No. 193 | 2d Cir. | Mar 9, 1915
This controversy involves a simple question of law. The facts are not disputed. After the filing of the petition in bankruptcy one of the bankrupts took $600 belonging to the bankrupts’ estate and delivered it to Ereida Silberstein, who refuses to return it to the trustee for the reason that it was received by her in payment of a debt of $600 for money loaned by her to Arthur J. Rosen-thal, one of the bankrupts.
We have no doubt that a plenary suit will lie in such circumstances: The question is, Was such a suit absolutely necessary? The Bankruptcy Act is in itself a summary proceeding. Its principal aim and object is to divide the bankrupt’s property among his honest creditors as speedily as possible. The purpose of the act will be largely defeated if each time a question of law arises over the title to property an action at law or a suit in equity must be commenced. In all these cases time will be lost and the assets depleted if the complicated machinery of a suit must be set in motion. After all is said and done, the question at issue must be determined by the court as matter of law. In the present case there are no facts in dispute. The bankrupt Rosenthal owed Freída Silberstein $600 for money which he borrowed of her. No one disputes this proposition. An hour after the petition was filed Rosen-thal took $600 from the assets of the bankrupt firm and sent it to Freída Silberstein, which sum she .still retains. No one disputes this proposition.
The trustee in bankruptcy petitioned the court alleging the facts as stated above. Freída Silberstein answered alleging that she received the money in payment of a debt due and owing her from one of the bankrupts. With the issue so joined what were the disputed questions of fact? If the case had been tried with a jury what question could have been sent them for determination ? The question was purely one of law and was, in substance, whether after the petition in bankruptcy was filed the bankrupt could lawfully pay out of the funds belonging to the bankrupt company a debt owing by the bankrupt. The debt to Freída Silberstein is admitted, the payment out of the company’s property after the petition was filed is admitted and the issue is whether upon these facts she can retain the money so paid. This upon admitted facts is a question of law. The court would, therefore, have been justified in dealing with it in a summary proceeding and, in order that the estate may be speedily and economically settled, it should have done so.
In the opinion of a majority of the court the order should be reversed and the petition granted.