In re Eggert
| Decision Date | 15 June 1900 |
| Docket Number | 656. |
| Citation | 102 F. 735 |
| Parties | In re EGGERT. |
| Court | U.S. Court of Appeals — Seventh Circuit |
On the 18th day of January, 1900, William T. Doyle, the trustee in bankruptcy of Louis A. Eggert, filed his petition in this court seeking a review and reversal of an order of the court below. The petition in substance alleges the adjudication in bankruptcy, the appointment of the trustee, and asserts that the Rundle-Spence Manufacturing Company on the 1st day of July, 1899, being a creditor of the bankrupt to the amount of $1,373.04, and within four months prior to the bankruptcy received from the bankrupt a partial assignment of a claim against the city of Milwaukee as security for its debt. On the 30th day of August, 1899, by stipulation between the Rundle-Spence Manufacturing Company and the trustee, the latter was allowed to receive from the city of Milwaukee the amount of Eggert's claim, without prejudice to the rights of the Rundle-Spence Manufacturing Company to assert in the bankruptcy court its claim thereto to the extent of the amount assigned. Upon receipt by the trustee of the amount of the claim against the city, the Rundle-Spence Manufacturing Company filed its claim in the court of bankruptcy, asserting its right to be paid out of the fund received the sum of $1,241.10, being the amount assigned to it by the bankrupt. The petition further states that upon the hearing of this claim the referee found the following facts and conclusion of law.
Findings of Fact.
(1) I find that on the 1st day of July, 1899, Louis A. Eggert, the bankrupt herein, was indebted to the Rundle-Spence Manufacturing Company in the sum of thirteen hundred seventy-three dollars and four cents ($1,373.04) for merchandise delivered between the 28th day of April, 1899 and the 5th day of June, 1899, on credit. That on the 1st day of July, 1899, Rundle-Spence Manufacturing Company adjusted its account with the said Louis A. Eggert by giving him a discount of ten per cent., which is the usual discount for cash in that line of business, and was done pursuant to the contract under which the goods were purchased, and agreeing to accept twelve hundred forty-one dollars and ten cents ($1,241.10) in payment, and that on said 1st day of July said Louis A. Eggert gave an order for the sum of twelve hundred forty-one dollars and ten cents ($1,241.10) on the city of Milwaukee, directing it to pay that amount to the Rundle-Spence Manufacturing Company from any moneys due or to become due the said Eggert; that said order was informal and subsequently on the 5th day of July, 1899, the said Louis A Eggert made an assignment to the Rundle-Spence Manufacturing Company of the amounts due or to become due him from the city of Milwaukee by reason of a certain contract for plumbing on the Fifth Ward School, to the amount of twelve hundred forty-one dollars and ten cents ($1,241.10); and that the said assignment was on the 5th day of July, 1899, filed with the city treasurer and the city clerk of the city of Milwaukee by the Rundle-Spence Manufacturing Company.
(2) That the bankrupt, Louis A. Eggert, for a number of years previous to the 17th of August, 1899, the date of the filing of the petition in bankruptcy, was engaged in the plumbing business in the city of Milwaukee. That the Rundle-Spence Manufacturing Company is a corporation engaged in the manufacture and sale of plumbing supplies at Milwaukee Wisconsin. That the said Rundle-Spence Manufacturing Company and other corporations and firms engaged in a similar business are members of an association which meets a number of times each month, the purposes of said association being for the mutual protection of the members, and the exchange of information as to trade matters and the standing of parties to whom the members are selling goods on credit. That, under the rules of the association if any debtor of any member of the association fails to meet his obligations promptly and allows accounts against him to remain unpaid, he is placed upon the cash list and no member of the association can give him credit or furnish him any goods except for cash. That at a meeting of the association held on the 18th of May, 1899, at which a representative of Rundle-Spence Manufacturing Company was present, Louis A. Eggert, the bankrupt, was reported as being behind in his payments, and entitled to no further credit from the members of the association. That on the 15th day of June, 1899, at another meeting of the association, at which a representative of Rundle-Spence Manufacturing Company was present, the report showing that Louis A. Eggert was behind in his payments was renewed, and the Rundle-Spence Manufacturing Company also reported that its account against Eggert, amounting to thirteen hundred seventy-three dollars and four cents ($1,373.04), was past due. That the bankrupt at the said meeting was placed upon the cash list, and could no longer obtain credit from the said Rundle-Spence Manufacturing Company or any other member of the association. That at the time the Rundle-Spence Manufacturing Company took the assignment of the claim from the bankrupt against the city, to wit, on the 1st day of July, 1899, said Rundle-Spence Manufacturing Company knew that the said Eggert was behind in his payments with his creditors, and could obtain no goods or merchandise from members of the association except for cash. That the fact that Eggert was reported as being behind in his payments did not in itself indicate that he was insolvent; that the Rundle-Spence Manufacturing Company prior to the taking of the assignment of the said claim made no investigation or inquiry as to whether the said Eggert was solvent or insolvent, and that in obtaining the assignment of said claim against the city of Milwaukee the said Rundle-Spence Manufacturing Company practiced no fraud or deceit, nor did it act in collusion with the bankrupt.
(3) That the petition in bankruptcy herein was filed on the 17th day of August, 1899, and that the assignment of the claim against the city of Milwaukee by the bankrupt to the Rundle-Spence Manufacturing Company was made within four months prior thereto, and that on the 1st day of July, 1899, Louis A. Eggert, the bankrupt, was insolvent, and that the effect of the enforcement of the transfer by the bankrupt to the Rundle-Spence Manufacturing Company will enable it to obtain a greater percentage on its debt than other creditors of the same class.
(4) That the Rundle-Spence Manufacturing Company on the 16th day of September, 1899, filed its claim in the proceedings herein, in which it set forth that at the time of the filing of the petition in bankruptcy the bankrupt was indebted to it in the sum of thirteen hundred and seventy-three dollars and four cents ($1,373.04), and that it held as security therefor the assignment of the claim against the city of Milwaukee. That there is a conflict of testimony as to whether the assignment was taken in payment or as security, the bankrupt testifying that it was taken as security, and the treasurer of the Rundle-Spence Manufacturing Company that it was understood and agreed that it was taken in payment, although no receipt was given therefor, and that the claim was filed under a misapprehension. It not being necessary for the purpose of this decision, I do not here determine whether it was taken either in payment or as security.
Conclusion of Law.
(1) As a conclusion of law, I find that the Rundle-Spence Manufacturing Company at the time of the obtaining of the assignment of the claim against the city of Milwaukee from the bankrupt, to wit, on the 1st day of July, 1899, had no knowledge of the fact that the said Louis A. Eggert, the bankrupt herein, was insolvent, and had no reasonable cause to believe that it was intended by the transfer to give it a preference.
Thereupon the referee ordered that the petition of the Rundle-Spence Manufacturing Company be granted, and that the trustee pay to that company the sum of $1,241.10, and upon such payment being made the claim of the Rundle-Spence Manufacturing Company filed in the proceedings of September 6, 1899, be expunged. Thereafter, on the 10th day of December, 1899, an application was made to the district court for a review of the order of the referee, upon which, on the 8th day of January, 1900, an order was made affirming the order of the referee. The petition further claims that by virtue of section 60, subds. 'a,' 'b,' of the bankrupt act (30 Stat. 544, c. 541), and under the findings of fact, the transfer was avoided, and that it was also repugnant to section 67e of that act, and asks for a review and reversal of the order of the district court.
W. P. Bloodgood, for petitioner.
A. G. Weissert, for respondent.
Before WOODS, JENKINS, and GROSSCUP, Circuit Judges.
JENKINS Circuit Judge (after stating the facts as above).
The petition does not state the precise question of law presented to and ruled upon by the court below, and in this respect fails to follow the practice pointed out in Re Richards, 37 C.C.A. 634, 96 F. 935. We however gather from the petition that the construction of subdivisions 'a' and 'b' of section 60 of the bankrupt act is supposed to be involved, and this view obtains support from the opinion delivered by the court below upon affirming the order of the referee. In re Eggert, (D.C.) 98 F. 843. These subdivisions are, respectively, as follows:
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