Lee v. Franklin Ave. German Sav. Inst.

15 F. Cas. 155, 3 Nat. Bank. Reg. 218

Opinion

THE COURT

held that, although the deed of trust executed by the bankrupt did in fact give a preference to the savings institution, yet, that its officers did not at the time know that the bankrupt was insolvent, and did not have reasonable cause to believe him to be insolvent, or to be acting in contemplation of bankruptcy or insolvency, and that the security was valid.

THE COURT further held, as the defendant had enforced its security by a sale under the deed of trust after the filing of the petition in bankruptcy, without proving its debt as secured creditor, the sale was invalid; but as the property had sold for a fair price, and for as large a sum as it would probably bring upon a resale, that upon application of the saving institution, due proof of the debt being made before the register, the sale would be confirmed upon payment of the costs of the suit. The defendant, upon a subsequent day, made proof of its debt, and applied for a confirmation of the sale, which was granted by the court upon payment of the costs of the suit, and the defendant was allowed to stand as a general creditor for the unpaid balance.