Block v. Academy Ball Room, Inc.

Citations

• 221 F. 1004
• 1915 U.S. Dist. LEXIS 1638

Syllabus

<p>Bankruptcy <©=>178—Voidable Preferences—Transfers Constituting.</p> <p>An insolvent debtor, against whom a suit for rent was pending, and who was conducting a dancing academy with some good will and some outstanding accounts, furniture, and cash, transferred _tbe lease of the dancing academy to his wife, and later organized a corporation, to which all the assets and property of the business was transferred. The wife and two others under his guidance became incorporators; the bulk of the capital stock being issued to him and transferred to his wife. He had drawn a salary, and both he and his wife received other benefits from the corporation. The wife had from time to time given him various small sums of money realized from keeping boarders, but no account thereof had been kept, and there was no agreement to repay, and no written evidence of any debt, and the debtor had from time to time given her money and contributed to the family support; it apparently taking the efforts of both to make ends meet The wife knew her husband’s general/ financial condition, knew of the suit for rent, and that the rights of creditors would be prejudiced by preferring her, and knew that substantially all the assets of the corporation were being transferred to her, and that as a result the corporation was insolvent. Weld, that the wife obtained a preference, voidable under Bankr. Act July 1, 1898, c. 541, § 60, 30 Ktat. 562 (Comp. St. 1913, § 9644), providing that a transfer by an insolvent within four months before the filing of the petition, which will enable one creditor to obtain a greater percentage of his debt than others of the same class, shall he deemed a preference, and that such a transfer, operating as a preference, shall bo voidable by the trustee, if the person receiving it has reasonable cause to believe that its enforcement will effect a preference,</p> <p>(gcxoFor other cases see same tópic & KEY-NUMBER in all Key-Numbered. Digests & Indexes</p> <p>[Kd. Note.—For other