The Savannah morning news. (Savannah, Ga.) 1900-current, 1902-12-08
SUSTAINED THE TRUSTEE
OF Woods and Malone In j. III. Ian
caster Claim Case.

caster Claim Case.
The decision of Referee A. H. Mac
Donell on the contested claim case OF
James H. Lancaster, a creditor OF
Woods & Malone. has been rendered.
The decision is an important one, for
not alone does it decide unique ques-
ton of law, but establishes the stand
ing of many similar claims against
the bankrupt estate.
In his decision the referee sustained
the objections of the trustee of the es-
tate to the payment of the claim, but
ordered that the claimant be consid-
cred common creditor of the estate.
In the objections of the trustee 1t was
submitted that the failure of the claim
ant to present his check at the proper
time worked hardship on the other
creditors of the estate, and that, there
fore, the claim should be disallowed.
The case is an important one, In
volving many other claims, the out
come of which has been watched with
interest. ]. H. Lancaster received
from Woods & Malone, on Nov. IS, 1901,
check on the Southern Bank. for
$2S3.4S, in consideration OF certain
shipments of cotton. This check he
presented for payment on Dec. l. at
which time payment by the bank was
refused.
Money in Bank to Pay Check
Up to Dec. 3. Woods & Malone had
to their credit in the bank an amount
sufficient to pay the check at issue,
and it was admitted that the check
would have been paid, had it been pre-
scented sooner Woods & Malone sus-
pended payment Dec. 2, and all sums
to their credit in the bank were APP
propriated to the credit of the gem
eral balance due the bank by Woods
& Malone. No part of the sum has
ever been paid to the receiver. and the
trustees has never had any claim
thereon.
When Lancaster presented his check
to the trustees for payment it was
contested on the grounds that he was
too late, the trustee, through his at
torney, Mr.. w. G.. Charlton, contend
ing that his failure to cash it should
result in it's dsallowance. Lancaster,
by his attorneys, Wilson e. Rogers,
filed answer to the objections made by
the trustee, alleging that the check was
given for cotton shipped to the bank
rupts as cotton factors; that the
Southern Bank, on which the check
was drawn, has never failed, and that
the estate of the bankrupts was In no
way injured by reason of the failure
to present the check for payment prior
to Dec. 4, and there was no reason
why it should not be allowed and paid.
Forfeiture of Right to Recover.
The referee decided that in order for
a holder to forfeit his right to recover.
three facts must concur, viz: First,
unreasonable delay in presentation;
foi lttr0 NR H.
third, injury resulting to the drawer.
On these three questions he held that
the check having been held by Ian
caster for fifteen days, the delay was
unreasonable; that the bank had never
failed, and there is not now any liabil-
ity by it, on the check; and that no
injury resulted to the drawers Of the
check from the unreasonable delay of
Lancaster in presenting it for pay
ment. The bank. he held, is under
no obligation to pay where the depos-
itor has in the meanwhile become In
debted to 1t, or where he has not suffi-
Client funds on deposit to pay the
check.
In holding that the claimant had not
forfeited his right as a common cred
1tor, the referee ruled as follows:
The Referees Decision
1T was contended by the trustee, in
this case, that the delay of the inter-
venor Lancaster, in presenting his
check, worked injury to the estate, and
especially to the general creditors. as
a class, as by the exercise of diligence
he could have obtained it's payment by
the bank, and it's payment now, out of
the general fund. would reduce the
dividends equally accessible to him.
will be required to pursue the one on
which other creditors have no lien.
But such is not the present case. There
are no two funds at this stage to which
Lancaster has equal access. nor has
he ever had access to any two funds
at the same time.
He has had no lien. His laches in
presenting his check for payment oc-
Cured prior to the bankruptcy before
there was an estate or trustee: before
creditors were called upon to come in,
file their claims, set up antagonis tic
rights; in fact. before their rights be-
came antagonistic, and before the in
solvency of Woods & Malone was
known or suspected. At that time
there existed no common fund. out of
which their respective claims were to
be paid. In falling to dilignetly pre-
sent his check to the bank for pay
ment, he violated no duty owing to
other creditors, and he cannot be held, |
from any equitable considerations, to |
have forfeited his right as a credi tor |
to participate in the common estate |
of the bankruats.
Wherefore Judgment is rendered by |
the court in favor of J. H. Lancaster. |
for the sum of S3S34S, to rank as q |
common creditor. and the trustee is |
ordered to pay to him the first and |
second dividends thereon. as provided |
by previous orders of court for claims |
of like dignity"