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leased the property to the minor children of Kolster at the same rent, and that Kolster received the first month's rent, and paid for repairs upon the property. Here the testimony ended, Kolster being the only witness examined. From this testimony, the transactions may have been bona fide, not fraudulent. There was no need of a suit to foreclose the right which Kolster had in the property. If he could not raise the money to pay it within the time specified in the lease, he had the right to surrender it, and, having surrendered it, Gooding had the right to lease it to anyone else; and the mere fact that he leased it to the minor children of the petitioner would not, of itself, be proof sufficient to authorize the court to declare the transaction fraudulent.
The basic foundation on which the specifications rest is missing. The evidence fails to show that there was any “equity of redemption' in Kolster at the time he filed his petition in bankruptcy, or at any time within four months prior thereto. In Re Cornell (D. C.) 97 Fed. 29, it was held that specifications in opposition to a bankrupt's application for discharge, on the ground of his having concealed property from his trustee in bankruptcy, must be supported by evidence showing the existence of property in the bankrupt, or in trust for his use, at the time of filing the petition in bankruptcy. There is no evidence in this case of any secret trust or agreement with Gooding, who held the legal title to the property at the time Kolster surrendered his interest therein, by which the property in question was to be held by Gooding for the benefit of the bankrupt; and, in the absence of such a trust or agreement, it cannot be held that the property, or any interest therein, belongs to the estate in bankruptcy.
If suit had been brought by the creditors against Gooding to enforce the equity of redemption claimed to exist in favor of Kolster, and no other testimony had been offered than is here presented, the proceedings would have failed for want of sufficient proof to show that the right of redemption still existed. A petition was filed by the creditors in this case March 5, 1906, praying for leave to have the trustee bring such a suit; but no further action was ever taken by the creditors. The failure to obtain sufficient evidence that the right of redemption continued may have been the cause.
The proceedings relative to the objections to Kolster's discharge have been twice continued, at the request of the creditors, and ample time has been given them to find such evidence, if any existed. They rest alone upon the testimony of Kolster, and claim that his testimony is sufficient to enable the court to infer that there must have been some understanding that the right of redemption should be kept alive.
As was said by the court in Re Dauchy (D. C.) 122 Fed. 688, 695:
"This court fully recognizes the rule of evidence that in cases of this kind, as in others, the existence of the main fact to be proved may be established by inference from other facts proved, when such inference is legitimate. But when from such other facts proved two or more inferences may be drawn, and the facts point as clearly to the one result as to the other, the court cannot say a case is made out.”
The most that can be said is that the circumstances proven “look suspicious.” This is not enough. Mere conjecture or surmise is not sufficient. Something more is required in order to justify the court
in declaring that the transactions were fraudulent, and made and entered into and carried out for the purpose of enabling Kolster to conceal his property in order to defraud his creditors. It is manifest that this testimony does not march up to the full proof required by the act of bankruptcy to sustain the specifications of objections filed by the creditors.
In Re Ferris (D. C.) 105 Fed. 356, where similar objections were made, and the creditors relied solely upon the testimony of the bankrupt, which was suspicious and unsatisfactory, the court said:
“The testimony given by the bankrupt is in a very unsatisfactory condition, and it is impossible for the court to ascertain therefrom the exact position of the affairs of the bankrupt, or to find with any certainty that in truth when the proceedings in bankruptcy were filed the bankrupt retained any interest in the mortgaged property or its proceeds. The opposing creditor having failed, therefore, to sustain the specifications by sufficient evidence, the same' must be overruled, and a discharge must be granted."
In Re McGurn (D. C.) 102 Fed. 743, 745, which bears a close resemblance in its facts to the present case, this court said:
"Specifications in opposition to a bankrupt's application for a discharge and the proofs in support thereof should be clear, positive, and direct. The opposing creditor or creditors must distinctly allege and prove one or more of the statutory grounds for refusing a discharge.
The burden of proof rests upon the opposing creditors to establish their charge against the petitioner by satisfactory and sufficient evidence.
No such evidence has been produced.”
Numerous authorities were cited in support of the principles announced. The decisions since rendered declare the same rule. In re Logan (D. C.) 102 Fed. 876; In re Fitchard (D. C.) 103 Fed. 742, 744; In re Bryant (D. C.) 104 Fed. 789, 792 ; In re Corn (D. C.) 106 Fed. 143, 144; In re Chamberlain (D. C.) 125 Fed. 629; In re Hamilton (D. C.) 133 Fed. 823, 826.
The creditors having failed to sustain their objections, the bankrupt. is entitled to his discharge.
In re OPPENHEIMER.
(District Court, M. D. Pennsylvania. June 20, 1906.)
BANKRUPTCY-ACCOUNTS OF RECEIVER—ALLOWANCE FOR COUNSEL FEES.
A receiver in bankruptcy is entitled to the assistance of counsel, and a reasonable allowance (keeping in view the economy enjoined by the general policy of the bankruptcy act, and, taking into consideration the value of the estate) will be made to him in the settlement of his accounts for services rendered in the administration of the estate while in his hands; but not otherwise. He is not entitled to an allowance for seryices rendered by the attorney for the petitioning creditors in instituting the proceedings and obtaining the receiver's appointment, or for other services rendered primarily in the interest of his clients, and the former is a matter for consideration if at all on settlement of the estate in the handsof the trustee, with which the receiver has nothing to do.
In Bankruptcy. On exceptions to receiver's account.
ARCHBALD, District Judge. The receiver asks credit for $400 attorney and counsel fees—$200 for Mr. Dando, his own immediate counsel, and $200 for Mr. Davis, attorney for the petitioning creditors. A receiver in bankruptcy is undoubtedly entitled to the assistance of counsel, the same as an executor or administrator, and upon the same grounds, and a reasonable allowance therefor will be made him in the settlement of his accounts. They come in, however, as part of the expenses of administering the estate, and not otherwise, and there is no place for anything outside of this. The services of Mr. Davis consist, as stated at the argument, in putting the respondent into bankruptcy, securing the appointment of a receiver, supervising the appraisement which followed, advising the sale of the bankrupt's stock, interesting possible buyers, and promoting an advantageous disposition of it, closely approximating the appraised value, and finally sustaining such sale, upon argument before the court, against exceptions made. Mr. Dando petitioned for and obtained the appointment of appraisers, and drew up and filed their schedules, saw to the setting aside by the receiver of the bankrupt's exemption, which was allowed under bond, petitioned for and obtained an order for a private sale of the bankrupt's stock, and made due return thereof, appearing, also, in opposition to exceptions filed, and finally drew up and filed the receiver's account which is now excepted to, appearing and arguing in support of the same.
There can be no question as to the character of the services rendered by Mr. Dando, nor the right of the receiver to the allowance therefor. The only thing is the amount. Economy is strictly enjoined, by the well-known policy of the bankruptcy act, in the administration of bankrupt estates, and there is no exception with regard to the compensation of counsel. The estate passing through the hands of the receiver in the present instance amounts to about $4,200, so that there was no great responsibility involved in its management, nor any intricacy in advising with regard to it, both of which bear on the value of the services rendered and the amount to be allowed. It may be that, as ordinarily measured, $200, the sum asked for, would not be out of the way. But, according to the standards which prevail in bankruptcy, one-half that sum, in my judgment, is all that could be reasonably expected, and is a fair compensation for the work done.
The services of Mr. Davis, however, are entirely outside of anything which is entitled to come in here. They were rendered in the interest of the petitioning creditors, whom he directly represented, and not for the receiver; or, if in any respect for the latter, they overlapped or supplemented those of Mr. Dando, and there cannot be a double allowance because of two counsel being employed. The distinctive thing about them is that they were steps taken primarily in behalf of the claims of creditors which had been put in his hands, which may call for compensation from his own particular clients, but are not to be imposed as a charge upon the estate. It may be that
obtaining the appointment of a receiver is an exception to this, and the filing of a petition by which proceedings are instituted has also been recognized and quite generally allowed for. Collier (5th Ed.) p. 472. But if there is anything of that kind which obtains, the receiver has nothing to do with it. Claim is to be made, if at all, before the referee, as for a charge against the estate in the hands of the trustee, and not, unless all distinctions are to be dispensed with, has it any right to consideration here.
The exceptions are sustained, the credit item of $200 paid to B. W. Davis, attorney, is disallowed, and the further item of $200 counsei fees is reduced to $100, making the balance to be accounted for in the hands of the receiver, $3,830.86, with which corrections the account is finally confirmed.
In re WATKINSON et al.
An increase of a bankrupt's estate as a net result of transactions between the bankrupt and a creditor within four months prior to the bankruptcy, where the last transaction was a payment on account of the indebtedness, is not sufficient to relieve the creditor from surrendering this last payment as preferential before he is permitted to prove the balance of his claim, under Bankr. Act July 1, 1898, c. 541, § 57g, 30 Stat. 560 [U: S. Comp. St. 1901, p. 3443], when the account runs far back beyond the four-month period, and the transactions end with a large payment on account of the whole indebtedness. In Bankruptcy. On question certified by referee. See 142 Fed. 782, 143 Fed. 602. Arthur G. Dickson, for trustee. Max L. Powell, for claimants.
HOLLAND, District Judge. The plaintiff in this case sold merchandise to the alleged bankrupts, and received payments on account, as set forth in the following statement: 1901.
173 64 15
122 30 28
59 66 29
103 80-$811 36 July 19
220 00 23
10 00 26
535 32 Aug. 14
364 02 24
180 60 Sept. 6
175 08 1901 11
176 04 June 29 By Cash......... $176 58 30
178 20 Oct. 10
.... 634 78—$ 811 36 26
2,565 92 Oct. 8
It will be noticed that there are payments amounting to $811.36. Goods sold from February 14, 1901, to June 29, 1901, inclusive, total the same amount.
The question certified is whether or not Joseph Wild & Co., the claimants, can prove the balance of their claim, to wit $2,565.92, without surrendering the sum of $634.78, received by them on October 10, 1901, which is said to be preferential. The bankrupts were insolvent from January 1, 1901, but the first goods were delivered by the plaintiffs to them on February 14, 1901. The account was open long prior to four months preceding the filing of the petition in bankruptcy, and had been running from February 14, 1901, down to October 8, 1901, when the last delivery of merchandise to the bankrupts took place. Two days later, October 10, 1901, the sum of $634.78 was paid to the plaintiffs. This was the last transaction between them, and within four months of the time of the presentation of the petition in bankruptcy. There were no subsequent credits. It was simply a payment on account of a former indebtedness, and it is ruled by In re Colton Export & Import Co., 10 Am. Bankr. Rep. 14, 121 Fed. 663, 57 C. C. A. 417. The cases of Jaquith v. Alden, 118 Fed. 270, 55 C. C. A. 364 (same case decided by the Supreme Court of the United States, and reported in 9 Am. Bankr. Rep. 773, 23 Sup. Ct. 649, 47 L. Ed. 717), and Yaple v. Dahl-Millikan Grocery Co., by the same court, reported in 11 Am. Bankr. Rep. 596, 24 Sup. Ct. 552, 48 L. Ed. 776, rule that where a debt for goods sold to the bankrupt upon a running account was all incurred within four months prior to filing a petition in bankruptcy, and while the alleged bankrupt was insolvent, of which fact the creditor was ignorant, payment on account did not constitute preferential transfers, under section 60a of the bankrupt act of July 1, 1898 (chapter 541, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3415]), which must be surrendered, under section 57g, 30 Stat. 560 [U. S. Comp. St. 1901, p. 3443], before the creditor can prove his claim, although the greater part thereof was for goods sold before the last payment was made. In the Jaquith v. Alden Case the last transaction was a purchase of goods by the bankrupts. We therefore hold that an increase of the bankrupt's estate, as a net result of the transactions between the bankrupt and a creditor within four months prior to filing the petition in bankruptcy, where the last transaction was a payment on account of the indebtedness, is not sufficient to relieve the creditor from surrendering this last payment as preferential before he is permitted to prove the balance of his claim against the bankrupt's estate, when the account runs far back beyond the four months before the petition is presented, and the transactions between them end with a large payment on account of the whole indebtedness. Under such circumstances, it is a preferential claim, and must be surrendered before the balance of the account of the creditor can be proven. Kimball v. Rosenham Co., 114 Fed. 85, 52 C. C. A. 33; In re Sagor Bros., 9 Am. Bankr. Rep. 361, 121 Fed. 658, 57 C. C. A. 412. Where in a running account payment by the bankrupt within the four months has induced new credits, which resulted in a net increase to the estate, the creditor may be said to have once surrendered his preference by the giving of the subsequent credit;