129 F. 728 | 8th Cir. | 1904
This is an appeal from an order of the District Court that the claim of the Western Tie & Timber Company against the estate qf S. F. Harrison, a bankrupt, be expunged unless the company pays to the trustee the sum of $2,210.73 which the court below found had been transferred to the company by the bankrupt in such a way that the transaction constituted a preference.
A motion has been made to dismiss the appeal, under rule 11 of this court (90 Fed. cxlvi, 31 C. C. A. cxlvi), because the assignment of errors was not filed at the time of, or before, the allowance of the appeal. The record, however, does not establish the fact upon which this motion is founded. The order allowing the appeal, the citation, the admission of service of the citation, and the bond, are dated June 12, • 1903. The approval of the bond and the assignment of errors are not dated. All these papers were filed June 16, 1903. As the assignment of errors was filed at the same time as the other appeal papers, the presumption is that it was presented to the court with them when the appeal was allowed, and the motion to dismiss is denied.
Harrison was adjudged a bankrupt on February 24, 1903. Prior to that time he owned some merchandise in two stores, and he was engaged in forwarding the work of gathering ties from the lands of the tie company, and in selling supplies to the laborers engaged in this work. Once in two or three weeks an inspector sent to the company a pay roll upon which the name of each workman, the amount owing to him for his services, and the price of the supplies which Harrison had furnished him, appeared. The comoany uniformly deducted from the wages due each workman the price, of the supplies. Harrison had deliv
This ruling is challenged by counsel for the appellant on three grounds: Because no transfer of anything by Harrison to the appellant was shown'; because there was no proof that Harrison was insolvent, or that the tie company had any notice of his insolvency, when it withheld the price of the supplies; and because there was no evidence that Harrison intended to prefer the tie company when he delivered the supplies to the men, or that the company had any notice of any such intention.
But the test of a preferential transfer under the bankrupt act of 1898 is not whether or not the debtor has conveyed anything to the creditor, oi1 whether or not the creditor has received anything from the debtor. It is whether or not the debtor has made a transfer of any of his property to any one in any way whereby the enforcement of the transfer will enable one of his creditors to obtain a greater percentage of his debt than any other creditor of his class can secure. So the question in this_ case is not whether or not Harrison transferred any of his property directly to the tie company, but whether or not any transfer of his property was made in the time and manner denounced by the bankrupt law, so that the tie company was enabled to secure a larger percentage of its claim against him than other creditors of its class can obtain.
One of the main purposes of the bankrupt law is to distribute the unexempt property which the bankrupt has four months before the filing of the petition in bankruptcy, share and share alike, among his creditors. In order to attain this object, the law provides that if a person, being insolvent, has, within four months before the filing of the petition, made a transfer of any of his property, the effect of the enforcement of which will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of his creditors of the same class, he shall be deemed to have given a preference, and -that if he has given a preference, and the person receiving it . or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that, it was intended thereby to give a preference, the claim of
Was Harrison insolvent when the company secured this preference, and did the latter have notice of this fact? The answer must be in the affirmative. He owed the tie company more than $20,000. It held a mortgage on his property, which had been made in January, 1902, to secure the payment of $15,000. He had frequently made statements of his assets and liabilities to the company which showed the former to be “a little bit more” than the latter. In December he applied for the advance of more money, and the company refused his request because it had received information that his indebtedness was greater than he had represented it to be. Thereupon, on December 28, 1902, the company first applied an installment of its indebtedness to Harrison for the supplies furnished to its workmen to the payment of a part of the bankrupt’s indebtedness to it. These facts convince that Harrison was insolvent, and that the tie company knew it before it applied its indebtedness to him in payment of its claim against him.
Finally, it is said that this $2,2x0.73 was a credit to Harrison, and that the company should be permitted to set it off against his debt to it, and should be allowed to prove its claim for the balance remaining, without restriction, on the ground that these claims were mutual debt's
It is so ordered.