Ortlieb v. Baumer

• Decision Date: 09 February 1934
• Citation: 6 F. Supp. 58
• Parties: ORTLIEB v. BAUMER et al.
• Court: U.S. District Court — Southern District of New York

6 F. Supp. 58

ORTLIEB v. BAUMER et al.

District Court, S. D. New York.

February 9, 1934.

Paul Jones, of New York City (Morris H. Marder, of New York City, of counsel), for plaintiff.

Solomon Badesch, of New York City, for defendant Peter Baumer.

Irving Jacobson, of New York City, for defendant Marie Frances Baumer.

CAFFEY, District Judge.

This has been a very puzzling case. It has been filled with irrelevancies. The ill feeling between the litigants is utterly immaterial to the determination of the issues. The situation in which the bankrupt found himself—in the respects that he suffered ill health, he had domestic infelicities, and he has been greatly harassed by creditors—is likewise immaterial. Whatever might be the feeling of the court in regard to his misfortunes, which I have mentioned, they are not pertinent to the determination of the issues now before the court. If they be of any significance whatsoever, they are only to be taken into account as an aid in interpreting his conduct.

As I have indicated several times during the trial, there are some unsolved mysteries left by the proof and left by counsel on both sides.

What was the state of the contract arrangements or deeds, or what not, as between the defendants or either of them and the Amsterdam Company, down to March 6, 1930, has not been clearly revealed.

So also the first deed from the Amsterdam Company is dated March 6, 1930; yet, the purchase contract, as between Mr. Baumer and the Amsterdam Company, is dated the day after. Some deeds have been put in evidence. One as produced is from the Amsterdam Company to Mr. West, dated March 6, 1930. Another as produced is from Mr. West to Mrs. Baumer dated July 12, 1932. Yet, under the proof, when executed, both deeds were left with the respective names of the grantee blank.

The inference is pretty plain that the name of West, as grantee under the March, 1930, deed, was filled in at the time when the deed was pledged by Mr. Baumer to the National Surety Company. That was in April, 1931, when the deed, with the name of the grantee blank, had been outstanding for more than thirteen months.

When, or by whom, the name of Mrs. Baumer, as the grantee, was inserted in the deed from Mr. West dated July 12, 1932, is left wholly unexplained. The affirmative evidence is that when the deed came back to Mr. Baumer from the National Surety Company in July, 1932, it was blank as to grantee. For a considerable time it remained blank. Examination of the original document, Exhibit D, shows that the name of the grantee is in a different typewriting from the typewriting in which the body of the deed is written. The acknowledgment of the deed is as of the date of the deed itself.

So I say that we have all these mysteries unexplained. I have presented them to counsel throughout, but they have rendered me no assistance whatever in solving them. They have added to my bewilderment in trying to get at the essential facts of the case.

Two issues are made by the pleadings:

First, Was there a transfer by the bankrupt to his wife which is voidable under the bankruptcy statute because preferential?

Second, Was there a transfer by the bankrupt to his wife which should be set aside because by it the bankrupt's creditors were hindered, delayed, or defrauded?

Before entering on the consideration of those questions, it is well to recall that this case deals with land, and land only. It is the law that in order to transfer title to land there must be a deed. Moreover, the deed must be delivered. Title does not pass by the mere execution of a deed; in addition, there must be delivery of the deed if title is to pass. When in the light of that circumstance we examine the proof and attempt to solve the problems raised by the two issues, much of what has been said is so indefinite about so many things, there have been such complete omissions in the evidence about so many matters, there has been failure of recollection about so many matters, there have been so many silences through failure to call witnesses, there are so many things which are uncorroborated by documents, that it is extremely difficult to get at the truth.

I may further point out that in passing on the questions I am not free to go outside the issues as made by the pleadings. While minor matters may be disregarded, I must look to the pleadings in order to render a decree on the issues as raised.

Let us first take up the first cause of action. Was there a preferential transfer by the bankrupt to his wife?

Section 60 of the Bankruptcy Act (11 USCA § 96) dealing with voidable transfers because preferential, has in mind transfers made to creditors of the bankrupt. The testimony, however, fails satisfactorily to establish that Mrs. Baumer was a creditor of her husband. That and that alone is an obstacle to setting aside the transfer, if it occurred, on the ground, as alleged, that it was preferential. Preferences are as between people in the same class, as creditors; and preferences relate only to creditors. In order for a transfer to be set aside under the provisions of section 60, as preferential, one of the elements is that the transferee shall have reasonable cause to believe that by the transfer a preference would be effected.

In weighing the evidence, if fair consideration is to be given to it, account must be taken of the relations between the bankrupt and the transferee, for the moment treating the bankrupt as the transferor. They were husband and wife. She lived in Pennsylvania and apparently spent most of her time there. It is not the ordinary experience that wives know the general financial conditions of their husbands, to the extent of embracing knowledge both of assets and liabilities. There must be some proof on the subject. Yet I fail to discover in the evidence enough to warrant me in making a finding that Mrs. Baumer knew or had reasonable cause to believe that, if she accepted a transfer of the lots at Sparkhill, she would thereby be treated better than other creditors of her husband of the same class. Lacking a finding to that effect, the transfer cannot be set aside upon the ground that it was preferential.

The third difficulty which I encounter under the first cause of action is that the complaint charges that the bankrupt transferred the property to his wife. The facts are as I have already set them out. There was an original purchase agreement as between the Amsterdam Company and the bankrupt, signed on March 7, 1930. What had happened before that, with reference to how the transaction should be conducted or how title should be vested, has not been brought out in the proof. On the day preceding the date of the purchase agreement, the Amsterdam Company signed a deed to a blank grantee. That deed seems to have gone into the possession of the bankrupt, although the proof is not clear as to the capacity in which he handled it, nor are his declarations and his conduct thereafter, as to the capacity in which he held it, consistent. They point either way. From the inception, the evidence as to the handling of the deed of March 6, 1930, is utterly confusing. The evidence in regard to it is extremely difficult of interpretation as affecting whether or not it was the genuine understanding between the parties that, as would not be unnatural, the husband held the instrument as agent for his wife, or whether it be a fact that the bankrupt handled, and intended to handle, the instrument as his own, because he made unambiguous declarations of ownership of the land. To the contrary of his individual ownership, the proof being inconsistent, the declarations and the acts of the bankrupt having been inconsistent, there has been evidence from which a conclusion might be drawn that the bankrupt at all times recognized that he held that instrument solely for the benefit of his wife. I cannot disbelieve the testimony to the effect that frequently the bankrupt,...