In re Goldner-Siegel Corp.

WOOLSEY, District Judge. Motion to confirm is denied — adjudication may be had. I hold that the alleged bankrupt was insolvent when the petition was filed on July 3, 1983, and disapprove and reverse the special master’s finding that the alleged bankrupt was then solvent by a margin of $185.32. I. As the special master has found transfers in fraud of creditors under Bankruptcy Act, § 3a (1), 11 USCA § 21 (a) (1), as acts of bankruptcy committed herein, the burden of proof was east on the alleged bankrupt of proving solvency at the time of filing the petition. Bankruptcy Act, § 3c, 11 USCA § 21 (c); George M. West Co. v. Lea, 174 U. S. 590, 596, 597, 19 S. Ct. 836, 43 L. Ed. 1098; In re West, 108 F. 940, 941 (C. C. A. 2); and cf. Acme Food Co. v. Meier, 153 F. 74, 79 (C. C. A. 6). II. Herein the special master seems, throughout, to have assumed erroneously that the burden of proof was in this situation on the petitioning creditors. That mistaken assumption clearly lay at the center of his approach to the evidence in this matter. III. It is somewhat rare to have a question of burden of proof control a decision, but here it is inescapable. For a careful reading of the evidence satisfies me, so far as the proof now shows, that whether the transaction with Mrs. Sadie Goldner was a loan of $2,500 or an investment of $2,500 was not shown by the bankrupt. The burden was on it to show that the transaction was an investment if it was to be excluded from the liabilities. It was first put down as a loan in bankrupt’s books, and the bankrupt’s proofs do not satisfy me that it was aught else— though doubtless the paper record of the company was so arranged as to enable the bankrupt to take either a loan or an investment theory as might seem advantageous. With this item thrown into the liabilities, insolvency is clear, and it becomes unnecessary for me to deal with the other small items. The finding of the special master is disapproved.