268 U.S. 111 (1925), 126, May v. Henderson

Docket Nº:No. 126
Citation:268 U.S. 111, 45 S.Ct. 456, 69 L.Ed. 870
Party Name:May v. Henderson
Case Date:April 13, 1925
Court:United States Supreme Court
 
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268 U.S. 111 (1925)

45 S.Ct. 456, 69 L.Ed. 870

May

v.

Henderson

No. 126

United States Supreme Court

April 13, 1925

Argued March 5, 1925

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

Within four months prior to the filing of the petition in bankruptcy against it, the bankrupt made a general assignment for the benefit of creditors to two trustees, one of whom, H., was the president of a bank to which the assignor was then indebted on a promissory note, and with which it carried a deposit account. The account was transferred, after the assignment, to the names of the trustees, as such, and afterwards augmented by deposits of money collected by them in carrying on the assignor's business. Partly before the date of the bankruptcy petition and partly thereafter, H., having control of the account, caused it to be applied to the note, with the tacit consent of the other assignee. The bank, as well as the assignees, had executed the creditors' agreement under which the assignment was made, providing for a pro rata distribution among all creditors and expressly extending the time of payment of all indebtedness of the assignor for the period of one year. Held, that the assignees were properly directed by the Bankruptcy Court, in a summary proceeding, to pay over to the trustee in bankruptcy an amount equal to the deposits, including the part paid the bank before the filing of the petition as well as the part paid thereafter. P. 115.

289 F. 192 reversed.

Certiorari to a judgment of the circuit court of appeals, on petition to revise, reversing a judgment entered

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by the district court summarily in a bankruptcy proceeding which required the present respondents to pay over a sum of money to the trustee in bankruptcy.

STONE, J., lead opinion

MR. JUSTICE STONE DELIVERED THE OPINION of the Court.

This is a writ of certiorari to the Circuit Court of Appeals for the Ninth Circuit to review its action (reported as Henderson v. May, 289 F.192) on a petition to revise an order of the district court confirming the order of a referee in bankruptcy summarily directing the respondents to pay over a sum of money to the trustee in bankruptcy.

On September 15, 1920, prior to, but within four months of, the filing of the petition, the bankrupt made to respondents, Henderson and Scannell, a general assignment for the benefit of creditors. At the time of the assignment, the assignor was indebted on a promissory note in the sum of $15,000 to the Ft. Sutter National Bank, of which respondent Henderson was president, and in which the assignor carried a deposit account. The referee found, on sufficient evidence, that the respondents accepted the trust under the assignment to them and continued the business of the assignor until the appointment of the receiver in bankruptcy on November 4, 1920, the petition in bankruptcy having been filed on October 9, 1920. In the meantime the deposit account of the assignor with the bank, with the knowledge and assent of the assignees, was changed from the name of the assignor to the names of the assignees, as "trustees," and further deposits were from time to time made by them to the

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credit of the account, in the course of their management of the business of the assignor. The assignor was duly adjudicated a bankrupt, and thereafter the trustee in bankruptcy petitioned the bankruptcy court for an order directing the respondents, as assignees, to account for and pay over all moneys received by them from the date of the assignment to the date of the appointment of the receiver. Proceedings on the petition resulted in the order of the district court directing respondents to pay over to the trustee an amount which would have stood to the credit of the assignees in their deposit account with the bank had the account not been closed in the following manner:

On September 30, 1920, 10 days before the filing of the petition, the deposit account of the assignees with the bank was debited with the sum of $4,516.43, which amount was [45 S.Ct. 458] credited on the note of the bankrupt held by the bank, and on October 13, 1920, subsequent to the filing of the petition and on various dates thereafter to and including October 25, 1920, further debits were made in the account which were credited on the note. These credits, including the first mentioned, amounted to the sum of $12,883,81, which was the amount directed to be paid over by respondents by order of the district court. These debits and credits were made by direction of the respondent Henderson, who, throughout the period in question, acted as one of the assignees and was also president of the bank. Although there was no explicit finding on the subject, the debits appear to have been made with the tacit assent of Scannell, the other assignee, who, in any event, appears to have left the management of the financial operations of the assignees to Henderson, and...

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