Yardley v. Torr, No. 5

No. 5 | U.S. Circuit Court for the District of Eastern Pennsylvania | Apr 26, 1895

BUTLER, District Judge.

Nos: only were the conveyances from W. S. Torr voluntary and therefore ineffectual as against existing creditors, but the time and circumstances under which they were made raise a strong presumption that they were executed in anticipation of a call to respond to Mr, statutory obligation as a stock holder of the bank. For the purposes of this case however, it is sufficient that the transfers were voluntary, and that the properties transferred constituted substantially all he owned.

His obligation to the creditors of the bank was a debt, in mo respect different from other debts subject to contingencies. Here indeed no contingency existed; the bank was insolvent and a large amount of indebtedness existed which the stockholders were responsible for. The transfers are therefore void as against the plaintiff; and to the extent that the properties remain in possession of the original grantees, and also to the extent of all proceeds in their hands, of sales or mortgages made by them, the bill is sustained.

As respects purchasers from these grantees for valuable consideration, and mortgagees who have loaned money on the properties, without notice, the bill must be dismissed. The plaintiff concedes that all transfers and mortgages by the grantees were for full value, and without actual notice, except that made by Mrs. Bringhurst to her husband. It is urged, however, that the conveyances from Torr were, on their face, sufficient to put purchasers and mortgagees to inquiry. I do not think so; presumably the conveyances were honest. This is the natural and legal inference. It could not be inferred that the grantor was indebted, or that he had not retained sufficient property to pay his debts, if he had any. Besides, of what avail would inquiry have been—of whom could it be made? The grantor and grantees would say the transaction was honest; their acts said so. If they had believed the transfers to be unlawful, and intended to perpetrate a fraud, the face of the deeds would be otherwise, the considerations would have been different. It is quite probable that the grantor did not regard the liability arising out of his relation to the bank as a debt, and he would therefore have answered that he was not indebted, if the question had been asked. The purchasers and mortgagees could not be expected to know or suspect that he was such stockholder and consequently to inquire at the bank. I will not pursue the subject, nor comment on the authorities cited by counsel. The cases are not entirely harmonious nor generally in point. Most that is said on the subject is mere dicta. The weight of authority, however, is against the plaintiff.

As respects the property transferred to Mr. Bringhurst the bill is sustained.

I do not find anything in the case which calls for further comment.

A decree may be prepared as indicated.