Case ID: ny-super-ct_47/html/0210-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THADDEUS F. MORE, as Assignee in Bankruptcy, &c., Appellant, v. JOHN A. WEEKS, et al., as Executors of LOUIS DURR, &c., Respondents.
    I. Preference. 
    
    1. Bankruptcy act.
    
      (a) What not necessarily a preference.
    1. A mere transfer of property does not necessarily constitute a preference.
    1. Presumption. To raise a presumption that a transfer is a preference, it should be shown that the transfer was of the whole or a considerable portion of the debtor’s property.
    2. Rebutting presumption. When the presumption rests on the fact that a considerable portion was transferred, it may be rebutted by showing that enough property was left to pay all remaining creditors, in money, as much value as was obtained in goods by the creditor alleged to have been preferred.
    Before Sedgwick, Ch. J., Freedman and Truax, JJ.
    
      Decided April 4, 1881.
    Appeal from judgment dismissing complaint.
    
      
      Edward Sexton, for appellant.
    
      George H. Forster, for respondents.
    
      
       The propositions stated in the head-note were not passed on by the general term, as being necessary to be decided for the disposition made of the appeal; but the views of the chief justice so commend themselves'to the reporters that they have deemed it advantageous to the profession to report the case.
    
   By the Court.—Sedgwick, Ch. J.

The action was to recover the value of certain property, alleged to have been received by defendants’ testator, in violation of section 35 of the United States Bankruptcy Act, as it was before the amendment of the section in 1874.

My judgment is that the plaintiff had given sufficient evidence to take the case to the jury, as to the insolvency of the bankrupt, at the time of the alleged preference, and also as to whether the testator of defendant had reasonable cause to believe that insolvency existed.

Although a firm is insolvent, it does not, in my opinion, necessarily follow^ that every transfer of its property to pay a creditor, is a preference. It may be that there is property enough left to pay all remaining; creditors in money, as much value as was obtained in goods by the creditor alleged to have been preferred. If the transferred property were the whole of the-insolvent’s property, or a considerable portion of it. (Wager v. Hall, 16 Wall. 602), or a large portion of it (Toof v. Martin, 13 Wall. 38), there may arise a presumption that there was a preference which calls for explanation, but the burden of proof is upon the-plaintiff to show that there was a view to a preference,, and that the transferee had reasonable cause to believe that there was a preference. To create the presumption referred to, it will be necessary to show what part or proportion of the whole stock was transferred. I am in doubt as to whether plaintiff gave enough proof, as to the fact of the transfer of the jewelry being a preference. The complaint, however, was not dismissed on this ground, but only on the ground of the insolvency, and of the belief of defendant’s testator as to it, and it is not necessary to decide as to the preference.

The judgment should be reversed and new trial ordered, with costs of appeal to appellant to abide the event. .

Freedman and Truax, JJ., concurred.