269 U.S. 504 (1926), 503, United States v. Butterworth-Judson Corporation

Docket Nº:No. 503
Citation:269 U.S. 504, 46 S.Ct. 179, 70 L.Ed. 380
Party Name:United States v. Butterworth-Judson Corporation
Case Date:January 11, 1926
Court:United States Supreme Court
 
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Page 504

269 U.S. 504 (1926)

46 S.Ct. 179, 70 L.Ed. 380

United States

v.

Butterworth-Judson Corporation

No. 503

United States Supreme Court

Jan. 11, 1926

Argued November 23, 1925

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

Where the answer of an insolvent corporation, in a suit brought by a simple contract creditor for the conservation and disposition of its property for the benefit of it creditors, admitted the allegations of the bill and consented to a decree appointing receiver, held that this amounted to the handing over of all the property and business to be administered a a trust fund to pay debts, and was in substance a voluntary assignment within the meaning of Rev.Stats. § 3466, entitling the United States to priority in payment of it claim. P. 513.

9 F.2d 1018 reversed.

Certiorari to a judgment of the circuit court of appeals affirming an order of the district court which dismissed a petition in intervention filed by the United States, seeking preferred payment of its claim in a suit to administer and dispose of the assets of a corporation, through receivers, for the settlement of its debts. See also Price v. United States, ante, p. 492.

Page 511

BUTLER, J., lead opinion

MR. JUSTICE BUTLER delivered the opinion of the Court.

April 22, 1922, respondent, a New York corporation, was insolvent within the meaning of R.S. § 3466 and as defined by the Bankruptcy Act. Its debts amounted to approximately $3,000,000, and included $1,154,450 due to the United States. The value of its assets was not in excess of $1,500,000. On that day, the Hay Foundry & Iron Works, a simple contract creditor, on behalf of itself and other creditors, brought suit against the respondent in the District Court for the Southern District of New York. Among the facts alleged are these: respondent

Page 512

owed plaintiff $7,988.43 for labor and materials furnished, and was without money to pay its debts then due. The value of its property, if properly and prudently realized on, would be more than enough to pay its obligations. Some of its creditors were threatening to bring suits on their claims, and resulting forced sales of the property would cause great loss to the creditors. Plaintiff believed that the property could be preserved for equitable distribution among those entitled thereto only upon the granting of equitable relief, including the appointment of receivers, and that, unless the court would deal with the property as a trust fund for the payment of creditors, it would be sacrificed to the great loss of creditors. More would be realized from a sale if the business was being carried on. The prayer was for the appointment of receivers, and...

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