Court Opinion

ID: 5567266
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:04:33.318353+00
Date Added: 2024-06-11T08:35:32.830095
License: Public Domain

Simmons, C. J.

1. In order to entitle unsecured creditors to file a petition under section 3149(a) et seg. of the code, known as the “insolvent traders act,” as amended by the act of December 13th, 1894 (Acts of 1894, p. 89), the provisions of the law must be strictly complied with; and consequently such a petition should show that the insolvent debtor against whom it is filed is still a trader, and should affirmatively allege that the plaintiffs represent at least one third in amount of the unsecured debts due by him, and also that payment of their debts after maturity has been duly demanded and refused. A petition lacking in these essential elements should be dismissed on general demurrer.
2. In the present case there was no error in sustaining the demurrer filed by a codefendant of the alleged insolvent debtors.

Judgment affirmed.

The defendant bank demurred, among other grounds, for want of equity in the petition; because it is not alleged that petitioners represent one third of the unsecured indebtedness against Cobb & Daniel, nor that said indebtedness is due and unpaid and demand for payment thereof has been made on Oobb & Daniel and payment refused; and because petitioners are not entitled to the relief prayed for.
Petitioners amended by alleging: They are advised and believe that Oobb & Daniel have a large amount of notes, book accounts, and evidences of indebtedness, of the nominal value of $5,000, from which, if properly looked after, a considerable sum may be realized to go towards the liquidation of their debts. These evidences of indebtedness grow out of the mercantile business of Oobb & Daniel, and are the proceeds of the sale of the goods for which they owe petitioners and others who may be made parties plaintiff. The assets of Oobb & Daniel, if properly managed, are more than enough to pay off the mortgage, even if it should be declared valid. Petitioners are advised and believe that Oobb & Daniel made a conveyance or assignment of all said evidences of indebtedness to the bank, as part of the same sale or transaction in which the mortgages were given. They pray, that the receiver to be appointed be directed to take charge of all such evidences of indebtedness, and collect the same and return the money into court to be j)aid out by order of the court, and that said conveyance of the evidences of indebtedness be cancelled as a legal fraud upon the right of petitioners. Further, at the time of the giving of the mortgage which has been foreclosed, it was expressly agreed between Oobb & Daniel and the bank that the mortgage was not to be recorded; and it was agreed, as part of the consideration of said mortgage, that the bank was not to foreclose it, but was to carry the debt until the fall of 1895 and would lend Cobb & Daniel financial aid for them to carry on their business during 1895; and if the bank had carried out its agreement Oobb & Daniel would have been able to pay all of their debts, including the debt to the bank. None of the unsecured creditors of Cobb & Daniel were pushing them, and all of them would have gladly extended time on their debts. The mortgage of which the mortgage foreclosed is a renewal was given with the agreement that it was not to be recorded, and the mortgage foreclosed was given at the instance of tbe bank upon the statement that there was an error in the mortgage. Oobb & Daniel, having great confidence in the officers of the bank, gave the mortgage foreclosed in lieu of the mortgage recorded.
By further amendment various parties plaintiff were made, and it was alleged: All the evidences of indebtedness to Oobb & Daniel, also a bond for title of Oobb, one-of the firm, to certain land in Muscogee county, was transferred to the bank as collateral security for the note which the mortgage was given to secure. Said note is largely infected with usury, and said transfers were made as part of the usurious transaction; wherefore the title of the bank to the same is void. Petitioners pray, that said transfers be decreed void, and the bank be required to surrender the things transferred to defendants or to a receiver, should one be appointed; and for judgment in their favor against Oobb & D'aniel.
The cause coming on for hearing on April 13, 1895, the court, by consent of all parties, passed an order granting the injunction prayed for, ordering the sale of the goods and impounding the proceeds, appointing the cashier of the bank receiver, ordering the collection of the notes and accounts, and that the receiver report to the court the proceeds of all money arising from the sale of the goods or the collection of the choses in action, to be a fund in court to be paid out under the order of the court; and further ordering that in the event the bank sustained its mortgage on the final hearing, the fund that should be awarded to it should not be charged with attorney’s or receiver’s fees, that the fund should be deposited in said bank on interest, etc. This order contained also the following provision: “The defendant, the Peoples National Bank, does not waive its right of demurrer by this consent.” Thereafter the bank insisted upon its demurrer, and moved to dismiss the petilion and. amendments. Plaintiffs contended that the demurrer should not be sustained or considered, because the same had already been adjudicated on April 13, 1895, when the consent order before mentioned was passed. After argument the court passed an order sustaining the demurrer and motion to dismiss, and revoking the restraining order.' Plaintiffs excepted, alleging that the court erred, because the demurrer had been fully adjudicated, and the money arising from the sale of the goods was then in the hands of the court, and the court having taken charge of the same, having appointed a permanent receiver and granted a permanent injunction, and ordering the goods sold and the fund arising from the sale thereof impounded, to he paid out according to order of court in the case, it was then too late to urge the demurrer on the grounds therein stated; because the grounds of demurrer are without merit; and because there was equity in the petition, and -the court-should have overruled each and all the grounds of the demurrer.
Doclson & Son, Ansley & Ansley and B. L. Maynard, for plaintiffs. Lumpkin é Nisljet, for defendants.