A mortgage given for valuable consideration more than four month
before the petition was filed held
fraudulent and void a
to creditor because fraudulently withheld from record until the day
the petition was filed.
In this case, both courts below having concurred in finding as
matter of fact that the mortgage was void because executed and
withheld from record for the purpose of hindering and defrauding
creditors, this Court follow the rule that such finding will not be
disturbed unless clearly shown to be erroneous.
208 F. 677 affirmed.
The facts, which involve the validity of a mortgage lien on the
property of the bankrupt, are stated in the opinion.
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
This controversy arose in a bankruptcy proceeding, and was begun
in the United States District Court for the Northern District of
Georgia. Appellant claims that it holds a valid lien on certain
real estate in the City of Athens, formerly the property of the
bankrupt, Webb, under a mortgage deed executed by him November 6,
Page 239 U. S. 82
but not recorded until noon, August 14, 1912, a few hours before
the petition in involuntary bankruptcy was filed. Among other
things, the trustee asserts that the mortgage is void as to
creditors because fraudulently withheld from record. Bankruptcy
Act, § 70, c. 541, 30 Stat. 544. Georgia Code, 1910, § 3224.
Having heard the witnesses and upon the entire evidence, the
district court, citing and purporting to follow In re
183 F. 405 (1910), found and adjudged the deed invalid
as against general creditors. Affirming this action, the Circuit
Court of Appeals for the Fifth Circuit declared:
"The evidence in this case tends strongly to show that, although
the mortgage given by the bankrupt to the appellant was for a valid
consideration and effective as between the parties thereto, the
same, by understanding, if not agreement, was withheld from record,
so as not to affect the mortgagor's credit, and we therefore concur
with the trial judge in his disposition of the case."
208 F. 677, 678. In the Duggan
case, the same court had
held fraudulent and void, both as to prior and subsequent
creditors, a chattel mortgage executed by a bankrupt but withheld
from record under agreement so to do because of the effect which
recordation would have on her credit.
Considering all said and adjudicated by the two courts below, we
must conclude they concurred in finding, as matter of fact, that
the mortgage in question was void as to creditors because executed
and withheld from record for the purpose of hindering, delaying, or
defrauding them. The rule is well settled that a finding of this
nature will not be disturbed upon review here unless clearly shown
to be erroneous. Washington Securities Co. v. United
States, 234 U. S. 76
234 U. S. 78
Stuart v. Hayden, 169 U. S. 1
169 U. S. 14
examination of the record reveals no clear error, and, accordingly
the judgment appealed from must be