In re Tiffany

• Citation: 147 F. 314
• Parties: In re TIFFANY.
• Decision Date: 15 August 1906
• Court: U.S. District Court — Southern District of New York

147 F. 314

In re TIFFANY.

United States District Court, S.D. New York.

August 15, 1906

Benjamin Tuska, for bankrupt.

Daniel Daly, for objecting creditors.

Selden Bacon, for creditors asking delay.

L. M Berkeley, for trustee.

HOUGH District Judge.

In April, 1903, the bankrupt was insolvent, and has by his own admission continued so to be. He was (and is) in this condition, although in receipt of an income derived from the trust estate of his father, paid to him weekly, and aggregating $18,000 per annum. Being so insolvent he wished to marry his present wife, who insisted, not as a condition of marriage, but as a condition of expediting the union, that he give her outright a supply of household furniture and fittings. No agreement was made as to the quantity or value of such supply. On April 25, 1903, the bankrupt married, and shortly thereafter purchased, at a cost of at least $15,000 and upon credit, the property necessary in his judgment to make good this antenuptial agreement. What he bought he instantly transferred to his wife, without the slightest intention of paying for the same out of the above-described income; it being in his expressed opinion quite impossible to pay so much out of so moderate a yearly revenue as $18,000.

As he has never pursued any gainful vocation, his sole hope of discharging the debts thus incurred depended upon the result of an action brought against the trustees of his father's estate to compel an increase of his yearly allowance. The fruition of this hope has been denied by the courts of New York.

Certain of the tradesmen whom he had used to fulfill his antenuptial contract (or rather perhaps his conception of the same) having obtained judgments for their claims, other creditors filed a petition in bankruptcy in October, 1904. Immediately upon the filing thereof the usual injunction was issued forbidding Tiffany's creditors from proceeding further against him, and this injunction is still in force except as modified by an order of the referee herein made on the 23d of March, 1905, whereby the trustee was authorized to institute or cause to be instituted various proceedings, among others an action in his own name in the state court to set aside the above-described transfer to the bankrupt's wife, and another action in the same court by one or more of the bankrupt's judgment creditors, against the bankrupt and the trustee under his father's will, to reach as surplus income some portion of his $18,000 per year.

The action to set aside the transfer to the wife was brought and is still pending on appeal. The evidence adduced upon the trial of that cause is on all material points identical with that offered before the referee under the objections to Tiffany's discharge. Judgment was entered at Special Term in that suit declaring that the marriage celebrated in compliance with the antenuptial agreement above recited constituted a valid consideration for the transfer, and that the same was (on the part of the wife) without fraud or intent to hinder or delay her husband's creditors; wherefore the transaction did not amount to a secret trust for the bankrupt's use, and did make the wife a bona fide purchaser for value of the goods sought to be recovered by the trustee.

The opposition to the bankrupt's discharge is contained in objections specifying, in substance, that the household goods in question were obtained while the bankrupt was insolvent were transferred to the wife without consideration, and were and are really held in secret trust for the bankrupt; the transaction thus amounting to a continuing concealment of property within Bankr. Act, July 1, 1898, c. 541 Sec. 14, 30 Stat. 550 (U.S. Comp. St. 1901, p. 3428).

The special commissioner reports that it has been described by a court of competent jurisdiction that the wife became a bona fide purchaser of the property in question more than four months before the filing of this...