175 F. 564 | 8th Cir. | 1910
Henry Heartfield was in the general mercantile business at Moulton, Appanoose county, Iowa, having a general merchandise stock of $5,000 in 1905, which was subsequently increased by-purchases to about $13,000. In March, 1908, he made an assignment under the state law for the benefit of his creditors. In April, 1908, he
The first question was fully discussed and decided by this court in Re George Bothe (C. C. A.) 173 Fed. 597. That case controls and rules this. Any and all creditors of the bankrupt who extended credit to him between the dates of the giving of the mortgages and their filing for record have an equity superior to the mortgagee whose conduct invited them to trust the mortgagor. All persons so extending credit between these dates will be presumed to have done so on the faith of an unincumbered title as disclosed by the record.
We perceive no reason why Berry is not entitled to prove his claim as a general creditor and share with the other creditors in the estate. That he is a bona fide creditor by reason of loaning the monejr to the bankrupt is unquestioned. The fact that the mortgages securing the same are invalid in no way affects the validity of his claims secured by the mortgages.
The decree of the court below is reversed, with directions to proceed in conformity with this opinion.