Rodolf v. First Nat. Bank of Tulsa, Case Number: 1389

CourtSupreme Court of Oklahoma
Writing for the CourtSHARP, C.
Citation30 Okla. 631,121 P. 629,1912 OK 62
PartiesRODOLF, Trustee, v. FIRST NAT. BANK OF TULSA et al.
Docket NumberCase Number: 1389
Decision Date09 January 1912

1912 OK 62
121 P. 629
30 Okla. 631

RODOLF, Trustee,
v.
FIRST NAT.
BANK OF TULSA et al.

Case Number: 1389

Supreme Court of Oklahoma

Decided: January 9, 1912


Syllabus

¶0 1. BANKRUPTCY--Preference--What Constitutes. In order to allege a voidable preference under Bankr. Act July 1, 1898, c. 541, secs. 60a, 60b, 30 Stat. 562 (U. S. Comp. St. 1901, p. 3445), and amendment thereto approved February 5, 1903 (Act. Feb. 5, 1903, c. 487, sec. 13, 32 Stat. L. 799 [U. S. Comp. St. Supp. 1909, p. 1314]), where the act complained of is the procuring of or suffering a judgment to be entered against the bankrupt in favor of any person, it is necessary, among other averments, to allege that at the time of the rendition of the judgment the judgment debtor was insolvent, and that by suffering said judgment to be entered against him he intended thereby to give a preference, and that the judgment creditor had reasonable cause to believe that the judgment debtor so intended, and that the judgment creditors benefiting thereby would receive a greater percentage of their debt than other creditors of the same class.

2. SAME--Preferences--Action to Set Aside--Petition. A petition drawn under the provisions of secs. 60a and 60b, which fails by proper averments to charge that the creditor receiving or benefiting by the alleged voidable preferences at the time had reasonable cause to believe that it was intended thereby to give a preference, fails to state a cause of action.

3. SAME--Preferences--Action to Set Aside--Petition. Sec. 67f of said act provides that levies, judgments, attachments, or other liens obtained through legal proceedings against an insolvent within four months prior to the filing of a bankruptcy petition against him, in case he is adjudged a bankrupt, shall be void, and the property affected shall pass to the trustee. Held, that such section affects only the lien thereby acquired, and not the judgment itself; and hence in a petition drawn under said section seeking to recover a voidable preference it is necessary to allege that at the time of filing the bankruptcy petition the lien acquired through the legal proceedings was in effect.

4. SAME--Preferences--Action to Recover--Pleading. In a suit by the trustee in bankruptcy of a partnership to recover a voidable preference knowingly obtained by a creditor, as defined in the foregoing sections, to authorize a recovery, it must be shown that the firm and the partners individually were also insolvent at the time the judgment was suffered to be entered against it.

Error from District Court, Tulsa County; L. M. Poe, Judge.

Action by Frank M. Rodolf, trustee in bankruptcy of A. Psihos and another, doing business as Psihos Bros., against the First National Bank of Tulsa and another, to recover an alleged voidable preference under Bankr. Act July 1, 1898, and amendment thereto approved February 5, 1903. From a judgment for defendants on demurrer to the second amended petition, plaintiff brings error. Affirmed.

Haskell B. Talley, for plaintiff in error.

Martin, Rice & Lyons, for defendants in error.

SHARP, C.

¶1 Plaintiff's amended petition attempted to fix a liability and base a recovery under the provisions of paragraph 15, sec. 1, c. 1; sections 60a, 60b, c. 6, and section 67, subd. f, c. 7, of "An act to establish a uniform system of bankruptcy throughout the United States." Sections 60a and 60b were amended by section 13 of the Act Feb. 5, 1903, 32 Stat. L. 799, 800 (U. S. Comp. St. Supp. 1909, p. 1314). The sufficiency, then, of plaintiff's amended petition must be tested by the requirements contained in the foregoing sections of the bankruptcy law in force August 5, 1907, the date on which the original complaint in equity was filed in the United States Court for the Western District of Indian Territory. Paragraph 15 of section 1, c. 1, defines an insolvent, section 60a, c. 6, defines what shall constitute a preference, and section 60b, c. 6, defines a voidable preference; while section 67f, c. 7, provides for the nullification of all levies, judgments, or other liens obtained through legal proceedings against an insolvent, and for the right of the trustee in bankruptcy to receive the property of the bankrupt discharged from these liens, unless, for special reasons or benefit to the bankrupt's estate, the court may order their preservation. The amended petition refers to plaintiff as "the trustee of A. Psihos and N. Psihos, doing business as Psihos Bros., bankrupts," and we shall therefore treat Psihos Bros. as a general partnership. The petition sufficiently charges that Psihos Bros. were insolvent within the meaning of paragraph 15, sec. 1, c. 1, but it does not show that the component members of the firm, viz., A. Psihos and N. Psihos, were individually insolvent. As to the sufficiency of the petition in this particular reference will later be made. Counsel for plaintiff in error, in the epitome of his argument, contends that, under section 60a, it is not necessary that an attempt be shown on the part of the debtor to prefer, in order that a preference obtained by attachment, judgment, or levy be set aside, providing such judgment, attachment, or levy was obtained within four months prior to the adjudication in bankruptcy. Sections 60a and 60b state very clearly what constitutes a preference and what a voidable preference under the bankruptcy laws. The former is defined in subdivision "a"; the latter in subdivision "b." Under the amendatory act, a preference consists in a person while insolvent and within four months of the bankruptcy procuring or suffering a judgment to be entered against himself, or making a transfer of his property, the effect of which will be to enable one creditor to obtain a greater percentage of his debt than any other creditor of the same class. Such preference is voidable at the instance of the trustee, if the person receiving it, or to be benefited thereby, has reasonable cause to believe that it was thereby intended to give a preference. Collier on Bankruptcy (6th Ed.) 476. And unless the person recovering the judgment or to be benefited by the transfer has reasonable cause to believe that it was intended thereby to give a preference, while there may be a preference in name, it will not be in fact. The transfer must, in short, be voidable, and, in order to be voidable, the person receiving it or to be benefited thereby must have reasonable cause to believe that a preference was intended; in other words, since the amendatory act of 1903 a preference is a name only, unless it may be avoided, and this can be maintained only when the pleadings charge and the proof shows facts such as must exist under the requirements of section 60b. A preference is therefore not necessarily a voidable preference. Remington on Bankruptcy, par. 1277; In re Knost et al., 2 Am. Bankr. Rep. 477.

¶2 Plaintiff's amended petition charges:

"But said sale, as your petitioner verily believes, was merely colorable and with the intention of annoying and injuring the plaintiff and of obtaining an undue preference over the other creditors of the bankrupts, contrary to the provisions of the bankruptcy law; that said First National Bank of Tulsa and said First National Building Company of Tulsa, and all parties claiming through them the property of the bankrupts, had full and complete knowledge of the failing condition of the bankrupts on and before December 23, 1906, and at all times thereafter until your
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1 practice notes
  • Macdonald v. Haynes, Case Number: 14694
    • United States
    • Supreme Court of Oklahoma
    • April 15, 1924
    ...firm and the partners also were insolvent when the payment was made." ¶20 In the case of Rodolf, Trustee, v. First National Bank of Tulsa, 30 Okla. 631, 121 P. 629, it is said:"In a suit by the trustee in bankruptcy of a partnership to recover a voidable preference knowingly obtained by a c......
1 cases
  • Macdonald v. Haynes, Case Number: 14694
    • United States
    • Supreme Court of Oklahoma
    • April 15, 1924
    ...firm and the partners also were insolvent when the payment was made." ¶20 In the case of Rodolf, Trustee, v. First National Bank of Tulsa, 30 Okla. 631, 121 P. 629, it is said:"In a suit by the trustee in bankruptcy of a partnership to recover a voidable preference knowingly obtained by a c......

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