Court Opinion

ID: 8868139
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:12:43.054085+00
Date Added: 2024-06-11T17:06:04.480027
License: Public Domain

TJIOMPBON, District Judge.
This matter is submitted to the court on a petition for the review of the findings and rulings of the referee in disallowing the claims of certain creditors. The able opinion of the referee in support of his rulings presents the true construction of the provisions of the bankrupt act covering the controversy. When insolvency overtakes the debtor, his creditors, as contributors' to the estate in Ms possession, have an equitable right to liave the proceeds of the estate distributed among them equally, in proportion to the amount of their respective claims; and if, pending the insolvency, one of the creditors receives partial payment of liis claim from the debtor, and to the extent of the remainder of his claim is permitted to share equally in the distribution of the balance of the estate, he thereby obtains an inequitable advantage or preference *414over the other creditors. And this is true, although no preference was intended by the debtor in making, or by the creditor in receiving, the partial payment. The construction, therefore, of paragraph “g” of section 57 and of paragraphs “a” and “b” of section 60 of the bankrupt act, which requires the creditor to surrender his preference as a condition precedent to participation in the distribution of the fund in the hands of the trustee, is not unreasonable. It permits the innocent creditor, at his option, to retain or surrender the preference. JBut the creditor- who has reason to believe thai a preference was intended has no such option, and, i.' made within four months before the adjudication in bankruptcy, the trustee may recover the amount of the payment. The findings of the referee are approved.