IN RE PEARSON.
425
trustees will be in any way prejudiced by the recovery of the judgment. What should be done if the attachment were still in force need not be decided. Petition for discharge dismissed. Injunction denied. In re TIRRE. (District Court, S. D. New York. July 7,1899.)
BANKRUPTCY-INvoLUNTARY PETITION-JURISDICTIONAL AMOUNT.
In computing the amount of the indebtedness of a person against whom a petition in involuntary bankruptcy has been filed, to make up the jurisdictional sum of $1,000, the claim of a creditor to whom he had given a fraudulent preference, which is null and void under the act, should be included.
In Bankruptcy. Edward K. Sumerwell, for petitioning creditors. Henry Meyer, for the bankrupt. BROWN, District Judge. The defendant, a grocer, becoming embarrassed, sold out his entire stock of goods, fixtures, etc., to one Schwoon for about $800. This price was applied ill' payment of a prior debt to Schwoon for money loaned and his assumption of a grocery bill owing by Tirre to Britten & Co. for $214.83, for which amount Schwoon gave his note to Britten & Co. Soon afterwards the remaining creditors filed a petition to have the defendant adjudged a bankrupt. The only defense is that the debts, excluding the debt to Schwoon, are less than $1,000. I think the debt to Schwoon should be counted in reckoning the amount of defendant's indebtedness. The sale to Schwooll', who was thereby in effect preferred, was fraudulent as against the creditors under the bankruptcy act; and it was not valid under the bankruptcy act as between defendant and Schwoon, for the reason that it was not made for a "present fair consideration." Section 67, cl. e. Being "null and void" as respects Schwoon also, the debt to him remains unaffected by the void transfer, and that debt should, therefore, be counted among the debts still owing by the bankrupt. The cases cited by the defendant under the act of 1867 all relate to petitioning creditors. .That presents a different question. To exclude a debt upon the ground of a void preference, would enable the parties to evade the bankruptcy act altogether, and thus take advantage of their own wrong. Bankruptcy adjudged.
In re PEARSON. (District Court, S. D. New York. July 7, 1899.) BANKRUPTCy-AcTS OF BANKRUPTCy-PREFERENCE.
a debtor, being the owner of a leasehold interest in real property having a term of years to run, but not assignable without the consent of the landlord, sells the same, and applies part of the proceeds in paying the arrears of rent due, taxes on the property, and the incidental expenses
426
95
JtEPORT.ER.
s\lle, suc4.paYlllentdoes not constitute a preference of the credbutmerely a means of realizing the value of the leasehold, and therMorets not an act ofbal'l!kruptcy, on which a petition against the debto,r, may Ibll maintained.
In Bankruptcy. Louis Scheuer, for petitioners. Julius Offenbach, for defendant. BROWN, District Judge. An adjudiCation in bankruptcy was sOllght agaillstthe defendanton the ground that, being the owner of a leasehold 'of hqtel property, he had sold out and the lease, in paying with furniture, for $9,000, and appliednlOst of the certain debts, leaving from $6,000 to $8,000 owing to his general creditors unpaid. The alleged preferences consisted of $5,000 back rent for the four months previous to the sale; also some $700 water taxes, chargeable upon the property; a broker's commission for effecting the sale, and a counsel fee in the same business. There was also a smaU item of $50 paid to the father· to replace a vevy temporary to pay cash for certain supplies, in acloan cordance with,lln )1nderstanding made with the during the While efforts were making to effect a sale of the lease.".. , . , ' TIle that it cduldnot, be assigned by the defendant .01' trallsferred withOut con'seilt of the landlord. It had toruIi; aQd 'jtwas the most valuable asset., In this nearly sitilation it is 'IllliI1ifest that 110thing whatever. could be realized from the iease eicept' through the 'l,andl'o'rd's .assent to'tl: 'fratisfer, :which coul4. not pe..QbtaiJ;led ,ojJ.,paymenfOf the back .A transthe purcha:sei"W'pay the, baGk;reIit, would deduction of so' much from the 1h11'ch;lse.price payable. ro(}hesa,le the property;' , so. that evidently It was, Immllterutl,whether the, trllnsfer took that shape, or. -Whether the should pay the WhOle $9,000 to the defendant, · t.he: ,ttple payjng', .the '. charges and other the. .. the calIri'll:! rbe transferred Knox, 'and were In part lIDmedmtely payoff the back rent,hl.:x:es,l;l,nd charthe sale:"', The payment of alttnese! was 'a necesges .br: realizing anYthing from the leasehold' property, or obtaining o{tne Hindlord.. Tlieywere allpMd from Knox's money and notes, and in their essential na:ture these payments were not preferences, but merely a_ of making sale of the leasehold, and realizing what was possible from it. The alleged act of bankruptcy not being petition should, therefore, be dismissed, but iJ:l this ,case. witbout costs.,. I , i I
,
IN RE KENNEY.
427
In re !{ENNEY.
(District Court,S. D. New York. BANKRUPTCY - DISSOLUTION OF LIENS PunCIIAsER - PROCEEDS' OF SALE. SALE
July 7, 1899.) EXECUTION TITLE OF
Untler Bankruptcy Ad 1898, § 67, cI. f, providing that "all levies, ments attachments or other liens obtained tm'oug-h legal proceedmgs a perSQn who is insolvent, at any time within foUl' months prior to the filing of a petition in bankruptcy against him, shall be deemed nul' and void in case he is adjudged a bankrupt," but that "nothing herein eontained shall have the effect to destroy or Impair the title obtained by sueh levy, judgment, attachment, or other lien, of a bona fide for vBhw" where within four months before the filing of a petitIOn III an insolvent jUdgment debtor" an execution has been issued Bnd levied, and sale made, the title of one purchasing at such sale in good faith and without notice will not be 'affected by the subsequent l,ankl'nptey; but the proceeds of the sale, remaining in the sheriff's hands, do not helong to the jndgment creditor, but to the estate of the bankrupt, anti lllnst lIe paid over to the trustee when appointed.
In Bankruptcy. Eugene Krenier,for petitioners. Gt'orge Bell, opposed. ' , ,
mtOWN, District Judge. Tbe petition to bave Raymond W. Kenney adjudged a bankrupt was filed on April 13, ;1.899, the act of bankruptcJ' alleged being, that be had suffered a judgment to be l'eeovered against him by one Olark in the preceding month of March, and had allowed his chattel property to be sold under execution 1hereunder. answer and hearing, bankruptcy was adjudged. The sberiff having collected the money upon the execution sale made prior to tbe filing of the petition, a stay of proceedings was obtained against the payment of the moneys upon the execution by the sberiff, and this stay is now asked to be continued. The stay is opposed by the judgment creditor, ""ho urges that the proceeds are not within the jurisdietion of tbis court and that they belong to the judgment creditor, citing the cases of In re Easley, 93 Fed. 419; Henkelman v. Smith, 42 Md. 164, 12 N. B. R. 121; and other cases. I cannot sustain the objection to the stay. The judgment and execution having been obtained and issued but a little more than a month before the filing of the petition, the case falls within the express provisions of section 67, cl. f, of the present bankruptcy statute, wbich declares, "that all levies, judgments, or other liens obtained through legal proceedings" in such case "shall be deemed null and void in case he is adjudged a bankrupt." The latter part of this section provides "that notbing herein contained shall have the effect to destroy or impair the title obtained by such levy of the bona fide purchaser for value." This proviso leaves no doubt of the intent of this section. A "title" could only be "obtained by a levy" tbrough a sale under tbe levy; and the proviso means that the bona fide purchaser's title shall not be impaired by the fact that as against all other persons the levy is to be deemed "null and void," in case the defendant is adjudged a bankrupt. The proviso is for
On