Court Opinion

ID: 5202117
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:54:26.680631+00
Date Added: 2024-06-11T08:27:13.162197
License: Public Domain

Ingraham, J. (dissenting):
The only indebtedness that existed in favor of the defendant against the Broadway Trimmed Hat Company was that evidenced by *293three promissory notes made by the corporation to the order of itself and indorsed by one Max Feist. These notes had been discounted by the defendant aud belonged to it. It was conceded upon the trial, and the court found, that the indorser was solvent, and the bank could have collected the note from him if it had not been delivered by the defendant to the maker. This being the situation, the corporation, having oh deposit with the defendant a sum of money exceeding the amount of these" notes, paid to the defendant the amount thereof, although not yet due, and obtained a delivery of the notes from the defendant. It subsequently appeared that this corporation was insolvent, but it is not alleged that the defendant had any knowledge or reason to suppose that it was insolvent or had notice of any fact to put it upon inquiry. It held these notes, indorsed by a perfectly'solvent indorser, and it had a right to dispose of them to any one that it pleased. At the request of the maker of the notes it transferred them to it and received the value thereof. Upon the trial the plaintiff conceded, and the court found, that the defendant acted in good faith in its transactions with the Broadway Trimmed Hat Company; that the defendant did not at any of the times mentioned have any knowledge or notice of any intent on the part of the Broadway Trimmed Hat Company, or its officers, .to give to this defendant a preference over other creditors of the said company ; that the defendant did not at any of the times mentioned have any intent oii its part to acquire a preference over other creditors of the Broadway Trimmed Hat Company, and that neither said company nor its officers had any intent in any of its transactions with tins defendant to create thereby a preference to this defendant over other creditors of the said Broadway Trimmed Hat Company; and that no transaction had by said company wdth this defendant did, in fact, create any preference to the defendant over other creditors of the Broadway Trimmed Hat Company.
I think that these findings are sustained by the evidence. What the defendant had and what it was entitled to retain was the obligations of the Broadway Trimmed Hat Company, secured by the indorsement on the. notes. It had a q>erfect right to sell those obligations ; and a sale of the instruments, either to the maker of the notes, to the indorser, or to a third party, was not a mere payment of the indebtedness, but was a transfer of the obligations, including *294the liability of the maker of the notes and the indorser. A transfer of that paper to the maker, with the indorsement • intact and the indorser liable for the payment of the notes when due, transferred the right of the defendant to collect the notes. I cannot see that there is any difference between a transfer of the obligation of an indorser upon a promissory note and the transfer of any other property held by a creditor to secure the payment of an indebtedness. ",
It is suggested that, notwithstanding this, transfer, the -defendant, upon the payment of the amount received by it from the corporation to the trustee in bankruptcy, would have the right to enforce the obligation of. the indorser; .but the obligation of the indorser necessarily depends, upon .the notes being presented for payment when due, and notice of non-payment thereof to the indorser ; and if these notes were never presented for payment, or notice of non payment giv.en to the indorser, I cannot see how the indorser can be held liable. By the defendant’s surrendering the notes to the maker, it parted with all interest iri the notes and put it out of its power to hold the indorser liable, and, so far as appears, the notes never were presented for payment when they became due. so as to hold the indorser. To treat this transfer of au existing valid obligation which the bank could enforce as a simple preference, void under the statute, without requiring the corporation or the trustee succeeding to its right to restore to the defendant the notes which it delivered to the corporation upon the payment, of the money, with the liability of the indorser intact, would be, it seems to me, a 'violation of settled legal principles. The' action is in equity to enforce a liability, designed to prevent the payment of favored creditors by a-corporation. It seems to me that this statute is not applicable where the substantial transaction is not solely the preference of a debt due by a corporation, but involves a transfer by a creditor of property or security which it held to secure the payment of the indebtedness, and where the creditor acts in entire good faith without any notice of the insolvency of the debtor or of ' any intent on its part to create a preference.
It has been assumed that the intent, of the creditor, or any knowledge or information sufficient to put the creditor upon inquiry as to the solvency of the debtor, or as to the intent with which á pay*295ment was made, is entirely immaterial; that all that has to be proved to entitle a trustee or receiver of a corporation to recover is an undisclosed intent on the part of the "debtor corporation to prefer one creditor over others. The statute provides that “no * * * payment made * * * by it (a corporation), or by any officer, director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid.” If the question were an open one, I should have considerable doubt as to whether the intent to give a preference to a particular creditor must not be an intent in which both the party making the payment and the party receiving the payment participated. A corporation transacting business, apparently solvent and in good credit, giving and receiving credit and paying its debts in usual course as they become due, may still be insolvent, although its condition be concealed from its creditors and others transacting business with it. It does not seem that it could have been the intent of this statute to justify a recovery from creditors whose debts have been paid, upon.proof that the corporation was insolvent and that its officers making the payment knew that it was insolvent, and from that adduce the inference that they or the corporation intended to create a preference. If this construction of the law is correct, years after a payment has been made by a corporation to a creditor, a trustee in bankruptcy or a receiver can recover back the money actually paid in satisfaction of an existing debt, merely because of an undisclosed intent of an officer of the corporation making the payment, when the money was received by the creditor in good faith in payment of the corporation’s conceded indebtedness to it. But certainly, where it appears that the transaction was not solely the payment of a debt, but obtaining from a creditor the security which the creditor held for the payment of a debt, a finding that no preference was intended within the statute should be sustained.
I think, therefore, that this judgment should be affirmed.
McLaughlin, J., concurred.
Judgment reversed, new trial ordered, costs to appellant to abide event.