The times. [volume] (Richmond, Va.) 1890-1903, 1900-06-10
KNOlTY QUESTION
IS NOW SETTLED
Referee Cardwell Renders an In
portant Decision.
AS TO PREFERENCES SHOWN.
The Referee in Bankruptcy for This
District Decides Matter That Has
Caused Much Contention
Precedent Established.
AS TO PREFERENCES SHOWN.

Nj c. p Cardwell. reteree IN bank
ruptcy. has just rendered decision "tlic'i
will establish a precedent and serve 10
Settle number of questions IN various
bankruptcy cases which are now IN the
United State Courts of this and other dis
tricts The question involved was that OF
preference to a creditor. and has been me
cause of many Tits between opposing
counsel in the courts. Referee Cardwe!i S
opinion in regard to this question Will es-
tablish a precedent and rule.
In his opinion Referee Cardwell says:
From the petition of Benjamin ii. West,
trustee in this matter, flied before me on
the list day of June. 1909. the answer
thereto OF Mrs. Agnes E. Gates. filed on the
5th day of June $780, and the dispositions
taken therein. the following statement of
facts are shown: On the 9th day of Feb
ruary. 1879. the said w. j. Brown, Jr-, was
adiudicated a bankrupt; on the list day
of February. 1900, six days previous thereto,
the said w. j. Brown, Jr., paid to Mrs.
A z. Gates the sum of $3.50. said payment
being made TO pay off and discharge
certain note for that amount held by Mrs.
Gates. In the list of said bankrupt cred
itors there appears the name of the SAID
Mrs. Gates as an unsecured creditor for
the sum Of $500 due on note and the sum
Of $3.50 due for borrowed money; both of
these said claims have been duly proved
and allowed.
In the said list there also appears the
name of w. J. Brown, Sr-. as an unse-
rured creditor for the sum of s4Oo, due on
certain note, and the said note was as
signtd 10 the said Mrs. A. z. Gates by the
said w ]. Brown, Sr., and duly proved
RS claim of the said Mrs. a. j.. Gates.
This note of 800 was assigned by the said
". ]. Brown, Sr., without any considera-
son whatever, and solely for the purpose
Of having the said note proved at the first
meeting or creditors which took place
during his absence from the city This
claim, added to the two already men
toned. makes the claim of Mrs. A. Z.
Gates against the estate of the said bank
rupt amount TO 1887 80. b.
THE QUESTIONS.
The questions to be determined IN this
ease are:
First. Whether the payment of the $3.50
by the said bankrupt to Mrs. A. e. Gates
On the 2Ist day of February, 1900, const-
tutes a preference within the meaning and
Intent of the Act of Bankruptcy of 1888,
chapter 6. section 81. CT. G..
Second. Whether the assignment Of the
claim Of W. ]. Brown. Sr.. TO the said
Mrs. A. Z. Gates for the purpose above
mentioned was proper and in accordance
with the bankrupt law
Third. Whether the claim of 800 due
w. j. Brown. Sr., and proven by the said
Mrs A. z. Gates should be eNpunged or
whether the same can be now proven by
the said w. ]. Brown, Sr.
As to the payment of the $3.50 by the
said bankrupt To the said Mrs. A. e.
Gates within four months prior to the
filing of his petition in bankruptcy the
referee holds that this payment of money
clearly constitutes a preference within the
purview of the Bankruptcy Act of 1855,
Sec. 60 A. The Bankruptcy Act provides
rat Sa 81 a m pf creditors uj1 have a.
relved preferences shall net be allowed
unless such creditors shall surrender their
preferences ] do not think the question
as to whether or not the creditor had
cause TO believe that shs WAS being pre-
feiTed is included as an element of the
preference which should work a disallow-
ance Of the claim. II a preference has
been actually received by the creditor the
statute, without regard TO the creditors
knowledge, or cause to believe that pre-
ference was intended is pcretnntory that
such preference must be surrendered or
her claim must be disallowed. In re. Fort
Wayne Electric Corp. &c Fed. Rep. p. So4.
PREFERENCE SHOWN.
An attempt Is made to avoid the oblec-
ton of the allowance of The claim Of the
said Mrs. A. e. Gates by insisting that
she has not received a preference, and in
the argument there is an attempt to draw
a distinction between preferences given
and preferences received: that is to say.
where an insolvent debtor diSDoSes of MS
property SO as to benefit one creditor and
knows that his other creditors must suffer
thereby, the benefit so given is. as TO the
debtor. preference. but if the creditor
who receives it does not happen to know
that he is gaining an advantage over other
creditors of the same debtor, then as TO
him, there is no preference. Such an ar
sument is unsound in principle and should
not be favprably considered.
ASSIGNMENT IMPROPER.
As to the assignment of the said claim
of w ]. Brown, ST.. TO the said Mrs. a.
T. Gates. she had no right to prove the
claim of ". j. Brown, ST., unless she
was duly authorized by power of attor
ney, the only mode prescribed by the
Bankrupt Act ] think, therefore, that the
assignment was improper and Illegal and
tho claim of S4oA should not be allowed
in the name of the said Mrs A r. Gates.
il would work a hardship on w. +.
Brown. ST.. to lose his claim altogether.
md j therefore decide that he may come
In and prove his claim before the referee
according to law.
Having decided that the payment made
by the bankrupt TO the said Mrs A E.
Gates constitutes a f,refernce. IL is there
fore held that all the claims proven by the
said Mrs A f. Gates in this matter.
other than that of $500 belonging III W. ].
Brown. Sir, must be expunged unless she
surrender 10 the trustee the $3.50 which
constitutes the preference above referred
to-
Tho, r w.