In re Scranton Knitting Mills

Decision Date18 November 1937
Docket NumberNo. 8882.,8882.
Citation21 F. Supp. 227
PartiesIn re SCRANTON KNITTING MILLS, Inc.
CourtU.S. District Court — Western District of Pennsylvania

Welles, Mumford, Stark & McGrath, of Scranton, Pa., for trustee.

W. L. Hill and Gunster, Mackie & Murphy, all of Scranton, Pa., for respondents.

WATSON, District Judge.

This is a petition for review of an order of the referee.

Involuntary petition in bankruptcy was filed against the bankrupt on November 5, 1934, naming the bankrupt as "Scranton Knitting Mills." On December 22, 1934, the court made an order permitting the name to be amended to "Scranton Knitting Mills, Inc." On the same day, an order of adjudication was entered.

On August 5, 1937, the trustee petitioned the referee for a rule on the Third National Bank & Trust Company (hereinafter referred to as "the bank") to show cause why it should not turn over to the trustee the sum of $15,196.11. Thereafter, the bank filed a motion to dismiss the trustee's petition on the ground that this court has no jurisdiction to entertain the trusee's petition in a summary proceedings. The referee entered an order denying the bank's motion. This order of the referee is now before the court for review.

A motion to dismiss a petition made under Equity Rule 29, 28 U.S.C.A. following section 723 must be decided on the basis of facts set forth in the petition alone. Scattergood v. American Pipe & Construction Co. (D.C.) 247 F. 712. Ignoring, therefore, the allegations of fact set forth in the motion to dismiss, and looking only to the facts alleged in the petition, the following facts are before the court:

At the time of the filing of the involuntary petition in bankruptcy against the "Scranton Knitting Mills" (November 5, 1934), the bank held on deposit to the credit of the Scranton Knitting Mills, Inc., the sum of $368.90. The bank acquired notice of the filing of the involuntary petition against the "Scranton Knitting Mills" on November 5, 1934, and, through its cashier, had actual knowledge of the proceedings. Also, through its officers and employees, it knew that the "Scranton Knitting Mills" and "Scranton Knitting Mills, Inc.," were one and the same corporation. Between the time of the filing of the petition in bankruptcy and November 26, 1934, there was deposited to the credit of the bankrupt in the bank the sum of $14,959.29, bringing the total deposits to $15,328.19, as of the date of adjudication. Of this amount, $51.44 was deducted by the bank in payment of a dishonored check and $80.64 was turned over to the trustee, leaving a balance of $15,196.11. The bank has refused to account to the trustee for the amount last stated. There is nothing in the record to indicate what disposition, if any, was made of this sum.

The question before the court is whether these facts state a case sufficient to give this court jurisdiction to summarily order the bank to turn the balance unaccounted for over to the trustee.

The filing of an involuntary petition in bankruptcy "is a caveat to all the world, and in effect an attachment and injunction." Mueller v. Nugent, 184 U.S. 1, 14, 22 S.Ct. 269, 275, 46 L.Ed. 405. From the time of the filing of the petition to the appointment of a trustee, legal title to property remains in the bankrupt, but as trustee for all creditors. The bankrupt cannot effect any valid transfer of the property, except possibly for full value in the ordinary course of business. Gilbert's Collier on Bankruptcy (4th Ed.) 1169. During this period the property is considered to be in custodia legis, in the full possession and control of the court. The bankrupt's possession is the court's possession. Reed v. Barnett Nat. Bank (C.C.A.) 250 F. 983. Persons dealing with an alleged bankrupt do so at their own risk, and this is as true of banks as of...

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7 cases
  • Matter of Cafes Internationale, Ltd.
    • United States
    • U.S. Bankruptcy Court — Southern District of New York
    • 30 Julio 1981
    ...see In re Mason C. Jones Co., 109 F.Supp. 843 (N.D.Ohio 1950); In re Livingston, 93 F.Supp. 173 (N.D.Cal.1950); In re Scranton Knitting Mills Inc., 21 F.Supp. 227 (M.D.Pa.1937). 19 In re 671 Avenue Holding Corporation, supra at 455. 20 Maggio v. Zeitz, 333 U.S. 56, 61, 68 S.Ct. 401, 404, 92......
  • In re David M. Hunt Const. Co.
    • United States
    • U.S. Bankruptcy Court — Eastern District of Pennsylvania
    • 27 Febrero 1980
    ...Co. v. Cominger, 184 U.S. 18, 22 S.Ct. 293, 46 L.Ed. 413 (1902); In re Meiselman, 105 F.2d 995 (2d Cir. 1939); In re Scranton Knitting Mills, Inc., 21 F.Supp. 227 (M.D.Pa.1937). 14 See notes 6 & 7 15 Harrison v. Chamberlin, 271 U.S. 191, 195, 46 S.Ct. 467, 469, 70 L.Ed. 897 (1926). See also......
  • IN RE MERCY-DOUGLASS HOSPITAL, INC.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • 10 Octubre 1973
    ...Penn Central Transp. Co., 453 F.2d 520 (3d Cir. 1972); In re Italian Cook Oil Corp., 91 F.Supp. 72 (D.N.J.1950); In re Scranton Knitting Mills, 21 F.Supp. 227 (M.D.Pa.1937). The creditor never obtained this permission, and therefore this Court dissolved the attachment. See 6 Collier on Bank......
  • First Nat. Bank of Ariz. v. Butler, 6250
    • United States
    • Arizona Supreme Court
    • 2 Julio 1957
    ...as of the date of the filing of the petition initiating a proceeding in bankruptcy. It was stated in the case of In re Scranton Knitting Mills, D.C., 21 F.Supp. 227, 228, that, 'Persons dealing with an alleged bankrupt do so at their own risk, and this is as true of banks as of others.' See......
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