Gill v. Farmers & Manufacturers Bank

CourtCourt of Appeals of Kansas
Citation176 S.W. 1111,189 Mo.App. 401
PartiesCHARLES S. GILL, Plaintiff in Error, v. FARMERS & MANUFACTURERS BANK, Defendant in Error
Decision Date05 April 1915

Error to Bates Circuit Court.--Hon. C. A. Calvird, Judge.


Judgment reversed and cause remanded.

Sherman & Landon and W. V. Thompson for plaintiff in error.

The petition stated a cause of action and the court committed error in sustaining the demurrer for the reason that upon filing the petition in bankruptcy any right or title the defendant might have acquired ceased, and upon the adjudication in bankruptcy the title to the fund vested in the trustee. National Bankruptcy Act, sec. 3, A-4, sec. 70 sec. 47; West Co. v. Lea Bros., 174 U.S. 590, 43 L.Ed. 1099; In re Tomlinson Co., 154 F. 834; Thomas v. Woods, 173 F. 585; Randolph v Scruggs, 190 U.S. 533, 47 L.Ed. 1165; In re Sievers, 91 F. 366; Davis v. Bohle, 92 F. 325; Mueller v. Nugent, 184 U.S. 1, 46 L.Ed. 405; In re Gutwiling, 92 F. 337; In re Smith, 92 F. 135.

Templeton & Hales, Frank W. Yale and Ernest S. Ellis, for defendant in error.

Under Bankruptcy Act, July 1, 1898, providing that the trustee is vested by operation of law with the bankrupt estate as of the date he was adjudged a bankrupt, the trustee takes title not as an innocent purchaser, but subject to all valid liens claims and equities. Palmer v. Welch, 171 Mo.App. 582; York Mfg. Co. v. Cassell, 201 U.S. 344; Security Warehouse Co. v. Hand, 206 U.S. 415; Bryant v. Swofford, 214 U.S. 279.



This action arises on a petition to which a demurrer was sustained on the ground that it did not state facts sufficient to constitute a cause of action. The following facts appear from the petition: Susan L. Ames was indebted to a number of creditors, the defendant bank being one of them. She owned a stock of merchandise and sold it for $ 3424.60. This sum constituted all of her assets and, on the 20th of April, 1910, she deposited it with the defendant bank as a special deposit to be distributed by the bank pro rata among all her creditors and that defendant accepted the deposit for such purpose and no other. But that defendant denies that it received the money as a special deposit to be distributed pro rata among her creditors and has attempted to apply a greater part of it in liquidation of its own claim. That on the 23rd of April, three days after the deposit, a part of her creditors filed an involuntary petition in bankruptcy against her and that she was adjudged a bankrupt on the 7th of July following and plaintiff was then elected and qualified as trustee in bankruptcy of her estate. That on the filing of the petition in bankruptcy, the referee issued an order to defendant restraining it from disposing of any part of said deposit. That thereupon plaintiff applied for an order requiring defendant to pay over to him as trustee in bankruptcy the sum so deposited with it by Susan L. Ames. Defendant was ordered to appear before the referee and show cause. It did appear and "filed a plea to the jurisdiction of the court and denied its right to issue the order on the ground that it held said sum of money as an adverse claimant." The petition further alleges that the proceeding was taken to the United States Circuit Court of Appeals. It is then alleged that that court in delivering its opinion (190 F. 726) stated: "The litigation over the validity of the plea to the jurisdiction in this case has occupied so much time and the probability that the bank's claim is colorable is so slight that it seems to us that the better course for the officers below to pursue in this case is to dismiss the petition of the trustee for the order to pay over the money and to let the parties litigate their controversy in a plenary suit." To that end the court ordered a dismissal of plaintiff's application for an order requiring defendant to pay to him said deposit, on the ground that it ought not to be tried summarily. This action followed.

We are of the opinion that the law of the case is with the plaintiff and that the demurrer to his petition should have been overruled. The facts stated, when reduced to their real meaning, are that only three days before the institution of proceedings in bankruptcy the bankrupt handed over all her...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT