98 F. 75 | S.D.N.Y. | 1899
Upon the voluminous evidence submitted, I think the proceedings against the witness Lena Williamson, a daughter of the bankrupt, have exceeded the proper limits. She was called as a witness by the creditors, and was examined in their behalf. The evidence leaves no doubt that the business which the creditors claim to have been the business of the bankrupt, was carried on in the daughter’s name for two or three years before the bankruptcy proceedings; that the business was claimed by the witness as her own; that the only bank account used in the business was her own genuine bank account, in which receipts of the business were deposited and on which checks in payment of its obligations were drawn. She was, therefore, in the position of a third person not only claiming title, but in possession of the business, as much as its intangible nature was capable of being in possession. If there was any fraud as between hex- and her mother, so that her title could be avoided in favor of the trustee, that could only be inquired into and adjudged in a plenary suit brought against her by the trustee. Her rights could not be adjudicated in a summary manner by the referee in the bankruptcy proceeding. Smith v. Mason, 14 Wall. 419, 20 L. Ed. 748; Marshall v. Knox, 16 Wall. 553, 21 L. Ed. 481. For the same reason she could not be treated as a defendant in the proceeding before the referee. The books which have been im
The petitioner is entitled to a stay of the proceedings on the part of the trustee complained of, and to the return of the books impounded.
Under the restraining order signed by the referee, the trustee, has already had ábundant opportunity to commence a plenary suit against the witness for the recovery of assets, if the facts are thought sufficient to justify such a suit. At this season such an injunction is specially injurious, unless the trustee’s rights are clear. The referee’s restraining order should, therefore, be vacated unless proper suit be commenced by the 15th inst.