The Federal Reporter with Key-Number Annotations, Volume 272: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States and the Court of Appeals in the District of Columbia, June-August, 1921. Page: 34
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272 FEDERAL REPORTER
the bankrupt, J. R. Crites, and is for a decree declaring certain mort-
gages null and void and for the specific recovery of the sum of $16,-
000 from the defendant bank.
The action involves the question of the validity of three certain
chattel mortgages given by the bankrupt, J. R Crites, to the defend-
ant, Farmers' State Bank, under date of October 11, 1917, for an in-
debtedness amounting to the sum of $22,837. These three chattel
mortgages covered all of the property of the bankrupt, and it is the
contention of the plaintiff in error, and as alleged in the complaint,
that the three chattel mortgages are and were null and void, so far as
the creditors of the bankrupt, Crites, are concerned, by reason of the
fact that they were given to hinder, delay, and defraud the creditors
of the said bankrupt.
Prior to the execution of the mortgages in question, the bankrupt
and defendant bank had been operating under a certain business ar-
rangement having the earmarks of a joint adventure. Plaintiff in error
alleged that the defendant bank knew at the time of the execution of the
chattel mortgages that the bankrupt was indebted to other creditors,
and that the bank knew or had reasonable cause to believe that the bank-
rupt was insolvent, and that his property or the property of his busi-
ness at a fair valuation was not sufficient to pay his indebtedness in
full; that the chattel mortgages were excuted by the bankrupt, Crites,
at the solicitation of the defendant bank, with the suggestion and in-
ducement to the bankrupt that it would prevent other creditors of the
bankrupt from collecting their debts by an action at law; that the said
chattel mortgages were accepted by the Farmers' State Bank with the
fraudulent intention to hinder, delay, and defraud the other creditors
of the bankrupt; and that the purpose of the bankrupt and defendant
bank in executing and accepting the chattel mortgages was to hinder,
delay, and defraud the other creditors of the bankrupt, by preventing
the creditors from collecting their claims by an action at law, and said
transfers were in fraud of the creditors of the bankrupt, Crites, and
in violation of the bankruptcy laws of the United States (Comp. St.
9585-9656), and of the laws of the state of Montana, and espe-
cially sections Nos. 5757 to 5773, inclusive.
Defendant filed its answer, denying the above, and alleging that the
chattel mortgages were executed to secure an indebtedness of $22,825.
Plaintiff filed his reply, denying the allegations in general of defend-
ant's answer, and, upon the trial of the action before a jury, evidence,
both oral and written, was introduced by both plaintiff and defendant.
Upon the close of the case, defendant moved the court to direct the
jury to return a verdict for defendant on the ground of failure of
proof, and the court ordered that said motion be granted, and direct-
ed the clerk to enter such verdict, to which plaintiff took exception.
The mortgaged property was sold under the mortgage and purchased
by the defendant. It is not charged that there was any irregularity m
 Section 47a, subdivision 2, of the Bankruptcy Act, as amended
June 25, 1910 (36 Stat. 838-840, 8; Comp. St. 9631), provides:
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The Federal Reporter with Key-Number Annotations, Volume 272: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States and the Court of Appeals in the District of Columbia, June-August, 1921., legislative document, 1921; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38843/m1/56/: accessed April 29, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.