
    No. 791
    FIRST TRUST & SAV. BK. v. GUARDIAN SAV. & TR. CO.
    Ohio Appeals, 5th Dist., Stark Co.
    No. 869.
    Decided Oct. 17, 1927.
    First Publication of this Opinion.
    Judges Richards, Williams and Lloyd of the 6th Dist., sitting.
    645. INSOLVENCY — Where conveyance, which is invalid because made in contemplation of insolvency, is made to secure additional loan, such conveyance is mortgage lien upon property conveyed to extent of such additional loan.
    Appeal from Common Pleas.
    Decree for plaintiff.
    Urban A. Wernet and Lynch, Day, Fimple & Lynch, Canton, for First Tr. & Sv.
    Atlee Pomerene, Canton, and C. R. Megerth and Squire, Sanders & Dempsey, Cleveland, for Guardian Co.
   WILLIAMS, J.

This cause comes to this court on appeal from the court of common pleas, and is an action to set aside a conveyance of property, by the defendant, The David Motor Car Co. to the defendant, the Guardian Savings & Trust Co. The court below found in favor of the plaintiff, and the defendant, the Guardian Savings & Trust Co., appeals.

The defendant, The David Motor Car Co., was an Ohio corporation, engaged in selling Star and Durant cars in several counties in the State of Ohio. At the time of the execution of the conveyance, it was indebted to the plaintiff in the sum of $22,500, to the George D. Harter Bank of Canton, $26,495.70, and to the defendant, the Guardian Savings & Trust Co., $50,000, making a total indebtedness, to banks alone, of $98,998.70. The evidence discloses, beyond question, that the David Motor Car Co. was in straightened circumstances and unable to pay its debts as they matured, in the ordinary course of business. ,

The action is brought under 11104 and 11105 GC., which make provision, in substance, that a sale, conveyance, transfer, mortgage or assignment, made by a debtor in contemplation of insolvency and with design to prefer one or more creditors, shall be void as to creditors of such debtor or debtors at the suit of any creditor or creditors.

We find that, at the time the conveyance was made, The David Motor Car Co. was insolvent, that the conveyance was made in contemplation of insolvency, and, as to the existing indebtedness owing to the Guardian Savings & Trust Co., was made with a design to prefer the defendant, The Guardian Savings & Trust Co., as a creditor, to the exclusion of other creditors, and as to such existing indebtedness, was made with intent to _ hinder, delay and defraud creditors, all with the knowledge of the defendant, The Guardian Savings & Trust Co. The conveyance was therefore invalid insofar as it worked a preference as to such existing indebtedness. We find that at the time the conveyance was made it was given to secure an additional loan of $19,000, made at that time, and to this extent it is a first mortgage lien upon the property conveyed.

The decree will be entered substantially in the form in which it was entered in the Court of Common Pleas.

(Richards and Lloyd, JJ., concur.)  