Laundy v. First National Bank

71 P. 259, 66 Kan. 759, 1903 Kan. LEXIS 135

Opinion

Per Curiam:

A debtor deposited with his creditor certain book accounts to secure his obligation’ and within four months was adjudged to be bankrupt in involuntary proceedings. The petition in bankruptcy contained the following allegation:

“That on the 25th day of July, 1899, they, while insolvent, transferred and delivered a large number of valuable accounts of the value of about $500 to the First National Bank of Junction City, to secure the payment of $100, with the fraudulent intent to prefer said creditor, the First National Bank, over the other creditors.”

The creditor collected $141.87 of the accounts deposited with it, which the trustee of the bankrupt’s estate sued to recover. In his petition the trustee in bankruptcy alleged that the deposit of the accounts was both fraudulent and preferential. On the trial, the only evidence relating to the character of the transaction was the petition and adjudication in the bankruptcy proceedings. While the adjudication was conclusive of the question of insolvency, and of the insolvent’s intent, it was not sufficient to show that the creditor participated in the insolvent’s fraudulent intent, or that the creditor had reasonable cause to believe that the securing of its claim was intended as a preference. The .evidence was, therefore, insufficient to authorize a recovery by the trustee.

The judgment of the district court was correct, and is affirmed.