214 Mass. 514 | Mass. | 1913
This is a bill in equity brought by the trustee in bankruptcy of the Graves China Company, a Missouri corpo
1. The first question is whether the effect of the transfer was to enable the defendant as a creditor “to obtain a greater percentage of his debt than any other of such creditors of the same class” would obtain under the definition of preference given in § 60 of the bankruptcy act. (U. S. St. July 1, 1898, c. 541, as amended by U. S. St. 1903, c. 487, § 13.) The finding of the master makes it plain that a larger percentage of the defendant’s claim would be paid out of the property of the bankrupt if the conveyance is permitted to stand than the other creditors would get. His finding was that one of three notes held by the defendant was paid in full. It cannot be said that this finding was plainly • wrong, nor that, on the question of preference, the several notes maturing at different times constituted a single debt.
2. The next question is whether there was a preference under the bankruptcy act arising from the intent of parties. The facts as found by the master are that on February 12, 1908, the Graves China Company was adjudicated a bankrupt. At that time it was hopelessly insolvent, the actual value of its assets being not in excess of $6,000, and its liabilities approximately $60,000. Before December, 1907, the bankrupt owed the defendant on three promissory notes, each for $2,500 for borrowed money, and more than $1,600 on- other indebtedness. In December, 1907, the president and general manager of the bankrupt came to Boston, and, in consequence of a conference with Mr. Woodbury representing the defendant, at or about that time goods of nearly $3,500 in value were shipped to one Cochran for the defendant, which took up one $2,500 note, the balance being credited on account. The master finds “ that this transaction was put through by Mr. Woodbury for the purpose of obtaining a preference at a time when, although he did not have actual knowledge, yet he believed, and had reasonable cause to believe, that the Graves China Company was insolvent and would not be able to pay its creditors in full. That at the time, while Graves may not have realized the insolvent condition of his company, and had clearly in mind, and actually in fact intended, a preference, he knew that he was giving the defendant an advantage over other
It is not necessary to decide whether under § 60 of the bankruptcy act an actual intent on the part of the debtor to prefer, as well as reasonable cause to believe that a preference was intended on the part of the creditor, is necessary to constitute a preference, as was held in Hardy v. Gray, 75 C. C. A. 562, and by other decisions of Circuit Courts of Appeal, First National Bank of Louisville v. Holt, 84 C. C. A. 16, Curtiss v. Kingman, 87 C. C. A. 60, Tumlin v. Bryan, 91 C. C. A. 200, 202, Kimmerle v. Farr, 111 C. C. A. 27, In re Klein, 116 C. C. A. 603, 612, or whether the intent of the debtor is immaterial, as was held in Benedict v. Deshel, 177 N. Y. 1, Parker v. Black, 143 Fed. Rep. 560, affirmed on opinion below in 80 C. C. A. 484, Gabriel v. Tonner, 138 Cal. 63, and Alexander v. Redmond, 103 C. C. A. 446, 449, following strong intimations to that effect in Wilson v. Nelson, 183 U. S. 191, at 196, and Pirie v. Chicago Title & Trust Co. 182 U. S. 438, at 446, because it appears from the report of the master that, whichever of those views be sound, the provisions of § 60 were violated, and a preference was created from the conduct of the bankrupt and the defendant in December, 1907, which we have outlined. It was said in Western Tie & Timber Co. v. Brown, 196 U. S. 502, at 508: "If the inevitable result of the transaction would have been to create such a preference, then the law would conclusively impute to . . . [the debtor] . . . the intention to bring about the result necessarily arising from the nature of the act which he did.” To the same effect are Kimmerle v. Farr, 111 C. C. A. 27, 32, First National Bank of Philadelphia v. Abbott, 91 C. C. A. 538, 545, and our own decisions, Atherton v. Emerson, 199 Mass. 199, 211, Brown v. Pelonsky, 210 Mass. 502, 505. Categorical affirmative evidence of intent to prefer is difficult to obtain.
3. The master erred in ruling that the defendant had a right to surrender a part of the property obtained by the preference, and might absolve itself to the extent of the part returned from liability to the trustee of the bankrupt in this suit. Whatever
4. Interest should be allowed from the date of the filing of the bill. There is no evidence that there was any demand by the trustee for the return of the goods or money damages in place thereof before the bringing of the bill. A preference was valid at common law, and is not rendered tortious by the bankruptcy act, nor is it penalized in any other way than is expressly pointed out in that act. Under these circumstances the general rule that interest is allowable only from date of the demand or institution of the suit should prevail. Soule v. Soule, 157 Mass. 451. Kaufman v. Tredway, 195 U. S. 271. Alsop v. Conway, 110 C. C. A. 366, 377; 188 Fed. Rep. 568, 579.
The result is that the only error disclosed relates to the second paragraph of the final decree authorizing the defendant to diminish damages by a partial return of the merchandise received in preference. The decree is reversed for the purpose of striking out this paragraph of the decree, and when so amended should be affirmed.
So ordered.