211 F. 638 | 7th Cir. | 1914
(after ’ stating the facts as above).
Thesei leading -facts are expressly stated in the stipulation: The indebtedness secured by the mortgage was $5,300, of which $5,000 was pre-existing, in two loans upon notes of the mortgagor within a few months theretofore, incorporated in the new note, extending^ payment 60 days, together with a present loan of: $300, each loan obtained “for the purpose of using the money in the business” of the mortgagor and so used. For “the purpose of procuring credit from time to time,” and prior fo the first-mentioned loan, a written statement of its “financial condition” was made by the mortgagor and held by the bank, showing $25,685 of assets and $1,600 of liabilities, with the mortgaged property specifically described at a valuation in excess of $16,000, aside from
The above-mentioned finding of the referee upon the issue is neither expressed in terms as a finding of fact from the evidence submitted, nor do we infer that it can have been so intended. Treated as an issue of ultimate fact, no doubt is entertainable that these facts (as above recited) are established: That the mortgage was both given and taken “in good faith,” neither in contemplation of insolvency or bankruptcy, nor with intent to give or obtain an unlawful preference; and that it was in truth received by the bank without “reasonable cause to believe that the enforcement of such” mortgage “would effect a preference” in violation of the Bankruptcy Act. This finding, therefore, can have no other force than a conclusion of law, resting on the terms of that act, that such “reasonable cause to believe” must be imputed to the bank, notwithstanding its entire good faith in the transaction so submitted. If the ruling thus adopted is untenable, we are advised of no ground on which the denial of the appellant’s claim can be upheld.
While it appears from other findings of the referee (in accord with the evidence), (a) that the $5,000 amount in controversy secured by
“If at the time of the transfer * * * the bankrupt be insolvent and the * * * .transfer then operate as a preference, and the person receiving it,” or his agent therein, “shall then have reasonable cause to believe that enforcement of such * * * transfer would effect a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person.”
It is unquestionable that this provision requires proof, both of insolvency of the bankrupt at the time of the mortgage, and of “reasona*
Several objections to the mortgage are urged in the argument—as (a) ultra vires, (b) unauthorized by the directors, (c) insufficiently executed, and (d) embracing property “consumable” in its nature—none of which appears to have been recognized below as lending support to the decree. We believe each of the objections to be untenable and they are overruled without further mention.
The order of the District Court is reversed, accordingly, -with direction to proceed in reference to the appellant’s claim in conformity with the foregoing opinion.