Irving Trust Co. v. Jacob Weckstein & Sons
| Decision Date | 10 April 1933 |
| Docket Number | No. 224,225.,224 |
| Citation | 64 F.2d 333 |
| Parties | IRVING TRUST CO. v. JACOB WECKSTEIN & SONS, Inc. SAME v. EITINGON SCHILD CO., Inc. |
| Court | U.S. Court of Appeals — Second Circuit |
Barron, Rice & Rockmore, of New York City (Murray H. Marker, Daniel Katz, and George P. Halperin, all of New York City, of counsel), for appellants.
Samuel Sturtz, of New York City (Richard J. Mackey, of New York City, of counsel), for appellee.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
Margulies & Ratner, Inc., a corporation engaged in the buying and selling of furs, was adjudicated bankrupt upon an involuntary petition filed on April 13, 1930. During the month of January, 1930, the bankrupt transferred to each of the defendants certain money and merchandise in payment of notes, which they, respectively, held, although its notes had not yet become due. The circumstances were such as to render the transfers voidable preferences according to the findings of the court below, and decrees were entered setting them aside. These appeals challenge the decrees upon two grounds: (1) That the evidence will not support the finding of insolvency of the bankrupt on the dates of its transfers; and (2) that the court erred in admitting in evidence an accountant's report showing the bankrupt's financial condition on February 5, 1930.
Convenience will be served by treating these contentions in inverse order, because the proof of insolvency will necessarily fail if the accountant's report must be excluded. It is contended that no proper foundation was laid for the report by first introducing the bankrupt's books. The accountant, Mr. Klein, testified to examining the books, preparing his report as of February 5, 1930. The report was then offered in evidence and objected to upon the ground that "no proper foundation has been laid." The defendants' solicitor explained that he meant by that objection that "there is no testimony that the contents of that report accurately reflects the statement of each asset and liability that appears." The witness thereupon testified that it did. Counsel then objected on another ground, that it was prepared at a date subsequent to the transfers attacked as preferences; and this was the only ground mentioned when he renewed his objection to the use of the report in the other suit (fol. 316). The books were present in court, and counsel should have pressed his objection that they had not been put in evidence, if he meant to insist upon it. On a similar objection with respect to Klein's testimony as to what the books showed concerning the payment of notes, when the books were about to be offered, he did not insist that they go in (fols. 216-218). We think it clear that the objection now urged was not pressed below. Indeed, no assignment of error mentions it. The contention is plainly an afterthought, and cannot now be successfully raised.
Although the claims against the bankrupt estate show liabilities in excess of $53,000 and the total assets collected by the trustee are only about $3,400, the appellants earnestly argue that the bankrupt was actually solvent during the month of January, 1930, when the transfers under attack were made. Accountant Klein audited its books as of February 5, 1930, and testified that its financial condition as shown by its books was substantially the same during the preceding month. From his audit it appears that the books showed a surplus worth of $28,115.89, so that it is only by a shrinkage of book values that insolvency was made to appear. It is the evidence in support of such shrinkage that the appellants challenge.
The chief item relates to notes of Weinschenker Bros., Inc., which the bankrupt held in the amount of $43,159.11, constituting its main asset. Equity receivers had been appointed for the Weinschenker corporation on December 21, 1929, and accountant Klein in his report valued these notes at only 30 per cent. of their face. In fact, the dividend realized by creditors of Weinschenker Bros. was only 6.7 per cent., but the contention is...
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