Western Tie Timber Company v. Brown

This is an appeal from a decree of the circuit court of appeals for the eighth circuit, affirming, as modified, an order of the district court of the United States for the eastern district of Arkansas, directing that the claim of the Western Tie & Timber Company against the estate of S. F. Harrison, a bankrupt, be expunged unless the company paid to the trustee in bankruptcy a specified sum, found to have been transferred to the company by the bankrupt, and decided to have operated a voidable preference. 129 Fed. 728.

The facts were thus found by the circuit court of appeals:

'1. On February 24, 1903, a petition to procure an adjudication that S. Frank Harrison was a bankrupt was filed in the district court of the United States for the eastern district of Arkansas, and Harrison was then adjudged a bankrupt.

'2. The Western Tie & Timber Company was a corporation and a creditor of Harrison. It presented a claim against his estate in bankruptcy of $24,358. The trustee moved to expunge this claim on the ground that the tie company had secured a voidable preference. The district court ordered the claim expunged unless the tie company should pay to the trustee $2,210.73, and an appeal from this order was taken.

'3. For some years prior to February 24, 1903, the tie company and Harrison had been engaged in removing timber from land of the former, and converting it into ties, which the company received and sold. For many months prior to October, 1902, Harrison had owned and conducted stores in the vicinity of the places where the work of cutting and hauling the ties was carried on, and had furnished the laborers engaged in that work with groceries and other supplies. These laborers and Harrison were paid by the tie company in this way: Once in two or four weeks an inspector sent to the tie company a pay roll, on which the name of each laborer, the amount he had earned, and the value of the supplies he had received from Harrison, appeared. The company deducted from the earnings of each laborer the value of the supplies the laborer had received, and sent him a check for the balance. At the same time it sent to Harrison a check for the aggregate amount of the supplies which he had furnished to the laborers.

'4. Four months before the filing of the petition in bankruptcy, or October 24, 1902, Harrison owed the tie company more than $20,000.

'5. Between December 27, 1902, and February 24, 1903, the company refused to pay to Harrison, retained and credited on its claim against him $2,210.73, which was due him for supplies he had furnished to the laborers subsequent to November 30, 1902.

'6. At all times, when the amounts which aggregate $2,210.73 became due and were retained by the company, Harrison was insolvent, the tie company knew that fact, and it intended, by retaining these amounts, to secure to itself a preference over the other creditors of the insolvent, but Harrison had no such intention.

'7. After the company had retained several hundred dollars of the amount due Harrison for the supplies, it advanced to him $75 under a new and further credit.'

An appeal to this court was allowed by the presiding circuit judge of the circuit court of appeals.

Joseph Wheless, George M. Block, F. H. Sullivan, and Charles Erd for appellant.

[Argument of Counsel from pages 504-505 intentionally omitted]

Messrs.John M. Moore, C. F. Henderson, H. L. Ponder, M. M. Stuckey, and S. M. Stuckey for appellee.

[Argument of Counsel from pages 505-506 intentionally omitted]

Mr. Justice White, after making the foregoing statement, delivered the opinion of the court: