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KAUFMAN V. TREDWAY, 195 U. S. 271 (1904)

U.S. Supreme Court

Kaufman v. Tredway, 195 U.S. 271 (1904)

Kaufman v. Tredway

No. 17

Argued October 24, 1904

Decided November 28, 1904

195 U.S. 271


In an action by a trustee in bankruptcy to recover a preferential payment, the insolvency of the bankrupt at the time of payment and whether the payee had reasonable cause to believe that a preference was intended are questions of fact determined by the verdict of the jury.

The commencement of an action by a trustee in bankruptcy to recover a preferential payment is a demand, and he is entitled to interest from that time.

One who after receiving a preferential payment from the bankrupt, loans him money in good faith without security and which actually passes into the bankrupt's possession is entitled to have the amount loaned set off from the amount recoverable by the trustee.

On August 20, 1898, Gustave Kaufman filed his petition in bankruptcy and was subsequently adjudged and decreed a bankrupt. W. T. Tredway was appointed trustee of his estate. On July 24, 1899, the trustee commenced suit in the Court of Common Pleas, No. 3, of Allegheny County, Pennsylvania, to recover from Joseph S. Kaufman the sum of $4,086.64, charged to have been given, on August 4, 1898, by the bankrupt to the defendant as a preference. The trial resulted in a judgment in favor of the trustee for $1,086.64 and interest. This judgment was affirmed on appeal by the superior court. An application for a further appeal to the supreme court of the state was denied, and thereupon this writ of error was sued out to review the judgment of the superior court. Section 60 of the Bankrupt Act is as follows:

"SEC 60a. A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the

Page 195 U. S. 272

enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class."

"b If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of the petition, and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be viodable by the trustee, and he may recover the property or its value from such person."

"c If a creditor has been preferred, and afterwards in good faith gives the debtor further credit, without security of any kind, for property which becomes a part of the debtor's estate, the amount of such new credit remaining unpaid at the time of the adjudication in bankruptcy may be set off against the amount which would otherwise be recoverable from him."

30 Stat. 544, 562, c. 541, July 1, 1898.

Page 195 U. S. 273

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