Gratiot County State Bank v. Johnson Ex Rel. St. Louis Chemical Co.

Citations

• 249 U.S. 246
• 39 S. Ct. 263
• 63 L. Ed. 587
• 1919 U.S. LEXIS 2173

Syllabus

<p>Although an adjudication of bankruptcy concludes all the world as to the status of the debtor qua bankrupt, it does not bind strangers as to the facts or subsidiary questions of law upon which it is based. P. 248.</p> <p>In a suit by the trustee tó recover, as illegal preferences, payments made by the bankrupt, within four months before the filing of the involuntary petition, to a creditor who did not appear in the bankruptcy proceedings, the adjudication of bankruptcy is not conclusive evidence of the bankrupt’s insolvency when such payments were made, even if based upon allegations and findings that the bankrupt was insolvent throughout the four months and that, during that period, he gave illegal preferences to such creditor, among' others. Id.</p> <p>Sections 186 and 59/ of the Bankruptcy Act, allowing creditors to ' intervene, are permissive only; and, unless a creditor exercises the right, he remains a stranger to the proceedings. P. 249.</p> <p>The purpose of Congress in expressly authorizing such interventions ■ in involuntary bankruptcy proceedings was to guard against improvident adjudications and protect those creditors whose peculiar interests might be prejudiced by establishing the status of bankruptcy. P. 250.</p>