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102 F. 987

In re Blair

New York Southern District Court

Decided June 25, 1900.)

New York Southern District Court · decided 1900-06-25

<p>1. Bavxiu ptoy — í'ukfeí:exce«—Hkcovkby by Trustkk.</p> <p>Money collected on execution and received by tlie creditor’before the tiling of a petition in bankrupicy against ihe debtor, lrat within four months prior thereto, although it eons titules a preference, within Baukr. Act 1Si:S, ⅜ uoa, cannot be recovered back by (he trustee, under Miction 00b, unless it is shown that the creditor had reasonable cause to believe that a preference was intended.</p> <p>8. 8amk--Jurisdiction of Bankruptcy Courts.</p> <p>tinder Bankr. Act 1898, where a judgment was collected by execution, and the money paid over to the judgment creditor before the filing of a petition in bankruptcy against tlie judgment debtor, although within four months prior thereto, tlie court ot bankruptcy lias no power, in a summary proceeding on petition of the trustee, to compel tlie «'editor to repay the money, but the remedy of the trustee is by plenary action in a court of competent jurisdiction.</p>

2 counsel of record

Key passage — most relied on by later courts

““That all conveyances, transfers, assignments, or incumbrances of his property, or any part thereof, made or given by a person adjudged a bankrupt under the provisions of this act subsequent to the passage of this act and within four months prior to the filing of the petition, with the intent and pitrpose on his part to hinder, delay, or defraud his creditors, or any of them, shall be null and void as against the creditors of such debtor, except a-s to purchasers in good faith and for a present fair consideration; and all property of the debtor conveyed, transferred, assigned, or encumbered as aforesaid shall, if he be adjudged a bankrupt, and the same is not exempt from execution and liability for debts by the law of his domicile, be and remain a part of the assets and estate of the bankrupt and shall pass to his said trustee, whoso duty it shall be to recover and reclaim the same by legal proceedings or otherwise for the benefit of the creditors.””

quoted by 1 later decision, including Grant v. National Bank of Auburn

““The remedy, if any, the trustee has against the creditor, is under the provisions of section 60a and 60b of the Bankrupt Act in a plenary action, where it will be necessary to allege and show that the creditor had reasonable cause to believe that the bankrupt, by suffering’judgment to bo taken against him, intended to give a preference.””

quoted by 1 later decision, including Grant v. National Bank of Auburn

Relies on Hicks v. Knost · In re Kenney · Strobel & Wilken Co. v. Knost

Good law ✅— No negative treatment on recordhow we know

Decided 1900-06-25

How this case has been cited

Cited by 6 later decisions — most recently December 1935

1 federal appellate · 4 district ·

201900191019201930decided

Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.

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¶11. Bavxiu ptoy — í'ukfeí:exce«—Hkcovkby by Trustkk.

¶2Money collected on execution and received by tlie creditor’before the tiling of a petition in bankrupicy against ihe debtor, lrat within four months prior thereto, although it eons titules a preference, within Baukr. Act 1Si:S, ⅜ uoa, cannot be recovered back by (he trustee, under Miction 00b, unless it is shown that the creditor had reasonable cause to believe that a preference was intended.

¶38. 8amk--Jurisdiction of Bankruptcy Courts.

¶4tinder Bankr. Act 1898, where a judgment was collected by execution, and the money paid over to the judgment creditor before the filing of a petition in bankruptcy against tlie judgment debtor, although within four months prior thereto, tlie court ot bankruptcy lias no power, in a summary proceeding on petition of the trustee, to compel tlie «'editor to repay the money, but the remedy of the trustee is by plenary action in a court of competent jurisdiction.

¶5In Bankrupicy. On motion to compel creditor to repay to the trustee money collected on execution, and received by the creditor, *988through an attachment and judgment, within four months prior to the filing of the petition in bankruptcy.

¶6Ilayes & Bitterman, for the motion.

¶7Zeller & Miehling, opposed.

¶8BROWN, District Judge.

¶9Although the collection by execution and payment to the creditor constituted a “preference” (Bankr. Act, § 00a), yet, as the money was received by the creditor before the petition in bankruptcy was filed, the transaction thereby became consummated, thus differing from In re Kenney, 3 Am. Bankr. R. 353, 97 Fed. 554. If the preference was received by the creditor, without reasonable .cause to believe a preference was intended (Bankr. Act, § 60b), it seems not to be recoverable back by the trustee. Here the petition does not charge that the creditors had reasonable cause to believe the bankrupts to be insolvent; but only the fact of- their insolvency at that time, which the creditors in their answer deny, and also deny all knowledge of that fact, if true.

¶10Under the recent decision of the supreme court, I am of opinion that this transaction being completely executed by the payment of the money by the sheriff before the petition was filed, the remedy of the trustee is by plenary action alone in the state court. See Hicks v. Knost, 2 Am. Bankr. R. 153, 94 Fed. 625; In re Knost, 2 Am. Bankr. R. 475; Strobel & Wilkin Co. v. Knost, 3 Am. Bankr. R. 631, 99 Fed. 409.

¶11Motion denied.

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