In re Mullen
Decision Date | 26 April 1900 |
Docket Number | 1,889. |
Citation | 101 F. 413 |
Parties | IN re MULLEN. |
Court | U.S. District Court — District of Massachusetts |
Alfred S. Hayes, for trustee in bankruptcy.
Putnam & Putnam, for attaching creditor.
The trustee's amended petition, filed February 23, 1900 alleges that in 1892 the bankrupt, by a mesne conveyance transferred real estate to his wife; the conveyance being duly recorded. No conveyance of this real estate was thereafter made by Mrs. Mullen, who died in 1898. On November 1, 1899, Mullen was adjudicated a bankrupt on his voluntary petition. By writ dated November 3, 1899, the respondent in this case, the Continental National Bank, attached the real estate belonging to Mrs. Mullen in a suit against her administrator, upon which suit the bank subsequently recovered judgment. An execution was issued thereon January 26, 1900, by virtue whereof the respondent levied upon the real estate above mentioned. The petition further alleges that the real estate in question is the property of the bankrupt, that his wife held the title thereto solely as trustee for his benefit, and that the record title to the real estate had been put in her name by the bankrupt for the purpose of hindering, delaying, and defrauding his creditors. The petition asks that the respondent be ordered to reconvey the real estate to the trustee in bankruptcy. To this petition the respondent has filed a paper in the form of a demurrer, which demurrer was overruled by the referee, of whose decision the respondent has duly sought a review. No question of the general jurisdiction of the court was raised, either before the referee or before me.
Before discussing the questions of law involved in this case, it is proper to say that no opinion is to be taken as expressed upon the applicability of a demurrer to a summary petition in bankruptcy like this. I doubt if the forms of pleading at common law and in equity are applicable to such summary proceedings. It may well be that the objections raised by the demurrer should have been presented, as they certainly might have been, in an answer to the merits. I am also inclined to think that it would have been more regular had the review sought by the respondent in this case been made to await a decision of the referee upon the facts involved. It is not usually convenient for this court, by way of review, to deal twice with the same petition,-- once upon the law, and again upon the facts. As, however, all parties are desirous that the questions of law should now be settled, and as it lies in my discretion to pass upon them at this time, I shall not send the case back to the referee for further hearing.
The trustee does not now contend that he is entitled to a conveyance on the ground that Mrs. Mullen held the property in dispute as her husband's trustee, but solely upon the ground that it was conveyed in fraud of his creditors. The clauses of the bankrupt act concerning transfers in fraud of creditors are:
Section 70a, subds. 4, 5, which read substantially as follows:
'The trustee of the estate of a bankrupt * * * shall * * * be vested by operation of law with the title of the bankrupt as of the date he was adjudged a bankrupt * * * to all * * * (4) property transferred by him in fraud of his creditors; (5) property which, prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him. * * *'
I find myself unable to interpret and arrange all these provisions so that they shall be altogether free from contradiction, repetition, and redundancy. Manifestly, they deal (perhaps not exclusively) with transfers made by the bankrupt in fraud of his creditors, and the classes in which they arrange these transfers are not mutually exclusive. Clause 'e' of section 67 was inserted in the bankrupt act at a very late state of its consideration. It is not found in the house bill, so called, as printed in S. 1035, 55th Cong., 2d Sess. In that draft section 67 ends with clause 'd.' The origin of the interpolated clause I have not been able to discover. Section 67f, which was interpolated at the same time, is said to have been added in order to strengthen the bill. See In re Richards, 96 F. 935, 939, 37 C.C.A. 634. A part of the phraseology of section 7 of the so-called senate bill printed in S. 1035 suggests a part of the phraseology of the second sentence in the existing clause 'e,' but the differences are as considerable as the resemblances. The interpolation of the latter part of clause 'e' was so hastily made from a draft of some other bankrupt bill that the word 'assignee' was left therein, and was not changed to 'trustee,' according to the nomenclature of the existing act. There is nothing to be found in the senate bill resembling the first half of clause 'e,' which seems to have had a separate origin. Most of the property dealt with in one part of the clause is again dealt with somewhat inconsistently in the other part, and the whole clause, thus introduced without corresponding amendments to other parts of the bill, contains contradictions and superfluities. As the conveyance in question is not within the terms of any part of section 67e, not having been made within four months prior to the filing of the petition, that clause need not be further considered here, and it is mentioned only to show that it has not been overlooked, and that little argument by way of analogy can be drawn from its provisions. Section 70a, subd. 4, invests the trustee with the title to property transferred by the bankrupt in fraud of his creditors. By section 67e the trustee had been already vested with the title to some property so transferred. But section 70a, subd. 4, in its present form was part of the bill before section 67e was interpolated, and was not modified to suit the interpolation. The inconsistency of the clauses, one of which invests the trustee with property transferred in fraud of creditors within four months of bankruptcy, and the other with property so transferred without limit of time, is thus explained. Probably section 70a was not so much intended to avoid certain classes of transfers, as to declare the right of the trustee to avoid transfers voidable by other persons. A similar observation is applicable to section 70a, subd. 5. See Pratt v. Curtis, 2 Low. 87, Fed. Cas. No. 11,375. The history of section 70e is as follows:
In its original form...
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...the trustee is successful in such an action, the transfer, no matter how fraudulent in fact, is only voidable and not void. In re Mullen, 101 F. 413 (D.Mass.1900); Fitch, et al. v. Jones & Lamson Machine Co., Inc. (In re Jones & Lamson Machine Co., Inc.), 113 B.R. 124, 127 (Bankr.D.Conn.199......
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