Breckons v. Snyder

Opinion by Mb. Justice Fell, A petition in bankruptcy was filed by the creditors of W. D. Chimelewsky on March 14, 1902, and was so proceeded with that he was adjudged a bankrupt on April 29, 1902. This action was brought by the trustee of his estate to 'recover of’the defendant f>5,000 transferred to him by the bankrupt on February 17, 1902. The declaration contained two counts.' In the first it was alleged that the money had béen given to the defendant without any consideration and with the intent to defraud the bankrupt’s creditors and for this purpose it was received and retained by the defendant;'in the second it was alleged that the money was paid after insolvency and within four months of the filing of the petition in bankruptcy for the purpose of giving the defendant a preference over other creditors. The second count was withdrawn at the trial, and the case went to the. jury on the issue raised by the first, the .'plaintiff’s contention being that the money had been placed by the bankrupt in the defendant’s hands for concealment, and the defendant’s that he had', received it in discharge of a debt due him by the bankrupt. These contentions were submitted to the jury with instruction that if the transaction was the payment of a debt due the defendant, their verdict should be for [182] him ; that if they disbelieved his testimony and found that the bankrupt did not owe him the money, their verdict should be for the plaintiff. In support of a number of assignments of error which raise the question in different forms it is argued that it was incumbent on the plaintiff to show that there were unsatisfied creditors at the time of the transfer, at the time the suit was brought, and at the time of the trial, for the reason that if there were no creditors when the transfer was made, there was no one to be defrauded by it, and if there were none afterwards there was no one in whose interest the trustee could maintain the action. The first ground of objection would not be without merit if a recovery had been sought because of a preferential transfer within the time prohibited by law.. But the second count was withdrawn and the only issue at the trial was whether a debt had existed and had been paid. No other right to retain the money was set up. If it had not been given to the defendant in discharge of a debt, it was the bankrupt’s money in the defendant’s hands, which the trustee could recover for creditors. The adjudication was evidence of the bankrupt’s insolvency at its date, and.it was not necessary to prove insolvency at the trial. The remaining assignments do not require discussion. The court had jurisdiction because it was the court that would have had jurisdiction if bankruptcy had not intervened: Bardes v. First National Bank of Hawarden, 178 U. S. 524. * Although it does not appear of record that the trustee obtained an extension of time for the filing of a bond, the presumption is in favor of the regularity of all proceedings before the referee, and that the trustee complied with all the requirements of the law and was qualified to act. The notes of the testimony of the bankrupt taken at a preliminary proceeding before the referee to ascertain his assets and liabilities were properly rejected. The issue was not between the same parties nor did it involve the same subject-matter. The judgment is affirmed. Footnotes [*] Also reported 20 Sup. Ct. Repr. 1000, Reporter.