33 Ind. App. 465 | Ind. Ct. App. | 1903
Appellee Albert G. Harlan is the trustee in bankruptcy for Hannah Hadel and Flora Kempner. Max Kempner is the husband of Flora Kempner, and was the manager of the business of the firm of Hadel & Kempner. Jacob Goldberg was a surety on a note due from said
The facts relied upon and stated in the complaint of the trustee were the following: That in January, 1900, Jacob Kahn, Henry Kahn, and Jacob Yohlbach filed in the district court of the United States for the district of Indiana their petition for involuntary bankruptcy against the appellants, Hannah Nadel and Plora Kempner, as partners, then and theretofore doing business as Nadel & Kempner— they then being citizens and residents of the State of Indiana, and doing business in the city of Elkhart, in said State — praying said district court to adjudge said appellants bankrupts; that notice was given to said appellants of the filing of said petition, and such proceedings were had, that upon an appearance to said petition by said appellants, and after due consideration, to wit, on the 2d day of March, 1900, the said appellants Were by said court duly adjudged involuntary bankrupts; that thereafter, immediately, the said cause was referred by order of said court to the referee in bankruptcy having jurisdiction in said county, and notice was given to the creditors for a meeting, fixing the time and place, and at such meeting the appellee was chosen by said creditors as trustee in bankruptcy, and that thereupon, on the 9th day of April, 1900, aj>pellee qualified by, giving a bond as such trustee, and his appointment was duly approved; that on the 19th day of March, 1900, the said bankrupts filed their schedule in bankruptcy, but failed, neglected, and omitted to name in said inventory all of their property which should have been turned over to the trustee; that some two or three years prior to January, 1900, the husband of the appellant Hannah Nadel and the husband of the appellant Plora Kempner were partners doing business in the city of Elkhart, aforesaid; that they
The relief asked, as shown by the prayer of the .complaint, was as follows: “In consideration whereof and inasmuch as the plaintiff is, entirely without remedy according to the strict rules of the common law, and can only have relief of an equitable character, plaintiff prays that all of said goods and chattels and merchandise, and goods and chattels of whatever character charged to be the assets of said firm, and such land and book accounts, be decreed to be assets of the estate of said bTadel & Kempner, bankrupts, and that the defendants, and each of them, in so far as they are in possession of said assets, be required and decreed to turn over and deliver the same to plaintiff, as trustee, for the benefit of the creditors, ratably and
The trial court held the complaint good against appellant’s demurrer. Appellants filed an answer of general denial. A special finding of facts was made by the court and conclusions of law stated thereon. By the special finding of facts every material allegation of appellee’s complaint is established. It is therefore unnecessary to repeat any part of it here. The conclusions of law were: (1) That the said sale by Nadel & Kempner to Goldberg and the payment of $2,713 was an unlawful preference; (2) that the plaintiff, as trustee in bankruptcy of said Nadel & Kempner, is entitled to the possession of said goods and personal property sold for said sum of $2,713, as against all defendants; (3) that the plaintiff is entitled to a judgment that said Goldberg within five days deliver to the plaintiff the property so sold to him on January 12, 1900, by said Nadel & Kempner; and that in case of nondelivery of said goods the plaintiff shall recover from said Gold
It is first contended that the court erred in overruling the demurrer of Jacob Goldberg to the complaint. It is provided by section sixty of the bankruptcy law of 1898, that “A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or 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. If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of a petition and before the adjudication, and the person receiving it, or to 'be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person.”
The transaction between Goldberg and Nadel & Kempner, by which Goldberg attempted to secure himself by the purchase of the stock of goods, was undoubtedly lawful under our state laws. An insolvent debtor has a right to prefer his creditors. O'Donald v. Constant, 82 Ind. 212; Dice v. Irvin, 110 Ind. 561; Lee v. Gross, 126 Ind. 102; John Shillito Co. v. McConnell, 130 Ind. 41. It is equally true that the St. Joseph National Bank had the right to deduct from the funds of Nadel & Kempner, represented by the Goldberg check, the amount of their indebtedness to the bank. Bedford BanK v. Acoam, 125 Ind. 584, 9 L. R. A. 560, 21 Am. St. 258.
In the case of Swarts v. Siegel, 8 Am. B. R. 689, the court, in an exhaustive opinion, in which á great many
The fact being- established that Goldberg was a creditor of the bankrupts, it must certainly follow that the allegations of the complaint state facts sufficient to show' .that there was an attempted preference of the debt upon which he was liable, within the prohibited time. And it would seem that this would be true, under the authorities, without the averments of fraud and conspiracy; the law itself prohibiting such preference, whether the act by which preference was created was or was not in good faith. Swarts v. Siegel, supra, and cases cited.
The strength of appellee’s complaint in this case is well illustrated by the case of In re Beerman, 112 Fed. 662, 7 Am. B. R. 431. In that case a creditor of an insolvent debtor, a month before his bankruptcy, procured a third person to loan the debtor money to satisfy his claim, the lender taking a mortgage upon the debtor’s stock of goods to secure the loan, knowing at the time that the money so loaned was to pay the creditor’s claim. It was there held that the mortgage was void, under the bankruptcy act, because? if enforced it would enable the creditor to obtain.
In regard to the meaning of the word “preference,” the case of Stern v. Louisville Trust Co., 112 Fed. 501, 7 Am. B. R. 305, holds that the word “preference,” while not defined in set terms in the bankruptcy act, includes everything in the nature of property which has capacity for being taken and appropriated to the satisfaction of debts provable under the act, and may be either of a legal or equitable nature, and that however devious the method by which a creditor acquires property which is subject at law or equity to be appropriated to the payment of the debtor’s obligations, there is a preference within the meaning of the act.
No demand for a restoration of the goods or their value was necessary before the commencement of the action. The whole transaction under the bankruptcy act was unlawful and void, and in such cases demand is unnecessary. Brandenburg, Bankruptcy (3d ed.), §§1104, 1214; Bull v. Houghton, 65 Cal. 422, 4 Pac. 529; Barbour v. Priest, 103 U. S. 293, 26 L. Ed. 478; Toof v. Martin, 13 Wall. 40, 20 L. Ed. 481. The trial court properly overruled appellants’ demurrer to the complaint.
We think the conclusions of law stated are correct upon the facts and fall within the strict meaning of section sixty, (b) and section sixty-seven (e) of the bankruptcy act. What we have said disposes of all the questions raised by both appellants and appellee.
The judgment is affirmed.