117 F. 792 | M.D. Penn. | 1902
This record is in rather an unsatisfactory shape. The referee has found no facts, and I have therefore to pass upon the evidence which has been returned by him, without any knowledge of the witnesses by which to judge of their credibility. The exceptions to the allowance of the exemption are based on the alleged fraudulent transfer by the bankrupt of certain of his property just prior to the time he was put into bankruptcy. It seems that on December 19, 1901, being in failing circumstances, he disposed of all his available assets, and, among other things, of the machinery in his mill, to U. G. Stover for $650. Of this $300 was paid in cash, and a judgment note for $350 given for the balance,
The mere fact that the bankrupt while in failing circumstances disposed of this and other of his assets does not necessarily impress upon the transaction the stamp of fraud. As I had occasion to point out in Githens v. Shiffler (D. C.) 112 Fed. 505, a fair and open disposition by a man of his property is not necessarily fraudulent, although it may incidentally have the effect of leaving nothing which creditors can get hold of, and even though it was made for the purpose of preferring some obligations rather than others. It is only where the intent is to get the property out of the reach of creditors that it is void at law as well as by the statute of Elizabeth.
Notwithstanding this saving observation, however, I cannot escape from the conclusion that the transfer in the present instance was colorable only, and therefore covinous. Not only do we find the bankrupt dealing with the note as his own, and attempting to arrange with Stover for its payment at a discount, after it had been apparently assigned to Lehman, but we have his admission, according to the testimony to which I have alluded, that there was a special arrangement with regard to it, by which, although Lehman had paid over and parted with the face of the note ($350), the money was so held that he would get it back if creditors successfully attacked the transfer, while if it escaped them it was to go to Yost. If the parties themselves had such doubts about the validity of the transaction that they found it necessary to so provide, how much
The exceptions are sustained, the report of the referee is set aside, and the case sent back, with instructions to disallow the exemption claimed by the bankrupt.