Lapas attēli

First. It cannot be doubted that the payment in question was a preference, and that Miss Sampter is the person "benefited thereby," and the first question raised revolves around the inquiry whether she had “reasonable cause to believe that it was thereby (i. e., by the payment) intended to give (her) a preference.” It has frequently been said, in actions turning upon the presence or absence of reasonable cause to believe a material or vital fact, that anything "sufficient to excite attention and put a party on inquiry is notice of everything to which inquiry would have led,” and that known facts "calculated to awake suspicion” will justify an inference of actual and complete knowledge. In re Knopf, 16 Am. Bankr. Rep. 432, 144 Fed. 245; Parker v. Conner, 93 N. Y. 118, 45 Am. Rep. 178. But obviously facts, whether producing certainty or merely suspicion, must have a mind upon which to operate and affect, and the rule is equally well established that it is sufficient if the facts brought home to the person sought to be affected are such as would produce action and inquiry on the part of "an ordinarily intelligent man" (Grant v. Bank, 97 U. S. 80, 24 L. Ed. 971), "a prudent business man" (Bank v. Cook, 95 U. S. 343, 24 L. Ed. 412; Toof v. Martin, 13 Wall. 40, 20 L. Ed. 481), "a person of ordinary prudence and discretion” (Wager v. Hall, 16 Wall. 584, 21 L. Ed. 504), "an ordinarily prudent man" (In re Eggert, 4 Am. Bankr. Rep. 449, 102 Fed. 735), “a prudent man" (Dutcher v. Wright, 94 U. S. 553, 24 L Ed. 130).

The peculiarity of this case is that the mind to be affected is that of a confiding niece, wholly unacquainted with business knowledge, and, however intelligent and prudent in matters within her own experience, incapable of comprehending the significance of business facts, which would have been more than enlightening to men of the business world. It is therefore urged by the defendants that Barbour v. Priest, 103. U. S. 293, 26 L. Ed. 478, justifies the proposition that not only must the facts exist and be sufficiently impressive to awake inquiry in such minds as are catalogued in the cases above cited, but they must be sufficient to impress their significance upon the mind of the person to be affected

in this case a woman leading a life apart from the world of business, It was indeed said in the case last cited (one inducing great sympathy for the preferred creditor) that it is "necessary to prove the existence of this reasonable cause of belief

in the mind of the preferred party.” Page 296 of 103 U. S. (26 L. Ed. 478). But these words must be taken in conjunction with the whole opinion, which was written in express consonance with Grant v. Bank, supra, and the phrase quoted I take to assume in "the preferred party" the mind of "an ordinarily intelligent man.” It would be intolerable that the voidability of a preference should depend not upon the effect of facts admittedly or by proof known to a defendant, but upon the degree of intelligence or experience which such defendant was capable of exercising in respect thereto; such a rule would put a premium upon ignorance, and encourage the assumption thereof. The rule here applicable is, therefore: Would an ordinarily intelligent and prudent business man have had reasonable cause to believe, upon any facts known to Miss Sampter, that her uncle intended to prefer herself, her sister and mother? I think not. All that she knew was entirely consistent with the busi


ness conclusion that, inasmuch as 6 per cent. was a high rate of interest, it was no longer profitable for the firm to pay it, and wrong for them to keep the money in a mercantile venture at lower rates, which could be obtained with greater security elsewhere. She did not know that all friends and relatives were being paid off, nor was she aware of any embarrassment on the part of her long prosperous uncle. If all she knew had been known by a merchant, I see no reason why it should have produced any other feeling than that Sampter's Sons no longer felt like paying a high rate for the use of a small sum of money.

Second. This branch of complainant's contention assumes (and I think properly) that the payment to Miss Sampter was with the intent on Arnold Sampter's part prohibited by the statute, but admits (necessarily, in my opinion) that the defendant was wholly guiltless of any participation in the bankrupt's purpose or design. In the view contended for, the ignorance or innocence of the transferee is of no consequence, provided the bankrupt, with the "intent and purpose" prescribed in 67e, executes a preferential transfer to any one not a "purchaser in good faith and for a present fair consideration.” Miss Sampter was a “purchaser,” because she acquired the payment to her otherwise than by descent (McCartee v. Orphan Asylum Soc., 9 Cow. (N. Y.) 137, 18 Am. Dec. 516), and her "good faith" (as defined in Searle v. School District, 133 U. S., at page 563, 10 Sup. Ct. 377 [33 L. Ed. 740]) is unimpeachable; but inasmuch as she neither requested nor desired the payment that surprised her so much to her advantage, it is denied that she got the money "for a present fair consideration," and the payment must be regarded under the act as a voluntary dissipation of a fund properly to be regarded as a trust for all creditors alike. This view of the section under consideration assumes that the bankruptcy act has laid down a new rule in respect of the voidability of fraudulent conveyances by wholly sweeping away the requirement that the transferee or grantee, to merit condemnation, shall have either actual notice of the fraudulent intent, have participated in the fraud, or had notice of some fact calculated to put him on inquiry and leading to a discovery of such fraudulent intent. Undoubtedly this assumption finds support in Sherman v. Luckhardt, 11 Am. Bankr. Rep. 26, 74 Pac. 277, 67 Kan. 682, and possibly also in Re McLam, 3 Am. Bankr. Rep. 245, 97 Fed. 922. But it cannot prevail in this court, being clearly opposed to the ruling for this circuit made in Re Bloch, 142 Fed. 674, 15 Am. Bankr. Rep., at page 751, viz., that the transfers prohibited by 67e are only those fraudulent and therefore voidable at common law," or, what is the same thing, such as constitute acts of bankruptcy under section 3, (30 Stat. 516, c. 541 (U. S. Comp. St. 1901, p. 3123]). By "common law" must be understood the rules of property growing out of 13 Eliz. c. 5, as affected by similar statutory enactments in force in the state wherein the transaction complained of took place.

It follows that the payment to Miss Sampter is voidable under this section of the act, only if in fraud of creditors according to the law of New York as contained in the decisions of the courts of that state and (at present) in the personal property law (Laws 1897, p. 511, c. 417, $ 24), prohibiting transfers "with the intent to hinder, delay or defraud creditors," and no other or different tests are to be applied there

to than have long been used in federal and state decisions without any reference to bankruptcy.

Further consideration would be superfluous, were it not for certain decisions in this state wherein the courts have pointed out as one of the badges of fraud that the creditors preferred "took no affirmative or independent action to collect their claim; they simply accepted the advantages which the fraudulent debtor voluntarily gave them for his own purpose and as a part of the fraudulent scheme." Metcalf v. Moses, 161 N. Y. 587, 56 N. E. 67. And compare First National Bank v. Miller, 163 N. Y. 164, 57 N. E. 308; Mandeville v. Avery, 124 N. Y. 376, 26 N. E. 951, 21 Am. St. Rep. 678. From these authorities it is urged that while a creditor demanding payment in the way of business may lawfully obtain such payment even from a fraudulent insolvent intending to hinder and delay his creditors, provided that he himself does not participate in the fraud, a similar right does not attach to one who, without effort and without demand, merely receives payment of an unmatured debt from such fraudulent debtor. Undoubtedly as civilization, and with it business methods, become more complex, the badges of fraud increase with the opportunities for fraud; but the decisions above referred to have not changed, and do not purport to change, the rule of law. The court or jury must find participation in the fraud on the part of the payee or grantee as a matter of fact, and each case must stand upon its own facts. There is nothing in this cause, except the bare fact that Miss Sampter did not demand or expect payment, to indicate participation on her part in the fraud of her uncle, and that bare fact, even plus the relationship, is not enough to turn the scale against her; it is evidence, nothing more, and on the whole evidence she must be absolved.

The bill is dismissed

(Circuit Court, E. D. Missouri, E. D. April 4, 1907.)

No. 5,437.

The courts of the United States inferior to the Supreme Court, being statutory courts created by Congress, possess only those powers which are expressly granted to them by statute, and until Congress confers upon them jurisdiction of a matter authorized by the Constitution of the United States they cannot exercise it.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 13, Courts, $8 792,


State courts of general jurisdiction, until divested by an act of Congress of jurisdiction in causes which, under the national Constitution, may be conferred upon the courts of the United States exclusively, may, so far as the Constitution and laws of the United States are concerned, exercise jurisdiction over them.

[Ed. Note.--For cases in point, see Cent. Dig. vol. 13, Courts, $ 1326.) 3. SAME-CONCURRENT JURISDICTION-STATE AND FEDERAL Courts.

Subdivision 4 of section 629, Rev. St. [U. 8. Comp. St. 1901, p. 503), does not confer exclusive jurisdiction on the courts of the United States

in controversies arising under the postal laws of the United States, but only concurrent with the courts of the states, and for this reason state

courts may take cognizance of such causes. 4. REMOVAL OF CAUSES-SUBJECT OF CONTROVERSY-Postal LAWS.

Although Congress has not authorized by special act the removal of causes arising under the postal laws of the United States, if the bill on its face shows that the controversy is one arising under the postal laws of the United States, and the value of the matter in controversy exceeds $2,000, exclusive of interest and costs, such cause is removable from the state to a national court, under section 2 of the act of March 3, 1887, c. 373, 24 Stat. 553, as corrected by the act of August 13, 1888, c. 806, 25

Stat. 434 [U. S. Comp. St. 1901, p. 509). (Syllabus by the Court.)

On Demurrer to the Jurisdiction and Motion to Remand.
Barclay & Fauntleroy and Carter, Collins & Jones, for complainant.
Chester H. Krum and H. H, Glassie, for defendants.

TRIEBER, District Judge. This action was originally commenced in the circuit court of the city of St. Louis, state of Missouri, and on petition of the defendants removed to this court. Defendants demurred to the jurisdiction of the state court, claiming that that court was wholly without jurisdiction to entertain the bill, the national courts having exclusive original jurisdiction of all controversies involving the actions of the executive department in postal matters.

The bill filed in the state court, in so far as it affects the jurisdictional question, may be briefly stated as follows: The complainant is the publisher of a monthly magazine which liad theretofore, in conformity with the acts of Congress and the rules and regulations of the Post Office Department, been admitted to be sent through the mails at secondclass rates; that it has a circulation exceeding 1,000,000 copies, and that the privilege of sending the magazine at these rates is a very valuable one; that on March 1, 1907, the Postmaster General, without any hearing or notice to complainant and in violation of the act of Congress approved March 3, 1901, c. 851, § 1, 31 Stat. 1107 [U S. Comp. St. 1901, p. 2655), annulled this privilege, and the defendant, the postmaster at St. Louis, where said publication is mailed, has notified complainant that in conformity with the order of the Postmaster General the secondclass privilege of complainant for his said magazine has been revoked, and that it will have to be sent as third-class matter, which will cause an increase in the postage to complainant of probably $20,000 a month, and practically destroy its business and cause irreparable damage. The prayer of the bill is for an injunction to prevent the enforcement of this order of the Postmaster General by the defendants, the postmaster and assistant postmaster at St. Louis.

The complainant also filed a motion to remand the cause to the state court, upon the ground that the action was not removable to this court. The fact that the defendants who now demur to the jurisdiction caused the removal of the cause to this court does not estop them from questioning the jurisdiction of the court from which it was removed. Cowley v. Northern Pacific R. R. Co., 159 U. S. 569, 16 Sup. Ct. 127, 40 L. Ed. 263; Wabash Western Ry. Co. v. Brow, 164 U. S. 271, 17 Sup. Ct. 126, 41 L. Ed. 431; De Lima v. Bidwell, 182 U. S. 1, 21 Sup.

Ct. 743, 45 L. Ed. 1041; Tootle v. Coleman, 107 Fed. 41, 46 C. C. A. 132, 57 L. R. A. 120.

Are the courts of the states without jurisdiction to grant relief to a citizen who claims that by reason of some action of an official of the Post Office Department he has been greatly injured? Or, in other words, have the national courts exclusive jurisdiction of cases of that nature? In the view which this court takes it is uitnecessary to determine whether an action of this nature may be maintained under section 3833, Rev. St. [U. S. Comp. St. 1901, p. 2610), or whether Teal v. Felton, 12 How. 284, 13 L. Ed. 990, is applicable. The law is well settled that the courts of the United States inferior to the Supreme Court are mere creatures of Congress, and possess no powers except those specifically granted to them by an act of Congress, and this limitation applies to all causes which, under the Constitution, Congress might have granted to the national courts jurisdiction to hear and determine. As early as 1799, in Turner v. Bank of North America, 4 Dall. 10, 1 L. Ed. 718, it was said:

"The political truth is that the disposal of the judicial power (except in & few specified instances) belongs to Congress, and Congress is not bound to enlarge the jurisdiction of the federal courts to every subject in every form which the Constitution might warrant.”

To the same effect are United States v. Hudson, 1 Cranch, 32, 3 L. Ed. 259; Cary v. Curtis, 3 How. 215; 11 L. Ed. 576; Sheldon v. Sill, 8 How. 448, 12 L. Ed. 1147; Stevenson v. Fain, 195 U. S. 165, 25 Sup. Ct. 6. 49 L. Ed. 142; Ex parte Wisner, 203 U. S. 449, 455, 27 Sup. Ct. 150, 51 L. Ed. —; Case Sewing Machine Companies, 18 Wall. 553, 577, 21 L. Ed. 914.

In the last-cited case the court say: “Congress, it may be conceded, may confer such jurisdiction upon the circuit courts as it may see fit, within the scope of the judicial power of the Constitution not vested in the Supreme Court; but as such tribunals are neither created by the Constitution nor is their jurisdiction defined by that instrument, it follows that, inasmuch as they are created by an act of Congress, it is necessary in every attempt to define their power to look to that source as the means of accomplishing that end. Federal judicial power beyond all doubt has its origin in the Constitution; but the organization of the system and the distribution of the subjects of jurisdiction among such inferior courts as Congress may from time to time ordain and establish, within the scope of the judicial power, always have been and of right must be the work of the Congress.”

Prior to the adoption of the Constitution no one will deny that the courts of: the states had complete jurisdiction over all legal questions capable of judicial determination. Article 3 of the Constitution defines the powers which Congress may confer on the national courts. In the first judiciary act, that of September 24, 1789, c. 20, 1 Stat. 73, the act creating the national courts inferior to the Supreme Court and which but for the acts of Congress would not exist, the jurisdiction of the circuit courts in civil actions was limited to cases in which the United States were plaintiffs or petitioners and actions depending entirely on a diversity of citizenship. The first act conferring upon the courts of the United States original jurisdiction in cases other than that

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