Ottumwa semi-weekly courier. [volume] (Ottumwa, Iowa) 1899-1903, 1900-06-21
MAY HASTEN REPEAL OF Law.
Holds That Payment Of Accounts while
Business Man is solvent But who
Afterwards Enters Bankruptcy,
Makes Preferred Creditor. 4

Bai oy iAeHt Oh III account Dy person
who believes himself to be solvent at
the time payment was made, but who
afterwards enters bankruptcy within
the time fixed by the bankruptcy law,
makes such person a preferred cred
itor according to a recent decision by
Judge Shiras to whom the facts were
certified by Referee John w. Lewis in
the Sloan bankruptcy case which came
before the official. It is not believed
that the ruling will meet with the app
prevail of business men and that it will
alos hasten the time when the bank
ruptcy law as it now exists will be
greatly modified or perhaps repealed.
Referee In Bankruptcy John View
is in receipt of an important decision
in the Frank Sloan Bankruptcy pros
ceedings, which sheds further light on
what are preferences" under the
bankruptcy act. A petition was fled
in this matter alleging that within four
months next preceding the date on
which these bankruptcy proceedings
were begun, Sloan made payments to
certain of his creditors amounting in
all to $3,9s4.16; that these payments
were made in good faith and in the us
ual course of business; that at the time
the bankrupt was in fact insolvent, all
tho he believed himself to be solvent
and was not contemplating bankrupt
cy, did not in making said payments
intend to prefer such creditors over his
other creditors.
1t was further shown that these
creditors had fled claims with the ref.
cree for balances still due them and the
prayer of the petition was that they be
required to surrender to the trustee
all money paid them within four
months next preceding the date on
which petition in bankruptcy was fled
and that in case they failed to do this,
that their claims now on file be denied.
The question presented in short, was
whether these payments made within
| the four months period constitute a
| preference i. e., preferring Of one
creditor over another as defined in the
titles this question to Judge Shiraa
and the decision just handed down
holds that under the facts above stated
such payments were a preference and
hence, it would seem to follow that the
Creditors receiving the same must pay
the amount thereof to the trustee or
submit to a denial of their claims now
on file.
This decision is in harmony with the
celebrated TT. Wayne case decided some
time since by the circuit court Of ap-
4 peals at Indianapolis. However, there
is still much confusion and conflict in.
the cases decided on this point and
nothing but decision by the supreme
court can settle the flaw upon it. Ex-
pressions from commercial circles in
dictate much dissatisfaction with this
construction of the statute as it tends
to. leave the relations between debtor
and creditor in state of uncertainty.
Law writers and members of the legal
profession generally seem to. regard
this construction of the law doubt
i full one and hardly within that spirit
of equality which is supposed to UNDER
lie the bankruptcy act
1t is believed that this decision will
add to the unpo pularity of the act and
j hasten the time of its radical modifi-
cation or entire repeal.
j For the present at least this Sloan
case is the law on this point for all
referees and litigants within this dis-
trict. Is