In re Kehler
| Decision Date | 07 January 1908 |
| Docket Number | 115. |
| Citation | 159 F. 55 |
| Parties | In re KEHLER. |
| Court | U.S. Court of Appeals — Second Circuit |
S. M Enterline and C. E. Berger, for appellant.
John Van Arsdale, for appellee.
Before LACOMBE, COXE, and NOYES, Circuit Judges.
On February 22, 1907, the petitioning creditors filed a petition asking that Kehler be adjudicated a bankrupt, alleging as acts of bankruptcy the transfer, while insolvent, on or about January 3, 1907, of property, aggregating $5,140 in value, to four relatives, who were creditors with intent to give them a preference; on the same day, February 22, 1907, a receiver of the property within the jurisdiction of the court was appointed. On March 21, 1907 H. Franklin Schlegel as committee of the alleged bankrupt filed an answer to the petition in bankruptcy alleging that Kehler on March 2, 1907, was adjudged a lunatic by the court of common pleas of Pennsylvania upon petition filed February 18, 1907, four days prior to the filing of the petition in bankruptcy. Attached to the answer is a certified copy of the Pennsylvania proceedings.
The inquisition dated March 2, 1907, finds that from December 21 1906, Kehler has been a lunatic, but with lucid intervals prior to February 1, 1907. We obtained the impression at the argument that Kehler's insanity developed suddenly about the time of his departure from Buffalo, that it was transient in character and, indeed, that doubt was entertained as to its genuineness. An examination of the testimony returned with the inquisition removes all doubt as to Kehler's insanity. Dr. Marshall who saw him last at Kirkbride's Insane Asylum at Philadelphia, testified that he was suffering from paretic dementia, or softening of the brain which had affected his brain for over a year, and is beyond the hope of recovery. The doctor further testified that when he saw Kehler on January 2, 1907, he was much depressed, having alternating periods of laughing and crying, while his countenance was expressionless. That he was undoubtedly insane since January 2, 1907, and before that date, that he had only partial lucid intervals, that it is a case of progressive paralysis, beginning with the spine and progressing until the entire body collapses.
It is, therefore, at least possible that an insane man has been adjudged a bankrupt because of acts for which he was in no way responsible. If he committed the acts of bankruptcy alleged in the petition while insane, the adjudication is a wrong which, irrespective of technical objections to the pleadings and proceedings of his committee, should be righted. If, on the other hand, these acts were committed while sane, there was no error in continuing the case even though the bankrupt subsequently became insane.
Section 8 of the Bankruptcy Act, Act July 1, 1898, c. 541, 30 Stat. 549 (U.S. Comp. St. 1901, p. 3425), provides that the insanity of a bankrupt shall not abate the proceedings, and section 1 provides that the word 'bankrupt' shall include a person against whom an involuntary petition has been filed. It is manifest, therefore, that if Kehler committed an act of bankruptcy while sane, and by reason of such act the court obtained jurisdiction, it can continue the proceedings notwithstanding the subsequent insanity of the bankrupt.
The all-important question is, was he sane or insane on January 3, 1907, when it is alleged the acts of bankruptcy were committed? If insane at that time he could not give a fraudulent preference and should not have been declared a bankrupt. The district judge correctly states the proposition as follows:
'True, an insane person cannot commit an act of bankruptcy, but if Kehler was compos mentis at the time the acts were committed, the petition by creditors being filed before he was adjudged insane, I think the court acquired jurisdiction of the proceedings.'
Believing however, that the burden was upon the committee to prove that Kehler was insane on January 3, 1907, because of the findings that he had 'lucid intervals prior to February 1, 1907,' the judge denied the motion to dismiss the petition, granted the motion to dismiss the answer and amended answer, on the ground that they do not allege facts sufficient to constitute a defense to the petition, and adjudged Kehler a bankrupt. We are unable to agree with this...
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