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United States Supreme Court

81 U.S. 244

Gibson  v.  Warden

APPEAL from a decree of the Circuit Court for the Southern District of Ohio, in a bill in equity filed by Warden & Ludlow, assignees of Moore & Co., against David Gibson, and against Gaylord, Son & Co., and other defendants. The matter in issue was the validity, in view of the bankrupt law, of two chattel mortgages, given by the bankrupt, one to the said Gibson, and the other to the said Gaylord, Son & Co. The mortgages were asserted to be frauds on the bankrupt law, as coming within either the first clause or the second of the 35th section of the Bankrupt Act. The first clause reads thus:

'If any person being insolvent, or in contemplation of insolvency, within four months before the filing of the petition by or against him, with a view to give a preference to any creditor or person having a claim against him, or who is under any liability for him, procures any part of his property to be attached, sequestered, or seized on execution, or makes any payment, pledge, assignment, transfer, or conveyance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, assignment, transfer, or conveyance, or to be benefited thereby or by such attachment, having reasonable cause to believe such person is insolvent, and that such attachment, payment, pledge, assignment, or conveyance is made in fraud of the provisions of this act, the same shall be void, and the assignee may recover the property, or the value of it, from the person so receiving it, or so to be benefited.'

The second clause read thus:

'And if any person being insolvent, or in contemplation of insolvency or bankruptcy, within six months before the filing of the petition by or against him, makes any payment, sale, assignment, transfer, conveyance, or other disposition of any part of his property to any person who then has reasonable cause to believe him to be insolvent, or to be acting in contemplation of insolvency, and that such payment, sale, assignment, transfer, or other conveyance is made with a view to prevent his property from coming to his assignee in bankruptcy, or to prevent the same from being distributed under this act, or defeat the object of, or in any way impair, hinder, impede, or delay the operation and effect of, or to evade any of the provisions of the act, the sale, assignment, transfer, or conveyance shall be void, and the assignee may recover the property, or the value thereof, as assets of the bankrupt. And if such sale, assignment, transfer, or conveyance is not made in the usual and ordinary course of business of the debtor, the fact shall be prim a facie evidence of fraud.'

The court below decreed that the mortgages were invalid, and secured no priority, and that the defendants stood on the footing of general creditors. Gibson appealed, as did Gaylord & Sons; the other defendants did not appeal.

Mr. Aaron F. Perry, for the appellant, Gibson; Mr. E. M. Johnson, for the appellants, Gaylord & Son; no counsel for the appellees.

Mr. Justice SWAYNE stated the case more particularly, and delivered the opinion of the court.

NotesEdit

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).