95 Wash. 209 | Wash. | 1917
Upon its own petition, on May 23, 1912, the Brachvogel Commission Company, a corporation, of Aberdeen, was adjudged a bankrupt. About three years later, appellant, the trustee in bankruptcy, began this action in the superior court to set aside a certain conveyance as a preferential transfer.
The amended complaint alleged that, on February 21, 1912, the defendant M. A. Brachvogel was indebted to the Brachvogel Commission Company in the sum of $3,300, on account of his subscription to the capital stock of the Brachvogel Commission Company; that, on that date and for some time prior thereto, the Brachvogel Commission Company was insolvent and unable to meet its obligations as they matured in the ordinary course of business or otherwise, and was indebted to a large number of creditors, including the defend
The amended complaint, it will be observed, proceeds upon the theory that the original transfer by way of mortgage
The facts show that the bankrupt company commenced business as a corporation in July, 1910; that it had a continuing business with respondent, the Sperry Flour Company, and on February 21, 1912, it owed a balance of $6,368.40 to the respondent Flour Company, and to other unsecured creditors a total of $8,481.81, making a total unsecured indebtedness at that time of $14,850.21. The bankrupt’s capital stock was $10,000, and the subscribers therefor were M. A. Brachvogel for $3,300, A. H. Brachvogel for $3,300, and one Miller for $3,400. Up to February 21, 1912, Miller had paid in $3,000 and the others nothing. On that date, respondent Sperry Flour Company sent a representative to Aberdeen to negotiate concerning its account with the commission company. The representative met M. A. Brachvogel and had some conversation with him, in which Brachvogel told him that the company could not pay or settle the account, but that he could give a mortgage upon the real estate now involved for $3,300 in payment of that amount of the account; that the real estate was worth $3,500. The representative knew nothing of the value of the real estate, but looked at it and agreed to take the mortgage. The real estate did not belong to Brachvogel nor to the bankrupt company, but belonged to a Mrs. McClellan, mother-in-law of Brachvogel. By agreement between her and Brachvogel, she agreed to execute and deliver the mortgage for his accommodation, and to whom he directed, and he agreed to deed her certain real estate worth $1,800, and give her his note for
Appellant strenuously urges that the transfer of the real estate which is attacked in this suit was a transfer in violation of the bankruptcy law as the preference of a bankrupt debtor. The definition of an insolvent which has been generally approved in this state, to the effect that the corporation was insolvent in the sense that it was wholly unable to meet its obligations as they matured in the ordinary course of business, stated in State ex rel. Strohl v. Superior Court, 20 Wash. 545, 56 Pac. 35, 45 L. R. A. 177; Nixon v. Hendy Machine Works, 51 Wash. 419, 99 Pac. 11, and Bohling v. Hendron, 56 Wash. 687, 106 Pac. 205, is urged in aid of the contention that it was established by the evidence that the company was insolvent on February 21, 1912, at the time the deed was given, and that, therefore, the transfer is a preferential one and must be set aside.
. But this proceeds upon the theory that the property was the property of the bankrupt company, or became so commingled with property which the company was entitled to look to as its assets that it may be so considered. Appellant makes a strong case in attempting to show that the agreements between the Brachvogel Commission Company and the Sperry Flour Company, the agreements between M. A. Brachvogel and Mrs. McClellan, and the agreement between the Brachvogel Commission Company and M. -A. Brachvogel, were all simultaneous, one transaction in effect; and the net result of the same was that the company became the owner of the interest in the real estate which Mrs. McClellan mort
We cannot so construe the transactions. Whatever may have been the condition of the Brachvogel Commission Company on February 21, 1912, whether solvent or insolvent, the transfer by Mrs. McClellan, by mortgage, of certain real estate to apply in part satisfaction of the debt of the Brachvogel Commission Company to the Sperry Flour Company did not operate to transfer her legal title in and to the real estate or her interest in the same, whatever it may have been, either to the Sperry Flour Company or to the Brachvogel Commission Company. It was simply, as was stated, for the accommodation of Brachvogel or the Brachvogel Commission Company. It was another stepping into the breach and attempting to relieve the financial difficulties of a concern in which she had no interest and did not acquire any interest. It is true, M. A. Brachvogel was indebted to the company for his unpaid stock subscription in the sum of $3,300; and it is true that his stock subscription was canceled because of his having secured the release of $3,300 of the company’s unsecured debts; and it is true, also, that he conveyed to his mother-in-law property of the agreed value of $1,800 and gave to her his note for $1,500. But those arrangements did not merge her property into the assets of the Commission Company, nor deplete the assets of the debtor company, and in no way charged the transactions with the character of a transfer by the debtor company of its own property in preference to other creditors. The transfer was the independent transfer of another and could not come under the rules as to preferential transfer.
To constitute a preference, the transfer must consist of the bankrupt’s own property so as to cause a depletion thereof. National Bank of Newport v. National Herkimer County Bank, 225 U. S. 178; New York County Nat. Bank v. Massey, 192 U. S. 138; Western Tie & Timber Co. v. Brown, 196 U. S. 502; Continental & Commercial Trust Savings Bank
The question being determined as a matter of law, there is no need to discuss the further questions raised by appellant. The judgment was correct and must be affirmed. It is so ordered.
Ellis, C. J., Mount, Parker., and Fullerton, JJ., concur.