98 F. 974 | U.S. Circuit Court for the District of Oregon | 1900
In October, 1897, the Colby Company negotiated with Camp for an advance of not less than $5,000 or more than $5,500, to enable such, company to secure a lease; and furnish what is'known as the “Fredericksburg Café and Music Hall.” In January of 1898, and from that time until June following, the defendant loaned money to the Colby Company, in pursuance of this agreement, to thé aggregate amount of $5,400. It was a part of the original agreement made in 1897 that the Colby Company should pay the sums of money advanced on demand, after six months from the first loan, and that in default of a payment the company would give the defendant-possession of the premises to secure him for repayment; and it was also provided that, if the money was not paid, the defendant should have the option to buy all the property for a sum not less
The transfer by the Colby Company to Camp was not a preference under the bankruptcy act. It is true, the transaction was consummated within the four months, hut it originated in October, 1897. What was done was in pursuance of the pre-existing contract, to which no objection is made. Camp furnished the money out of which the property which is the subject of the sale to him was created. He had good right, in equity and in law, to make provisions for the security of the money so advanced, and the property purchased by his money is a legitimate security and one frequently employed. There is always a strong equity in favor of a lien by one who advances money upon the property which is the product of the money so advanced. This was what the parties intended at the time, and to this, as already stated, there is, and can be, no objection in law or in morals. And so when, at a later date, hut still prior to the filing of the petition in' bankruptcy, Camp exercised his rights under this valid and eqnitablo arrangement to possess himself of the property and make sale of it in pursuance .of his contract, he was not guilty of securing a preference under the bankruptcy law. It is not pretended that the sale was for an inadequate price, or that there was any fraud, or that the interests of the creditors have been in any way injuriously affected, any further than it may he to the interests of the creditors to secure to their own benefit the property purchased with Camp’s money