165 N.W. 2 | S.D. | 1917
Lead Opinion
Plaintiff seeks to foreclose a chattel mortgage on a stock of merchandise, defendant Winkler 'being the mortgagor and defendant Warren the trustee in bankruptcy of the estate of the defendant Winkler. The mortgage in question was given and filed September 8, 1913, and contained the following clause:
“It is further agreed- that, so long as the terms and conditions of this mortgage are kept and performed, the undersigned may retain possession of said property, and sell and -dispose of the same in -the ordinary course of trade, for cash; but of all such sales tire undersigned shall keep a detailed and- accurate account, and at the end of each month shall render to (plaintiff) an accurate account of such sales and shall, at the time of so> rendering such account, pay over to said (plaintiff) * * * the entire proceeds of all' such sales, to be credited and applied, as fast as pai-d, to the payment of the debt hereby secured, until the same shall have been fully paid and satisfied.”
It appears that on June 24, 1913, Winkler being indebted to plaintiff bank in the sum of $600, the bank loaned to him $400 more, took -his note for $1,000, and took a chattel mortgage on the whole of his stock of goods to secure such note; the stock of -goods being represented by Winkler to be worth $1,500. The mortgage contained the same provision- as in the mortgage of September 8, 1913. It was to secure a $1,000 note given in •renewal of the note of June 24, that the mortgage sought to- be-foreclosed was given. Winkler made no- appearance herein. The trustee in bankruptcy defended, alleging that the said mortgage was void as to him for the reason that it was given to hinder, delay, and defraud the creditors of the said Winkler; that it was given within four months prior to the time when the -petition in -bankruptcy was filed; and that the effect of sustaining such chattel mortgage would be to- create a preference in favor of plaintiff. It stands conceded that both of the mortgages above referred to were given within such four-month period. The trial court found in favor of the plaintiff on the
The judgment and order appealed from are reversed.,
Concurrence Opinion
(concurring specially). I concur in the conclusion that the giving of the mortgage within four months of the filing of -the petition in bankruptcy constituted a preference of plaintiff bank as a creditor which would enable plaintiff to obtain a greater percentage of its debt than other creditors of the same class, and that plaintiff had reasonable cause to believe that it was intended to give such preference. The mortgage is- therefore voidable under the federal statute, at the suit of the trustee in bankruptcy. But I am' not able to concur in the view, announced in' the majority opinion, that the mortgage was given with an actual intent to hinder or delay the other creditors of the mortgagor. It may be, as suggested, that the manner in which the mortgaged property was handled after the giving of the mortgage could properly be considered in determining whether the mortgage was originally intended to hinder or delay other creditors. But this was a question of fact to be 'determined under all the evidence. Under the laws of this state, the giving of preferential security to any creditor is not unlawful, and is not in itself evidence of an intent to hinder, delay, or defraud other creditors. There is no evidence of a secret trust in this case. The mere
The intent to hinder and delay creditors is not conclusively shown when it is made to appear that the mortgagee was negligent in compelling- payment Qf his debt, even to the extent of permitting the mortgagor to deal with the mortgaged property as his own. The indebtedness secured is shown to have been an honest one, contracted by one not insolvent at the time, to enable him to carry on his usual business, and such facts strongly tend to disprove the existence of any wrongful intent. The law does not declare that a mortgagee is bound to foreclose his mortgage or otherwise assert his contract rights under the mortgage, under legal penalty of having a court or jury declare he intended to hinder or delay other creditors when he took the security. In this case there is no question about the bona fides of the indebtedness; it is undisputed that the money was> loaned to Winkler in good faith, to assist him in carrying on his. business; there was no attempt to show that he was then insolvent, nor had he done any aot from which insolvency might reasonably be inferred.
“For it is well-settled law -that a conveyance made in good faith, whether for an antecedent or present consideration, is not forbidden by such statutes (subdivision 1, § 3, of the Bankruptcy Act), notwithstanding the effect may be that it hinders or delays creditors by removing from their reach assets of the debtor.”
The trial court in that case had held that,, because a mortgage covered the whole property of the debtor, it necessarily followed that a case was made out and that no- proof of good faith could prevail against that assumption. That holding was reversed. I think .the decisions- cited in the majority opinion are in error in holding, in substance, that the legal effect of such a mortgage is to: hinder and delay creditors. In the Platts case, however, it was shown that the mortgage was given on December 8, 1899, and the mortgagee, with knowledge that the mortgagor was disposing of the stock, withheld' the mortgage from- record until August 20, 1900. This-fact, together with the manner in which the mortgagor dealt with the stock and proceeds of the sales, was held sufficient to prove an original intent to 'hinder and 'delay creditors. I do not presume to criticize the decision o-n the facts, but I challenge the correctness of the decision when it says:
“It is not probable that Platts had any intention of defrauding his creditors by any dishonest act, but, when we are called upon to determine the intent of a debtor in this kind of a case, the debtor must be held to1 have intended the natural and legal result of his act; and, if his act ■in giving the mortgage in question did in fact oferate to hinder or delay Kis creditors, then he*461 must be held to have intended this result.” (The italics are my own.)
This statement of the rule of law is in direct conflict with the Ryerson case, supra.