This is a review of the action of the referee in bankruptcy in disallowing a claim to the extent of $1,260 *580duly and regularly made and filed in the above proceedings by Mrs. J. P. Warren, a sister of the bankrupt.
[1] The court has gone over very carefully the report of the referee containing his reasons for the disallowance of the claim, together with the claim itself and all the evidence in the case relevant thereto. It seems to be the law that, there being no conflict at all in the evidence, and the conclusions of the referee being based entirely upon inferences, drawn from the evidence, or want of evidence at hand, the conclusions of the referee are in no sense binding upon the court. The court is just as able to indulge in inferences from the testimony adduced as is the referee. It is not a case where there is a conflict in the evidence and the referee is in a more advantageous position, presumably, because of the inspection of the witnesses, etc., to arrive at a conclusion respecting the verities of the transaction. In re Swift (D. C.) 118 Fed. 349; In re People’s Department Store (D. C., N. Y.) 20 Am. Bankr. Rep. 244, 159 Fed. 286.
In my judgment, the case here may well be ruled by Baumhauer v. Austin (C. C. A., 5th Cir.) 26 Am. Bankr. Rep. 385, 186 Fed. 260, 108 C. C. A. 306, wherein the action of the referee and of the District Court, in a transaction, not dissimilar to the one at bar, was set aside by the Circuit Court of Appeals of Fifth Circuit- and the claim allowed.
[2, 3] It is fundamental, of course, that a relative of a bankrupt has a perfect right to loan the bankrupt money, and, having done so, he has a perfect right, the same as any other person, to file a claim in the bankrupt’s estate and participate in the dividends properly allowed, etc. Davis v. Schwartz, 155 U. S. 631, 638, 15 Sup. Ct. 237, 39 L. Ed. 289. The fact that the transaction is between relatives would, of course, very naturally justify unusual care and scrutiny in examination as to its genuineness, but would in no wise debar the claimant from obtaining all rights properly belonging to him and properly supported by legal and adequate proofs.
In this case the sister lived at Santa Barbara with her husband, who was a contractor and carpenter and making about $100 per month, and who turned over to her each month about that sum for the care of the house, etc. After paying the running expenses, with commendable frugality, she would save the balance. She also let out two of her rooms to roomers, and retained for herself all of this money. She never deposited her savings in the bank, but kept them as they grew, with her in her home, a highly undesirable, but at the same time a not infrequent, mode of procedure, as common experience will testify. In addition to that, her mother left her some money before her death, which she also kept in her home as a part of her savings. She and her brother, the bankrupt herein, a sort of irresponsible individual, were upon the best of terms, and in times gone by, when he apparently was in better luck, he had loaned her money; and now that she possessed some savings and he had need of money in furtherance of the manufacture and sale of an automobile invention, in which he wa9 interested, it was in no wise unnatural or peculiar, much less incredible, *581that he should apply to her for financial assistance. It also is in the record that he had trouble in his family, the exact nature or the consequence thereof not being developed.
On the whole case, however, there is nothing at all of a nature sufficient to induce the belief, which the referee apparently entertained, that this entire claim was fraudulent. The proven conduct of the_parties was not unnatural or improbable. The money seemingly was advanced from time to time on at least five different occasions by the sister to the bankrupt for use in his business, or to tide him over, or help him along, and while his evidence, due to his obvious physical debilitation, was not as enlightening as it might have been, the sister’s rights are in no wise to be prejudiced because of his inability to remember'precisely what he had done with her money. The question in the case is: Did the sister loan him the money as asserted, and, if so, has it been paid back ? There is no claim made that the money was ever paid back, and I can see no rational ground for indulging in the conclusion that the loan was never made, and that the whole thing is a “frame-up,” to use a colloquial but forceful expression.
Some complaint seems to have been made by the referee that no indicia of indebtedness were given from time to time as the loans were made; but this is not exactly in accordance with the facts, as there seems to be no doubt from the evidence but that a memorandum of the transaction was made each time; and, if the parties had really intended to perpetrate a fraudulent scheme, they would, of course, have sought to perfect it by sedulously preparing and providing full written evidence of the things alleged to exist, but which were to exist only in the imagination and pursuant to the preconcerted plan. The fact that after four of the loans had been made, the sister complained to the brother about the amount that had been loaned and the fact that she then had no security, and that he, then and there, seemingly long before any question of his probable bankruptcy had arisen, gave her a deed to the only real property that he possessed as security for the loans, seems to ine to bear out the truth of the assertions of the claimant with respect: to the making of the loans. There is no doubt but that tins deed was given, and it is a fact, that would seem to provide a very satisfactory sort of corroboration with respect to the making of loans originally. It was a natural and probable thing to occur and to be done.
The language of the Circuit Court of Appeals in the Baumhauer Case, to the effect that the referee “failed to allow adequate probative force to the claimant’s proof of claim.” citing Whitney v. Dresser, 200 U. S. 532, 26 Sup. Ct. 316, 50 L. Ed. 584, seems peculiarly apposite herein. Our own Circuit Court of Appeals in Moore v. Crandall (C. C. A. 9th Cir.) 30 Am. Bankr. Rep. 517, 205 Fed. 689, 691, 124 C. C. A. 11, used practically the same language.
I commend, of course, the referee’s zeal to protect bankrupt estates against imposition through the filing of fraudulent claims, but it seems to me that, the prima facie proof being made, there should be more evidence that perjury or attempted fraud is being or is about to be practiced in the premises. The claimant, on her examination, orally *582on deposition, in no wise declined to answer any questions asked her, and if the referee was desirous of securing further evidence, or evidence upon.points not covered in the deposition originally, it was his function to suggest a further examination. There was no evidence at all adduced by the objectors, tending to show that the loans had not, or could not, have been made.
[4] I repeat again, the question is not what her brother, did with the money, or her brother’s good faith in the premises, although the latter does not seem, in my judgment, in any wise challenged-; but the question is: Did she loan the money, and has it been repaid to her ? And, there being no evidence directly or even inferentially contradicting her sworn statements, is there anything in her evidence that suffices to render it inherently improbable or “absolutely incredible ?” I cannot find anything of that sort, and am of the belief that the referee erred in his conclusions to that end.
The order of the referee is reversed, and he is directed to allow the claim for the sum of $1,260, heretofore disallowed by him.