In re Downing
| Decision Date | 09 December 1912 |
| Docket Number | 39. |
| Parties | In re DOWNING. |
| Court | U.S. Court of Appeals — Second Circuit |
Charles B. Sullivan, of Albany, N.Y. (Danforth E. Ainsworth, of Albany, N.Y., of counsel), for petitioner.
W. H Maider, of Gloversville, for respondent.
Before LACOMBE, COXE, and NOYES, Circuit Judges.
The order appealed from permits the trustee to sell his interest in certain real estate, together with his right to set aside as fraudulent a conveyance of such property by the bankrupt to his wife, in alleged fraud of creditors. The trustee is unable to prosecute a suit for this purpose for he has no funds. The creditors have been asked to contribute, but have declined to do so. The trustee cannot wind up the estate and procure his own discharge with this interest and right of action undisposed of. It is of some value, for he has already received an offer of $301 therefor. In such circumstances what is to be done? Is there any alternative but to sell whatever interest and right he possesses?
The order of the District Court does not pass upon the validity of the transfer of the real estate; there is nothing in the order itself or in the opinion of the court deciding that the transfer was fraudulent; that question must be decided when the proper action is brought to set it aside.
All that the court decided is that the trustee is vested with all the rights, remedies and powers of a judgment creditor of the bankrupt with the execution returned unsatisfied and, if a transfer be in fraud of creditors, he may set it aside, have the specific real property sold and apply the proceeds to the payment of debts proved against the bankrupt.
The trustee has a transferable interest in real estate owned by the bankrupt and transferred by him in fraud of his creditors, even though made more than four months prior to the proceedings in bankruptcy and may sell this interest together with the right vested in him by statute to maintain an action to set aside such fraudulent transfer.
The sale is to be made without warranty or representation of any kind and the purchaser takes simply the trustee's interest in the real property and his right to bring an action. The right may be valuable and it may be worthless whoever buys does so with a full understanding of the character of the claim, he cannot be misled into thinking that the District Court or this court has in any way recognized the...
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