Robert A. Bankert, As Trustee of Francis J. A. Delia, Jr., Bankrupt, Plaintiff-appellee, v. George Rezey, Defendant-appellant, 337 F.2d 377 (2d Cir. 1964)

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US Court of Appeals for the Second Circuit - 337 F.2d 377 (2d Cir. 1964) Submitted October 14, 1964
Decided October 14, 1964

Evans, Pirnie & Burdick, Utica, N. Y., for plaintiff-appellee.

Francis P. Finnegan, Utica, N. Y., for defendant-appellant.

Before WATERMAN, MOORE and SMITH, Circuit Judges.


The trustee in bankruptcy of Francis J. A. Delia, Jr. brought suit under 11 U.S.C. § 96, in the United States District Court for the Northern District of New York, to recover property claimed to have been preferentially transferred by the bankrupt to the defendant. The trustee was awarded judgment by Brennan, J., in a careful unreported memorandum decision dated May 22, 1963. The district judge found that Delia was insolvent at the time of the transfer and that at that time the defendant had reason to know of Delia's insolvency.

The defendant does not dispute either of these findings on their merits. His appeal is based solely on the fact that the order of the referee in bankruptcy in the prior proceeding adjudicating Delia an involuntary bankrupt did not specifically state that Delia was insolvent. Therefore, so the defendant argues, the district judge could not properly infer in this proceeding either that Delia was insolvent at the time of the transfer or that the defendant then had reason to know of Delia's insolvency.

In the prior proceeding Delia did not dispute his insolvency but instead claimed that he was a wage earner exempt from involuntary bankruptcy under 11 U.S.C. § 22. Because the insolvency of Delia was not disputed before the referee in bankruptcy the referee omitted from his order which held that Delia was not a wage earner any explicit finding of insolvency. The district judge was entitled to assume this finding in the present proceeding. See Moore, Federal Practice, ¶52.06 [1] at 2659-61 (2 ed. 1951).