Court Opinion

ID: 7064137
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:24:08.221735+00
Date Added: 2024-06-11T16:12:18.395526
License: Public Domain

*485Dissenting Opinion.
Eoby, J.
It was held by this court in Goldberg v. Harlan (1904), 33 Ind. App. 465, that no demand was necessary before action by a trustee in bankruptcy to recover an unlawful preference. That decision is controlling here. In determining the quality of appellant’s action, both the jury and this court are limited to a consideration of the facts known by it or with knowledge of which it was chargeable at the time of the transaction. These facts were that Key had overdrawn his account with appellant $5,725.78, and had deposited collateral notes to the amount of $7,800 to secure such overdraft; that some of said notes were overdue when the payment- in question was made; that no steps had been taken to collect them; and that appellant’s officer, testifying with reference to a portion of them, said “that we never regarded them as of any particular value” and that under this state of affairs it accepted certain payments from Key.
It is stated in the main opinion that all the notes held as collateral except one were forgeries, and that appellant knew that $5,000 thereof were worthless. I do not believe that appellant knowingly loaned money upon forged col-laterals, and I do not find any evidence justifying the statement that it knew $5,000 of such collaterals were worthless.
The case is reduced to the single proposition which may be illustrated as follows: One holding $7 of collateral notes as security for payment of $5 due obtains an unlawful preference by accepting payment of $5 although he thus releases and renders available to other creditors $7 worth of assets. It is stated in the main opinion: “It follows, therefore, that the payment made by an insolvent debtor to his creditor, who holds collaterals as security for the debt, is as much an unlawful preference within the meaning of the bankruptcy law as it is where such payment *486is made under like circumstances upon the note of the insolvent debtor which is secured by solvent indorsers.”. Unfortunately the cases cited in support of this conclusion-do not sustain it. The verdict can not be sustained except by the legal proposition thus stated in the main opinion; and, it being erroneous, the cause should be reversed.