Sessions v. Johnson - 95 U.S. 347 (1877)
U.S. Supreme Court
Sessions v. Johnson, 95 U.S. 347 (1877)
Sessions v. Johnson
95 U.S. 347
On April 5, 1870, A., in order to secure B. as his endorser, made a mortgage of certain property. This mortgage the latter, on the thirteenth of that month, assigned to C., to secure a debt due him. Oct. 4, A. made a second mortgage of the same and additional property to D. for $4,000, which sum D. paid to B. as the agent of A., whereupon B. paid certain notes of A. upon which he as well as D. was liable as endorser. On the 12th of October, A. sold the entire property covered by both mortgages to E. for $6,000, and received the tatter's notes in payment. Of them, $2,444.40 was delivered to C., and $3,555.60 to D., who thereupon released their respective mortgages. Proceedings in bankruptcy were commenced against A. Nov. 2,1870, and he was duly adjudicated a bankrupt. His assignees then sued D. for the value of the property covered by his mortgage, and obtained, by a compromise, a judgment for $34,000, which he satisfied. They subsequently sued him for the amount paid on the said notes
whereon he was liable as endorser. This suit was compromised by his paying $2,000. The assignees thereupon released all claims and demands against him, and brought the present action to recover from C., who was note a creditor of A., the $2,444.40, on the ground that it was, in fraud of the Bankrupt Act, and within six months before the filing of the petition in bankruptcy, paid to him to secure him as endorser for B., he having reasonable cause for believing A. to be insolvent, and that he thereby prevented the property from coming to the assignees for distribution, and sought to impede the operation and evade the provisions of that act.
1. That it was incumbent upon C. to show that B. took up the notes to secure the payment of which the mortgage to the latter had been executed.
2. That, in the absence of such proof, the amount received by C. was clearly a preference by way of indemnity.
3. That the action was not barred by the satisfaction of the judgment against D.
4. That the court having charged that, if the assignees had received from D. full satisfaction for the proceeds of the sale, there could be no recovery in this action, the verdict in favor of the assignees is upon that point conclusive against C.
5. That the inquiry whether C. had paid any thing for A. was properly submitted to the jury.
The facts are fully stated, and the assignment of errors is set forth in the opinion of the Court.