Appeal from the District Court of the United States for the Western District of Pennsylvania; F. P. Schoonmaker, Judge.
Before WOOLLEY and DAVIS, Circuit Judges, and JOHNSON, District Judge.
This is an appeal from the order of the District Court for the Western District of Pennsylvania disallowing the claim of Schloss Bros. & Co., Inc., the appellant, against the estate of J.G. Bennett Company, a bankrupt. The Monongahela National Bank, an objecting creditor, joined the trustee in opposing the claim.
Before the transaction in question was effected in November 1926, the J.G. Bennett Company, the bankrupt, was apparently in a sound financial condition. In October, 1926, it borrowed a considerable sum from the Monongahela National Bank; a greater part of the loan being outstanding at this time.
On November 3, 1926, T. C. Wilson, the president and general manager of the J.G. Bennett Company, applied to the appellant for a personal loan of $50,000 to enable him to finance the purchase of the outstanding stock of the bankrupt. That fact was known to the appellant. The appellant told Wilson that it would not make a personal loan, but would arrange to discount a note of the J.G. Bennett Company. To this Wilson replied that he would give his own note indorsed by the company, representing that he was authorized to make the indorsement. The note was prepared at that time, the bankrupt being the payee; Wilson, the maker; and the bankrupt, the indorser, by Wilson. The original note was for the sum of $50,000, payable in 90 days. The note was renewed from time to time until January 29, 1928.
At the time of the transaction the following letter was prepared and signed:
"Messrs. J.G. Bennett & Co., Inc., Pittsburgh, Pa.
"Gentlemen: Referring to our interview with your Mr. T. C. Wilson today and in accordance with his request we are pleased to inform you that we have arranged a loan for you of $50,000, on the note of Mr. Wilson made payable to your corporation and endorsed by yourselves.
"The note to be for a period of ninety days at 6% per annum, payable in advance and the note will be renewed or extended from time to time as long as same may be needed by you and your business continues to show good progress and the security remains unimpaired and upon the further conditions that you will handle our clothing each season and give us a reasonable amount of business and keep a satisfactory account with us otherwise and furnish such statements, of your business or financial condition as may be required from time to time.
"We are very glad to make this arrangement for you and look forward to long continued pleasant dealings and you may also rest assured that we are always glad to do all we can for your interests.