IN RE STRENZ.
until the death of his son William, whichever should first occur, and was to be made; Eliza Ann to\>e cousii,lered then the be entitled to share as such. in making the division the land devised to Eliza Ann was to be valued and '(jhaiged to her. But why? Clearly to end that the testator's othergrandchill1ren might be made equal with Eliza Ann before she received any part of the residuary estate then to be distributed. The fallacy of the argument of the learned counsel for the as seems to me, lies in the assumption that, upon the death of thetestator's son William, in the year 1852, the tract of land devised to Elizb. Ann fell into the residue and passed under the residuary Notilo.The special deyise t.o her still remained in full force, and the valuation directed to be made was merely for the purpose of determining whether she was entitled to receive anything more out of the testator's estate. Eliza Ann took. this tract of land not at all by virtue of the residuary clause, but under the special devise thereof, and subject to the conditional limitation expressed in the proviso Already quoted. ." The land was to revert and' become part of the residuary estate only in case she should die in her minority:andwith;' out lawful issue then living, and when she so died. Dying J,a.n'l1ary 23,1857, under age, as the jury haveiound, and without tile land thereupon reverted and became part of the residuary estate; ·b.ut Eliza Ann being dead, and havingJeft no issue,the land went to the other beneficiaries entitled under the, residuary Clause, 'viz.: the testator's grandchildren .then living·. And now, July 16, 1881, the motion for a newtrialis denied) and it is ordered that judgment,in favor of the plaintiff be entered on'the 'Verdict. '
BANKRUPTCy-SALE OF STOOK.
(DistritJt Court, 8. D. New York.
June 28, 1881.)
A sale by a bankrupt tr!tder of his stock, for its full in theabscnceof all frauduh-nt intent, cannot be impeached. 2. SAME-t;AME-HEV. ST. §,51,29. Such a sale cannot be attacked by an assignee in bankruptcy within lJix months afterwards, under section 5129 Of the H.evised Statutes. . .. 3. ·REv. ST. suriD.9,§ 5110, . Nor cau it be attacked under subdivision 9, § 5110.
Some time about May, 1876, the bankrupt bought a bill of goods of the creditor who now opposes his final discharge. These constituted all the goods in his store at the time of the sale hereinafter mentioned, of which the bankrupt was the owner, the other goods there, CO!1stituting about three-fourths of the whole, being consigned to him by tIle firm of Graham & Aitken, whose agent for the. sale of goods he had been for some time, and from whom he received weekly wages. For a considerable time before the sale he had been in failing eircumstances,but had heen left undisturbed by his creditors. Under these circumstances, Graham &J..itken, avoid, compI:cations with his creditors, for its full value, what rmuained 'of ,this bill of goods, making the last partial payment abont a year'afterwards. ' The sale was free from secrecy, from haste, ,an!Jifrom any intent to defraud ,or prefer creditors, to whom all but aamaIl suq!. of the purchase money was paill, Neither at the time of the sale !lor afterwanls wus thebankrllpt indebted to the purchasers, Heia, that the 'coull:l'not be impeached, and that the discharge must be granted. " ,
Birdseye, Cloyd ct Bayliss, for bankrupt. ' Armstrong ct Briggs, for creditors.
BROWN, D. J. Final hearing in opposition to discharge. Adolph Strenz was adjudicated a bankrupt on his own petition in August, 1818. November, 1876, he was carrying on a small store in Brooklyn, mostly supplied with goods, by consignment from Graham & Aitken, for whom he had been.for time selling as agent and accounting regularly for the proceeds. He received from them $10 per week for his own services and $8 for his wife's, who assisted in the store.. He had bought of J. Berlin, the opposing creditor, about six months previous, a miscellaneous lot of goods, mostly "rubbish," as one witness called it, at 60 per cent. upon a list furnished of articles and prices, amounting to $2,605.94; but upon examination of the goods and list, items to the amount of $739.25 were found either missing or destroyed, so that 60 per cent. upon the residue made the bill less than $1,200. On November 15, 1S76, Graham & Aitken bought out what then remained of this lot of goods, being, as the evidence shows, less than one-fourth part of the usual stock of tbe store, together with the fixtures, for the price of $1,200, which was the full value of the goods, all of which was paid by them during the year following, and all except a very small fraction paid out by Strenz to different creditors. It is claimed that this sale to Graham & Aitken in November, 1876, was in violation of subdivision 9 of section 5110, as a transfer in contemplation of bankruptcy, and to prevent the property from coming to the hands of the assignee, or from distribution among the
creditors. The specifications charge also that the sale was designed to give a preference to Graham & Aitken; but this is not sustained by the proofs, which show that Strenz was not indebted to them either then or afterwards. Strenz was insolvent; he had been so for some time, but was not disturbed by his creditors. Graham & Aitken knew this, and the object of the purchase by them was to extricate themselves and their goods, which formed three-fourths of the stock, from Ordinary prudence in business any complications with his required them either to withdraw their goods, thus practically breaking up the store and turning Strenz out of employment, or else to buy him out and become the unquestioned owners of the whole stock. They chose the latter and bought him out, agreeing to pay, and subsequently paying, the full value of the goods. In the sale itself (and that is all that is here in question) I see nothing objectionable. The purchase could not in my opinion have been impeached by an assignee in bankruptcy within six months afterwards, under section 5129. As respects the creditors of Strenz and his estate it was an advantageons sale. It was not wholly closed up until about a year after. There are no marks of secrecy, haste, or fraudulent intent about the transaction. The assignee in bankruptcy, if then procured, would have received the proceeds of the sale, or the greater part' of them, which were still unpaid. The transaction did not lessen Strenz's ostate, ncr tend to defeat or embarrass proceedings in bankruptcy, nor to divert bis effects from any assignee that might have been appointed. Clark v. Iselin, 10 Blatch!, 204, 208. It therefore involved no fraud upon the bankrupt !tct, and none was intended. If un insolvent .trader can sell out his remaining stock for its full value, it is fortunate for him and for his estate: and in the absence of all fraudulent intent there is certainly no law against his doing so, any more than there is against his selling out by piecemeal. The oIlly exception, if any, to be taken in such cases is to any preference or unequal bution of the proceeds of sale. The proceeds in this instance were paid out to various creditors from time to time as received. But there was no design in selling out in this case to get money to prefer any particular creditor or to hinder any creditor in collecting his debt. Had the creditors put Strenz into bankruptcy in time, they might, perhaps, have avoided what preferences were thus made. But they could have impeached the sale itself under section 5129; and the same language employed in subdivi--ion 9 of section 5110 must receive the same construction, except as to the limitation of time, as to which
i express no opinion. The trans8iction appears from the proofs to
have been a fair sale for a fair price, without fraud, without injury to the bankrupt's estate or to his creditors, and without prejudice to any proceedings in bankruptcy thatmightbave been bad. The objedtions are therefore overrtiledand the discharge granted.
FIRST NATIONAL BANK OF MARIlI;TTA
(Uircuit Court" 8.
Decision of the district court (In re Hovey, lams If 00. 5 FED. BAXTER, C. J., without delivering an opinion.
Co. and another v.
(Circuit Court, D. CO'(l.necticut.
August 16, 1881.)