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BENNETT v. RODMAN & ENGLISH

January 15, 1932

BENNETT
v.
RODMAN & ENGLISH, Inc.; SAME v. LOUIS BOSSERT & SON, Inc. (two cases)



The opinion of the court was delivered by: CAMPBELL

CAMPBELL, District Judge.

These are three actions in equity, brought by the trustee in bankruptcy of Froh Homes, Inc., against the several defendants to recover what he alleges to be fraudulent transfers and preferences.

The bill of complaint in the first action is against Louis Bossert & Son, Inc., to recover the sum of $1,523.50, and in the action against Rodman & English, Inc., to recover the sum of $4,566.80. Each alleges two causes of action: The first cause of action being to set aside certain payments made by the bankrupt to the defendant, on the alleged ground that the payments were made without consideration and with the intent to hinder, delay, and defraud the creditors of Froh Homes, Inc., and were fraudulent and void; the second cause of action being to set aside the transfers as preferences under the Stock Corporation Law of the state of New York, and praying for judgment against the defendants, requiring them to pay to the plaintiff herein, the trustee, the sums so alleged to have been paid in fraud of creditors or as preferences, with costs and disbursements.

 The bill of complaint in the second action against Louis Bossert & Son, Inc., to recover the sum of $6,583.19, alleges but one cause of action, and that is that the transfer therein described was made by the bankrupt to the defendant named therein at a time when the corporation (the bankrupt) was insolvent under the Stock Corporation Law of the state of New York (Consol. Laws N.Y. c. 59), or its insolvency was imminent pursuant to said law, and with the intent to prefer the defendant, and the defendant in receiving such money knew, or had reasonable cause to believe, of the existence of said intent to prefer it, and that said payments were contrary to law and void, and prays for a judgment against the defendant, requiring it to pay to the plaintiff herein, the trustee, the sum so alleged to have been paid to the defendant by the bankrupt, with costs and disbursements.

 On stipulation the three cases were tried together.

 One Harold F. Frohwitter, engaged in the business of developing real estate on Long Island with one-story houses and the sale thereof, formed for that purpose two corporations, one having the name Froh Homes, Inc.; the word "Froh" being the first portion of his surname, and the other having the name Witter Homes, Inc.; the word "Witter" being the last portion of his surname.

 Froh Homes, Inc., was organized in the month of April, 1926, the certificate being filed with the secretary of state, April 13, 1926; and Witter Homes, Inc., was organized in the month of November, 1927, the certificate being filed with the secretary of state, December 2, 1927, both under the Stock Corporation Law of the state of New York.

 Froh Homes, Inc., first bought lands in Queens Village and erected houses thereon.

 Later in 1928, Froh Homes, Inc., undertook another development in Middle Village.

 In the latter part of 1927 or the early part of 1928, Witter Homes, Inc., commenced the construction of houses in Queens Village.

 The defendants in the above-entitled actions furnished materials to both corporations on the several improvements.

 At the times hereinafter described there was due to the several defendants money from each of the corporations, Froh Homes, Inc., and Witter Homes, Inc.; the said defendants having made their charges against the several corporations for materials furnished to each corporation.

 On October 8, 1928, the bankrupt Froh Homes, Inc., made a payment to the defendant Louis Bossert & Son, Inc., of $1,523.50, not in payment of a debt due said defendant from Froh Homes, Inc., but on account of a debt due it from Witter Homes, Inc., being the amount for which recovery is sought in the first action against said defendant.

 Between October 19, 1928, and February 1, 1929, both inclusive, the bankrupt Froh Homes, Inc., made payments to the defendant Louis Bossert & Son, Inc., of various sums aggregating $6,583.19 on account of the debt due the said defendant from Froh Homes, Inc., being the amount for which recovery is sought in the second action against said defendant.

 Between September 7, 1928, and December 21, 1928, both inclusive, the bankrupt Froh Homes, Inc. made payments to the defendant Rodman & English, Inc., of various sums aggregating $4,566.80, not in payment of a debt due said defendant from Froh Homes, Inc., but on account of a debt due it from Witter Homes, Inc., being the amount for which recovery is sought in the action against the defendants.

 Plaintiff contends that Froh Homes, Inc., was insolvent from the time it commenced the building operation in question, but ...


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