Appeal No. 28, March T., 1963, from decree of Court of Common Pleas of Allegheny County, Oct. T., 1958, No. 2122, in case of James C. Larrimer, trustee in bankruptcy of estate of Ralph B. Hatz, bankrupt, v. Betty W. Feeney, executrix of estate of Emily K. Writh, deceased. Decree affirmed.
James Victor Voss, with him Victor E. Voss, Walter S. Feeney, and Voss & Voss, for appellant.
Robert S. Grigsby, with him Pringle, Bredin & Martin, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen and Roberts, JJ.
OPINION BY MR. JUSTICE EAGEN
This is an appeal from a final decree of the court en banc affirming a decree nisi entered by the chancellor, which rendered a judgment in the amount of $46,621.73 in favor of James C. Larrimer, Trustee in Bankruptcy of the Estate of Ralph B. Hatz, Bankrupt, against the appellant executrix of the Estate of Emily K. Wirth.
The facts of the case are stated in detail in the able opinion of the court below and may be summarized as follows:
From about 1947 to September 1957, Hatz was engaged in the buying and selling of listed and unlisted securities. Under his scheme of operation, he borrowed money from his customers to invest in securities and agreed to pay them a return of two per cent per month on their investments. Each loan was callable
on thirty days notice. All investments were made in the name of Hatz. From 1948 to the time of his adjudication in bankruptcy, the number of Hatz's customers increased from one (the plaintiff herein) to a total of 143.The amount of the loans received by Hatz totaled $1,030,369.48. He repaid unsecured creditors the sum of $295,223.61 of which $158,194.20 was principal and $137,029.41 interest. The unpaid balance due his creditors was $735,145.87. Of his 143 customers, 44 received no payment at all; 84 received part payment; 15 received payments in excess of the money advanced. The appellant was a member of the last fortunate group. As of April 8, 1953, she had received her investment of $34,362.37 plus interest at six per cent per annum or a total of $40,037.39. Subsequently, she received an additional amount of $46,621.73. Hatz kept his financial affairs in a haphazard fashion and indicated he never knew his true financial position. Accountants for the trustee in bankruptcy were able to reconstruct his financial position as of several calendar years as follows: Year ending, 12/31/52, Deficit Net Worth, $62,345.86; Year ending, 12/31/53, Deficit Net Worth, $279,165.37; Year ending, 12/31/54, Deficit Net Worth, $235,302.00; Year ending, 12/31/55, Deficit Net Worth, $339,953.23.
The plaintiff alleges that any payments made by Hatz exceeding the amount loaned plus the legal rate of interest were without fair consideration and were fraudulent since 1) Hatz was insolvent at the time of such payments; 2) his capital was unreasonably small for the kind of business he was engaged in; 3) the payments made by Hatz were made when he intended to incur debts beyond his ability to ...