NATIONAL BANK OF ATHENS
v.
SHACKELFORD, TRUSTEE IN BANKRUPTCY FOR WEBB

U.S. | 1915-11-08
No. 40
239 U.S. 81 Supreme Court of the United States (1915) Caution
Also reported at: 60 L. Ed. 158 · 36 S. Ct. 17 · SCDB 1915-055 · 1915 U.S. LEXIS 1514
Cited by 35 cases

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Synopsis

The National Bank of Athens claimed a valid mortgage lien on real estate of a bankrupt debtor, but the mortgage deed was not recorded until hours before the bankruptcy petition was filed, having been executed months earlier. The Supreme Court affirmed the lower courts' findings that the mortgage was void as to creditors because it was fraudulently withheld from the public record with the understanding that recordation would harm the debtor's credit, establishing that such conduct constitutes fraud under bankruptcy law.

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Opinion of the Court
Mr. Justice McReynolds

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 6,1911, 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 Duggan, 183 Fed. Rep. 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 Fed. Rep. 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, 78; Stuart v. Hayden, 169 U. S. 1, 14. An examination of the record reveals no clear error, and, accordingly, the judgment appealed from must be

Affirmed.

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Citator

Cited By (14 total)

  • Finefrock v. Kenova Mine CAR Co., 22 F.2d 627 (4th Cir. 1927)
    …, but withheld from record, by understanding or agreement, may be avoided at the suit of a trustee in bankruptcy, as property transferred in fraud of creditors, under section 70, National Bankruptcy Act (11 USCA § 110). National Bank v. Shackelford, 239 U. S. 81, 36 S. Ct. 17, 60 L. Ed. 158; Fourth National Bank v. Willingham (C. C. A.) [*634] 213 F. 219; In re Lamie Chemical Co. (C. C. A.) 296 F. 24; Crothers v. Soper (C. C. A.) 10 F.(2d) 793. See, also, Reynolds v. Gawthrop, 37 W. Va. 3, 16 S. E. 364. In…
  • United States v. O'Donnell, 303 U.S. 501 (U.S. 1938)
    …iption of the deed to Castro. United States v. State Investment Co., 264 U. S. 206, 211; Shappirio v. Goldberg, 192 U. S. 232; cf. Page v. Rogers, 211 U. S. 575; Washington Securities Co. v. United States, 234 U. S. 76; National Bank v. Shackleford, 239 U. S. 81; Risty v. Chicago, R. I. & P. Ry. Co., 270 U. S. 378. Nor is the fact that a patent has issued to California, in obedience to the judgment in the mandamus proceeding brought by respondents in Work v. United States ex rel. O’Donnell, supra, decisive…
  • Bodkin v. Edwards, 255 U.S. 221 (U.S. 1921)
    …uch concurring findings unless clear error is shown. Page v. Rogers, 211 U. S. 575, 577; Washington Securities Co. v. United. States, 234 U. S. 76, 78; Wright-Blodgett Co. v. United States, 236 U. S. 397, 402; National Bank of Athens v. Shackelford, 239 U. S. 81. No such error is shown by the record before us. Besides, it does not contain all the evidence that was before the courts below, a part having been omitted under the appellant’s specification of what should be included. In these circumstances, to re…

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