Joseph Kaufman v. Tredway

• Citation: 49 L.Ed. 190,25 S.Ct. 33,195 U.S. 271
• Decision Date: 28 November 1904
• Docket Number: No. 17,17
• Parties: JOSEPH S. KAUFMAN, Plff. in Err. , v. W. T. TREDWAY, Trustee of the Estate of Gustave Kaufman, Bankrupt
• Court: United States Supreme Court

195 U.S. 271

25 S.Ct. 33

49 L.Ed. 190

JOSEPH S. KAUFMAN, Plff. in Err.,

v W. T. TREDWAY, Trustee of the Estate of Gustave Kaufman, Bankrupt.

No. 17.

Argued October 24, 1904.

Decided November 28, 1904.

On August 20, 1898, Gustave Kaufman filed his petition in bankruptcy and was subsequently adjudged and decreed a bankrupt. W. T. Tredway was appointed trustee of his estate. On July 24, 1899, the trustee commenced suit in the court of common pleas, No. 3, of Allegheny county, Pennsylvania, to recover from Joseph S. Kaufman the sum of $4,086.64, charged to have been given, on August 4, 1898, by the bankrupt to the defendant as a preference. The trial resulted in a judgment in favor of the trustee for $1,086.64 and interest. This judgment was affirmed on appeal by the superior court. An application for a further appeal to the supreme court of the state was denied, and thereupon this writ of error was sued out to review the judgment of the superior court. Section 60 of the bankrupt act is as follows:

'Section 60. (a) A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the* enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.

'(b) If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of the petition, and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be viodable by the trustee, and he may recover the property or its value from such person.

'(c) If a creditor has been preferred, and afterwards in good faith gives the debtor further credit, without security of any kind, for property which becomes a part of the debtor's estate, the amount of such new credit remaining unpaid at the time of the adjudication in bankruptcy may be set off against the amount which would otherwise be recoverable from him.' 30 Stat. at L. 544, 562, chap. 541, July 1, 1898, U. S. Comp. Stat. 1901, p. 3445.

Messrs. Joseph A. Langfitt and William Kaufman for plaintiff in error.

Messrs.

H. L. Castle, William A. Stone, and Stone & Stone for defendant in error.

Statement by Mr. Justice Brewer:

Mr. Justice Brewer, delivered the opinion of the court:

Whether the bankrupt was insolvent on August 4, 1898, when he paid the money to his brother, the defendant, and whether the latter had reasonable cause to believe that it was intended thereby to give a preference, are questions of fact, determined by the verdict of the jury, and not open to review view in this court. Hedrick v. Atchison, T. & S. F. R. Co. 167 U. S. 673, 677, 42 L. ed. 320, 322, 17 Sup. Ct. Rep. 922; E. Bement & Sons v. National Harrow Co. 186 U. S. 70, 83, 46 L. ed. 1058, 1064, 22 Sup. Ct. Rep. 747; Jenkins v. Neff, 186 U. S. 230, 46 L. ed. 1140, 22 Sup. Ct. Rep. 905, and cases cited in opinions. It is suggested that the trial court erred in admitting testimony of transactions between the brothers some six or seven months prior to the payment by the bankrupt to the defendant; that such transactions were too remote from the time of the preference to throw light on the question of knowledge. We think that the testimony, whether of much or little value, was competent, and that it was not error for the court to admit it. Clune v. United States, 159 U. S. 590-592, 40 L. ed. 269, 270, 16 Sup. Ct. Rep. 125.

We see no reason to doubt the propriety of allowing interest on the claim from the commencement of the action. Such commencement is itself a demand.

The principal contention, however, is that the state court erred in ruling that the sum of $767, loaned by the defendant to the bankrupt on August 8, could not be considered as a set-off. If appeared that four days after he had received the money paid to him in preference the defendant handed to the bankrupt $767, on the latter's request for money to pay his employees. There was no testimony tending to show what became of this money, whether it was used in paying employees, or whether the payments, if made, were for wages earned within three months before the date of the commencement of proceedings in bakruptcy. All that appeared was the fact of the loan and the expressed purpose thereof. Under these circumstances the court instructed the jury that the defendant had...