Kobusch v. Hand

• Decision Date: 19 October 1907
• Docket Number: 2,479.
• Citation: 156 F. 660
• Parties: KOBUSCH v. HAND.
• Court: U.S. Court of Appeals — Eighth Circuit

156 F. 660

KOBUSCH v. HAND.

No. 2,479.

United States Court of Appeals, Eighth Circuit.

October 19, 1907

B Schnurmacher and William A. Kinnerk, for plaintiff in error.

Warren Hilton, for defendant in error.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

HOOK Circuit Judge.

The trustee in bankruptcy sued Kobusch to recover the amount of a voidable preference claimed to have been received from the bankrupt, and obtained judgment which this writ of error is brought to review. The bankrupt was a manufacturing company and Kobusch was its president. It had executed to a bank four notes aggregating $4,800 upon which Kobusch was an indorser for its accommodation. Within four months of the filing of the petition in bankruptcy, and whilst the company was insolvent, he, as president, caused it to pay the notes to the bank. The trial court found from the evidence that, when the notes were paid, he had reasonable cause to believe his company was insolvent, that the payment was made with intent on the part of the company to give a preference, and that he Kobusch, intended to secure such preference. The question is whether Kobusch received such a preference as may be recovered from him under the preference clauses of Bankr. Act July 1, 1898, c. 541, 30 Stat. 544 (U.S. Comp. St. 1901, p 3418), as amended by Act Feb. 5, 1903, c. 487, Sec. 13, 32 Stat. 799 (U.S. Comp. St. Supp. 1907, p. 1031).

There is no doubt that, as abstractly defined by section 60a, a preference was given by the bankrupt. Nor in view of the findings of the trial court, which are not disturbed by the contents of the bill of exceptions, is there doubt that Kobusch was benefited by being discharged from his obligation to the bank as surety or indorser upon the notes of the bankrupt. Section 60b provides:

'If a bankrupt shall have given a preference, 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 voidable by the trustee, and he may recover the property or its value from such person.'

There is a significant resemblance between the language of this section and that of the corresponding sections of Act March 2, 1867, c. 176, 14 Stat. 517. Section 35 (page 534) of the act of 1867 provided that if any person insolvent or in contemplation of insolvency, within the period limited, with a view to giving a preference to any creditor or person having a claim against him, or who is under any liability for him, makes any payment, etc., the same shall be void and the assignee may recover the property or the value of it from the person so receiving it or so to be benefited. Section 39 (page 536) of the same act also provided for the recovery of preferences given to persons under liability for the bankrupt 'as indorsers, bail, sureties or otherwise. ' It is quite clear that in passing the existing act Congress intended to adopt the substance of the prior provisions upon this subject, and in doing so to employ terms more concise, but equally as comprehensive. The act of 1867 was construed in Bartholow v. Bean, 18 Wall. 635, 21 L.Ed. 866. In that case the bankrupts when insolvent paid their note, indorsed by one Wilcox, which they had discounted with their bankers. Shortly afterwards bankruptcy proceedings were instituted, and the assignee who was appointed sued the bankers, not Wilcox, the indorser, to recover the payment as a voidable preference. In treating of the relation to the case of the fact that the indorser was solvent and the right of the bankers to refuse payment from the bankrupts without danger of losing their claim upon the indorser, the court said:

'The statute in express terms forbids such preference, not only to an ordinary

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