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a motion to dismiss the petition on the ground that the allegation of the act of bankruptcy was insufficient because it did not specifically aver an intent by the Oil Company to prefer the Trust Company over its other creditors when it gave the Trust Company its bonds secured by a mortgage covering all its property. The District Court denied the motion and in due course entered an order adjudging the respondent a bankrupt. The Trust Company appealed; the Oil Company accepted the decision.

This case arises under section 3 of the Bankruptcy Act (Comp. St., 9587) prescribing that an act of bankruptcy by a person "shall consist of his having * * * (2) transferred, while insolvent, any portion of his property to one or more of his creditors with intent to prefer such creditors over his other creditors. *

* * "

The question involved does not call for an interpretation of this provision with respect to the intention of the debtor to give a preference. To avoid any misunderstanding we state that we are in full accord with the unwavering line of decisions that the debtor's intent to prefer is an essential element of the offending act and must be disclosed by the petition. In re Bieler (C. C. A., 2d Cir.), 2 Am. B. R. (N. S.) 192, 295 Fed. 78, 81, 82. The precise question is whether the statute requires that the petition contain an averment of such intent specifically in words.

While an affirmative and specific averment of this essential element of the act of bankruptcy will always be made by a careful draftsman and is, for obvious reasons, greatly to be desired, we find nothing in the statute which requires it. If the petition charge an act of bankruptcy by averring facts which embrace all the elements of the act and bring the act fully within the definition of the statute, the requirements of the law have, we think, been met. An inartificial statement is distinguishable from an insufficient statement. In re Ed. W. Wright Lumber Co. (D. C., Ark.), 8 Am. B. R. 345, 114 Fed. 1011; In re McGee (D. C., N. Y.), 5 Am. B. R. 262, 105 Fed. 895; In re Rome Planing Mill (D. C., N. Y.), 3 Am. B. R. 123, 96 Fed. 812; Boyd v. Lemon & Gale Co. (C. C. A., 5th Cir.), 8 Am. B. R. 81, 114 Fed. 647, 52 C. C. A. 343; In re Grant (D. C., N. Y.), 5 Am. B. R. 837, 106 Fed. 496.

In the charging paragraph of the petition in this case there is expressly stated the essentials of a transfer by the debtor, while insolvent, of all its property to one creditor to secure an existing indebtedness. The debtor thereby preferred this one creditor over all other creditors and it follows impliedly, because inevitably, that it intended to do the only thing which in the circumstances was possible. We freely say that if in an averment of facts charging such an act of bankruptcy there should lurk any doubt as to the debtor's intent, it would be insufficient, but when the avermment states facts which disclose but one possible.intent, it would be going far to dismiss the petition because that intent was not stated in words. We agree with the District Court in holding the petition sufficient, in denying the motion to dismiss, and in entering a decree of adjudication.

We come to a matter which at first seemed troublesome but which, on investigation, we find has no place in the discussion. In the agreed statement of facts which is before the court in the nature of a bill of exceptions, the parties regarded and defined the obligations which the bankrupt gave the Trust Company as "first mortgage bonds" secured by "a mortgage dated April 29, 1921, drawn to secure the payment of the bonds, which mortgage was duly recorded July 29, 1921." In the bankruptcy court neither the parties nor anyone else thought of this instrument other than a first mortgage upon real property, or of the bonds other than bonds secured by that mortgage. At the argument it developed, in colloquy, that these bonds were not bonds secured by a mortgage upon described property. The instrument is rather unusual in form. The bankrupt entered into a trust agreement or deed of trust with the Franklin Trust Company as trustee to secure an issue of $100,000 bonds (of which $96,700 par value were later delivered to the same trustee to secure its debt of $47,000). The instrument contains a warrant of attorney authorizing any attorney to appear for the obligor and confess judgment against it in favor of the trustee for the principal amount of the bonds secured and outstanding. It also provides that the trustee may, when requested by the holders of twentyfive per cent of the bonds, and, after entry or without entry, proceed to sell, publicly or privately, "all and singular the property 65-N. S. VOL. IV.

then subject to the provisions of this Trust Agreement" and apply the proceeds to the payment of the bonds. The question arose whether this instrument, not giving a lien upon specified property at the time it was executed and recorded, was a first mortgage in the sense in which that term was used in the proceedings. We are not required to pass on this question for several reasons, the controlling one being that the question was not raised before the District Court and therefore is not a subject matter of this appeal.

The decree below is affirmed.

IN THE MATTER OF ANNA SILVERMAN, Bankrupt.*

U. S. District Court, Eastern District of New York, April, 1924. SUITS AND ACTIONS BY AND AGAINST TRUSTEE-SUMMARY PROCEEDING OR PLENARY SUIT-IN GENERAL-POSSESSION WITHOUT CLAIM OF TITLE DOES NOT SHOW ADVERSE POSSESSION.

Mere possession of property by a third party without claim of title by transfer prior to bankruptcy does not require the bringing of a plenary suit to recover the property where there is an allegation under oath that the third party holds the property and that it belongs to the estate of the bankrupt.

(See Collier, 13th Ed., p. 751 (II); Am. B. R. Digest, § 647.)

Motion for order directing third party to turn over assets. Motion granted.

Charles Soble, for petitioning creditors.

Tolins & Jakobson, for Alexander M. Zack, appearing specially.

GARVIN, District Judge:

This is a motion for an order directing a third party to turn over a sum of money to the trustee in bankruptcy. The motion is based upon a verified petition, which alleges that the third party has in his possession this sum of money, belonging to the bankrupt, which he refuses to turn over to the trustee. The petition sets

299 Fed. 959.

forth that the bankrupt paid over this money as a result of false representations by the third party, who has retained the money, instead of turning it over to the United States Lumber Company, as he agreed when payment was made to him. The petition alleges that this money is therefore the property of the bankrupt and that the trustee is entitled to its possession,

The third party has filed a notice of appearance, appearing specially, and objects to the jurisdiction of the court, asserting that the court is without power to make a summary order, and that petitioner must bring a plenary action. Undoubtedly Matter of Marquette (C. C. A., 2d Cir.), 42 Am. B. R. 555, 254 Fed. 419, 166 C. C. A. 51, recently approved in Atwater v. Community Fuel Corporation (C. C. A., 2d Cir.), 298 Fed. 455, is authority for the proposition that, where the trustee has neither title nor possession, the court is without power to summarily determine an adverse claim to property demanded by him. But in the Marquette Case, supra, affidavits were filed on both sides and an issue raised. Here the respondent asserts no adverse claim, but merely questions the jurisdiction of the court. I understand the cases to hold that the third party must set up a claim of title, and, failing so to do, may be summarily ordered to turn over property, where there is an allegation under oath that he holds such property and that it belongs to the estate. It was said in Mueller v. Nugent, 184 U. S. 1, 7 Am. B. R. 224, 22 Sup. Ct. 269, 46 L. Ed. 405:

"The bankruptcy court would be helpless indeed, if the bare refusal to turn over could conclusively operate to drive the trustee to an action to recover as for an indebtedness, or a conversion, or to proceedings in chancery, at the risk of the accompaniments of delay, complication, and expense, intended to be avoided by the simpler methods of the bankruptcy law."

And in Babbitt v. Dutcher, 216 U. S. 102, 23 Am. B. R. 519, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969:

"There are two classes of cases arising under the Act of 1898 and controlled by different principles. The first class is where there is a claim of adverse title to property of the bankrupt, based upon a transfer antedating the bankruptcy. The other class is where there is no claim of adverse title based on any transfer prior to the bankruptcy, but where the property is in the physical possession of a third party or of an agent of the bankrupt, or of an officer of a bankrupt corporation, who refuses to deliver it to the trustee in bankruptcy. In the former class of cases a plenary suit must be brought, either at law or in equity, by the trustee, in which the adverse claim of title can

be tried and adjudicated. In the latter class it is not necessary to bring a plenary suit, but the bankruptcy court may act summarily, and may make an order in a summary proceeding for the delivery of the property to the trus tee, without the formality of a formal litigation."

It seems to me, therefore, that, as the third party sets up no claim of right or title whatever, I am constrained to grant the motion.

FLEISCHMANN & DEVINE, INC., ET AL. V. SAUL WOLFSON DRY
GOODS COMPANY, INC.*

U. S. Circuit Court of Appeals, Fifth Circuit, May, 1924.
Rehearing Denied May, 1924.

No. 4267.

COMPOSITIONS-CONFIRMATION-APPEAL AND REVIEW-CREDITORS MAY APPEAL FROM ORDER CONFIRMING COMPOSITION.

A creditor is entitled to appeal from an order confirming an appeal composition because the enforcement of such order has the effect of granting a discharge to the debtor.

(See Collier, 13th Ed., p. 868 (3); Am. B. R. Digest, § 712.)

SAME-CONFIRMATION-APPEAL AND REVIEW-PARTIES-CONSENTING CREDITORS NOT NECESSARY PARTIES TO APPEAL FROM ORDER CONFIRMING COMPOSITIONS.

The creditors who consent to an offer of composition are not necessary parties to an appeal from an order confirming a composition made before adjudication and which has not been executed.

(See Collier, 13th Ed., p. 868 (3); Am. B. R. Digest, § 712.) SAME-CONFIRMATION REFUSED WHERE ESTATE WOULD PAY CONSIDERABLY MORE THAN OFFER.

The confirmation of an offered composition is manifestly not for the best interests of the creditors if it would pay them considerably less than they might reasonably expect to realize in the administration of the assets in due course. Therefore confirmation should be refused where cash on hand and presently obtainable for other assets amounts to enough to pay the costs of the proceedings, priority debts in full, and nearly 60 per cent of other debts, while the offer would realize only 40 per cent to general creditors. (See Collier, 13th Ed., p. 449 (2); Am. B. R. Digest, § 709.) SAME-CONFIRMATION-COURT SHOULD NOT GIVE UNDUE EFFECT TO THREATS OF BANKRUPT TO CONTEST ADJUDICATION.

On the application for confirmation of a composition which offers considerably less to the creditors than could be reasonably expected to be

299 Fed. 15.

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