Court Opinion

ID: 8745939
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:07:15.446659+00
Date Added: 2024-06-11T17:00:40.399973
License: Public Domain

PER CURIAM.
We are of the opinion that a payment made.by an insolvent debtor, within four months of the filing of a pétition upon which he was adjudicated a bankrupt, which enables a creditqr to obtain a greater percentage of his debt than the other creditors of the bankrupt of the same class, is a preference, and that the creditor receiving the payment cannot prove his debt for the balance without surrendering it, notwithstanding he received it innocently and without reasonable cause to believe that it was intended to give a preference. The payment being a preference within the plain definition of Bankr. Act 1898, § 60, subd. a, it must be surrendered before the claim of the creditor for the balance can be allowed by the terms of section 57, subd. “g”; and it is quite immaterial that the payment is not avoidable as a preference by the trustee in bankruptcy, pursuant to subdivision “b” of section 60. Subdivision “a” of section 60 needs no other explanation. from other provisions of the bankrupt law for its proper interpretation, and the element of time or intent necessary to enable the trustee to recover a preferential payment cannot be reasonably incorporated into it.
The case presents another question. The bankrupt was indebted to the creditor upon an open account, and at a date more than four months previous to the filing of the petition made a payment upon that account in money, and gave his note for the balance, which payment and note were treated by the creditor as full payment, and the account was balanced upon his books. The debtor was insolvent at the time, but the creditor had no reasonable cause to believe that a preference was intended. Subsequently the bankrupt contracted another debt with the creditor. The question is whether proof of that debt cannot be allowed without a surrender by the creditor of the payment received upon the. previous debt. We are of the opinion that the payment, notwithstanding it was a preference, being upon a distinct and independent debt from that which is sought to be proved, need not be surrendered by the creditor. We are also of the opinion that the payment cannot be treated as a set-off against the debt sought to be proved. We do not deem it necessary to enlarge upon the reasons for our conclusions in respect to these questions. These are fully discussed in the opinion of Judge Thomas, who decided the case in the court below, ánd we fully concur in his views.
The order of the court below is affirmed.