43 F.2d 661 (S.D.N.Y. 1930), 46360, In re Times Square Auto Supply Co., Inc.

Docket Nº:46360.
Citation:43 F.2d 661
Party Name:In re TIMES SQUARE AUTO SUPPLY CO., Inc.
Case Date:June 20, 1930
Court:United States District Courts, 2nd Circuit, Southern District of New York
 
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Page 661

43 F.2d 661 (S.D.N.Y. 1930)

In re TIMES SQUARE AUTO SUPPLY CO., Inc.

No. 46360.

United States District Court, S.D. New York.

June 20, 1930

Page 662

David Haar, of New York City, for Bank of United States.

Blumberg & Parker, of New York City, for Irving Trust Co.

In Bankruptcy. Cross-petitions to review order of referee. The trustee had moved before him to compel the Bank of United States to turn over $10,523.68, and the bank objected to the referee's assuming summary jurisdiction. The referee overruled the objection and sustained the summary jurisdiction, but gave the bank permission to file answering affidavits to the petition. Both the bank and the trustee now petition to review the order; the bank, on the ground that its adverse claim prevents the referee from having summary jurisdiction; and the trustee, on the ground that, since the bank admitted the facts, it should not be permitted to interpose an answer, and that the referee should have made a turnover order immediately.

FRANK J. COLEMAN, District Judge.

An involuntary petition in bankruptcy was filed against the Times Square Auto Supply Company, Inc., on January 11, 1929. At that time it had a bank account with the Colonial Bank, now the Bank of United States, and had shortly before the date of the filing of the petition deposited in that account its own checks drawn in the aggregate of $15,742.03, and had at the same time drawn against these deposits the sum of $10,523.68. The checks so deposited were dishonored by the banks against which they were drawn, and consequently there was a large overdraft in the bankrupt's account in the Colonial Bank.

The checks which were so deposited and dishonored were drawn against the bank accounts of the various branch stores which the bankrupt maintained in this city and elsewhere. After the filing of the petition no receiver was appointed, but the bankrupt was permitted to continue business under the guidance of a creditor's committee. The bankrupt continued to make deposits in the bank accounts of its various branch stores, and, within three weeks after the filing of the petition, these accounts had sufficiently large credit balances to pay the checks which had been deposited with the Colonial Bank and dishonored when presented. The Colonial Bank, therefore, had them presented again, and during the period from January 15th to January 31st they were all paid...

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