IN RE PITTS.
quently to the rulings in this case, 7by acquittal, and 11 were the district attorney. The ruling made at the trial of, this case, on the authority ,of theNew Yorlt cases, permitting the defendant t? testify as to his intention in taking goods, receives confirmation in the case of G-reer v. W/J,itjield,4 Lea. 85, appearing since the trial. " '' "
DZ'Btriet Court; 8. D. New York. June 24,1881,)
L BANKRUPTCY - bmmECT TRANSFERS -REv. ST. § 5110, SUBD. 9 - RIllV. ST.· 5129-DIBCHARGE. -
Upon his own petition, P. was adjudged a bankrupt. The specifications in opposition to his discharge state, in substance, that, within six months previous to the filing of his petition, he suffered a judgment to be obtained against him by default, in favor of his brother, upon a pretended claim for borrowed that upon execution on this judgment all of the bankrupt's property was sold and the·proceeds applied on this judgment; that ,the bankrupt was not indebted to his brother in any sum whatever; and that the judgment and execution were fraudulent and collusive, and for the of preventing the property seized from coming to the hands of the assignee and being distributed among his creditors. Held: , (1) The case falls under subdivision 9 of section 5110 of the Hevised Statutes, as an "indirect" transfer, made in contemplation of bankruptcy, to prevent the property from coming into the hands of the assignee. (2) The bankrupt is entitled to no shorter period of limitation than the six months prescribed by section 5129 of the Hevised Statutes in analogous cases,
2, REv. ST. § 5110, BUBD. 9, CONSTRUED.
By the words" indirect" transfer, the framers of the statute intended to include every device of the bankrupt by which the same purpose and effect are . accomplished as by a direct ,
In Bankruptcy. Demurrer to specifications .in opposition to bankrupt's discharge. Om'roll Whittaker, for bankrupt. Wm. H. Sloan, for creditors. BROWN, D. J. Proceedings in bankruptcy were commenced in this case upon the bankrupt's own. petition, filed July 27, 1878, and the adjudication was made on the 29th of that month. Thespecifications in opposition to his discharge state, in substance, that on January 30, 1878, (one copy, by a clerical mistake, says 1876,) i.e., within six months of the commencement of the proceedings, the bankrupt suffered a judgment to be obtained against him by default, in the supreme court of this state, iu favor of his brother Henry, for $6,24tl.77, upon a pretended olaim for borrowed money; that upon execution on this judgment all the bankrupt's property, consisting
mainly of goods sold to him by t,he objecting creditors upon a long credit in the winter of 1878, were sold, and the proceeds, $5,074.77, applied on said judgment; that the bankrupt was not indebted to his 'brother Henry in any sum whatever; and that the judgment and execution were fraudulent and collusive, and for the purpose of preventing the property seized from coming to the hands of the assignee and being distributed among his creditors. In behalf of the bankrupt it is claimed that such a transaotion is within subdivision 3 of seotion 5110, and therefore subject to the four months' limitation therein prescribed. The partioular time of the seizure on execution is not stated in the speoifioations, and though it sufficiently appears that it must have been within six months of the adjudication, it is not stated to have been within four months; and I assume that itwas not. If the objeotors intended to rely on subdivision. 3, they were bound to state the seizure to have been within the time limited by that' subdivision. Not having done so, the speoifioations cannot be sustained under subdivision 3. For the oreditors, however, it is claimed that the case falls under subdivision 9 of section 5110, as an "indirect" transfer, made in contemplation of bankruptcy, for the purpose of preventing the property from coming into the hands of the assignee. I have not been referred to any case deciding the precise point here presented. Whatever the actual faots may be, the statements in the specifications must, for the purposes of this hearing, be taken as true. The facts stated constitute of themselves an act of bankruptcy, and show a collusive judgment and execution sale upon a fictitious claim, for the purpose of preventing the property from coming to the hands of the assignee. In the Shick Case, 2 Ben. 5, this court held that a similar fictitious judgment and sale on execntion "were in substance and effect, within the provisions of section 39, (section 5021.) a of the property of the debtor, made by him." And this was held although section 39 did not expressly embrace indirect transfers. Subdivision 9 of section 5110 expressly includes "indirect" as well as direct transfers; and I cannot doubt that, by the use of that word, it was intended to include every device of the bankrupt by which the same purpose and effect are accomplished as by a direct transfer. It is scarcely credible that in declaring the effect of seizures upon execution procured by the bankrup't, as in subdivision 3, the statute could have intended to refer to fraudnlent and fictitious judgments and executions, which, as respects ereditors, have none of the merits
IN BE PITTs.
or attributes of bonafide executions, but are merely a collusive device for the fraudulent transfer of the debtor's property. The selztires referred to by that subdivision are, in my opinion, seizures upon bona fide judgments and executions, which necessarily imply 8, bona'.ftde creditor, who would by such seizure 'obtain a preference in the payment of a bonafide debt. A penalty for giving a' preference toa legal debt through s,seizure on execution'is all that was intended by that subdivision. But where th-ere is still deeper fraud, and the 'judgniellt and eX'6cution are colorable only, and are merely a means of effehting a fraudulent transfer of the debtor's property, the case must, thin'k, be dealt with under subdivision 9, according to its intrinsic character, as an indirect transfer of property, and not according to its mere form as an ordinary seizure on execution. 5128 and section 5129, which This view is confirmed designate the cases in which aetsof the bankrupt are void as against tile assignee, and the different penods of limitation for the two classes of cases there referred to. Section 5128, which, like subdivision II of section 5110, embraces seizures upon execution and thej&Ur'months' limitation, is expressly restricted a intended to "a creditor or person having a claim." But by section 5129, in cases of other transfers, which do not have even thepa,rtial merit of preferring a creditor, but are designed to prevent the' debt· or's property from going either to eteditor or assignee, the period of limitation is extended to six months.. The fair inference i$ that section 5128, and subdivision 3 of section"5UO, in imposing the 's'ame period of limitation, intend to refer to seizures on execution of It similar character, viz.: upon bona fide executions only, intended to prefer bona'fide claims. Hubbardv. The Allain Works, 'T Blatcht'284. Such It transaction as is charged in these specifications would. not fall under section 5128, because not done "with a view to give a preference to any creditor." That was not the intention of this transaction, nor was there any bona fide debt or bona fide creditor. The case would plainly fall under section 5129, according to its 'real and substantial character alid intent, as a fraudulent transfer and diversion of the debtor's property. Hubbard v. Allain, 'T Blatchf. 284. Subdivision 9 of section 5110, in regard to such transfers; uses the same language as section 5129; and if the transaction, as respeds the rights of the assignee, falls within section 5129, and within the limitation of six months there specified, consistency in construction requires that it should also be held to fall within the same language of subdivision 9 of section 5110, as respects the rights of the bank-
rupt; at leasG no shorter term of limitation should hy construction beiplacecJ upon that subdivision. It would be am anomalous result if a fraudulent transfer w;e:re voidablehy the assignee for bankrupt who commitsix months -prior to, ted the ;frl\ud !should; stand acquitted and obtain his discharge under ;' any shorter period Qf My conclusion is that the governed by flubdivision 9, and by no sho.rter limit/lotionthanjhe, six prescribed by section 5l29inana.logous cases, anClthlJ,Uhe demurrer be overruled and the case referred ,back to the register to take proofs upon the specifioations.
pou'rt, J). Maine. May, 1881.)
L B.umnil"rbtl.....Bu'V¢HBR. " ,' their testified that Qeen engaged in selling butcherll% and farming some, ,and that the firm 'amounted fr'om $2,o,odto $3,000, or thereabouts; per year. Held, " that Vilai'tllat o(b'titohers. 2.,iSiQ.....ri:IhADESi¥rAN. , ;)' , : bankrupt act a butchllrisa tradesmalj.,
OF THE BANKRUPT.,
Whex:e ll,re tliadeSII\en an4keep no books of accounts, they are not' entitled to Ii ,d\scbarke under, tlie'bankrupt law. ' . , .' , . f' ' ..
. . .
Where the statements'mad'e bY'8uch bankrupt8, at It hearing before the court., \"4ry greatly from' their furmer ones, made. before the register, in that they .are w.'Vorable themselves, held, in view of a change the <jOl1rse of their' case was mea'nwhile, their original statements must be , taken 'to be the mO're"trustworthy, .
In ]3ankruptcy. Henry L.M,itchell. f9r .gankrupt. . D.lladlock. for ,J.Thedischarge of these bankrupts is opposed on .the that they, tradesmel:)J did not keep prope;rbook,s of a,ccount. These bankrupts are brotqers, who, for ,nearly 2.0 years prior to their petition in resided on :a farm in Verona, in this but Qarried on the farm todistrict. They had/separate gether,andwere also engaged in the business of buying, selling, ltnd slaughtering cattle and .other s,tock. No accounts were kept of their receipts or expenditures.. Each;used from the farm produce. and from