Bank of Italy v. Welbilt Auto Body Co.

The facts upon which this appeal is predicated are that the defendant bought some lumber from a man by the name of Bergman, in payment of which the defendant gave its trade acceptance to Bergman, payable about sixty-seven days from the date thereof. Some years preceding such transaction Bergman, who theretofore had become indebted to the plaintiff bank, was adjudicated a bankrupt. The debt owing by Bergman to the bank, although listed by Bergman in his schedule of liabilities in the bankruptcy proceeding, was not paid either in whole or in part, but on his. discharge in bankruptcy Bergman was legally relieved from the necessity of paying such debt. In addition thereto, at the time the transaction here involved occurred the statute of limitations had run against the debt. After Bergman had received the trade acceptance, but before its maturity, he indorsed it to the bank in attempted part payment of the said debt theretofore contracted by him in favor of the bank, and the trade acceptance was received by the bank without notice of any defense by the drawer (defendant) thereto. As testified by an officer of the bank, no immediate credit was given Bergman’s former account by reason…