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$3,000 for the company, which was discounted by the defendant, and became due on March 23, 1904. The note was renewed on that date, with the same indorsers, for three months, and again fell due June 23, 1904. At the time of the renewal on March 23, 1904, there was no payment on account, and the bank officers were told by the makers of the note that there was no money to pay it, but that there was leather waiting to be sold. On the 2d day of June, about three weeks before the note again fell due, Edgar S. Gardner, the vice president of the bank, informed Roger J. Maynes, who seemed to be managing the leather company's business, that the board would insist upon a satisfactory settlement of the note when it fell due. At that time the leather company had on deposit with the defendant the sum of $650, out of which Maynes drew a check on that date, to wit, June 2, 1904, for $500, and paid on account of the note, which was not yet due. Mr. Gardner informed him that this payment would not be satisfactory, when he was told by Maynes they still had the leather on hand, which they were unable to sell, and therefore unable to reduce the note any further, but informed Gardner that, if he would sell the leather for the company, the proceeds could be appropriated on account of the note. Mr. Gardner called up a Mr. Orr, who was in the leather business, and as a result the leather was accepted by the bank and sold, and $820, the proceeds thereof, credited on the note when it fell due on June 23, 1904, and a new note was given for the difference. At the time of the transfer of this property to the bank by the leather company there was an inquiry as to the solvency of the leather company, and the bank was informed by Mr. West, then secretary of the company, and also by Mr. Maynes, that the company was solvent. There was, however, no further inquiry on the part of the bank to ascertain the correctness of this statement, notwithstanding the fact that the company was unable to pay in cash, and had transferred part of its assets for the purpose of meeting the demands of the defendant. The defendant, by its officer, at the trial of the case insisted that it had no knowledge of the insolvency of the leather company at the time these payments were made. Subsequently, within four months from the time of these payments to the bank, the leather company was declared insolvent, the plaintiff was appointed trustee, this suit was brought, and at the trial before a jury on March 16, 1905, a verdict was rendered in favor of the plaintiff for the sum of $1,380.20. The question of the insolvency of the leather company at the time the payments were made, together with the question as to whether the bank had reasonable cause to believe that it was intended by such payments to give a preference, was left to the jury, with proper instructions, to which no objections were made, and the verdict was in favor of the plaintiff for the sum above specified.

On the motion for a new trial there are four reasons assigned, but the only question raised, according to the rules to be considered, is the third, which was in the form of a request to the court to charge the jury that, "under all the evidence in this case. your verdict must be for the defendant," which was refused. In

this we are still of the opinion there was no error. Reasonable cause to believe that it was intended to give a preference does not require proof that the defendant had either actual knowledge or actual belief, but only such surrounding circumstances as would lead an ordinarily prudent business man to conclude that a preference was intended. And whether or not the facts and circumstances in the possession of the defendant in this case at the time. the payments were made to it were sufficient to cause an ordinarily prudent business man to conclude a preference was intended was a question for the jury, and not for the court. Wetstein v. Franciscus (C. C. A.) 133 Fed. 900; In re Andrews (D. C.) 135 Fed. 599; Thomas v. Adelman (D. C.) 136 Fed. 973.

The motion for a new trial is overruled.

MACK MFG. CO. v. VAN DUERSON et al.

(Circuit Court, E. D. Pennsylvania. July 10, 1905.)

No. 39.

JUDGMENT-VACATION-DEFENSES-DISCHARGE IN BANKRUPTCY.

Where a bankrupt was not ruled to plead in an action against him until more than three months after his discharge in bankruptcy, but failed to interpose such discharge as a defense until after judgment, he was not entitled to have the judgment set aside in order that he might interpose such plea, on the ground that he was led to believe that the receiver would protect his interest and interpose such defense.

Rule to Open Judgment Discharged.

E. O. Michener, for plaintiff.

Jos. H. Brinton, for defendant.

HOLLAND, District Judge. Harry V. Oliver presents a petition to open a judgment for the purpose of allowing him to interpose his discharge in bankruptcy as a defense to a judgment recovered against him on April 8, 1904. The petitioner had been declared a bankrupt, and his discharge was entered October 3, 1903, in the state of New Jersey. This suit had been instituted against him prior to that time, but he was not ruled to plead until January 21, 1904. On the following day, to wit, January 22, 1904, more than three months after his discharge in bankruptcy, he entered a plea in this case in this court of non assumpsit, payment, and notice of the special matter set forth in the affidavit of defense, but did not plead his discharge in bankruptcy. Subsequently, on April 8, 1904, a jury was called, and a verdict rendered against the defendant for $4,164.40. He now requests that this judgment be opened, in order that his discharge in bankruptcy may be interposed. The only excuse he gives for the delay in taking advantage of this plea is that he was led to believe that the receiver would take care of his interests and make defense for him in this court, but there is no explanation as to why he failed to enter this plea on January 22, 1904, when he entered the other pleas above mentioned.

There is no reason why this plea should not have been entered at that time, and, having failed to do so, we do not think he has shown any reason why this judgment should now be opened. The rule is therefore discharged.

In re HESS.

(District Court, E. D. Pennsylvania. June 19, 1905.)

No. 1,993.

BANKRUPTCY-ADVERSE CLAIM TO PROPERTY.

Evidence held insufficient to sustain an adverse claim to property in possession of a bankrupt on the ground that he obtained it by fraud, it appearing that when claimant sold the property he fairly understood the bankrupt's financial condition.

In Bankruptcy. On report of referee.

See 136 Fed. 988.

Samuel P. Tull, for trustee.

William F. Johnson and Saul S. Myers, for petitioners.

HOLLAND, District Judge. Nickelsburg Bros. & Co. presented a petition for an order on the trustee in this estate to deliver to them certain goods which were found in the possession of the bankrupt at the time of adjudication and which passed into the possession of the trustee. There was no answer filed, and the petition was referred to Edward F. Hoffman, Esq., who, in a very full and satisfactory report, recommends that the petition be dismissed. The petitioners claim the merchandise was obtained by fraud, and no title passed; but the whole transaction shows the financial standing of the bankrupt was fairly understood by petitioners in making the contract. The evidence, considered with the transaction, fails to make out such a case of fraud as to entitle them to a return of the property claimed.

I am convinced the order made by the referee should be approved, and it is so ordered.

In re HOOKS SMELTING CO.

(District Court, E. D. Pennsylvania. June 19, 1905.)

No. 1,995.

1. BANKRUPTCY-EXAMINATION OF OFFICER OF BANKRUPT CORPORATION. The president and treasurer of a bankrupt corporation, on his examination before the referee, may properly be required to make known to the trustee the combination of a safe owned by the corporation and alleged to contain assets.

2. SAME-CLAIM OF PRIVILEGE.

Where an officer of a bankrupt corporation is under indictment in a state court for embezzlement of funds of the corporation, he cannot be required, on his examination before the referee, over his claim of privi

lege, to state whether or not he appropriated certain money of the corporation to his own use, but he may be required to state whether or not he has in his possession or under his control any property belonging to the bankrupt estate.

[Ed. Note. For cases in point, see vol. 50, Cent. Dig. Witnesses, §§ 1026-1037.]

In Bankruptcy. On certificate from referee.

Henry J. Scott, for trustee.

William H. Peace, for William S. Tryon.

HOLLAND, District Judge. A certificate was filed in this court on May 11, 1905, by the referee, wherein he reports that several orders were made against William S. Tryon with which he refuses to comply:

(1) On March 23, 1905, William S. Tryon, president and treasurer of the bankrupt company, was directed to make known to the trustee the combination of a safe alleged to belong to the bankrupt company at the time the petition was filed. It is alleged that the safe contains assets belonging to the estate, and the trustee should be permitted to examine the contents of the safe for the purpose of ascertaining the truth of this allegation. There is therefore no reason why the witness should not, upon examination before the referee, inform the trustee of the combination, and William S. Tryon is directed to comply with this order by appearing before the referee and stating, upon examination, the combination of the safe.

(2) The referee's finding in favor of the validity of the claim of $103.50, of Robert J. Ruby, an expert accountant, and the bill of Mrs. Anna B. Elliott for $45, is approved.

(3) The report of the accountant, Robert J. Ruby, was called for by counsel for William S. Tryon, during the examination of Mr. Ruby, when he was testifying in support of his claim of $103.50. The referee refused to make an order on the trustee to produce it, and thereupon Mr. Peace, attorney for Tryon, requested that the matter be certified. There is nothing to show the purpose for which the report was wanted, nor why the referee refused to make the order. It might or might not be important in considering the question of Mr. Ruby's claim. There is not sufficient information upon which an order can be made by the court.

(4) During the examination of William S. Tryon on March 21, 1905, he was asked certain questions, which he refused to answer, upon the ground that his answers would tend to incriminate him, inasmuch as he was under a criminal charge of embezzling the funds of the Hooks Smelting Company. It appears that Mr. Tryon was the president and treasurer of the bankrupt company, and he has been indicted for embezzling its funds during the time he occupied these official positions. The indictments are pending in the Philadelphia court. At the examination on the above date, questions were propounded to him to ascertain (1) whether he had taken any part of a certain $10,000 belonging to the bankrupt company and appropriated it to his own use, and (2) whether he now

had in his possession or control any property belonging to the bankrupt estate. The questions directed to the witness for the purpose of ascertaining this information extended over more than 50 pages, and need not be repeated here. As to the first, one of the questions asked was as follows: The witness having stated that $40,000 had been borrowed on mortgage by this company, and that part has been used in a certain purchase, he was asked, "How much of it did you take?" This question he refused to answer, upon the ground that it might incriminate him. In view of the fact that indictments for the taking of this money from the company are pending against him, he cannot be compelled to answer this question if its answer would incriminate him, and the referee was therefore in error in directing him to answer it. But as to the other questions, directed to the ascertainment of the fact as to whether he now has any property in his possession or control belonging to the bankrupt, he is directed to answer. He can state the fact, and, if he has such property, it is his duty to turn the same over to the trustee. We do not see how this could incriminate the witness by informing the trustee as to whether or not he possessed property belonging to the bankrupt.

(5) William S. Tryon and Albert Cempini were ordered to appear before the referee for further examination. The bankrupt act authorizes the referee to make such an order, and they are directed to comply with this order upon receipt of notice from the referee fixing the date for their further examination.

MONTGOMERY v. MCNICHOLAS.

(District Court, E. D. Pennsylvania. June 21, 1905.)

No. 2.

BANKRUPTCY-Fraudulent Transfer of Property by Bankrupt—ActiON TO

RECOVER.

Instructions considered and approved in an action by a trustee in bankruptcy to recover the value of property alleged to have been transferred by the bankrupt with intent to hinder, delay, and defraud his creditors.

At Law. On motion for new trial.

Thomas Leaming, for plaintiff.
J. Washington Logue, for defendant.

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HOLLAND, District Judge. This action was brought by the plaintiff as trustee of the estate of Samuel J. Ferguson, bankrupt, to recover from the defendant the value of a retail liquor license transferred to him by the bankrupt in fraud of his creditors one day before the petition in bankruptcy was filed. The suit was brought under section 67, subd. e, Bankr. Act July 1, 1898, c. 541, 30 Stat. 564 [U. S. Comp. St. 1901, p. 3449], which provides that all conveyances of his property by a bankrupt within four months prior to the filing of the petition in bankruptcy, with intent

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