Widetzky v. Pilgrim Trust Co.
| Decision Date | 10 January 1940 |
| Docket Number | No. 3453.,3453. |
| Citation | 108 F.2d 647 |
| Parties | WIDETZKY v. PILGRIM TRUST CO. |
| Court | U.S. Court of Appeals — First Circuit |
Hyman J. Torf, of Boston, Mass., for appellant.
Francis T. Leahy and Edmund P. Keleher, both of Boston, Mass., for appellee.
Before MAGRUDER and BINGHAM, Circuit Judges, and FORD, District Judge.
This is an action at law brought in the Massachusetts District Court by the trustee in bankruptcy of the Fulton Beef & Provision Co., Inc., against the Pilgrim Trust Co., to recover certain alleged preferential transfers made to the bank within four months prior to the filing of a petition in bankruptcy against the Fulton Co. The petition in bankruptcy was filed July 22, 1937, adjudication was had August 5, 1937, and Widetzky shortly afterwards was chosen trustee.
The plaintiff's declaration contains five counts. In the first it was alleged, (1) that the Fulton Co. was insolvent within four months preceding the filing of the petition in bankruptcy and was indebted to the bank in the sum of $3,350; (2) that it transferred to the bank $3,500 in the sums and on the dates set forth in the account annexed marked "A"; and (3) that the bank had reasonable cause to believe that the transfers would effect a preference.
The account annexed reads as follows:
"Item 1. May 14 — June 18, 1937
Deducted by Pilgrim Trust Company
six payments: $ 300.00
Item 2. June 15, 1937
Transferred by check of Fulton
Beef & Provision Co., Inc., to
Pilgrim Trust Company: 300.00
Item 3. June 21, 1937
Taken by Pilgrim Trust Company: 71.56
Item 4. June 24, 1937
Taken by Pilgrim Trust Company: 2678.44
_______
Total $3350.00"
The remaining counts contain like allegations, the only difference being that each count relates solely to one of the four above enumerated items.
The defendant's answer was a general denial; and it further answered, "that if the plaintiff proved that at the time of filing the petition in bankruptcy, the bank had on deposit money to the credit of the Fulton Co., that it owed the bank in excess of the deposit, and the deposit was lawfully set off against the sum due the bank."
It appeared in evidence that in March, 1935, the Fulton Co. began business in Boston selling meat and provisions at wholesale and thereafter made deposits in the bank in a general checking account and borrowed money from time to time from the bank, giving its notes therefor. Its obligations to the bank as of June 11, 1937, were as follows:
Note dated May 7, 1937, for $350 payable in $50 installments, weekly.
Note dated May 29, 1937, for $1,000 payable July 8, 1937.
Note dated June 11, 1937, for $2,000 payable July 22, 1937.
Between May 7 and June 14, 1937, the Fulton Co. paid the bank $300 on the $350 note, leaving the last installment of $50, due June 25, 1937, unpaid. This is the only direct payment made by the company to the bank that is here in question.
June 15, 1937, the Fulton Co. gave the bank a check for $300, drawn on its deposit, to be and which was credited to the company's indebtedness.
On June 21, 1937, the Fulton Co. had on deposit $74.56, which a creditor attached on trustee process, returnable in the Municipal Court of Boston July 17, 1937. The bank then credited $71.56 of this sum on the company's indebtedness, held $3 for expense of service, and notified the Fulton Co. accordingly.
On June 23, 1937, checks were deposited totalling $2,537, part of which was withdrawn on that day in cash and the balance by certified check.
On June 24, 1937, another creditor of the Fulton Co. caused the bank to be served by trustee process twice, once at 10.10 A. M. and again at 10.11 A. M. on a writ returnable in the Boston Municipal Court July 24, 1937. At 10.12 on June 24, 1937, the Fulton Co. deposited in the bank $2,698.47 in checks and cash. Thereafter on that day an officer of the bank having learned of the attachment and of the deposit, applied $2,678.44 of the deposit on the indebtedness of the Fulton Co., holding $3 on each of the attachments for expenses of service, leaving a balance of $14.03, which was withdrawn by the Fulton Co. July 26, 1937, when the account was closed.
At the close of the evidence, the defendant submitted the following request, among others:
The court instructed the jury as to this matter as follows:
"The defendant had a right under the law to offset against moneys on deposit in the bankrupt's name at the time when an attachment by trustee process was served upon it, any indebtedness due to it from the bankrupt, whether or not such offset would result in a preference in favor of the defendant; but of course would have a voidable preference if it was made with knowledge, or with reasonable cause to believe that by taking such money it would result in a preference."
After the charge and before the jury retired, the plaintiff excepted to so much of the charge as was included in the above-quoted request. This was the only exception taken by the plaintiff during the progress of the trial and preserved in the bill of exceptions.
The jury returned a general verdict for the defendant, and the plaintiff duly prosecuted this appeal. The case was tried before the new Rules of Civil Procedure, 28 U.S.C.A. following section 723c, became effective and the District Court being of the opinion that their application "to the appeal in this case would not be feasible or would work injustice," prior to the appeal being taken, ordered that "the former procedure on appeal should apply." Rule 86 of the Rules of Civil Procedure.
The plaintiff filed seven assignments of error, of which only the second was based on an exception, the one above...
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