In re Prokop, 4911.
| Decision Date | 05 June 1933 |
| Docket Number | No. 4911.,4911. |
| Citation | 65 F.2d 628 |
| Parties | In re PROKOP et al. HEYER et al. v. SCHWEMER. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Nathan M. Stein and L. L. Rieselbach, both of Milwaukee, Wis., for appellants.
Morris Stern, of Milwaukee, Wis., for appellee.
Before ALSCHULER and EVANS, Circuit Judges, and CARPENTER, District Judge.
The only controversy which is presented by this appeal is one for control and disposition of bankrupts' estate, between the trustee in bankruptcy and the trustees under a voluntary assignment of bankrupts made more than four months prior to adjudication in bankruptcy.
The facts: A voluntary assignment for the benefit of creditors was made by bankrupts on January 6, 1931, to one J. Abrams. Thereafter, on July 28, 1931, Abrams assigned and set over to appellants all of his interest in the assets of said bankrupts as such trustee. In the execution of their trust appellants realized $2,268.88 from the sale of merchandise and $1,200 from rental of real estate. They conducted the business of the bankrupts and unfortunately at a loss and until their obligations exceeded the assets.
Adjudication in bankruptcy occurred on October 21, 1931. To avoid a plenary suit by the trustee, a stipulation was entered into whereby the fund was placed in the hands of the trustee in bankruptcy. The stipulation is set forth in the margin.1
The trustees under the common law assignment thereafter petitioned the United States District Court to return to them the moneys they had voluntarily delivered to the trustee in bankruptcy. Their petition was denied, and this appeal is from this order of denial.
Under the stipulation, it is clear that the parties agreed to turn over assets, to which the trustee in bankruptcy claimed title, to the trustee. Had the stipulation not been entered into, it would have been incumbent upon the trustee in bankruptcy to bring suit against the trustees named in the voluntary assignment proceedings. This would have entailed expense, and so, by consent of the parties, the assets realized from the sale of bankrupts' property were delivered to the trustee in bankruptcy. The trustee in bankruptcy having thus secured possession of the property, the court of bankruptcy acquired jurisdiction of it as a part of the res of the bankrupts' estate and was in duty bound to administer it.
Proceedings to secure property to which the trustee in bankruptcy makes claim may be by summary proceedings or by plenary action, depending upon the fact situation. If there be no possession, constructive or actual, on the part of the trustee in bankruptcy and the party holding the property in good faith disputes the trustee's claim to the property, the determination of the issue must be through a plenary action. It cannot be determined in a summary proceeding. However, the adverse claimant may, by consent, permit title to be determined in a summary proceeding in the court of bankruptcy. Likewise he may consent to turn over...
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