Court Opinion

ID: 8762694
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:12:51.844403+00
Date Added: 2024-06-11T17:01:40.164229
License: Public Domain

ROSS, Circuit Judge,
after stating the case as above, delivered the opinion of the court.
Subdivisions “a” and “b” of section 60 of the act entitled “An act to establish a uniform system of bankruptcy throughout the United States” (Act July 1, 1898, c. 541, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445]), as amended by the act approved February 5, 1903 (32 Stat. 799, c. 487, § 13 [U. S. Comp. St. Supp. 1905, p. 689]), are as follows:
“(a) A person shall be deemed to have given a preference if, being insolvent, he has, within four months before the filing of the petition, or after the filing of the petition and before the adjudication, procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to' enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class, Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of the recording or registering of the transfer, if by law such recording or registering is required.
“(b) If a bánkrupt shall have given a preference, and the person receiving it,' or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person. And for the purpose of such recovery, any court of bankruptcy, as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.”
Passing the failure of the bill to allege that Costigan was, in fact, insolvent at the time of the execution of the deeds referred to, we agree with the District Court that the failure to record the deeds given by Costigan to Fairbanks until after he was adjudged a bankrupt is not, of itself, sufficient to make such deeds an unlawful preference within the meaning of the above-quoted provisions of the bankruptcy act; for, under the provisions of the statute of California, the instruments in qúestion were valid as between the parties thereto and against the general creditors of Costigan, without recordation, if otherwise free from vice.
By section 1217 of the Civil Code of California, it is provided that:
“An unrecorded instrument is valid between the parties thereto, and those who have notice thereof.”
The word “instrument,” as used in the provisions of the Code, said the Supreme Court of that state in the case of Hoag v. Howard, 55 Cal. 564, 565, “will be invariably found to indicate some written paper or instrument signed and delivered by one person to another, transferring the title or creating a lien on property, or giving a right to a debt *549or duty.” And in the case of Bank of Ukiah v. Petaluma Savings Bank, 100 Cal. 590, 35 Pac. 170, the court said:
“The lien of an -unrecorded mortgage, given to secure a loan, is created by the mere execution and delivery of the morigage, and takes precedence over a judgment or judgment lien obtained after its execution.”
See, also, In re Hunt (D. C.) 139 Fed. 283; Rogers v. Page, 140 Fed. 596, 605, 72 C. C. A. 164, and cases there cited.
But, as said by the Court of Appeals for the Eighth Circuit in Rogers v. Page, supra:
“There is a distinction between a mere negligent failure to record a mortgage or deed, and a deliberate agreement to do so, although the mere fact of an agreement to withhold from record is not of itself such evidence of a fraudulent purpose as to constitute a fraud in law. It is, however, a circumstance constituting more or less cogent evidence of a want of good faith according to the particular situation of the parties, and the intent as indicated by all of the facts and circumstances of the particular case.”
In the bill'under consideration there is not even an averment of an agreement on the part of the defendants to withhold from record the deeds in question, much less any direct averment that the deeds were withheld from record by the agreement of the parties for the fraudulent purpose of giving to the bankrupt a false credit, or that the grantee concealed the fact that such deeds were made with fraudulent intent to deceive and defraud the creditors of the grantor. We agree with the district judge that it is not sufficient to simply allege probative facts from which it may be argued that there was such agreement or active concealment. Rogers v. Page, supra, and cases there cited. See, also, Blennerhasset v. Sherman, 105 U. S. 118, 26 L. Ed. 1080; Curry v. McCauley (C. C.) 20 Fed. 583; Smith v. Craft (C. C.) 17 Fed. 705; Stephens v. Sherman, Fed. Cas. No. 13,369a.
Nor are the allegations of the bill as amended sufficient to justify a decree adjudging the deeds in effect mortgages, for the reason that there is no averment that it has ever been claimed by either of the defendants to the bill that the deeds were absolute conveyances or other than security for money loaned, and therefore in effect mortgages. As, therefore, the bill as amended stated no ground for a decree adjudging the instruments mortgages, the judgment of the District Court, to the effect that the complainants take nothing by their amended complaint and that the defendants go hence without day, cannot be a bar to any subsequent action to have the purported deeds declared mortgages, in the event such action shall become necessary.
The judgment is affirmed.