Schwartz v. Holzman, 192.

• Decision Date: 12 March 1934
• Docket Number: No. 192.,192.
• Citation: 69 F.2d 814
• Parties: SCHWARTZ v. HOLZMAN.
• Court: U.S. Court of Appeals — Second Circuit

69 F.2d 814 (1934)

SCHWARTZ v. HOLZMAN.

No. 192.

Circuit Court of Appeals, Second Circuit.

March 12, 1934.

Celler & Kraushaar, of New York City (Meyer Kraushaar, of New York City, of counsel), for plaintiff-appellee and appellant.

Silberman & Steinfeld, of Brooklyn, N. Y. (Jacob B. Steinfeld, of Brooklyn, N. Y., of counsel; Herman Gross, of Brooklyn, N. Y., on the brief), for defendant-appellant and appellee.

Before L. HAND, SWAN, and CHASE, Circuit Judges.

CHASE, Circuit Judge.

The plaintiff, as trustee in bankruptcy of Arthur C. Holzman, the husband of the defendant, sued to recover three sums of money received by the defendant which it was claimed (1) were recoverable preferential payments made by the bankrupt to her, and (2) were transfers by the bankrupt with intent to hinder, delay, and defraud his creditors. The second cause of action was not sustained and the plaintiff has acquiesced. Recovery was allowed in part under the first cause of action, and both parties appealed.

Arthur C. Holzman was adjudicated a bankrupt on his voluntary petition on September 17, 1931. At that time his wife, the defendant, was liable as indorser on his note payable to the Brooklyn Trust Company on which there was due $5,150. The trial judge found that the defendant received $2,500 from the bankrupt in June, 1931, and that it was a voidable preference. The claim that it was a fraudulent transfer is no longer urged, and the only fault now found by the defendant with the decree in respect to the $2,500 is that the evidence was insufficient to support the finding that the defendant received this money from the bankrupt. This issue must be resolved by deciding whether to believe that the defendant was correct when she testified at the first meeting of creditors that she did receive the $2,500 from her husband in June or was incorrect as she subsequently claimed and attempted to prove at the trial of this case. This question of fact was one which the District Judge was in a much better position to decide than are we. It was essentially a question of the credibility of the defendant, and he had the advantage of being present when she attempted to explain that her previous testimony was wrong. Put very bluntly, the thing we are now asked to do is to reverse the finding of the trial judge because after seeing and hearing the defendant testify in explanation of her previous admission he refused to believe her. We must decline to deal in such an arbitrary way with findings of fact so dependent upon the credibility of a witness who has testified before the trial judge. To secure a reversal on the facts it must be shown clearly that a mistake has been made.

The remaining part of the appeal relates to the receipt of $3,861.41 in July. This amount was the sum of the cash surrender value of two policies of life insurance which the bankrupt had taken out some years before upon his own life. The defendant was the beneficiary named in each policy. Each policy contained a clause reserving to the insured the right to change the beneficiary, but when the policies were surrendered he had not elected to make any such change and the checks were drawn payable jointly to the bankrupt, the insured, and the defendant, the beneficiary. They were received by the bankrupt, indorsed by him and given to his wife who indorsed them herself and deposited them in her own account. Whether the money so received by her may be recovered in this action depends upon the effect to be given section 55-a of the New York Insurance Law (Consol. Laws N. Y. c. 28) as amended effective March 31, 1927 (Laws 1927, c. 468). It reads:

"Rights of creditors and beneficiaries under policies of life insurance. If a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his own life or on another life, in favor of a person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, the lawful beneficiary or assignee thereof, other than the insured or the person so effecting such insurance, or his executors or administrators, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved...