Court Opinion

ID: 8813255
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:10:08.265142+00
Date Added: 2024-06-11T17:04:22.246322
License: Public Domain

On Petition for Rehearing.
PER CURIAM.
A petition for rehearing calls attention to the fact that after the petition in the case was amended, as stated in the foregoing opinion, there was another amendment of it, which consisted in substituting for the word “insolvent,” where it appeared in an above-mentioned averment of the petition as first amended, the words ■ “greatly in debt.” The change made by the last amendment indicates an absence of any intention to claim that Moore was, or was supposed to be, solvent when he sold to the appellee the crop on the McCrimmin land. As last amended the petition showed that the appellee’s becoming responsible for the rent and its advances for making the crop were necessary to enable Moore to make it, because he was then greatly indebted and had no personal credit, and all the material he then had, including his interest in a crop on another tract of land, was under mortgage to another creditor. It well may *130be inferred, from the averments of the petition as last amended, that Moore’s lack of credit, and his inability to get land to make a crop on without another'standing for the rent, or to make a crop without obtaining advances secured by the crop to be grown, were due to his insolvency, and that he was insolvent from the time the land was rented until he went into bankruptcy, a few weeks after making the sale sought to be enforced in this suit. There is nothing to indicate that his financial condition changed from solvency to insolvency between the date of the alleged sale and the filing of the petition in bankruptcy. But, whether the petition as last amended is or is not to be regarded as showing that Moore was insolvent when he made the alleged sale, the evidence in the case shows that he was then insolvent. The transaction in question was between a creditor and a known insolvent debtor, by which the former got for its debt the latter’s growing crop and his services in supervising it until it matured and was harvested. It was not alleged or proved that what the creditor parted with was even approximately equivalent in value to what it acquired from the debtor, even if the services rendered by th’e latter were left out of the account.
It is a fraud on a known insolvent debtor’s other creditors for one . creditor to get in satisfaction of his demand property of the debtor worth substantially more than the amount of the debt for which such property is given. The validity of such a transaction is dependent upon the creditor so acquiring the debtor’s property paying or allowing an adequate price or fair value therefor. It being disclosed that the transaction sought to be enforced against the seller’s other creditors was a sale to a creditor by a known insolvent debtor, it was incumbent on the party claiming under such sale to show that the satisfaction of the debt, which was the consideration for the sale, was a fair price for what the buyer gave for it. That the creditor, in acquiring the known insolvent debtor’s property, went beyond the permissible purpose of obtaining .satisfaction of the debt owing is disclosed by a comparison of the amount realized from the property so acquired with the aggregate of the items of its cost to the creditor. The cost to the creditor is shown by the following statement:
•Balance of old debt owing December 31, 1905.? 5,426.43
Six per cent, interest on same for six months. 162.79
Amount of advances on crop. 1,139.80
Expenses of harvesting and marketing crop.2,814.19
Amount paid for rent of land. 813.00
Total ...810,356.21
The crop which, according to the pleadings and evidence in the case, cost the creditor $10,356.21, was sold for $11,651.35. If the transaction had been acquiesced in hy those adversely affected by it, it would have resulted in enabling the favored creditor to realize $1,295.14 in excess of the debt 'and the outlay on the property taken in satisfaction of it, while the debtor’s other property was worth greatly less than enough to pay what he owed to other creditors. To say the least, *131there was a failure to show that the alleged sale to satisfy the debt owing to the preferred creditor was fair and valid as against the seller’s other creditors.
The conclusion is that the petition for a rehearing should be, and it is, denied.
BATTS, Circuit Judge, did not take part in the action of the court on the petition for rehearing.