214 F. 221 | 2d Cir. | 1914
(after stating the facts as above). This court was called upon to pass upon this same motion in February, 1913. The court below had then entered an order in which it granted the relief asked, and we reversed its action in part. We then said:
“So much of the order, therefore, as grants a stay will be affirmed. We think this measure of relief all that is called for at the present time and sufficient to determine the rights of the parties. The other portions of the order are, however, set aside without prejudice to further proceedings if necessary.” In re Federal Biscuit Co., supra.
The motion was a year later renewed, and this time the learned District Judge, to whom the.application was made, denied the motion and said:
“In the first place, I do not see why the decision of the Circuit Court of Appeals does not require the denial of this motion. This seems to be a mere renewal, on the same facts, of the motion granted by an order of Judge Hough which was afterwards reversed by the Court of Appeals.”
The appeal taken from the order denying the motion raises the question whether the facts are the same now as they were when this matter
“I do not see the necessity of an order vacating the attachment in the suit in the state court brought by Vick. That attachment was vacated and discharged by the bond given to take its place by the Massachusetts Bonding Company.”
It is possible that the District Judge did not have the matter clearly presented to him, and'we are free to say that we do not think it was clearly presented in the argument .in this court. It is important to distinguish between the discharge of the lien of the attachment by the, bond given to take its place and the vacation of the writ. The two things are quite distinct, and the District Judge apparently did not have his attention called to the distinction, and it was not clearly pointed out in the argument before us. The bond given by the Massachusetts Bonding Company-bonding the attachment in the suit in the New York Court was authorized under the New York statutes, and the purpose of the statute as explained in Christal v. Kelly, 88 N. Y. 285, 292 (1882), by Chief Judge Andrews was the following:
“It was intended for the benefit of defendants whose property had been, or might be,, attached under process, to enable them to substitute, for the property which had been or might be attached, security for the payment of any judgment which might be recovered in the action, and thereby relieve their property from, the actual or apprehended lien of the process.”
The discharge of the lien of attachment is one thing, the vacation of the writ is another. The discharge of the lien does not necessarily vacate the writ. See King v. Block Amusement Co., 126 App. Div. 48, 111 N. Y. Supp. 102 (1908), affirmed 193 N. Y. 608, 86 N. E. 1126. The question whether the writ shall be vacated is important as affecting the liability of the surety.
“A suit which is founded’ upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him shall be stayed until after an adjudication or the dismissal of the petition; if such person is adjudged a bankrupt, such action may be further stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such discharge is determined.”
In pursuance of this provision of the Bankruptcy Act the United States District Judge for'the Southern District of New York on September 25, 1912, issued an order staying Vick, his attorneys and agents, from taking any further action in the suit in the courts of the state of New York. That stay was for an indefinite period. But under the statute it is not within the power of the court to grant a stay for a longer period than 12 months after the date of the adjudication of bankruptcy except in cases where the bankrupt applies for a discharge. If he has made no application for a discharge, and the time has passed within which an application can be made, there evidently is no right longer to restrain the proceedings in the, state court, and, upon the facts being properly brought to the attention of the District Court, that court should vacate the stay previously granted. But while it wás stated in argument that the bankrupt has never been discharged, and that the matter of his discharge is not pending, and that he has not even applied for a discharge, there is nothing in the record before us to show these facts.
“All conveyances, transfers, assignments, or incumbrances of Ms property or any part thereof, made or given by a person adjudged a bankrupt * * * within four months prior to the filing of the petition, with the intent and purpose on his part to hinder, delay, or defraud his creditors, or any of them, shall be null and void as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration.”
And the act goes on to provide that property so transferred shall remain a part of the assets of the bankrupt, and it is made the duty of the trustee to reclaim the same for the benefit of the creditors. The act also provides against the -transfer of property by an insolvent within four months of the filing of the petition in bankruptcy, if the transfer operates as a preference and the person recovering it or to be benefited thereby, or his agent acting therein, had reasonable cause to believe that the enforcement of the transfer would .effect a preference.
There is no evidence in the record' which establishes the fact that the transfer of the property to Richter to secure Anger, and thus secure the bonding company, was invalid either under the provision which avoids transfers made to hinder and delay creditors or under the provision relating to preferences.
We understand that a suit brought by the trustee is now pending in a court in Massachusetts to set aside the transfer to Richter. What evidence the trustee may have to invalidate the transfer he will undoubtedly present to that court. It has not been presented to the District Court and therefore is not before us. We are therefore unable now, as we were unable when the case was last before us, to see why the court below, should order a cancellation of the bond executed by the bonding company, or a^ cancellation of the bond executed and delivered by Anger to the bonding company, or a cancellation of the trust agreement executed by Richter to secure Anger. There is not in the record any evidence of positive fraud or bad faith on the part of the bonding company or of Anger or of Richter. There is no evidence that the transfer of the real estate to Richter was intended to create a
It has been held that there is nothing in the Bankruptcy Act to interfere with the exercise of that right. In re Busby (D. C.) 124 Fed. 469. And it seems to be a settled principle of bankruptcy law, both in the United States and in England, that advances made in good faith tó a debtor to assist him in his business do not violate either the terms or the policy of the Bankruptcy Act. See Darby v. Boatmen’s Saving Inst., 1 Dill. 141, Fed. Cas. No. 3,571.
The order is affirmed, but without prejudice to further proceedings, if necessary.