The Federal Reporter with Key-Number Annotations, Volume 272: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States and the Court of Appeals in the District of Columbia, June-August, 1921. Page: 22
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272 FEDERAL REPORTER
account of the paper she had indorsed would be more than $30,000.
The court below did not consider this question in this aspect.
[16, 17] The burden of proof is on the trustee to establish such
reason to believe on the part of the bank (Kimmerle v. Farr [C. C. A.
6] 189 Fed. 295, 297, 111 C. C. A. 27), and the burden of proof was
not changed by the amendment of 1910 of the Bankruptcy Act (36
Stat. 838), though the fact to be proved was affected (Baxter v. Ord
[C. C. A. 6] 239 Fed. 503, 504, 152 C. C. A. 381; Pyle v. Texas Co.,
238 U. S. 90, 98, 35 Sup Ct. 667, 59 L. Ed. 1215). A review of all
the evidence compels us to think that the trustee has failed to satisfy
this burden, and that the securities given to the bank by the mother
on her property cannot be successfully attacked as preferences by her.
When the present Bankruptcy Law (Comp. St. 9585-9656) was
enacted, the phrase "reasonable cause to believe," in this very connec-
tion, had been judicially defined to mean, not mere suspicion, but "such
knowledge of the facts as to induce a reasonable belief," "cause for
well-grounded belief." That definition follows the phrase into this act;
and it has been so construed and applied by this court. Grant v. Na-
tional Bank, 97 U. S. 80, 81, 24 L. Ed. 971; Stucky v. Masonic Bank,
108 U. S 74, 75, 2 Sup. Ct. 219, 27 L. Ed. 640; In re Eggert (C. C. A.
7) 102 Fed. 735, 43 C. C. A. 1; Carey v. Donahue (C. C. A. 6) 209 Fed.
328, 331, 126 C. C. A. 254; Baxter v. Ord, supra.
This conclusion disposes also of the attack made by her trustee
upon the payment of about $10,000 made by her on September 16th.
She devoted $10,000 of the money received from the railroad right of
way to retiring that amount of paper in the bank which she had in-
dorsed for her son, and we assume that the taking up of rediscounted
paper was equivalent to the payment of direct paper. It is true that
this payment reduces her separate assets by the sum of $10,000, but
it reduced by the same amount Halliday's debts to the bank and any
possible deficiency which could come against her on her indorsement.
The situation, therefore, as to this alleged preferential payment dif-
fers only in degree from that of the mortgage of September 1st, and
is covered by the same conclusion.
Since we sustain the mortgage given to the Delaware bank to the
extent of the mortgagor's title, it is not necessary to consider separate-
ly the rights of the City National Bank as assignee of the mortgage.
[181 Motions have been made to dismiss the appeals because they
present only proceedings in bankruptcy rather than controversies, and
therefore should have been brought to this court by petition to re-
vise. These motions are based upon In re McMahon, 147 Fed. 684,
77 C. C. A. 668, and Bank v. Title Co., 198 U. S. 280, 25 Sup. Ct. 693,
49 L. Ed. 1051. All the matters involved took such shape that it was
necessary for this court to pass upon the facts, and we think the right
to have review by appeal is sustained by Coder v. Arts, 213 U. S. 223,
29 Sup. Ct. 436, 53 L. Ed. 772, 16 Ann. Cas. 1008; Moody v. Century
Bank, 239 U. 'S 374, 36 Sup. Ct. 111,'60 L. Ed. 336; Weidhorn v.
Levy, 253 U. S. 268, 40 Sup. Ct. 534, 64 L. Ed. 898; Barnes v. Pam-
pel (C. C. A. 6) 192 Fed. 525, 528, 113 C. C. A. 81. These motions
to dismiss are denied.
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The Federal Reporter with Key-Number Annotations, Volume 272: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States and the Court of Appeals in the District of Columbia, June-August, 1921., legislative document, 1921; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38843/m1/44/: accessed June 24, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.