In re Freeman Cotting Coat Co.
| Decision Date | 28 July 1913 |
| Docket Number | 18,581. |
| Citation | 212 F. 548 |
| Parties | In re FREEMAN COTTING COAT CO. |
| Court | U.S. District Court — District of Massachusetts |
Friedman & Atherton, of Boston, Mass., for petitioning creditors.
Ferdinand A. Wyman, of Boston, Mass., for answering creditors.
This is an involuntary petition in bankruptcy. The acts of bankruptcy alleged are eight preferential transfers of property to the International Trust Company on various dates between April 23, 1912, and July 26, 1912. The respondent company has not answered, and as to it the petition goes by default. The International Trust Company has answered under section 59 of the act (Act July 1, 1898, c. 541, 30 Stat. 561 (U.S. Comp St. Supp. 1911, p. 3445)), denying insolvency and intent to prefer. The referee has reported in favor of adjudication and the case is here on his report.
The petitioners rely only on the first, third, fourth, fifth, and seventh acts of bankruptcy set out in the petition. The facts are not in dispute. In each instance the alleged bankrupt borrowed a sum of money from the trust company within the four months preceding the filing of this petition, and concurrently gave as collateral security for the loan assignments of accounts due to it to an amount in excess of the loan received, upon a form of note furnished by the trust company, which permitted the trust company to apply the surplus security upon antecedent indebtedness of the borrower. Practically all of the assigned accounts proved good, and in each of the five instances relied on the trust company subsequently collected an excess of collateral and under the terms of its notes applied such excess to the payment of the respondent's past indebtedness to it which was of substantial amount. The excess of collateral received by the trust company varied on the different loans from 7 per cent. to 14 per cent. and averaged about 12 1/2 per cent.; the total amount loaned being $16,300, the total collateral $18,626, and the total surplus $2,026.
The respondent's financial condition had become difficult as early as the latter part of December, 1911. Under date of January 1, 1912, an examination of its affairs and a report on its condition was made by expert accountants and submitted to the trust company and to several others of its principal creditors. On April 25, 1912, it agreed in writing with a committee of three, representing certain creditors, to conduct its business under their 'joint direction,' to make no transactions without their approval, and 'more especially we will not contract any bills, nor contract any debts or pay any bills, or prefer one creditor to any other and at any time that you will jointly request, we will place our affairs in your hands. ' Mr. Sears, of Wellington, Sears & Co., was soon afterward added to this committee as a fourth member. Until the filing of the bankruptcy petition on August 23d the respondent conducted its business under the supervision of this committee in an effort to pull it out of its difficulties.
Each and all of the transactions relied on as acts of bankruptcy were made in pursuance of this effort, with the approval of said committee.
Each of the three petitioning creditors were represented on the committee, and the representative of each petitioning creditor approved, at the time when they were made, each of the transactions now relied on as acts of bankruptcy.
This statement of facts is sufficient to dispose of the controversy. An 'intent to prefer' is an essential element of the acts of bankruptcy alleged, and it is plain that no such intent existed. The loans in question were made and the security therefor was given, with the full knowledge and consent of the very creditors, who now contend that the transactions were intended as preferences and were acts of bankruptcy. The creditors' committee was fully informed as to the respondent's condition. There is no greater reason to attribute an intent to prefer to the respondent than to the creditors. The fact is that all part...
To continue reading
Request your trial
-
In re Maryanov
...on Bankruptcy (1923 Ed.) § 244; Collier (1925 Ed.) p. 1220 (h). This is not a case of an intervening petition such as In re Freeman Co. (D. C.) 212 F. 551, and it is not a case where an intentional preference is given as In re Freeman Co. (D. C.) 212 F. To be sure Janowitz in his petition a......
-
Shingleton v. Armour Boulevard Corporation
...3 Cir., 1 F.2d 442; Bean v. Jarvis, 1 Cir., 19 F.2d 342; Eastern Drug Co. v. Bieringer-Hanauer, 1 Cir., 8 F.2d 838; In re Freeman Cotting Coat Co., D.C.Mass., 212 F. 548; In re Seeley, Fed. Cas.No.12,628; 1 Remington on Bankruptcy (4th ed.) § 139, p. The argument affords no aid in the circu......
-
In re E.T. Russell Co., Inc.
...Wilson v. City Bank, 17 Wall. 473, 21 L.Ed. 723; Grant v. National Bank, 97 U.S. 81, 24 L.Ed. 971; Hardy v. Gray, 144 F. 922; In re Freeman Cotting Coat Co., supra. In latter case Judge Morton remarks that: 'An insolvent has the right to endeavor to continue; he is not obliged to shut up sh......
-
Eastern Drug Co. v. Bieringer-Hanauer Co., 1868.
...152 F. 978, 82 C. C. A. 109; In re Douglass Coal & Coke Co. (D. C.) 131 F. 769; In re Bloomberg (D. C.) 253 F. 94; In re Freeman Cotting Coat Co. (D. C.) 212 F. 548. It is apparent, however, that, when the alleged payments were made in this case, the treasurer of the corporation knew that i......