101 F. 802 | N.D. Iowa | 1900
Prom the record submitted to the court it appears that on the 23d day of February, 1900, Erik A. Christensen was adjudged to be a bankrupt, and a trustee of his estate was duly appointed. On behalf of the firm of Van Patten & Marks, a claim was submitted for allowance, to which objections were filed by the trustee on the ground that the claimants had received, within four months preceding the filing of the petition in bankruptcy, payments aggregating the sum of $984.70, which were in fact preferences, in that, when these payments were made, the bankrupt was insolvent, and, as the claimants had not surrendered these preferences, the claim presented could not be allowed. Upon Hie bearing before the referee it was shown (hat the claimants, commencing in May, 1899, had sold to the bankrupt goods to the total amount of $1,740.92; that there was due to claimants the sum of $746.22; that from and after October 23, 1899, the bankrupt was in fact insolvent; that the total payments made on the account in cash aggregate $984.70, of which $553.21 were made after October 23, 1899, during which time Christensen was in fact insolvent, although such fact was not known to the claimants when they sold the goods and received the payments on account; that after October 23, 1899, the claimants sold to the bankrupt, on credit, without security, goods to the amount of $577.19, whicli were added to the stock in trade of the bankrupt, and of which goods there remained unsold and passed to the trustee the amount of $4(5.92. 'Upon these facts the referee ruled that the claimants could not be allowed to prove their claim unless they first surrendered to the' trustee all preferences received hv them, and in support of such ruling the referee held, as matters of law, that the payment of money is a transfer of property within the meaning of these words as used in section 00 of the bankrupt act; that the payment of money to apply on an open account for goods sold does not create a ease of mutual debts or mutual credits, within the meaning of section 68, so as to enable a creditor to set off against the claim of the trustee to recover preferences paid in violation of the bankrupt act the sums due for the goods sold constituting the debt upon which the preferential payments were made, and that in cases wherein the trustee defends against the allowance of a claim on the ground that the claimant has received a preference (hereon which he has not surrendered to the trustee according to the provisions of clause “g” of section 57 the claimant cannot set off against the amount of the preference by him received the amount of a new credit extended without security to the bankrupt after the payment of the preference; or, in other words, that the provisions of danse “c” of section 60 are intended to apply only to cases wherein the trustee seeks to enforce the repayment of preferences under clause “b” of the same section. To reverse the ruling of the referee in holding that the claimants cannot be allowed to prove their claim unless they surrender the preferences received, the case is now
The remaining question presented for review, briefly stated, is whether the set-off of a new credit, without security, provided for in clause “c” of section 60, is available to a creditor as against a preference he is required to surrender in order to secure the allowance of. his claim under clause “g” of section 57. On behalf of the trustee it is contended that by its terms clause “c” applies only to the .cases provided for in clause “b” of section 60, whereas on behalf of the claimants it is contended that the set-off thus provided for should be held applicable to the cases coming under clause “g” of section 57. It is not to be denied that there is much force in the contention of the claimants that equitably there is as good reason for allowing