In re Michaelis & Lindeman
| Decision Date | 01 January 1912 |
| Citation | 196 F. 718 |
| Parties | In re MICHAELIS & LINDEMAN. |
| Court | U.S. District Court — Southern District of New York |
Robert P. Levis, for receiver.
Cardozo & Nathan, for bankrupts.
Raymond Rubenstein, for American Exchange Bank.
HOUGH District Judge (after stating the facts as above).
This motion requires a somewhat novel application of what I think are elementary principles. It may be assumed, as stated in Re Zotti (C.C.A. 2d Cir.) 26 Am.Bankr.Rep. 234, 186 F. 84, 108 C.C.A. 196, that the receiver in bankruptcy is but a custodian without title for the purpose of preservation and not for the purpose of distribution of the estate. Nevertheless he is entitled to take custody of whatever is plainly the property of the bankrupt and against which no third party makes any claim with color of title.
It may also be admitted that there is no power in the court by summary order to divest third party of any title (even a fraudulent one) asserted by him against the bankrupt or his trustee. But this does not prevent the entry of a summary order where the only title set up rests, not upon any matter of fact, but upon a statement of law.
It is also true in this case that, although no trustee has as yet been elected or appointed, adjudication has been entered, and the bankrupts are divested of title.
The sole question, therefore, raised by this motion, is whether as matter of law, under the admitted facts of the case, the bank is entitled to retain this money, not because it has title thereto, nor because it owes it to the bankrupts and not to the receiver, but because it is a case of set-off within section 68a of the act.
Admittedly there must come a time as of which claims against a bankrupt's estate are to be liquidated and stated. This is just as true when there is a set-off or counterclaim concerned as when there is none, and this time has been fixed as the date of filing petition. Sexton v. Dreyfus, 219 U.S. 339, 31 Sup.Ct. 256, 55 L.Ed. 244, 25 Am.Bankr.Rep 363, and Steinhardt v. National Park Bank, 18 Am.Bankr.Rep. 86, 52 Misc.Rep. 464, 102 N.Y.Supp. 546.
Section 68 requires that, in all cases of mutual debts or credits between the estate of a bankrupt and a creditor, the 'account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid. ' The statutory direction that the account shall be stated implies that there must be a time when the statement is to be made,...
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