Wright v. Sampter

• Decision Date: 14 March 1907
• Citation: 152 F. 196
• Parties: WRIGHT v. SAMPTER et al.
• Court: U.S. District Court — Southern District of New York

152 F. 196

WRIGHT v. SAMPTER et al.

United States District Court, S.D. New York.

March 14, 1907

The material facts stipulated by the parties are as follows: The plaintiff is trustee in bankruptcy of the partnership of M Sampter, Sons & Co. The defendant Elvira Sampter is a niece of the individual bankrupts who are joined with her as defendants. On June 4, 1904, M Sampter, Sons & Co. were insolvent, and Arnold Sampter, one of the firm, its financial head and a defendant herein, was well aware that the firm was 'financially in a critical condition.' For a long time prior to the date above given, the defendant Elvira Sampter had had money on deposit with the partnership. The evidence of deposit was a passbook similar to those used by savings banks, and she regularly received interest upon her deposit at the rate of 6 per cent per annum. She was at liberty to increase or diminish her deposit when and as she chose. She resided with her sister and widowed mother, both of whom had similar deposit accounts with the bankrupts. Both mother and daughters were wholly unfamiliar with business matters, and for several weeks prior to June 4, 1904, had had no communication, either oral or written, with any member of the partnership or with any employe thereof. Neither the defendant Elvira Sampter nor her mother nor sister had urged requested or desired repayment of their deposit accounts, or any part thereof, when on or about said June 4th each of them received by mail a letter signed by the firm, per Arnold Sampter, or at his direction; which letters read: 'We find that we can no longer use your money, and therefore ask you to accept enclosed check for (the amount of deposit with interest to date) in full for your account. ' When these letters were simultaneously received by the defendant, her sister and mother, none of them had the slightest suspicion that the family firm was either embarrassed or insolvent. They and each of them accepted the statement contained in the letters as true, took the checks inclosed with their several communications, and collected them in the usual manner. Although this simultaneous repayment of long-standing accounts was the subject of conversation between mother and daughters, none of them was aware that she was being preferred over other creditors. About 10 days later, and on or about June 13, 1904, they learned through the newspapers that a petition in bankruptcy had been filed against their late debtor. Mr. Arnold Sampter, when he caused these relatives to be paid, not only believed, as above stated, that his firm was 'financially in a critical condition,' but had been informed by a bank which held a large quantity of the firm paper that none of said paper would be renewed upon maturity. Between the 3d and 10th of June the bankrupt firm paid relatives, friends, and employes who were their lawful creditors, but had not requested payment, the sum of about $30,000, and when such payments were made it was known to Mr. Arnold Sampter that his firm would not after such large disbursements be able to meet its maturing obligations. He made these payments to relatives and friends 'in order to prevent possible loss to them. ' The firm has paid a dividend in bankruptcy of about 40 per cent. with a small balance remaining in the trustee's hands. Prior to their failure M. Sampter, Sons & Co. had for many years enjoyed good reputation and credit, and been one of the leading wholesale clothing houses of this city.

James, Schell & Elkus and Mr. Rosenberg, for d Mr. Rosenberg, for complainant.

Max J. Kohler, for defendants.

HOUGH District Judge.

The facts agreed upon in this cause present two oft-mooted questions in rather an extreme and unusual form. The trustee seeks to recover the sum paid Elvira Sampter on the eve of bankruptcy, (1) because it is a voidable preference within sections 60a and 60b of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 562 (U.S. Comp. St. 1901, p. 3445)), and (2) because the transfer was 'with the intent' on the bankrupt's part to 'hinder, delay or defraud' his creditors, and was not for 'a present fair consideration' within section 67e (30 Stat. 564, c. 541 (U.S. Comp. St. 1901, p. 3449)); and should also be 'held null and void as against the creditors' of the firm 'by the laws of the state ' of New York, pursuant to the same section.

First. It cannot be doubted that the payment in question was a preference, and that Miss Sampter is the person 'benefited thereby,' and the first question raised revolves around the inquiry whether she had 'reasonable cause to believe that it was thereby (i.e., by the payment) intended to give (her) a preference. ' It has frequently been said, in actions turning upon the presence or absence of reasonable cause to believe a material or vital fact, that anything 'sufficient to excite attention and put a party on inquiry is notice of everything to which inquiry would have led,' and that known facts 'calculated to awake suspicion' will justify an inference of actual and complete knowledge. In re Knopf, 16 Am.Bankr.Rep. 432, 144 F. 245; Parker v. Conner, 93 N.Y. 118, 45 Am.Rep. 178. But obviously facts, whether producing certainty or merely suspicion, must have a mind upon which to operate and affect, and the rule is equally well established that it is sufficient if the facts brought home to the person sought to be affected are such as would produce action and inquiry on the part of 'an ordinarily intelligent man' (Grant v. Bank, 97 U.S. 80, 24 L.Ed. 971), 'a prudent business man' (Bank v. Cook, 95 U.S. 343, 24 L.Ed. 412; Toof v. Martin, 13 Wall. 40, 20 L.Ed. 481), 'a person of ordinary prudence and discretion ' (Wager v. Hall, 16 Wall. 584, 21 L.Ed. 504), 'an ordinarily prudent man' (In re Eggert, 4 Am.Bankr.Rep. 449, 102 F. 735), 'a prudent man' (Dutcher v. Wright, 94 U.S. 553, 24 L.Ed. 130).

The peculiarity of this case is that the mind to be affected is that of a confiding niece, wholly unacquainted with business knowledge, and, however intelligent and prudent in matters within her own experience, incapable of comprehending the significance of business facts, which would have been more than enlightening to men of the business world. It is therefore urged by the defendants that Barbour v Priest, 103 U.S. 293, 26 L.Ed. 478, justifies the proposition that not only must the facts exist and be sufficiently impressive to awake inquiry in such minds as are catalogued in the cases above cited, but they must be sufficient to impress their...