Benjamin v. Chandler
| Citation | 142 F. 217 |
| Decision Date | 15 December 1905 |
| Docket Number | 3. |
| Parties | BENJAMIN v. CHANDLER. |
| Court | U.S. District Court — Middle District of Pennsylvania |
Russell Dimmick and John F. Scragg, for the rule.
R. L Levy and Houck & Benjamin, opposed.
This is an action by a trustee in bankruptcy to recover a preference and the verdict was in favor of the plaintiff for $578.88. Admittedly, this is some $11 too much; the amount actually received by the defendant being $539.40, on which interest became due only from the time demand was made for it (Tredway v. Kaufman 21 Pa.Super.Ct. 256; Kaufman v. Tredway, 195 U.S. 271, 25 Sup.Ct. 33, 49 L.Ed. 190) which was not till December 13, 1904, thus making $567.10. It is agreed that all over and above this sum shall be remitted. But the defendant, not content with that, denies any liability whatever, and asks for a new trial, accordingly, upon several grounds.
One of the main points in controversy at the trial was the bankrupt's insolvency at the time of the alleged preference. His bankruptcy almost immediately followed, and it is a question whether this of itself was not evidence of his antecedent insolvent condition. Hackney v. Hargreaves, 13 Am.Bankr.Rep. 164, 99 N.W. 675; Cincinnati Cooperage Co. v. Gaul, 170 Pa. 540, 32 A. 1093. But, without resting the case upon that, there were other considerations upon which it was properly submitted to the jury. The indebtedness of the bankrupt all told, secured and unsecured, was between $5,000 and $6,000; and his assets, nominally, considerably more than that; but in reality, as shown by the evidence and as found by the verdict, materially less. His real estate, of which there were two pieces, was worth, the one about $2,800, and the other somewhere from $1,000 to $1,300, both heavily incumbered. He was carrying on a small grocery store, but his stock of goods was reduced to very meager proportions, and was worth at the most, with the horses and wagons employed in the business, not more than $500 or $600. The only things else he had were his book accounts, having a face value of $4,400, and two life insurance policies of $2,000 each, one in the Heptasophs and the other in the Woodmen, both well known beneficial and protective orders. It is these last two items that are made the subject of contest here. The book accounts apparently raise the assets above the liabilities, and the surrender value of the policies was not shown. But the accounts were stale, and however much they amounted to numerically, the trustee, with the aid of others, was only able to collect some $66 out of them, and that may be accepted as all that they were practically worth. It may be that time and persistence would have succeeded in realizing more; but they manifestly were not available to any extent to the bankrupt, who was in a position to make the most out of them; and, as was pointed out in Re Coddington, 9 Am.Bankr.Rep. 243, 118 F. 281, it is the value of such assets as they stand that is to be taken, in balancing them up with the liabilities, on the issue of insolvency; and it is plain that there was nothing of substance to them here. The jury have so found, on the question being submitted to them, and their verdict is not to be disturbed.
Neither am I persuaded that any mistake was made with regard to the life insurance policies which have been spoken of. All, at most, that could have been realized from that source, was the surrender value, if they had any, and whether they had depended upon a number of circumstances, and was not a necessary incident, and was not therefore to be presumed. This is particularly true with regard to insurance by virtue of membership in a beneficial order, the right to which is conditioned upon the good standing of the party, and its payment met by assessments upon surviving members. All we have on the subject in the present instance is the statement by the bankrupt, drawn out on cross-examination, that he had $1,000 of insurance of this character, without any particulars, as to when it was taken out, in what condition it stood, or to whom or upon what terms it was payable. It is idle upon any such showing to contend that it represented anything of value, to be reckoned with in an estimate of the bankrupt's financial condition, or that the trustee was required to prove, as a negative, that it did not.
With more show of reason, it is claimed that the payment to the defendant which is claimed as a preference was the independent and voluntary act of a third party, and not of the bankrupt, out of which no preference could grow. The facts with regard to this are as follows: On June 1, 1903 the bankrupt being indebted to the defendant gave him five promissory notes with confessions of judgment, for $100 each, payable in three, four, five, six, and seven months. The first two of these were taken care of as they came due; but not so the others, which a year or more later still remained in the defendant's hands unpaid. On September 24, 1904, having received a circular letter from Mr. Levy, the bankrupt's attorney, saying that he (the bankrupt) was in financial difficulty and was compelled to offer a compromise to his creditors, the defendant...
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