The Portland daily press., 1869-07-28

before this mortgage was executed, when it
was taken up and included in pew drafts CIV
en- N extension. together with another note
o' ooz3.io. which tell due May Sd, and re-
NAMED unpaid until included in tlese drafts
tneir business fr more than six months
| had n"t r'been carried on as traders usually
| DO business their business notes were over
| que and unpaid thes owed more tha $1,000
for borrowed money some OF IL due Tor moie
than year: their bank liabilities were also
overdue al d unsalisfied, and in m view, on
the 18th OF June they were rot only insol-
vent. as they admin the fact to have been but
| thev were fully conscious OF the existence OF
all the circumstances which made them in
| sol-ent and under such a stale OF facts, but
| little reliance can be placed by I court
IN the statement of the bankrupt, thar at
that time they had no reason to believe they
were insolvent. ~ ...a.. ..,..f.. ..,.,f n.
III. Was this mortgage executed by tt
bankrupts with view to give preference to
any creditor or pei son having claim against
| them or who was under any liability for
them? HaF lili h,l.W .iHl .el II
The mortgage was not given to secure the
original liability OF the respondents, but they
loaned to the hankrupts the money to dis
| charge these liabilities, with the exception OF
| the anoun due Cole, and received the mor.-
| gage to secure these amounts. 1t is claimed
! by the answer, that the mortgage therefore
| was given to secure a present consideration
| and not an existing liability. , stf.r rs
Such a construction of this transact n cam
not be sustained un Ter the provisions OF the
bankrupt act, if it could be all an endorser or
surety need do, to obtain valid security Tor
| his liability would be 10 lend bis principal the
amount with which to pay the deot, and re-
ceive back q mortgage as security Tor the
| loan. Such proceeding. within the purview
| oil the bankrupt act, is nothing more than an
exchange or substitution of securities. a mere
| attemot and 'contrlyance to relieve or protect
an andorser or surety, aud whatever means
may be adopted TO acco nplish this purpose, 1t
will prove invalid under the bankrupt law,
| when it is designed and used to obtain pref
| erence for the party who is updvr a liability
| for the bankrupt. In the present case, the
| security IN all respects would have been equal
| iy valid 10 it had been SO drawn as in terms
| to indemnify the respondents as endDrsers or
| sureties on the notes for which they were la
\, bic.
| The testimony of Novel;, who was the
book keeper and probably moie conversant
| with the condition OF the firm than Chad
bourne, has not been taken, as he has lett
The State, and we must judge OF his me
| tiFeS and purposes from the course adopted
| and its natural consequences. Chadbodrne
states that his purpose in making the
mortgages was to meet the notes that were
| due and about coming due, and that he dill
Il
them a preference over the other creditors.
| Whist have no doubt that he desired to
meet these notes, feel equally confident that
| he did intend BY these mortgages to protect
Hooper and Cole against loss, and that they
should be secured at any rate against all Ii
/ ability; all the. circumstances compel me to
| this conc usion. Both members OF the firm
knew that they had not net their payments
| as they fell DUE their liabilities to the amount
j OF $500 were then overdue, including the
money due to Cole, and they had no means
| to pay these sums excepting the money re-
ceiyed from Hooper and Cole on this secur-
i ity.4 n si5 Fl,rg df ..,t.lt.t .i..,t "a
/ ION the 18th of this very month, they were
indebted to, Holmes and Co. over S1UO0, part
| IOf which was on notes VIII ch were over due,
and one of which had been so tor six or seven
| months. Instead ofeiying them any security
| OF preference, they asked and obtained an ex-
| tension tor the whole amount They were
| owing two other notes to- the banks on which
other parties were sureties or endors ers, one
leof which, at least, was arenewal, a but neither
iof these notes-were paid or secured although
they were soon payable They were owing
other parties. in BIddelordl and Saco about
two thousand dollars Tor borrowed money,
i some OF it TOR more than a year, but none OF
u these did they think proper to secure IN any
| way, but they did secure every dollar tor
| which either of these respondents could IN any
way be made accountable Tor the firm or
i either OF IFS members, although portion Of It
II was not then Lue and payable. IN 49, ~
A. lI their, object, as IS now claimed, was to
/ relieve themselves from their bank liabilities
and paper falling due, why did they not pay
these, other notes, which were held by these
saue corporations p Whs make tnis d.stine,
L tim, and pay those and only those for which
the respondents woufi be accountable, leaving
i all'the Others I'm .aid or secured. .
Z olo..f sln a. xAnxr& &L.f, Larr
ing's Bank Noweps individual debt? This
was not a firm liability. it was Nowells pri-
Il vate note, on which Cole and Chadb0urne
| were sureties and so lar as it appears, was not
due at that 'ime, and lit had been, sucn in /
stitutons are always really 70 loan their funds
ON good security and the bank would not,
/ pro ably, have pressed Tor payment il the
parties lwere in good credit and desired tur-
| ther time or renewal OF the Ioan. .iisi Z bus Z
| Why pay Chadboarnes note OF $500 tU
i, Gardner LIBBY? What reason, other than to
protect the sniet. Cole, is shown Tor seaect
/ 'hg this liability OF one OF the members OF the
| hrm and dischare emg II withthe copartnersfip ip
assets whilst there we're over due ano unpaid
large amounts OF borrowed money loaned The
iIm, aud for which the lenders mad uosesu.ity-
! | Ii thus appears that they were not satisfied
u with discharsina the Gains against the firm,
upon which these respondents were liable,
| ilut they also undertook 10 discharge, with the
I firm property the Individual liabilities OF each
| Inember to the amount Or IS %, or rather. TO
| allow Cote to pay these Individual liabilties
/ for which he was accountable as surety and
i receive therefor, from the tirn, the partner
ship note tor the amount thus paid, secured
bya mortgage OF the partnership estate The
lrm wasiunderi no liability tor tins amount, 1t
could not have been in any way made, ae
, countable torIt or its property applied to its
y discharge. Chadbourne LOOK legal advice
| about these mortgages, and was proOab.y
| aware that as those claims then stood, npi-
ther the holders nor the sureties could ,ook to
L The fru. for payment Why should the irm
\ pay or assume these de e'uands, or charge lis
i property with, the payment OF tnem, unless
/ the object and parpose was to relieve the sure.
II Hes,upon them irom their liability? ?5A ifs this
/ was the design, then the course adopted, OF
i giving the company note Tor the amount SO
Il paid BY Coie, IN discharge OF their Individual
| claims, and securing this note by mortgage.
/ Fas proper to accomplish The object excepting
| for fhe provisions OF the, ban nkrupt law. But
4 dnless done tor that pulpos wheG excuse Can
II De suggested tor the members OF tirm ap-
L plying one Thousand dollars oi its company
4 property in discharge of their private debts,
4 the nrmi at the time being insolvent? They
Il had no right to so conddc with the property
| DIT partnership, 9ioi which they were then
Indebted more than they could pay, and they
/ could, not, but be aware that thereby, they
/ we're Diminishing, to that extent, the assets
4 which they had for the payment OF their
i partnership creditors, who had an equitable
claim upon their property, under these cir
eumstances. for their security. When insol
vents in such condition SO dispose OF their
partnership effects, think IL is an extremely
l charitable construction of their conduct, II 1
only infer that it was done for the pur-
| pose Of PIE erring those who are benefited
j thereby. TO many minds, apprehend, it
4 would present Itself as worthy OF much se-
/ Ferer Judgment. 8 siaa.l. r. ..s...le .a.i
The excuse now suggested, that they want
| ted to take up the paper,which was thus paid,
! so that they could give their attention to
4 their business, is futile and vdin-in the first
! place they lett outstanding against them,
/ claims for nearly as large an amount oil Dor
| fowei money, as Was pad, some OF which was
| due TO the veiy banks 10 which their pay
1 ments were made. And the instant the
/ mortgages, Of all their joint and separate es-
4 tates weIe known to their creditors, their,
1 credit with them would be entirely ruined
| and destroyed. The slightest investigation OF
| their affairs, would develop still more clearly
\ their deep insolvency and not dol ar could
! afterwards be obtain ed by them on credit
/ The inevitable consequence OF such mort
| cages, as everybody well knows, is, 10 put an
| END to further credit tor party, and break
| up aud terminate his business and especially
| would such be the results, when none OF the
| demands due tor merchandise, were secured;