In re United Cigar Stores Co.
Decision Date | 09 April 1934 |
Docket Number | No. 331.,331. |
Citation | 70 F.2d 313 |
Parties | In re UNITED CIGAR STORES CO. OF AMERICA. SALISBURY INV. CO. v. IRVING TRUST CO. et al. HALLORAN v. IRVING TRUST CO. |
Court | U.S. Court of Appeals — Second Circuit |
Kellogg, Emery & Inness-Brown, of New York City (Dean Emery, Douglas M. Black and George Koegler, all of New York City, of counsel), for Salisbury Investment Co.
Paul Williams, of New York City, for William J. Halloran.
Cravath, de Gersdorff, Swaine & Wood, of New York City (William D. Whitney, of New York City, of counsel), for Irving Trust Co. as Trustee in Bankruptcy.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.
The United Cigar Stores Company of America, a New Jersey corporation, was adjudged a bankrupt on August 29, 1932. It leased a hotel in Salt Lake City, Utah, on November 12, 1919, from the appellant Salisbury Investment Company, for a term of years expiring December 31, 1940, with renewal privilege for 60 years more. The bankrupt agreed to demolish the existing buildings before January 1, 1936, and to build, within 20 months thereafter, new buildings to cost not less than $250,000.
The bankrupt, after entering into possession under this lease, on August 9, 1922, entered into a contract with William J. Halloran, appellant, with reference to the operation and management of the property. By that agreement, the parties were to share equally all the net profits derived from and sustain all losses incurred through the management of the premises under the lease. The net profits were to be determined after deducting all expenses of management and operation, a fixed compensation to Halloran, and a sum for auditing duties assumed by the bankrupt. The bankrupt paid rent for a cigar store occupied by it in the demised premises. The agreement provided that it was not to constitute an assignment of any interest of the bankrupt in and to the premises under the lease nor was it to establish a partnership relation. Moreover, the agreement provided that the construction of the new building under the terms of the lease should be provided for by saving all the net profits, if any, arising out of the premises after the payment of the service item to appellant Halloran and the auditing duties assumed by the bankrupt. There was to be no division or distribution of net profits, if any, until after the new building had been erected and all charges in connection therewith had been fully paid. And "in the meantime United shall be charged with interest upon any such net profits accumulated and remaining in its possession, at the rate of five per centum per annum * * * which interest shall likewise be credited to and become a part of the fund so to be provided for such new building."
It further provided that:
And further:
After this agreement, the appellants carried out the terms of the agreement between them. The gross receipts from the operation of the hotel were deposited in several bank accounts of the bankrupt, which paid the expenses involved in the operation of the premises, drawing upon various of its bank accounts. At all times the aggregate amount of the bank accounts exceeded the amount of the net profits. The net profits were never segregated in a separate bank account, nor were the expenses in connection with the lease paid out of the same bank accounts in which the gross receipts were deposited. Entries were made on the bankrupt's books in two accounts, one crediting the net profit monthly as they accrued under the title of "William J. Halloran, Equity Fund 766," and the other "United Cigar Stores Co. of America, Equity Fund 766." At the time of adjudication in bankruptcy, it is stipulated the amounts were $77,563.77 and $79,119.04, respectively. Appellant Halloran claimed his sum as a trust fund and filed a reclamation claim. The Salisbury Company was granted permission to intervene. The referee disallowed the Halloran claim as a reclamation claim, but allowed it as a general claim, but the claim of the Salisbury Company was disallowed both as a reclamation claim and as a general claim.
The appellants' agreement provided that the bankrupt retain the net profits for the purpose of providing funds for the building operation and also for any expenditures in connection with the lease. Thus the fund was not to be gathered for building only but for purposes of the lease. The bankrupt promised to pay interest, indicating a debtor and creditor relationship rather than that of trustee and beneficiary. A trust involves a specific subject-matter or res, while a debt does not. The obligation of a trustee is equitable rather than legal. A fiduciary relation exists in the office of a trustee. The appellants' agreement does not specifically provide for a trust; it does provide for net profits and the uses to be made of such profits. There was no segregation of the net profits or putting aside of such funds. Article VII provides for the disposition of the net profits after the performance of the building covenant. After completion of the building, the net profits were to be used as a fund against future losses. This negatives the claim of a trust...
To continue reading
Request your trial-
Grede v. Fcstone, LLC
...to its initial deposits of customer funds and therefore cannot exempt the proceeds from the estate. See, e.g., In re United Cigar Stores Co., 70 F.2d 313, 316 (2d Cir.1934) (“There can be no recovery ... where all that can be shown is enrichment of the trustee. [The trust property] must be ......
-
In re Schick
...that they could trace their money. See Morris Plan Indus. Bank v. Schorn, 135 F.2d 538, 539 (2d Cir.1943); In re United Cigar Stores Co. of America, 70 F.2d 313, 316 (2d Cir.1934). Since, however, the money was immediately transferred, they never pursued it although they might have been abl......
-
In re Bradley
...TRUSTEES, § 921, 433-34, nn.13-14 (citing Adams v. Champion, 294 U.S. 231, 55 S.Ct. 399, 79 L.Ed. 880 (1935); In re United Cigar Stores of America, 70 F.2d 313, 316 (2d Cir.1934)). It is simply not enough that the property claimed may have been the product of trust funds at one time. Id. at......
-
Atlas Powder Co. v. Nelson and Chase & Gilbert Co.
... ... Ordinarily, such donations, or gratuitous benefits, are not ... made to strangers. In re United Cigar Stores Co. of ... America, 2 Cir., 70 F.2d 313; Smith v ... Anglo-California Trust Co., ... ...