The Savannah morning news., 1902-02-26
PROVED THEIR CLi
PREFERRED CREDITORS OF STEIN
NIGER MERCANTILE co. LET IN.


ferred Creditors sought to Estab-
Were Denicd--Then. Tried to Come
in with Others and This Effort
Was Contested-Judge speer Holds
They Have Clearly This Legal
Right.
The bankruptcy case of the Steinin-
ger Mercantile Company was finally
disposed of in the United States Dis
trict Court yesterday morning BY the
decision of the court the preferred cred
itors are allowed to come in and estab-
lish their claims and litigation extend
ing over nearly or quite three years
has thus been ended.
This was one of the first important
cases brought under the bankruptcy
law. 1t involved the failure of large
mercantile corporation in Bainbridge.
The night before the failure the com
pany executed a large number OF mort
cages to favored creditors, and very
early next morning deposited them in
the clerks Office of the Superior Court.
In fact, they woke up that official TO
make an early deposit.
These mortgages were attacked as
preferences, and after full hearing
Judge Speer set them all aside The
case was carried by counsel for othe
mortgages to the Circuit Court Of Ap-
peals and the decision of Judge. Speer
| was affirmed. t B,fz -ao; tt4 -
Then the creditors Who had been fRv-
ored, including the Bank of Thomas
vile, the Bainbrfdge State Bank, the
City of cambridge, E, ], Willis x Co.
and H. b. Ehrlich & Co., sought to OBJ
tain their pro rata share as unsecured
creditors in the distribution of the
bankruptcy funds, This was resisted
by certain creditors, 1whe were repre-
sented by Messrs. Garrard s& Meldfim
and Erwin & Galloway. The case was
fully heard in the United States Court
| yesterday, Messrs. Erwin and tfarrard
arguing against the creditors from the
interior and ex-Judge Byron e. Bower
in their favor. The court upheld the
| contention of Judge Bower on all
points, rendering the following opinion:
If this contest was made on the
| part of these creditors in good faith,
| believing sincerely that. they had valid
| liens, there is no reason why they
should not now be- allowed their dis
| tributive share of the estate on valid
unsecured. debts although their liens
were denied. If they had made a
/ fraudulent claim and persisted in it in
| fraudulent manner the court might
very we'll have shut them off and de-
| MED them any share in the distribution.
THE twelve months provision of the
| act does not preclude the court from
| allowing a claim of this character.
| There is a, fundamental principle of
| law under and behind statutes of that
| sort. The statute merely requires that
proof of some kind shall be put before
| the referee in twelve months after ad-
| judication. but back, Of 1t all is the
fundamental principle that wherever
there is a right there is a remedy: 'Ubi
jus ibi remediuni. i1
why, as early as the time of Edward
|, in courts of equity where no remedy
was afforded. it was the duty of the
clerks in chancery to frame writs for
the purpose of protecting parties who
| had rights for which an appropriate te
remedy had not been previously pro-
vided. Now the Bankruptcy court is
a court of equity. 1t is expressly SO
declared by the act, and many decfs-
| ions, and it will look through all of
| these various contentious here to the
true facts. What are the facts? Here
are number of reputable merchants
and corporations in cambridge and
Thomasville. No question has been
made about their standing or about
their integrity or about the honesty OF
their claims. They wake up one morn
ing and find out that their debtor, the
Steininger Mercantile Company, is In
| solvent, and that it has deposited
mortgages for their benefit on the ta-
BILE of the clerk of the Superior Court.
They go there. and look al
them and they do what nine
tv-n!ne men out of a hundred would
do, they take their mort
cages. and then, they seek to set up
claims which have been thus volun-
tarily rendered to them.
We'll, the litigation ensues. The
Circuit Court of Appeals in it's opinion
in this case stated that these. mort
gagees neither urged payment nor
asked for a mortgage, but after they
had obtained their mortgages they try
to prove their claims in the usual way
Their proof was submitted to the ref
| cree. That officer quite correctly held
that they were not entitled to prove
their claims as secured by the mort
cages, but the accounts on which the
claims were based were then present
| tu anu nave Tei1dlIlFut the court
The litigation goes on TO the end. The
decision is against these Bainbridge
and Thomasville creditors as to their
liens. but in my opinion 1t would be
obnoxious to the principles of equity
and fair play to deny to these people
the right to prove the debts on which
| their mortgages were based.
Besides, I think that much is due
them in view of the fact that they
came in and voluntarily carved out an
might decide this question and distrib-
doubt whether, if the question of ju-
risdiction had been originally raised
this court under recent decisions would
not have been deprived of the right OF
its power as a bankruptcy court to
distribute this property in accordance
with the bankruptcy law SO the de-
cision of the court is in favor of these
creditors who formerly thought them
selves secured creditors. but who may
now be treated as, unsecured creditors.
The objections are overruled to the
proofs OF their claims. An order in
accordance with these views will be
taken" .,t@ ..s.'.
An order was taken expressing fthe
views of Judge Speer and an additional
order providing for the compensat ton
/ OF the special master. BY the terms
/ of the latter order Erwin. a. Galloway,
! Townsend e. Westmoreland and Gar
! rard & Meldrim. attorneys for the NOV
ing creditors, were allowed 81. 1888, be-
sides which amount Garrard e. Mel
drim were allowed S22.S3 and Townsend
A. Waetnaoreland $40 32 for owpensee II