Court Opinion

ID: 8747833
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:14:27.88995+00
Date Added: 2024-06-11T17:00:46.321005
License: Public Domain

PLATT, District Judge.
I have carefully examined the certificate of John W. Banks, referee, in the above case. After setting forth in its earlier paragraphs a history of the business dealings in accordance with which the bankrupts had borrowed large sums of money from the petitioners, and, to secure their notes given-therefor, had assigned to the petitioners a large number of mortgages as collaterals, and had from time to time taken up certain collaterals and substituted other collaterals instead, sometimes with permission of the petitioners and sometimes without such permission, the referee goes on, in paragraph 20 et seq., as follows:
“The petitioners caused all of said assignments to be recorded in the land records of Bridgeport on the 26th day of December, 1900, and were *399prompted to record the same because it came to tbeir knowledge tbat said Marsh Bros, were in embarrassed circumstances.
“The estate of the said bankrupts that went into the possession of the trustee consisted of miscellaneous items of personal property and numerous equities in real estate in said Bridgeport. Said trustee derived from sales of equities of redemption the • sum of $303, and the interest of said bankrupts in the equities still undisposed is of inconsiderable, if any, value. Said trustee had derived from all of the personal estate of the said bankrupts the sum of $5,447.16. The claims against said estate as proved amount to $32,-830.92, of which $2,583.09 are for wages due employes of the bankrupts, and of which last-mentioned sum about $2,583.09 are preferred claims.
“No evidence was offered to show that the estate in the hands of said trustee had been enhanced in value by said sums previously realized by said Marsh Bros., or C. B. Marsh, from the releases of said mortgages or sales of said properties in respect to which said wrongful appropriations are claimed to arise, nor what disposition was made of said sums realized from said mortgages or sales, and no connection was traced or shown between said sums so realized and the ownership of the property that passed into the possession of said trustee.
“X find that the petitioners had knowledge that said Marsh Bros, were withdrawing and releasing mortgages held by them as collateral security as aforesaid, and that said assignments were not recorded to facilitate this mode of doing business, and that the wrong committed by Marsh Bros, consisted only in the releases in question having been made without substituting other mortgages in their place, -as it was understood by the parties from their uniform course of dealing would be done.
“The petitioners claimed that the burden of proof lay upon the trustee in bankruptcy to show that the bankrupt estate in his hands was not enj hanced by the sums of money which came into the possession of Marsh Bros., as the proceeds of the sale of these properties, and claimed to have proven that the estate in the hands of the trustee was increased by that amount.
“The court overruled the claim of petitioners, but held and ruled that the burden of proof was upon the petitioners to trace the proceeds into the estate coming into the hands of the trustee, and that this they had failed to do; and the said question is certified to the judge for his opinion thereon.”
In stating my opinion upon the point of law at issue it would be an unnecessary task to attempt any improvement upon the comprehensive, closely reasoned and logical analysis contained in the memorandum filed by the referee December 18, 1901. The matter has been argued before me exhaustively and ably by counsel. I have given thorough attention to all the points which they have presented, have examined the cases to which they refer me, and have noticed the care with which the referee has discussed them. I fully agree with him, and offer herewith his memorandum as containing a very complete statement of the opinion at which I have arrived from my own investigation, and many of the reasons which have led me to my conclusions. The exceptions to the report of the referee as to matters contained in paragraphs 5 and 23 are overruled.
My reason for this ruling is twofold: (1) In the decision of questions of controverted fact I must depend upon the conclusions arrived at by the referee. He has every opportunity for arriving at the truth. (2) In this particular case I have been at great pains to examine the testimony which was taken down at the time of hearing and has been forwarded to me, and I am bound to say that I concur most heartily with the referee in his conclusions.
The decision of the referee is sustained.