Boudreau v. Chesley

• Citation: 135 F.2d 623
• Decision Date: 05 May 1943
• Docket Number: No. 3820.,3820.
• Parties: BOUDREAU v. CHESLEY.
• Court: U.S. Court of Appeals — First Circuit

135 F.2d 623 (1943)

BOUDREAU v. CHESLEY.

No. 3820.

Circuit Court of Appeals, First Circuit.

May 5, 1943.

Henry E. Foley, of Boston, Mass., and Herbert E. Locke and Locke, Campbell & Reid, all of Augusta, Me., for appellant.

Frederick H. Tarr, of Gloucester, Mass. (Franklin R. Chesley, of Portland, Me., pro se), for appellee.

Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.

MAGRUDER, Circuit Judge.

Appellant Boudreau, as trustee in bankruptcy, brings this appeal under § 24 of the Bankruptcy Act, 11 U.S.C.A. § 47, from a judgment of the United States District Court for the District of Maine dismissing his petition in an ancillary proceeding in which he sought a summary order requiring appellee Franklin R. Chesley to turn over assets of the bankrupt, Daniel C. Mulloney.

Mulloney was president of the Federal National Bank of Boston when it closed on December 14, 1931. Nearly six years later, on June 1, 1937, Mulloney filed a voluntary petition in bankruptcy in the United States District Court for the District of Massachusetts, and on the same day was adjudged a bankrupt. On November 27, 1937, Mulloney brought a tort action for $3,000,000 damages in the Superior Court for Suffolk County, Massachusetts, through his attorneys, the said Chesley and Francis H. Farrell, against several Boston banks and their officers; the case was later removed to the federal court in Boston. In his schedule of assets filed in the bankruptcy court, Mulloney did not list this right of action. Mulloney obtained his discharge in bankruptcy on July 24, 1938.

On June 10, 1941, Mulloney's claim in the removed case was compromised and settled by the payment of $24,000 in the form of a certified check to the order of his attorney, Chesley, the appellee herein. Chesley retained $5,000 for legal services and turned over to Mulloney the balance of $19,000.

Within two months of this settlement, on July 29, 1941, a creditor of Mulloney petitioned the bankruptcy court to reopen the bankruptcy proceedings, which was done shortly thereafter, and appellant Boudreau was named trustee. Boudreau obtained leave from the bankruptcy court to institute the present ancillary proceedings against Chesley. His petition asked for a summary order requiring Chesley to turn over to him the aforesaid $24,000, or to account for the proceeds thereof.

The court below dismissed the ancillary petition on alternative grounds, one of which, as we understand it, was that Mulloney's aforementioned right of action did not pass to his trustee in bankruptcy and become part of the bankrupt's estate. We affirm on this ground.

Section 70, sub. a(6) of the Bankruptcy Act, 11 U.S.C.A. § 110, sub. a(6), provides that the trustee in bankruptcy shall by operation of law be vested with the title of the bankrupt, as of the date of the filing of the petition, to all "rights of action arising upon contracts, or usury, or the unlawful taking or detention of or injury to his property." Appellant contends that the right of action in question was for injury to Mulloney's "property", within the meaning of this provision of the Act. We do not agree.

Mulloney's declaration setting forth his cause of action is a lengthy document covering twenty-eight printed pages in the record. The burden of the allegations is that the defendants entered into a malicious conspiracy to ruin the plaintiff's reputation, to drive him out of the banking business and to deprive him of his livelihood; that to accomplish this purpose they committed various wrongful acts, such as making false representations to the comptroller of the currency and to others, alleging incompetency, dishonesty and criminal acts on Mulloney's part as president of the Federal National Bank of Boston, the circulation of false representations affecting the credit of the bank, so as to incite heavy withdrawals of deposits, and the exercise of...