Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1907-02-21
In Suit OF Trustee Against
Farmers State Bank Of Clear.
field, Trustee Gets $1,000
II. e. WELLS ALSO IN THE CASE
Wells, a Merchant, While Insolvsnt,
Paid tho Bank $500 and Trustee
Sought to Set it Aside as in Violation
Of Bankrupt Law = Tried in Y. 8.
District Court and Circuit Court.
Special to Times-Republican.

Long, trustee, vs.. Farmers State Bank.
wherein T. f. Wells. a merchant while
insolvent. paid the bank $500, and
the trustee sought to set 1t aside as
in violation OF the United States bank
rupt law. The case was settled in
favor Of the trustee for $4,000 and all
costs In both the United States district
court and in the circuit court Of ap-
peals.
Mr.. Wells was merchant and had
room 22x60 feet, and claimed a $4,000
stock of goods. A fire consumed the
stock and the insurance. amounting
to $1,000, was settled for $500, and
turned to the Farmers State Bank,
claiming Wells owed the bank about
$4,000. Only about $500 in book ac-
counts were left for bther creditors
About $500 was later flied against
the estate OF Wells, who was forced
into Bankruptcy.
Suit was brought to recover the in
surance money paid the bank as a
preference. The defense OF the bank
was that Wells, six months before the
fire, to secure the bank for their claim,
made written assignment Of his In
surance, in case OF loss, to the bank,
and admitted that the payment was
made while Wells was insolvent, but
claimed the payment was made pursu-
ant to the written contract, assigning
the insurance, and was not within the
four months rule OF the law.
1t was tried before Hon. Smith Nc.
Pherson in United States district court
at Creston. Iowa, who held that the
written agreement, which, by the way,
had been kept secret for nine months,
should undel. the United States bank
ruptcy law, be held to take effect when
It was executed, aud as 1t showed that
it was made over four months before
he was declared a bankrupt, the bank
should hold the preference, and so
found, ordering the jury to find for
the defendant.
The trustees attorney, ]. r. Plum-
mer, held that as the contract assign
ing the insurance was kept secret, that
the contrac. was void under section
Cob and 3-l, of the bankruptcy law as
amended.
The trustees attorney was SO sure
of his position that he took an APP
peal to the circuit court of appeals at
st. Paul. The trustee and referee
felt the case was hopeless and refused
to put up the costs Of the appeal, but
the attorney backed up his opinion
with the money and paid the filing fees
and printing bills until he had used
$103.50 Of his own money He sued
out writ Of error to test the legality
Of the judges decision. After the ap-
peal was taken Messrs. Spurrier, Mills
and Perry took hold of the case with
Mr. Plummer and helped put 1t thru
the appeal court.
The case came on for hearing before
Judges Var DeVanter, Sanborn and
Phillips at st. Paul, and they reversed
Judge Mcpherson and held that as the
contract was only a promise to pay in
case OF a loss, it was not an equitable
assignment, but being kept secret from
everybody It was void as to creditors
and that it took effect only when the
money was paid, thus vindicating the
position Of the attorneys for the trus-
tee
After the, trial Of the case at St.
Paul, the filing fee and printing bills
were repaid to the attorney. A new
trial was ordered, but they were
whipped, and settled.
The Farmers State Bank had failed
in the meantime, so $1,000 cash and
costs was accepted by the trustee.
The case is a leading one inabank-
ruptcy and is to be reported as such
In the L. r. A. new series Of reports.
AS the case was considered hopeless
on the first trial, the attorneys had to
win ON the appeal or get nothing. When
the case was finally settled the court
granted the trustees attorneys $500
attorney fee and they feel well pleased
with their victory.