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![handle is hein.bank/ntlbknpts0004 and id is 1 raw text is: In the Matter of Southern Overall Mfg. Co.
Preferences-Set-Off-Sec. 60 (b) and (c).
UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF GEORGIA.
'In the Matter of
SOUTHERN OVERALL MFG. CO.,
Bankrupt.
As against a payment made within four months and required to be refunded before
proof of claim can be allowed, under Sec. 57 (g) of the Bankruptcy Act of 1898, the cred-
itor can set off the amount of new credit given, as provided in Sec. 60 (C), and the benefit
of Sec. 60 (c) is not limited to cases coming under Sec. 60 (b).
As to the cases coming under Sec. 60 (b), notwithstanding the payment is one which
would be recoverable, the creditor may still prove his debt if he' surrenders his prefer-
ence, and the only qualificatibn to this is that he probably cannot do so if he has allowed
suit to be brought and has resisted it up to judgment.
. Sec. 60 (c) applies as well to preferences innocently received and surrendered as to
those in which 'an action is necessary to secure their recovery.
King & Spalding and J. T. Pendleton for executors.
Rosser & Carter and King & Anderson for trustee.
Slaton & Phillips for bankrupt.
Newman, J.
The question presented by the exceptions to the decision of the referee is
whether, as against a payment made within lour months and required to be re-
funded before proof of claim can be allowed, under Section 57(g) of the Bank-
ruptcy Act, a creditor can set off the amount of new credit given as provided in
Section 60(c). The question stated in another way is, whether the provisions
of Section 60(c) refer only to cases covered by paragraph (b) of the same sec-
tion, -where the trustee is authorized to recover because the preference was know-
ingly received, or whether it refers also to payments made before proof can be
allowed under 57(g).
In the case of one of the creditors at least, whose rights are in question here,
in some instances after a payment in four months was made by the bankrupt
company, goods were sold to it to an amount in excess of the payment previously'
made, but the creditor only asks to set off the value of the goods so sold and going
into the bankrupt's estate, in an amount equal to the immediately preceding pay-
ment. On an accounting even in this way, however, a balance is left to be re-
turned by the creditors, which he offers to pay.
There have been conflicting opinions on this question. The cases holding
that paragraph (c) of Section 60 is confined to cases arising under the provisions
of paragraph (b) of the same section, are
In re Christensen, 3 N. B. N. Rep. 164, 101 Fed. 801,
decided by District Judge Shiras of the Northern District of Iowa;
In re Arndt, 3 N. B. N. Rep: 101, 104 Fed. 234,
by District Judge Seaman of the Eastern District of Wisconsin;
In re Keller, 3 N. B. N. Rep. 845, 109 Fed. 118,
'To say that one who has furnished a bankrupt goods or supplies after having inno-
cently received a preferential payment, co~lld not set off their value against the pay-
ment, prior to proving for the balance of the claim, would certainly work great inequity
and be contrary to all reason, simply because of the use of the word recoverable in
Sec. 60 (c). It may be safely said that the conclusions of the court is in accord with
the weight of authcrity and the most logical interpretation of the section.
December 1, 1901]](ViewImageLocal?handle=hein.bank/ntlbknpts0004&div=1&collection=&method=preview&ext=.png&size=3)