DocketNumber: No. 13,106
Citation Numbers: 70 Neb. 233
Judges: Albert, Barnes, Glanville, Tbe
Filed Date: 11/5/1903
Status: Precedential
Modified Date: 7/20/2022
This action was commenced in the district court for Phelps county by John A. Johnson, trustee of the estate of Neis L. Anderson, a bankrupt, against Lewis Anderson, defendant in error, to recover the value of certain property of the bankrupt which the defendant caused to be attached and sold for the payment of a debt due to him from said bankrupt within four months of the filing of the' petition in bankruptcy. The petition Avas framed to recover under section 67f of the national bankruptcy act of 1898 (U. S. Compiled Statutes, vol. 3, ch. 7), which provides: “That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time Avithin four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt, and the property affected by the levy, judgment, attachment, or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the
The length of the plaintiff’s petition precludes us from copying it in full, and it is sufficient to say that it alleges in substance that for a number of years prior to November 8, 1900, the bankrupt resided in Phelps county, Nebraska; was principally engaged in buying, feeding and selling live stock; that while carrying on that business he became and was indebted in various amounts to divers persons, and while so indebted, his creditors, on November 8, 1900, filed their petition in the district court of the United States for the district of Nebraska, for the purpose of having him adjudged a bankrupt under and by virtue of the laws of the United States; that he was so adjudged a bankrupt on the 16th day of February, 1901; that on the 12th day of June, 1901, the plaintiff was appointed trustee of said bankrupt; that he duly accepted such appointment, qualified, and since said time has been acting as trustee of said bankrupt estate (then follows a list of the different creditors and the amounts due them from the bankrupt, aggregating about $35,000), and it is alleged' that no part of these claims have been paid. It was further stated that the trustee had not sufficient funds in his hands to pay the claims, and that the amount of the assets and money in his hands for that purpose was less than $500. It was then alleged that the defendant, on the 23d day of July, 1900, and within four months of the filing of the petition in bankruptcy, filed his affidavit for an attachment,
The answer was a general denial, and contained the further allegation that the attachment proceedings referred to in the petition were in all respects regular; that the property in question had been sold by order of the court, and the proceeds of such sale paid to defendant before the filing of the petition in bankruptcy; that the judgments and proceedings of the court in said case were in all respects regular, and remained unreversed, unappealed from and unmodified in any particular. The reply was a general denial. The case was tried to a jury upon the folloAving stipulation of facts:
“It is hereby stipulated by and between the parties that on November 8, 1900, a petition was filed in the district court of the United States, in and for the district of Nebraska, for the purpose of having said Neis L. Anderson adjudged a bankrupt; that said proceedings were involuntary. That on the 16th day of February, 1901, said cause came on for hearing before said court, and upon the petition and the evidence the said court duly adjudged said Neis L. Anderson a bankrupt; said judgment is still in force and effect. That on the 12th day of June, 1901, the plaintiff was duly appointed trustee of said bankrupt’s estate, accepted said office and qualified, and since said time, and now is acting as trustee of said estate. That at the times hereinafter mentioned,, said Neis L. Anderson was insolvent, but it is not admitted by defendant that defendant kneAV, or had reason to believe, that said Neis L. Anderson was insolvent at the said time. That on July 26, 1900, the defendant filed his petition in the district court for Phelps county, the prayer of which was to recover the sum of $2,900 from Neis L. Anderson. That at the same time he filed his affidavit for an attachment, and procured a writ of attachment to issue thereon, which he caused to be levied upon certain personal property of Neis L. Anderson, to the amount and value of $2,125,59.
It is further stipulated that the said sum of money so received from said Smith, in said proceedings, instituted in Arapahoe county, Colorado, Avas upon indebtedness due and owing from the said Neis L. Anderson to defendant Lewis Anderson, being indebtedness other than the amount of indebtedness sued for in Dawson county and Phelps county as hereinbefore stipulated. About the 28th day of October, 1900, the fact of the receipt of the said $840 by Lewis Anderson, the defendant, and the indorsement of the same upon the note held by him against the said Neis L. Anderson, Avas brought to the attention of said Neis L. Anderson, and the same was consented to and approved by him.
It is further stipulated that, during all the attachment proceedings heretofore referred to, said Neis L. Anderson was absent from the state of Nebraska, and his whereabouts unknown, and that he had no knowledge whatever of such attachment proceedings.
It is further stipulated that at the present time there are, in round numbers, $35,000 in debts that have been
Said stipulation is modified as follows:
“That the property sold in Phelps county under the attachment proceedings was $1,054, sold at the sale held on October 24th; that there was a readvertisement and sale of the remainder of the property on November 8, at 10 o’clock A. M., to wit, $693.80; and that there were hogs sold previous to the sale, but not at public sale, to the amount of $377.79, but sold by the sheriff of Phelps county at private sale, and that the return of said sale was not filed in the office of the clerk of the court until November 12, 1900, and that the proceeds of said sales were paid to the defendant Lewis Anderson at the close of such sales, and that said sale was advertised to begin at 10 o’clock A. M. November 8.”
After introducing the stipulation in evidence the plaintiff moved the court to instruct the jury to return a verdict in his favor, and the defendant filed a motion asking the court to direct the jury to return a verdict for him. Before the court ruled upon either of these motions the plaintiff asked leave to amend his petition by inserting therein the following: “That said attachment proceedings and steps taken thereunder were for the purpose of obtaining a preference by said defendant, Anderson, over the creditors of said Neis L. Anderson, bankrupt.” This request was refused, and plaintiff excepted. Thereupon the court overruled the plaintiff’s motion, sustained the motion of the defendant, and the jury, by the direction of the court, returned a verdict for him. Plaintiff thereupon prosecuted error, and now contends that the court erred in his rulings on both motions, and in directing a verdict for the defendant.
The first question which requires our consideration, is the sufficiency of the petition. It will be observed that it
“Where money collected upon an execution issued upon a judgment obtained against the bankrupt Avithin the four months7 period is paid over to the judgment creditor before the filing of the petition in bankruptcy, the case does not fall within the provisions of section 67f of the bankrupt act, Avhich specifically provides for the nullification of existing liens and for the right of the trustee in bankruptcy to receive the property of the bankrupt discharged therefrom. Although payment to the judgment creditor of money collected upon an execution, issued upon a judgment obtained against the; bankrupt within four months of bankruptcy, constitutes a preference under section 60a, yet where the money was received by the judgment creditor before the filing of the petition in bankruptcy, it is not recoverable back by the trustee under section 606, in the*242 absence of proof that tbe creditor had reasonable cause to believe that the banrupt, by suffering judgment to be taken against him, intended to give a preference.”
In Peck, Trustee, v. Connell, 8 Am. B. Rep. 500, the court said:
“The bankrupt act does not take from the creditor all incentive to vigilance; he may still collect his claim from an insolvent debtor by legal process. Such process does not fall within the ban of the bankrupt act, unless the creditor shall have had reasonable cause to believe that it was intended thereby to give a preference. The intention of the creditor to obtain the preference is not condemned. The averment that the creditor had reasonable cause to believe that the debtor intended to give a preference is certainly as material and necessary to the statement in an action of this character, as is the allegation that the prosecution was commenced and carried on without probable cause in an action for malicious prosecution. * * * He who would recover back money which has been collected by the final process of a court of competent jurisdiction should distinctly aver every material fact upon which his right to recover depends.”
The petition in this case wholly fails to allege that the defendant, Anderson, had reasonable cause to believe that the bankrupt by suffering the attachment proceedings, and judgment complained of, intended thereby to give him a preference.
It is contended that the court erred in refusing the plaintiff leave to amend his petition, as above stated. The amendment offered would not have cured the defect in the petition, for the reason that it does not contain the allegation above indicated. It was not enough that the defendant, Anderson, should have instituted the attachment proceedings for the purpose of obtaining preference over the other creditors of the bankrupt, but he must have had reason to believe that the bankrupt, by suffering such attachment proceedings and judgment, intended thereby to give him a preference.
“Something more than passive nonresistance of an insolvent debtor to regular judicial proceedings, in which a judgment anil levy on his property are obtained, when the debt is due and he is without just defense to the action, is necessary, to show a preference of a creditor, or a purpose to defeat or delay the operation of the bankrupt act.”
In Brown v. Jefferson County Nat. Bank, 9 Fed. 258, Blatchford, J., observed:
“The mere existence of a desire on the part of a debtor, however strong such desire, that a particular creditor may succeed by suit, judgment, execution, and levy in obtaining a preference over other creditors, so that such preference may be maintained, even as against proceedings in bankruptcy which may be subsequently commenced, is not sufficient to establish that the debtor procured or suffered, his property to be taken on legal process, with intent to prefer such creditor, if the proceedings of the creditor were the usual proceedings in a suit, unaided by any act of the debtor, either by facilitating the proceedings as to time or method, or by obstructing other creditors who otherwise would, obtain priority.”
It is certainly competent for a creditor to institute an attachment suit against a bankrupt, obtain judgment by default, and sell the attached property; and unless the bankrupt does some act by which he has participated in some way in the act of the creditor the preference otherwise acquired is a valid preference as against other creditors.
There is nothing in the record to shoAV, or Avhich tends to shoAV, that the defendant did anything other than to proceed in a diligent, orderly and legal way to obtain the payment of the debt due to him from the bankrupt by and through proper legal process. It appears that the proceedings Avere AAdiolly terminated, and the property or its pro
For tbe reasons stated in tbe foregoing opinion, tbe judgment of tbe district court is
Affirmed.