Irving Trust Co. v. Mann
| Decision Date | 23 October 1933 |
| Citation | 5 F. Supp. 895 |
| Parties | IRVING TRUST CO. v. MANN et al. |
| Court | U.S. District Court — Southern District of New York |
Krause, Hirsch & Levin, of New York City (George J. Hirsch, of New York City, of counsel), for plaintiff.
Daniel J. Levowitz, of New York City, for defendant Bertha Mann.
Allan S. Feldman, of New York City, for defendants Max and Jacob Epstein.
The action is by the trustee in bankruptcy of Samuel Mann and Frank Mann, partners trading as Peerless Manufacturing & Supply Company. The complaint is in two counts, the first charging that the bankrupt firm made a preferential transfer of merchandise to the defendants, the second charging that the same transaction was made in fraud of creditors. The action is at law, and it was stipulated in open court that the case be tried without a jury.
An involuntary petition in bankruptcy was filed on December 14, 1931. It had been preceded by an assignment for the benefit of creditors made on November 28, 1931. The bankrupts' business was the sale of plumbing fixtures. In 1931 the business was operated at a heavy loss and was in a failing condition. As early as September the liabilities of the firm were greatly in excess of the assets, and there was an inability to meet maturing obligations. Many checks that had been issued were not honored because of insufficient funds. For two or three months preceding the assignment the firm had ceased depositing collections in its bank account, and was turning checks received in the course of business over to its creditors.
Among the creditors listed on the books of the firm were the defendants Bertha Mann, the wife of Frank Mann, in the sum of $1,591; Max Epstein, his father-in-law, in the sum of $1,000; and Jacob Epstein, his brother-in-law, in the sum of $1,000. These amounts were apparently for sums loaned to the bankrupts from time to time. Doubt is cast by the trustee upon the existence of any such loans, mainly because of the inability of the bankrupts and the defendants to specify the dates, amounts, and other particulars as to the several loans. Jacob Epstein had been in the bankrupts' employ until June 1931. He then left, and by September had opened a business of his own along the same lines as the bankrupts' business. His father, Max Epstein, however, remained with the bankrupts throughout, and the relations of all the defendants with the bankrupts continued to be close and friendly.
In September, October, and November the bankrupts shipped to Jacob Epstein merchandise carried on the books at $4,388.14, which is the transaction or series of transactions complained of by the trustee. This transfer was entered by the bankrupts as in payment of the three loans made by the defendants aggregating $3,591; the excess was said to be offset by shipments made by Jacob Epstein to the bankrupts in November 1931. It was testified by the defendants and by one of the bankrupts that an arrangement was made at the time whereby Jacob was to take over the accounts owed to the other two defendants and was to receive payment of all three accounts by taking merchandise needed by him in his new business. He was later to pay his sister and his father the same...
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