If it were not for the Uniform Partnership Act (Act 72 of Public Acts of Mich. 1917; section 7966 [1] et seq., Comp. Laws of Mich. 1922 Supp.), it is probable that, by reason of the stipulation entered into between claimant and the trustee, which provides that the proceeds of the sale of bankrupts’ property shall continue and be sub-, jeet in all respects to the mortgage as fully and to all intents and purposes as was the property described in said mortgage, claimant would be entitled to a proportionate share of the proceeds arising from the sal© of exempt property. See In re National Grocer Co., 181 F. 33, 104 C. C. A. 47, 30 L. R. A. (N. S.) 982; In re Andrews & Simonds (D. C.) 193 F. 776; In re Hutchinson (D. C.) 197 F. 1021.
A careful consideration of the Uniform Partnership Act, however, leads to the eon
The use of the word “attached” in the statute, instead of more general language, may create some doubt as to whether this intent has been expressed in the statute. This matter has been thoroughly and ably discussed in the ease of In re Safady Bros. (D. C.) 228 F. 538, and the conclusion was there reached that the rule in Wisconsin had been changed by the statute to accord with the majority rule, and that the word “attached” should be given its broad meaning, to indicate any seizure of property for the purpose of bringing it within the custody of the court. It appears to this court that any other conclusion would defeat the plain intent and purpose of the Legislature. See, also, In re Solomon v. Johnson (D. C.) 254 F. 503.
The order of the referee will be affirmed.
