Court Opinion

ID: 6881951
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:18:10.487262+00
Date Added: 2024-06-11T16:05:36.868465
License: Public Domain

CLARK, Circuit Judge
(dissenting).
Bankruptcy General Order 47, 11 U.S.C. A. follovying section 53, provides — as does Federal Rule 53(e) (2), 28 U.S.C.A. following section 723c — that the judge “shall” accept the findings of fact of a referee or master “unless clearly erroneous.” These rules are not rendered inapplicable by the failure of the trial court to heed their mandate. In re Connecticut Co., 2 Cir., *901107 F.2d 734. Here, moreover, the trial court acted in part on an erroneous conception of law, namely, that a debt barred by the statute of limitations is not good consideration; Central Hanover Bank & Trust Co v. United Traction Co., 2 Cir., 95 F.2d 50, holds otherwise
Disregarding much testimony whose only pertinency seems to be the creation of unfavorable atmosphere, we have here as the substantial issue the question of relative value of the property conveyed to the debt which was the consideration for the transfer. The debt itself up to the amount of $1,300 was pretty thoroughly substantiated by bank records. The property consisted of 50 shares of stock of a laundry company, then losing money, owing around $130,000, whose slender margin of about $14,000 of assets over liabilities was found by including in excess of $64,000 of machinery and $29,000 of real estate among the assets. There was no market for the company’s stock; it was closely held by the three officers, including the bankrupt who owned 25 per cent. The referee found that the book value of the bankrupt’s stock was approximately $3,750, that there was consideration for the transfer, to wit, the debt, and that the transfer was not 'made with intent to defraud the creditors. With property of so dubious value as this, I think the referee’s finding of lack of fraudulent intent is not clearly erroneous.