Hartranft v. Ives

• Decision Date: 09 October 1916
• Docket Number: 25-1913
• Citation: 64 Pa.Super. 338
• Parties: Hartranft, Appellant, v. Ives
• Court: Pennsylvania Superior Court

64 Pa.Super. 338

Hartranft, Appellant, v. Ives

No. 25-1913

Superior Court of Pennsylvania

October 9, 1916

Argued February 29, 1916

Appeal by plaintiff, from judgment of C.P. Lycoming Co.-1914, No 173, on verdict for plaintiff in case of P. F. Hartranft Trustee in Bankruptcy of Joseph v. Kuhns, v. E. F. Ives.

Assumpsit by trustee in bankruptcy to recover a preference. Before Whitehead, P. J.

The facts are stated in the opinion of the Superior Court.

Verdict and judgment for defendant. Plaintiff appealed.

Error assigned was in refusing binding instructions for plaintiff.

Reversed.

Mortimer C. Rhone, for appellant. -- The case was res adjudicata In re Docker-Foster Co., 123 F. 190; Cromwell v. Sac. Co., 94 U.S. 351; Henderson v. Denious, 26 A.B.R. 226; Clendening v. Red River Nat. Bank of Fargo, 11 A.B.R. 245; McCullouch v. Davenport Savings Bank, 35 No. 4, of American Bankruptcy Rep. Jan. 1916.

Edgar Munson, of Candor & Munson, for appellee, cited: Buder v. Columbia Distilling Co., 70 S.W. 508; Henderson v. Denious, 186 F. 100; Clendening v. Bank, 94 N.W. 901; McCulloch v. Red River Bank, 226 F. 309.

Before Orlady, P. J., Henderson, Head, Kephart, Trexler and Williams, JJ.

OPINION

WILLIAMS, J.

This was a suit by a trustee in bankruptcy to recover various sums of money, amounting to $ 821.43, alleged to have been paid to a creditor as a preference.

Ives, the defendant, presented a claim to the referee in bankruptcy against the bankrupt for $ 250. This claim was allowed. Subsequently the trustee in bankruptcy, the plaintiff below, presented a petition to the referee averring that Ives, having received a preference, in various sums set forth in the petition, amounting to $ 821.43, his allowed claim should be expunged. This petition averred the essential facts to warrant the order subsequently made by the referee. A copy of the petition with a rule to show cause why his claim should not be reconsidered, disallowed and expunged, was personally served upon Ives, who did not appear at the hearing and filed no answer; whereupon the referee, upon the facts averred in the petition, no denial of their truth having been made, adjudged them to be true and expunged the claim from the record. The present suit was brought to recover the preferences referred to therein.

At the trial, the record of the bankruptcy court and of the referee was presented and admitted without objection on the part of Ives. A motion for a nonsuit was made and refused. Ives then made an offer to prove that " the alleged transfers, amounting to $ 821.43 set forth in the plaintiff's statement of claim, were not such preferential transfers as could be avoided by the trustee, for the reason that the said E. F. Ives, the defendant, did not have reasonable cause to believe that the said transfers of money would enable him to receive a greater proportion of his debt than other creditors of the same class; propose to show further by the witness that he neither knew, nor had cause to believe, that Joseph V. Kuhns, the bankrupt, was insolvent at the time of the alleged transfers."

The trustee objected, inter alia, that the matter had been passed upon by the referee and was, therefore, res adjudicata. The testimony was allowed to go to the jury. The plaintiff and the defendant both asked for binding instructions and both were refused. The court charged the jury that the only question for its consideration was whether or not Ives, at the time he received the payments, had reasonable cause to believe that Kuhns was in bad financial condition and that he was receiving a preference. The jury found a verdict for the defendant Ives. The plaintiff made a motion for judgment non obstante veredicto which was refused.

A single question is raised by the assignments of error. Was the order of the referee, made in expunging the claim of Ives because a preference had been given, res adjudicata in a subsequent suit to recover that preference.

A referee is a judicial officer and his orders or decrees within the scope of his powers, are entitled to the same credit as orders or decrees of courts of general jurisdiction: Clendening v. Bank, 12 N.D. 51; McCulloch v. Davenport Savings Bank, 226 F. 309 (U. S.D. Ct.). In the latter case it was expressly held where a claim had been duly presented against the bankrupt's estate, to which the trustee objected on the ground that five automobiles had been transferred to the claimant as a voidable preference, the claimant having been notified and not appearing or offering evidence, and the referee having made an order expunging the claim, that such order was an adjudication of the fact that the five automobiles constituted a preference. Wade, D. J., says (311): " The principal question to be determined is whether or not said proceedings upon the claim of the Davenport Savings Bank before the referee constitutes such an adjudication of the facts involved in this case as to render further proof of the facts unnecessary. The referee in bankruptcy is a judicial officer, performing certain functions as part of the bankruptcy court, and there can be no question but that his findings upon all matters within his jurisdiction have the same force and effect as if...