Bronx Brass Foundry v. Irving Trust Co

• Decision Date: 10 February 1936
• Docket Number: No. 232,232
• Citation: 56 S.Ct. 451,297 U.S. 230,80 L.Ed. 657
• Parties: BRONX BRASS FOUNDRY, Inc., v. IRVING TRUST CO
• Court: U.S. Supreme Court

297 U.S. 230

56 S.Ct. 451

80 L.Ed. 657

BRONX BRASS FOUNDRY, Inc.,

v IRVING TRUST CO.

No. 232.

Argued Dec. 13, 1935.

Decided Feb. 10, 1936.

Mr. M. H. Goldstein, of New York City, for petitioner.

Mr. Charles A. Houston, of New York City, for respondent.

Mr. Justice BRANDEIS delivered the opinion of the Court.

J. R. Palmenberg Sons, Inc., was adjudged bankrupt in the Federal Court for Southern New York in August, 1933. In September, Bronx Brass Foundry, Inc., filed its proof of claim. In January, 1934, the Irving Trust Company, trustee in bankruptcy, moved to expunge the claim on the ground that the creditor had received, within the four months preceding the bankruptcy, payments on ac- count aggregating $1,000 which were unlawful preferences. The creditor denied the allegations of preference.

On the issue thus raised, several hearings were had before the referee and the evidence introduced clearly indicated that the payments would, upon bankruptcy, effect a preference over other creditors of the same class, and that the claimant had received them having reasonable cause to believe the debtor insolvent. But it left uncertain whether the amount received was more than its pro rata share would have been, if the then existing assets had been ratably distributed among all the then creditors. Before the hearing closed, and in view of an adverse ruling on the admission of evidence, the creditor filed a withdrawal of its claim and left the hearing.

The trustee objected to allowance of the withdrawal, and introduced further evidence, insisting that it was entitled to an adjudication of the question whether the payments made were unlawful preferences. The referee, at the close of the hearing, ordered that the claim be expunged, unless the creditor within 20 days repay the preference to the trustee, with interest from the date of service of the motion to expunge. He said: 'When a creditor files a claim against the bankrupt estate he elects a forum which may hear and determine whether a preference to him was made. Although judgment of recovery may not be granted, the finding thereon, subject to review, is conclusive as between the parties. It is not intended that a party shall have two trials of the same issue or be permitted to present the same issue to different tribunals for determination. When issue is joined upon the question whether a voidable preference has been received, the creditor may not withdraw of his own motion and thereby avoid such...