National Bank v. Warren

National Bank v. Warren. The mere non-resistance of a debtor to judicial proceedings' in which a judgment was rendered against him, when the debt was due and there was no valid defence to it, is not the suffering and giving a preference undér the Bankrupt Act; and the judgment is not avoided by the facts, that-he does not file the petition in bankruptcy, and that his insolvency was known to the creditor.' Appeal from the Circuit Court of the United States for the Southern District of New York. The Tenth National Bank of New-York, having an uúdisputed debt against the firm of Sanger & Co., of about' $10,000, endeavored to obtain its money by persuasion, but received only fair words in return. After pursuing this policy for several months, it brought suit against the debtors, Nov. 3, 1870. They received delay and indulgence in its prosecution, and judgment was rendered against them oñ the 12th of January, 1871. Execution was issued on that day, and a levy made upon their property: Yielding again to their solicitations, the bank did not press an immediate sale under the execution, and on the 24th of February, 1871, bankruptcy- proceedings were commenced .by their other creditors. The sale upon .the execution was stayed by an injunction in the present suit,.which was instituted by Warren & Rowe, assignees in bankruptcy of Sanger & Co., to set aside the judgment and execution as fraudulent and void. ■ • This injunction was afterwards, modified by allowing a sale, and directing the sheriff to hold..the proceeds subject to the order of the court. The District Court ultimately dismissed the bill with' costs. That decree having,- <?n appeal, been reversed by the Circuit • Court, the bank.brought the case here. Mr.- A. J. Vanderpoel for the appellant: This case is, in substance; identical with Wilson v. City Bank, 17 Wall. 473. - There is no evidence whatever of any intent to give the bank a preference. Partridge v.. Dearborn, 2 Low. 286; Hoover v. Greenbaum, 61 N. Y. 805; Sleek v. Turner, 76 Pa. St. 142; Henkelman v. Smith, 42 Md. 164. • Mr. Austen G. Pox, contra: This case comes within the class of cases represented' by Buchanan v. Smith (16 Wall. 277), and not that representedbyWilson v. City-Bank (17 id. 473). The liens obtained by the bank were a preference, and there .fore void as against the assignees in bankruptcy. [MAJORITY — Mr. Justice Hunt,] Mr. Justice Hunt, after stating the case, delivered the opinion of the court'. This action goes upon the theory that the mere non-resistance of a debtor to judicial proceedings against him, when the debt is due and there is no valid defence to it,-is the suffering and giving a preference under the Bankrupt Act. This theory is expressly repudiated in the .case of Wilson v. City Bank, 17 Wall. 473. It is also held- in that case that the facts that the debtor does not hiinself file the petition in bankruptcy under such circumstances, and that the creditor was aware of the insolvency of the debtor, do not avoid the judgment and execution. In the present case, there is hot proven a single fact or •circumstance tending to show a concurrence or aid on the part of the debtors in obtaining the judgment or securing the payment of the debt. Their only effort was to obtain delay, apparently in the hope of • relief from the • embarrassments which finally overwhelmed them. The decree of the Circuit Court must be reversed, and that of the District Court, dismissing the bill with costs, affirmed; and it is ■ So ordered.