In re Hanna

• Decision Date: 22 December 1900
• Docket Number: 482.
• Citation: 105 F. 587
• Parties: In re HANNA et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

105 F. 587

In re HANNA et al.

No. 482.

United States District Court, E.D. Pennsylvania.

December 22, 1900

The following is the certificate of the referee and report on exceptions:

To the Honorable the Judge of the District Court for the Eastern District of Pennsylvania:

The referee respectfully reports that the following question involving a claim upon the fund in the hands of the trustee in bankruptcy was presented to him for his decision by the trustee, and William S. Eaton, Jr., Esq., a creditor, the claimant:

The bankrupts were contractors for the erection of steam-heating apparatus in premises Nos. 1120 to 1142 Market street Philadelphia, a property belonging to the Stephen Girard estate. There was due to the bankrupts from the trustees of said estate the amount of $2,854.02 for materials furnished and work performed by them on this building. This fund was paid to the trustee in bankruptcy by the trustees of the Stephen Girard estate, with the reservation on behalf of the trustees of the Girard estate of any right in said fund which might be vested in the claimant, the said Wm. S. Eaton, Jr. by reason of a certain letter of request drawn by the bankrupts, and presented to the trustees of the Girard estate, requesting them to pay to the Boston Blower Co. the sum of $281.88; the said sum being the amount of a judgment obtained by them against the bankrupts in the court of common pleas of Philadelphia county in November, 1898. All the interest of the blower company and all debts whatever due them were duly assigned to the said Wm. S. Eaton, Jr., by a duly-executed deed of assignment.

The letter of request is as follows:

'Philadelphia February 1, 1899.

'To the Trustees of the Stephen Girard Estate, Philadelphia, Pa.-- Dear Sirs: Please pay to the order of Frank P. Prichard, Esq., attorney for the Boston Blower Company, the sum of $281.88 out of any balance due us remaining in your hands.

'Yours, truly,

Hanna & Kirk. 'J. V. Kirk.'

The deed of assignment by which Wm. S. Eaton, Jr., became assignee of all moneys due to the Boston Blower Company was executed on the 25th day of March, 1899. The adjudication in bankruptcy was made on the 23d day of February, 1900, so that the claimant was fully vested with all the rights of the Boston Blower Company in their claim under the letter of request more than four months before the adjudication in bankruptcy.

It appears clear to the referee that the trustee in bankruptcy became vested only with the title held by the bankrupts, taking the property subject to all existing liens, charges, claims, and equitable rights (Coll. Bankr. p. 375), and that the claimant, Wm. S. Eaton, Jr., became vested by the deed of assignment from the Boston Blower Company with whatever interest in the amount of $281.88 was transferred to the blower company by virtue of the letter cited.

It was contended on behalf of the claimant that the letter cited operated as an assignment of the amount expressed in the letter. On behalf of the trustee it was urged that the letter was not expressed in such terms as to be regarded as sufficiently specific to operate as a partial assignment of a fund in the hands of an ordinary holder, it was inoperative against the trustees of the Stephen Girard estate on the ground that the administration of the Girard estate was a branch of the city government, and that a partial assignment of a fund under the control of a municipal corporation is inoperative.

A partial assignment is not allowed at common law without the ratification of the debtor, because he might be submitted to multitudinous suits, and be subjected to embarrassments and responsibilities not contemplated in his original contract (2 Am.& Eng.Enc.Law (2d Ed.)p. 1068; 1 Beach,Mod.Eq.Jur.p. 378); but this rule of law has long been abandoned in courts of equity, for in proceedings in equity the interests of all parties can be determined in a single suit, and the debtor can bring the entire fund into court for distribution.

It only remains, then, to consider: First, whether the letter cited fulfills the conditions requisite to effect an equitable assignment; and, second, whether the holder of the fund, the trustees of the Stephen Girard estate, are exempt from the rule as to the validity of partial assignments, on the ground that they are a branch of the municipal government.

The conditions required to constitute an effective assignment are that the fund shall be designated, and the order to pay unconditional. The language of this letter is sufficiently specific on these points, under the decisions of the supreme court of the United States and the supreme court of this state. The letter addressed to the trustees of the Girard estate contains an unconditional order to pay the party named therein the sum of $281.88, and the expression in the letter that follows, 'out of any balance due us remaining in your hands,' defines the fund as being the money due the drawer of the order by the parties on whom it is drawn.

In the case of Caldwell v. Hartupee, 70 Pa.St. 75, the following order was held to operate as a partial assignment:

'Mr. W. A. Caldwell-- Dear Sir: Please pay to Mr. John Cuthbert $1,500 out of the proceeds of the last note coming to us from the steamer Quickstep, with interest from date of such note.

Hartupee & Company.

'Pittsburg, October 10th, 1868.'

The facts in this case were as follows: Henry T. Dexter, the owner of the steamboat Quickstep, which was largely in debt, made a trust mortgage of the boat to defendant and George W. Coffman, as trustees, to secure $15,000 for the benefit of the creditors of the boat, named in a schedule annexed to the mortgage among whom were the plaintiffs.

The plaintiffs drew upon the defendant in favor of John Cuthbert. The...