Court Opinion

ID: 8833021
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:09:19.199502+00
Date Added: 2024-06-11T17:04:58.754892
License: Public Domain

DEWIS, Circuit Judge
(dissenting). I accept, of course, the principles of law so well stated in the opinion of my associates, but believe none of them would be violated, because of the procedure adopted below, by an affirmance. That is, I think there is no room here for the application of those principles. A preference obtained under a judgment may be recovered by the trustee without first having the judgment vacated. Section 60b of the Bankruptcy Act deals only with the use to be made of a judgment and the effects that may result therefrom. A preference , is recoverable notwithstanding the judgment That seems to be conceded.
The chattel mortgage held by Morris, covering the stock of drugs, antedated the reach of the Bankruptcy Act, but the foreclosure decree and sale were within four months of bankruptcy. Morris bought at the foreclosure sale on his bid of $45,130, which equalled the sum found in the decree and costs; and the sale was confirmed to him. Neumann brought this action under sections 23b and 60b (Comp. St. §§ 9607, *9829644) to recover from Morris the value of the whole stock, alleged to he $75,000, as a voidable preference received by Morris within the four months; but his complaint disclosed that all of the indebtedness found in the decree, except $5,229, was actually secured by the chattel mort-, gage. As to the amount so secured there can be no doubt that Morris was entitled to foreclose, and if the decree had not included the excess amount named his purchase and title would, have been invulnerable to the attack now made by the trustee. The complaint alleges that the foreclosure sale was at public auction after it had been advertised for 34 days. There is no allegation that the,sale was conducted improperly-or unfairly in any respect. The answer of Morris did not deny that he knew, when the decree was entered, that the amount found to be secured by the mortgage was excessive to the extent of $5,229. In his answer he was content to rest his defense on a plea to the jurisdiction and that the decree of the State court operated ás an estoppel. He made no denial of any of the facts stated in the complaint. His answer thus raised only issues of law. In this state of the case both sides, on April 10th, moved for judgment on the pleadings, and on April 18th the court overruled the defendant’s motion, sustained. ■ plaintiff’s motion and entered judgment for the $5,229, in favor of plaintiff and against Morris. That is the judgment brought here hy Morris, and the question presented is, whether it is sustainable on the face of the pleadings. I think it is. The case having been submitted on motions for judgment on the pleadings there was no proof offered as to the value of the stock of goods, but it appeared from the pleadings that Morris bought the stock for $45,130 and the sale was confirmed. There is a basis for the conclusion that Morris’ bid approximated the value of the stock. What the stock sold for in open market is evidence of its reasonable worth. Morris then got a proportionate part of the bankrupt’s goods for the $5,229 excess in his decree, of that approximate value, and to that extent he depleted the bankrupt estate and obtained under his decree a voidable preference. That seems to be a reasonable conclusion from the facts set up in the complaint and not denied, and was the one adopted by the district judge. Morris can hardly complain that the court took his" bid as the measure of value rather than the higher amount alleged. His other assignments of error deal only with the question of jurisdiction and his claim that the decree of the State court was res adjudicata, which are both clearly, without merit.