Hinkleman, Jackson & Co. v. Fey

Boyd, J., delivered the opinion of the Court. The petition of the appellants was filed in the Circuit Court for Alleghany County, on October 17th, 1893, al ¹¹³ leging that the appellee, John T. Fey, was a merchant in Alleghany County; that, although indebted in large sums of money, which he was unable to pay, and being insolvent, and in contemplation of insolvency, he executed a mortgage on October 9th, 1893, to Robert R. Henderson, on his real and personal property, for the sum of |3000; that said mortgage contains and works an unlawful preference, and was made with the intent to hinder and defraud the creditors of said Fey, especially the petitioners, and that the mortgage and preference therein contained were unlawful, fraudulent and void. The petition then charges that said Fey has committed an act of insolvency contrary to the laws of Maryland, prays that he may be adjudicated an insolvent, and that the mortgage may be set aside and declared null and void. Robert R. Henderson and John T. Fey filed separate answers to the petition, both of which denied that Fey was insolvent, that the mortgage worked any unlawful preference, or that it was made with intent to hinder and defraud the creditors of Fey.

They allege that the mortgage was given to secure the sum of three thousand dollars bona fide and actually loaned and paid to Fey by Henderson at the time of the execution of the mortgage. The case was tried before the Court, a jury trial having been waived. The Court adjudicated Fey an insolvent, but adjudged the mortgage of Henderson to be bona fide within the meaning of the law, declared it a valid lien, and directed the trustees appointed to hold the property subject to the operation of the mortgage. The appeal of Fey from the order adjudging him an insolvent having been dismissed by him, the sole question to be disposed of is, whether the mortgage is valid under the insolvent laws of this State.

The only witness examined at the trial of the case was Mr. Henderson. He testified that Fey told him he wanted to borrow the money to pay debts with; that he gave him a statement showing ¹¹⁴ that he had assets valued at $14,200, and that his liabilities were $6150; that Fey “said he must raise thirteen hundred dollars to return to the City, money which he owed it as its treasurer, and that if he could get three thousand dollars altogether, he could pay that and divide the balance among such other obligations as. were pressing in such a way as to obtain entire relief until he could collect his book accounts, and out of them and out of his business pay all his