Appling v. Brueckner

FINCH, P. J.

This action was brought by the - plaintiff, as trustee of the estate of Frank Brueckner, a bankrupt, to recover money paid by the bankrupt to the defendant, within • four months before the filing of the petition in bankruptcy,

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in satisfaction of an antecedent debt. Judgment was entered in favor of the plaintiff and the defendant has appealed on the judgment-roll alone.

The only question raised by the appeal, although stated in various forms by appellant, is whether the case is governed by the provisions of sections 60a and 60b of the National,.Bankruptcy Act- or sections 3432 and 3451 of the Civil Code of this state. The court found that the payment referred to was made October 15, 1927, in satisfaction of a debt incurred in 1919, and that the petition in bankruptcy was filed November 2, 1927. The other facts found by the court show that the payment constitutes a preference under the provisions of section 60a of the Bankruptcy Act. Section 60b authorizes the trustee in bankruptcy to sue for the recovery of such a payment. Sections 3432 and 3451 provide, in substance, that a debtor, although insolvent, may pay one creditor in preference to another. That these sections of the Civil Code are in conflict with sections 60a and 60b of the Bankruptcy Act does not admit of doubt.

“The Federal Constitution, article I, section 8, gives Congress the power to establish uniform laws on the subject of bankruptcy throughout the United States. In view of this grant of authority to the Congress it has been settled from an early date that state laws, to the extent that they conflict with the laws of Congress, enacted under its constitutional authority, on the subject of bankruptcies, are suspended. . . . The Bankruptcy Acts of Congress may recognize the laws of the state in certain particulars, although such recognition may lead to different results in different states. . . . Section 70e of the Bankruptcy Act provides: ‘ The trustee may avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided. . . . ’ This section, as construed by this court, gives the trustee in bankruptcy a right of action to recover property transferred in violation of state law. . . . Under this subdivision if a creditor could have avoided a transfer under a state law, a trustee may do the same."