White v. Jones

29 F. Cas. 1020, 6 Nat. Bank. Reg. 175

• Court: District Court, D. Kentucky
• Decided: July 1, 1873
• Status: Published

Opinion

BALLARD, District Judge.

I have reluctantly come to the conclusion that complainant has not made out a case which entitles him tq any relief. It is not shown, that six thousand two hundred dollars, paid by Schiekedantz & Sewell to Boes & Lucking, were the product of complainant’s whisky. I may conjecture that a part, nay, that a large part of this sum was derived, but the fact is not satisfactorily proven. The bill, it is true, alleges that the whole of it was thus derived, and the allegation is not denied by the answer, but the allegation is not on this account to be taken as true, The'rule in chancery pleadings is not that every allegation of a bill be taken as true, simply because it is not denied in the answer. If any allegation is to be taken as true, simply because it is not denied, it is only an allegation of some fact which is presumed to be within the knowledge of the party answering. Now there is no ground for presuming that Jones knew, that the money which Schiekedantz & Sewell paid Boes & Lucking was derived from complainant’s whisky; and, therefore, if I have stated the rule of equity pleading correctly, the allegation of complainant’s bill, that it was so derived, though not denied by Jones, is not to be taken as true. But assuming the fact to be as alleged, still it is undeniable that complainant could not recover the money from Boes & Lucking without showing that they knew it. The moment the money was paid to them, under circumstances which were entirely lawful, but for the provisions of the bankruptcy statute, it was free from all trust and claim in behalf of the complainant. There is no allegation in the bill that Boes & Lucking knew whence the money paid them was derived, and, therefore, it must be assumed they were ignorant of the fact. Now, I think if complainant could not have followed the money into the hands of Boes & Lucking; if his lien on the trust in it was destroyed when it was received by Boes & Lucking, then he cannot follow it into the hands of the as-signee in bankruptcy who recovered it of Boes & Lucking, not on the ground that they received it knowing the complainant’s right or claim, but on the sole ground that they received it contrary to the provisions of. the bankruptcy statute.

It cannot be maintained that the assignee holds the money subject to the same trust and equities which attached to it when it was in the hands of the bankrupts. If he had received it from them, or had received it as their right, then he would have no better right to it than they, and if in his hands, it would be subject to every equity to which it was subject in their hands. But he did not receive, it from them or recover it on the ground of any right in them. They had effectually parted with iheir right. The as-signee recovered it in spite of their effort to part with it. and not as their representative, or as the representative of complainant, but as the representative of the bankrupts’ creditors. He recovered not because the bankrupts had defrauded complainant, but because'they had committed what is made by the thirty-fifth section of the bankrupt act a fraud on their creditors generally. As I view the case, the fund having been recovered. not in virtue of any right in complainant personally, but in virtue of the rights of the bankrupts" creditors generally; not in virtue of any peculiar equity in any particular creditor, but in virtue of the clear legal right of all the creditors under the bankrupt law, it must be distributed among tbe creditors generally, and not given to one. Let the bill be dismissed with costs.