against a bankrupt, the question of a payment is raised and litigatea between the plaintiff in such judgment and the assignee in bankruptcy, the federal court of bankruptcy is bound by the judgment; though this may be doubtful. No such case is presented here. The question of payment was not raised, and was, of course, not decided; and, for reasons already stated, I hold that it was not the duty of the assignee to raise it in that case. I find no error in the judgment of the district court, and the same is accordingly affirmed.
(Di8trict Court, D. New Jer8ell.
A bankrupt's application for a discharge is seasonable.if made before the dis, charge of the assignee. '" '
A year before his failure the bankrupt made a transfer of some of his property without consideration. Het4. on the evidence, that itwas not made, in contemplatfon of bankruptcy
In Bankruptcy. Oottlt a: Howell, for bankrupt. Henry Huston, for creditor. NIXON, D. J. Thirteen specifications are filed against the bankrupt's discharge. On the argument only the third, sixth, seventh, eighth, eleventh, twelfth, and thirteenth were relied upon by the opposing creditor. The third alleges that the bankrupt did not apply for his discharge within a reasonable time. Before the act of July 26, 1876, the law required that the bankrupt, having no assets, should apply for his discharge within one year after the petition in bankruptcy was filed. That act extended the time "to the final dispositionof the cause," which hat:l been held to mean the final disposition of the administration of the estate, including the discharge of the assignee. There is no proof before me that the assignee has been discharged. The sixth and seventh allege that the bankrupt allowed fictitious claims to be proved against his estate, severally specifying the proofs of debt made by Abraham Smith, his father, and Jacob Guild, his brother-in-law. The testimony put in by the opposing creditor shQws that both of these persons had valid and subsisting claims against the bankrupt. The eighth, was that the bankrupt did not keep proper books,of account. It was in evidence that he failed in business in the year 1874; that he had books of account while the
IN BE SMITH.
business was carried on; that after his failure they were taken by him to his father's house, at DEl'ckertown; that all collectible debts were collected; that he left them there during the year 1876, while he was living in Chicago, and that, without his .knowledge or wish, they were sold by his sister to the rag-man, as waste paper, under the impression that they were of no value to anyone. All the proof is to the effect that they were regularly kept, and were valueless to the creditors. The remaining specifications have reference to the transfer and assignment by the bankrupt of mineral leases to his brother-in-law, Guild, and of an endowment policy of life insurance for $5,000 upon his life to his father, Abraham Smith. The allegation is that these were transferred by him in contemplation of ba,nkruptcy. I have had no difficulty in regard to the leases, as the evidence is quite clear that they were of no value, either in the hands of the bankrupt or of his assignee. But this is not the case as to the insurance policy.·· It. ' was taken by the bankrupt on his own life, in the Mutual Life Insurance Company of New York, in 1866, on the plan of its becoming a paid-up policy the end of 10 years, and all the annual premiums, except one or two, had been paid by the bankrupt at the time of the assignment, and the unpaid premiums were afterwards settled by a transfer of accumulated dividends. It was assigned without the payment of any consideration. The bankrupt says that he gave it to his father because he wanted his parents to have the benefit of it in case of his death. The father testifies that he knew no.thing of the transfer for a year or two after it had been assigned to him. Whatever the intention of the bankrupt may have been, the effect of his action was to give over to his father, as against the claims of creditors, a valuable asset. Where the company is solvent, a paid-up policy will generally be purchased by the institution: and where this cannot be effected it has a market value. The counsel for the bap,krupt insisted, on the argument, that it could not be said it was assigned "in contemplation of bankruptcy," because the assignor did not go into bankruptcy until five years afterwards. But that is not the meaning of the phrase as used in the law. It occurred in the bankruptcy act of 1841, and had received a judicial construction when the late act was passed. In Everett v. Stone, 3 Story, 453, Mr. Justice Story said: "'Contemplation of bankruptcy' means a contemplation of becoming a broken-up and ruined man: according to the original signification of the term, a person whose table or counter of business is broken up, v.9,no.10-38
bairJ,'cus' '1'Uptu8." In order, therefore, to show that the debtor contemplated bankruptcy, it is not necessary to prove that, at the time of the transfer, there was in his mind an actual intention of becoming a bankrupt. If his pecuniary condition or act committed was such that he could not reasonably avoid becoming a bankrupt, the law considers him as acting in contemplation of bankruptcy. The question, then, is: What was the pecuniary condition of the bankrupt on the eighteenth of April, 1873, when the gift was made to his father? The burden of proof is on the opposing creditor. It is his duty to make it clear that the bankrupt was so much involved that he was in insolvent circumstances, and that bankruptcy was imminent. Has he done so? The bltnkrupt was two or three times under examination as a witness, and, speaking of the state of his affairs at the time of the assignment of the policy to his father, he says:
..At that time' I conSidered I was good financially; I considered myself worth from six to ten thousand dollars after the payml'lnt of all. my .debts. At that time my property consisted of my store-house, stock in trade, books of account, notes, etc."
Although he gave other testimony on the subject, which excites suspicioliland tends toa different conclusion, I am not willing to say that he has positively contradlcted it. His failure the next year can be traced to other causes, for he began in the winter of 1873-4 to speculate in mineral lands and stocks, and .his operations seemed to have been financially disastrous. In enumerating his debts during the month of April, 1873, he says that he was liable to the Domestic Sewing Machine Company, on account of the transactions of his brother, in $7,000 or $8,000. But he must hr.ve been relieved subsequently from the payment of the larger part of this sum, as he elsewhere states that his net loss on account of his brother was not more than from $2,000 to $4,000. In short, the ,proof does not satisfy me that he was insolvent when the transfer or gift was made, and hence I am relieved from considering whether a gift under such circumstances-so long a time before the bankruptcy proceedings began--is· one of the grounds for withholding a discharge under thj3 ninth clause of section 5110 of the bankrupt act. A discharge will be granted.
SIX llUNDREDTONS OF IRON aBE.
HUNDRED TONS OF IRON ORE.
New Jersey. December 10, 1881.)
FORlI'EITURES-LIENB FOR FREIGHT.
Where freight is earned before the government makes election whether to declare the merchandise, of which a false and fraudulent entry has been made, forfeited, or to recover its value by suit against the parties making the entry, and the former proceeding is finally chosen and the property is sold, held, that such freight must be paid out of the proceeds of the sale, the owners of the vessel having no knowledge before it was earned of any offence, committed or premeditated. ' 2.
Manual delivery of the cargo by the ship-owners to the consignees does not, of itself, operate necessarily to discharge their lien for freight. Where the intent of the ship-owners in making such delivery is to discharge the cargo, and not to deliver it, their lien for freight remains in full force.
Jas. K. Hill and Wing £t Slwudy, for petitioners· .A. Q. Keasbey, U. S. Atty., for the Government. NIXON, D. J. The petition is filed in this case by the owners of the steam-ship Italia, of the Anchor line, to recover from the proceeds of the sale of a quantity of iron are, now in the registry of the court, the sum of $1,305.61, as freight for the transportation of said OI:e in the Italia from the port of Almeira, in Spain, to the port of New York. The ore was shipped at Almeira by one Joseph Ribiera, about the ninth of March last, and was to be carried to New York and delivered to Messrs. Schenck & Co., for the freight of nine shillings British sterling per ton of 2,000 pounds weight, and the m ual bills of lading were ex.ecuted therefor. Before its arrival there Schenck & Co. entered into a written contract to sell the cargo to Joseph K. Wells. The are was guarantied to be not less than 55.56 of iron and 3.42 of manganese, making a total metallic yield of 58.98. ' A deduction of 10 cents per unit per ton to be made for any less percentage, and 10 cents per unit per ton added for any excess; the analysis to be determined from sample to be drawn from the cargo as discharged, and to be !tualyzed as received. The price agreed upon was $5.90 per ton, duty and all from the ship ll.t charges paid, and to be delivered to the the harbor of New York, and to be paid for-one-half cash on delivery of custom-house permit, and the balance on presentation of United States weigher's certificate of weight, and certificate of sampling and analysis: On the date of the execution of the contract Wells paid $200 on account, and in advance of the approximate oue-half to be paid by;him on the delivery of the .,custom-housepermitj the said