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“The power of their people ought not to be fettered, their sense of responsibility lessened, and their capacity for sober and restrained self-government weakened by forced construction of the Federal Constitution. If the people of New Jersey are not content with the law as de clared in repeated decisions of their courts, the remedy is in their own hands."
The proceeding here in question was in absolute conformity to the Massachusetts law of criminal procedure, and no fundamental principle of justice was violated by a determination of the mental capacity of the juror by a preponderance of the evidence. Neither is there any established rule of the common law inconsistent with the practice adopted in this case. There are many decisions in accord with the Massachusetts view of the law, among them being: State v. Scott, 1 Hawks. N. C. 24; Burik v. Dundee Woolen Co., 66 N. J. Law, 420; State v. Howard, 118 Missouri, 127; Surles v. State, 89 Georgia, 167.
In Hogshead v. State, 6 Humphrey (Tenn.), 59, the Supreme Court of Tennessee held that the trial court erred in not granting a new trial when it appeared “probable” that a juror was insane. But in Tennessee the denial of a new trial is assignable as error and reversible upon writ of error.
Our conclusion is that the plaintiff in error has not been denied due process of law, and the judgment is,
MR. JUSTICE PITNEY took no part in the hearing or consideration of this case.
Argument for Appellant.
NATIONAL BANK OF NEWPORT, NEW YORK, v. NATIONAL HERKIMER COUNTY BANK OF LITTLE FALLS.
APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE
No. 172. Argued February 28, 29, 1912.-Decided May 27, 1912.
To constitute a preference under the Bankruptcy Act it is not neces
sary that the transfer be made directly to the creditor; it may be made to another for his benefit, and if preferential circuity of ar
rangement will not avail to save it. Unless, however, the creditor takes by virtue of a disposition by the
insolvent debtor of his property for the benefit of the creditor so that the estate is diminished the creditor cannot be charged with
receiving a preference. Where the endorser of the bankrupt's note, which is under discount
at a bank and secured by the endorser's own collateral, pays the note, thereby recovering his collateral and charges the payment to the bankrupt to whom he is indebted in a larger sum on open account, there is no preferential payment to the bank which the trustee can recover from it as such, it not appearing that the bank was concerned with, or had any knowledge of, the relations be
tween the endorser and the maker of the note. 172 Fed. Rep. 529, affirmed.
The facts, which involve the question of whether a payment was an illegal preference under the Bankruptcy Act of 1898, are stated in the opinion.
Mr. Henry J. Cookinham for appellant:
The uncontradicted evidence shows that the debtor was insolvent at the time of the payment. There was a payment or transfer of property to defendant or for its benefit. The payment or transfer of property was a preference and the recipient received more, upon its debt, than the other creditors of the bankrupt. The creditor knew or had reasonable cause to believe, that a preference
Argument for Appellant.
was intended. The transfer was made within four months of filing the petition in bankruptcy.
The fact that the note was paid before due raises the presumption that the payment was preferential. No evidence was given to overcome the presumption.
Any payment, out of the ordinary course of business, is presumptive evidence of the intent of the insolvent to give à preference. Graham v. Stork, Fed. Cas. No. 5678; Walbrun v. Babbitt, 16 Wall. 577; Hardy v. Gray, 144 Fed. Rep. 922; Dokkin v. Page, 147 Fed. Rep. 438; In re Gesas, 146 Fed. Rep. 734.
The bank took what was virtually a general assignment from the Sheard Company.
The statute has reaffirmed the common law in regard to the knowledge of an agent being imputed to the principal.
It is not necessary that the transfer or payment should be direct to the defendant. If the effect of any transfer or payment is to prefer one creditor to his knowledge over the others, the transfer or payment will be set aside, for the benefit of the general creditors, no matter by what subterfuge it was effected. In re Sanderson, 149 Fed. Rep. 273; In re Hockney v. Raymond, 10 A. B. Rep. 213; In re Beerman, 112 Fed. Rep. 663; Western Tie & Lumber Co. v. Brown, 129 Fed. Rep. 728; Benjamin v. Chandler, 142 Fed. Rep. 217.
It is not necessary to show that a creditor has actual knowledge that the debtor is insolvent. The circumstances which would lead an ordinary prudent man to believe that a preference was intended is sufficient. Sundheim v. Ridge Ave. Bank, 138 Fed. Rep. 951; In re Himes, 144 Fed. Rep. 543; In re Virginia Hard Wood Mfg. Co., 139 Fed. Rep. 209; Parker v. Black, 143 Fed. Rep. 560; Webb v. Sachs, Fed. Cas. No. 11,325; Coder v. McPherson, 152
Fed. Rep. 951.
The facts bring this case under the rule as to what will be considered knowledge or reasonable cause to believe
Opinion of the Court.
225 U. &
the debtor insolvent and that a preference is intended.
The rule is that it is not necessary to show that a creditor has actual knowledge that the debtor is insolvent. The circumstances which would lead an ordinary prudent man to believe that a preference was intended is sufficient. In this case, however, the creditor had actual knowledge that the Newport Knitting Company was insolvent at the time of the payment. Sundheim v. Ridge Ave. Bank, 138 Fed. Rep. 951; In re Himes, 144 Fed. Rep. 543; In re Virginia Hard Wood Mfg. Co., 139 Fed. Rep. 209; Parker v. Black, 143 Fed. Rep. 560; Webb v. Sachs, Fed. Cas. No. 11,325; Coder v. McPherson, 152 Fed. Rep. 951.
Mr. Myron G. Bronner for appellee.
This suit was brought in the District Court of the United States for the Northern District of New York by Charles B. Mason, as trustee in bankruptcy of the Newport Knitting Company, to recover the amount of an alleged preference. Decree for the complainant was reversed by the Circuit Court of Appeals, which remanded the cause with instructions to dismiss the bill. Mason v. National Herkimer County Bank, 172 Fed. Rep. 529. Subsequently, the trustee assigned the claim in suit to the National Bank of Newport, New York, which was substituted as complainant and brought this appeal.
The bankrupt, the Newport Knitting Company, was organized in 1900, by Titus Sheard and his associates, and was engaged in the manufacture of knit goods at Newport, New York. Proceedings for its voluntary dissolution were begun in October, 1903, and on December 30, 1903, a
petition in bankruptcy was filed against it. It was adjudged a bankrupt on January 23, 1904.
Several of the officers and directors of this company were also officers and directors of a corporation known as the Titus Sheard Company, which manufactured knit goods at Little Falls. Titus Sheard was the leading spirit in both corporations; in each his son-in-law was the secretary and his nephew the general manager. The books of the Newport Knitting Company were kept at the office of the Titus Sheard Company. It does not appear that either company held stock in the other, nor is it shown to what extent the same persons had a stock interest in both. And upon the record the conclusion must be that, while the management of the two concerns was largely in the same hands, they were distinct organizations conducting separate businesses.
The Titus Sheard Company had a deposit account and discounted its paper with the defendant, the National Herkimer County Bank of Little Falls, of which Sheard was a director. The Newport Knitting Company was not a customer of the defendant bank, but kept its account with the National Bank of Newport.
The transaction which is alleged to constitute a preference was as follows: On January 7, 1901, the Newport Knitting Company gave its note for $5,773.05, at four months, to the Titus Sheard Company to pay for machinery and supplies. The Titus Sheard Company endorsed the note and had it discounted by the defendant bank, receiving the avails for its own use. The note was reduced by part payment to $5,000, and for this sum it was renewed every four months with like endorsement, the last renewal of this sort being on May 11, 1903. In August, 1903, the defendant bank held a large amount
a of paper made or endorsed by the Titus Sheard Company and insisted upon security. Thereupon the Titus Sheard Company submitted to the bank a statement of its af