Court Opinion

ID: 7989689
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:29:34.267765+00
Date Added: 2024-06-11T16:35:19.171278
License: Public Domain

Whitfield, C. J.,
delivered the opinion of the court.
The trust deed executed by Bryant on July 1Y, 1901, to secure a promissory note for $1,Y44, due January 1, 1903, was absolutely null and void under repeated decisions of this court. The bill of sale by Bryant to P. Z. Jones, trustee, to pay Belknap & Company, was executed within four months of the petition by Bryant to have himself declared a bankrupt. Contemporaneously with the execution of this bill of sale Belknap & Company executed a writing whereby they agreed “to realize the best prices obtainable for the said property, and not to sacrifice it, or sell it at an unreasonably low or absurd figure.” The evidence shows conclusively that the stock was outrageously sacrificed for the benefit of Belknap & Company, who got the full value of their debt. The evidence further conclusively shows that the intent and purpose of Belknap & Company and Bryant were that Bryant should execute this bill of sale to give Belknap & Company a preference. It is held in Western Tie & Timber Co. v. Brown, 129 Fed. Rep., 728 (64 C. C. A., 256), that, “The test of a preferential transfer, under the bankruptcy act of 1898, is not whether or not the debtor has conveyed anything to the creditor, or whether or not the creditor has received anything from the debtor. It is whether or not the debtor has made a transfer of any of his property to any one in any way whereby the en*204forcement of the transfer will enable one of the creditors to obtain a greater percentage of his debt than any other creditor of the same class can secure. One of the main purposes of the bankruptcy law is to distribute the unexempt property which the bankrupt has, four months before the filing of the petition in bankruptcy, share and share alike among the creditors.” See, also, the amendment to Bank. Act July 1, 1898, ch. 541, secs. 60a, 60b, 30 Stat., 562 (U. S. Comp. St. 1901, p. 3445), enacted February 5, 1903 (Act Feb. 5, 1903, ch. 487, sec. 13, 32 Stat, 799 [U. S. Comp. St. Supp. 1905, p. 689]) :
“Sec. 60a. Preferred Creditors: A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will enable anyone of his creditors to obtain a greater percentage of his debt than other of such creditors of the same class.
“Sec. 60b. If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of the petition and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee and he may recover the property or its value from such person.”
The act of 1898, as seen from the dates, governs in this case. Under the facts there can be no doubt that this bill of sale, made to give this preference, falls under the condemnation of the bankruptcy law. Counsel for appellant invoke the case of Baldwin v. Flash, Preston Co., 59 Miss., 61; but that was a case where the actual surrender of the goods was made before the rights of a third person intervened, and the court cited with approval the following language from the Massachusetts supreme court: “If the act to which it is applied is voidable only, then it inures by way of ratification. If actually void, *205and the subsequent act of itself is sufficient, it inures as by original act.”
Learned counsel for appellants .also - invokes the case of Thompson v. Fairbanks, 196 U. S., 516 (25 Sup. Ct., 306). But that case was decided upon a construction of a Vermont statute by the Vermont supreme court, and, of course, followed that construction! In its opinion the supreme court of the United States pointed out that the mortgage, in that case, was held to be valid by the supreme court of Vermont under the provisions of the Vermont statute, and in the course of the opinion said: “If this mortgage were fraudulent per se, then what the parties did under it, in taking and delivering possession before the petition for the adjudication of the insolvency of the debtor as filed, would be of no avail to the defendant to enable him to hold the goods which are included within the terms of the mortgage.” But these decisions can be of no avail to the appellants in this case, because the trust deed in this case is, under our decision, absolutely void, and the only ground the appellants have left to stand on is their contention that the act of surrendering the goods under the bill of sale relates back to the time of the execution of the trust deed. But the supreme court of the United States clearly says that such relation back cannot take place if the trust' deed was null and void, and not simply voidable, and that, when properly understood, is also what was held in Baldwin v. Flash, Preston & Co., supra. The original act, in that case, took place before the rights of third persons intervened. The original act here — -the bill of sale — occurred within four months of the filing of the petition in bankruptcy.
There is no merit in the other contention of the appellant, wherefore the decree is

Affirmed.