Court Opinion

ID: 9320524
Source: CourtListenerOpinion
Date Created: 2022-12-02 18:14:05.742097+00
Date Added: 2024-06-11T17:14:35.070332
License: Public Domain

TREAT, District Judge.
Upon a review of the facts of the case, without going through all the testimony presented, it is sufficient to say that it appears that August Brinkman knew that he was insolvent, and unable to pay all his debts, and, being hard pressed by some of his creditors, he determined to take care of his friends, who procured the executions to be issued with the purpose of getting ahead of the other creditors. The evidence really presents a case of a confederation between a debtor in failing circumstances and some of his creditors, by which the debtor confessed judgments with the intention of giving a preference to some, over the other, creditors. It is claimed by the respondents that the confessions of judgment were procured by their urgent solicitations, and by a pressure brought to bear upon the debtor, and by appealing to his fears, so that the confessions were not voluntary upon his part, but extorted from him by a kind of duress. The evidence shows no such case, but presents one of a purpose formed to accomplish what the bankrupt act forbids. Under the present act there' is no discrimination between cases of voluntary or involuntary preference. This matter has been well considered in the decision lately made by the United States district court in Michigan, in the case of Foster v. Hackley [Case No. 4,971], which discusses fully the provisions of sections thirty-six and thirty-nine of the act, and concludes that where the creditor has reasonable cause to believe that the act done was in fraud of the bankrupt act, or that there was an intention to prevent the property of the bankrupt from being equally distributed, that a fraud is worked, and the operation of the act is impeded; and that a conveyance of all his property by a debtor to one creditor, or set of creditors, is evidence of such intention; for if the transaction will, in fact, impede the operation of the statute, the parties must be supposed to know the consequence of their acts.
It is immaterial whether the confessions of judgments were voluntary or involuntary, and procured by pressure upon the debtor, and as the judgment creditors sought to procure a preference over other creditors, the assignee may proceed to recover "the property which has been seized and sold by the sheriff under the executions issued upon these judgments. It is claimed that the preference thus supposed to be obtained was not a voluntary preference given by the debtor, but was obtained from the debtor by operating upon his fears, and that the presence of the prosecuting attorney, who was also the attorney of the • creditors, operated to produce such fears. But the attorney tells us that when he saw the bankrupt he assured him that there was no danger; and it is apparent from the evidence that, whatever threats may have been made, they did not proceed from these judgment *116creditors; and then the bankrupt proceeded to do an act which exposed him to penalties provided in the act A trader is insolvent when he cannot pay his debts in the ordinary course of trade and business. Here was a debtor in failing- circumstances, against whom attachments had been issued, who enters into a contrivance to defeat the attachments and the impending levy thereof. The whole proceeding was fraudulent and void under the provisions of the statute. A decree will be entered for the value of the property sold by the sheriff; and as no evidence is presented of such value, except the amount of the sales made by him, the decree will be for the gross-amount of the sales as returned in his answer, and the judgment creditors must be left to pay the costs of their own suits. The court, upon the statement of the counsel for the parties, that the suit had been conducted by a sort of amicable arrangement, for the purpose of fairly testing the questions of law, so far modified its decree as to adjudge the sheriff to pay over to the assignee the net instead of the gross amount of sales.