Chism v. Citizens' Bank of Clarksdale

77 Miss. 599 | Miss. | 1900

ThRbal, J.,

delivered the opinion of the court.

John B. Chism, trustee of the estate of William Silverblat, a bankrupt, sued the Citizens’ Bank of Clarksdale for $300, as a preferred payment of that sum to the bank by said Silverblat within four months of his bankruptcy, the bank then knowing of his insolvency and of the payment of said sum as a preferred payment, and thereby the bank received a grater percentage of its debt than other creditors of the same class.

The transaction between Silverblat and the bank was directly in the face of the statute. The bankrupt act of 1898 plainly provides that a transfer, while insolvent, of any portion of his property to one of his creditors with -intent to prefer such creditor over his other creditors, shall be an act of bankruptcy by such transferer. Section 60 declares: “A person shall be deemed to have given a preference, if being insolvent he has procured a transfer of any of his property, and the effect of the transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.”

And it further provides that the trustee may treat as void a preference given within four months of bankruptcy to a person receiving it, having reasonable cause to believe it intended as a preference: and that such trustee may recover such property or its value.

The $300 paid by Silverblat to the bank is property (2 Bou-vier’s Law Diet., 662). Collier, in his forms in bankruptcy, in giving the form of a schedule of the bankrupt’s property, gives the first item as cash; and the bankrupt act gives to the trustee a right of action against a person knowingly receiving a transfer of property from his insolvent debtor within four months of his bankruptcy, by which he receives a greater percentage of his debt -than other creditors of the same class.

The object of the bankrupt law is to pay all creditors of the same class pro raiaj to work, equality of payment among creditors. Collier on Bankruptcy, pp. 41-46; Id., 299 et seq.

“A preference is an advantage in the payment of a debt due him, acquired by one creditor over other creditors.” In re Horton, 5 Benedict, U. S. D. C. R., 562; Black on Bankruptcy, 1898, p. 188,

The motive of the bankrupt is not a matter of consideration. However good the motive may be it does not affect the question; the intent is the point of inquiry, and that is taken h> arise out of the act. If a payment is made by an insolvent, knowing himself to be an insolvent, the intent to prefer is conclusively presumed, and if a creditor of a bankrupt knowingly obtains a payment which gives him a greater percentage of his debt than other creditors receive, the transaction is condemned by the bankrupt lawn Collier on Bankruptcy, p. 41 et seq.

2. It was not necessary for the trustee to obtain an order of the bankrupt court before suing. It is the plain duty of the trustee of the estate of the bankrupt to collect the debts due to it without waiting for the special directions of the court. By his appointment as trustee he is clothed with the legal title to the estate of the bankrupt, and it is his duty to collect, by suit if necessary, the .debts due to it, and' his failure to do so would render him liable for any loss incurred by his negligence. His right to sue is incident to his title and duty in the premises, and it is not necessary for him to obtain an order of the bankrupt court to justify him in maintaining a suit for the protection of the estate committed to him.

The circuit court of Coahoma county had undoubted jurisdiction of this suit. See, also, as settling both questions in this case, In re Conhaim, 97 Fed. Rep., 923, and Perkins v. McCauley, 98 Fed. Rep., 286, cited in February No., pp. 70-72 of advance sheets of American Digest by West Publishing Co.

Reversed and remanded.