U.S. Supreme Court ADAMS v. CHAMPION, 294 U.S. 231 (1935)

[Page 294 U.S. 231, 239]

held by the receiver upon a trust for equal distribution. Cf. Wisdom v. Keen (C.C.A.) 69 F.(2d) 349, 350; Fera v. Wickham, 135 N.Y. 223, 230, 31 N. E. 1028, 17 L.R.A. 456; Gerseta Corp. v. Equitable Trust Co., 241 N.Y. 418, 425, 150 N.E. 501, 43 A.L.R. 1320. The shift had come too late.

2. What has been said as to the sale of the stock certificate to Cullinan applies with equal force to the second and third of the contested items, the Graff and Sommer notes.

The collections on these notes were made in April, 1929. They were made, not in cash received over the counter, but by cancellation of a debt owing to the makers upon their deposit balance in the bank. There was neither trust, nor claim of trust, until the bank had suspended, and was in the hands of a receiver.

3. The fourth contested item, the collection on the Veesaert bonds, differs from the others in that the payment was received after the trustee in bankruptcy had elected to avoid the preference and had sued for that relief.

The payment was made as we have seen, by the deposit of $1,597.31 in the First National Bank of Chicago, Ill.

The balance in that account was reduced in 1931 to $776.57. What became of the difference ($820.74) there is nothing to inform us. Evidence is lacking that it was withdrawn in such a form or for such purposes as to be represented by any assets forming part of the estate today. The receiver consents that this item of $776.57, the balance in the Chicago bank, be paid to the respondent as a preferred charge upon the fund.

The decree is reversed and the cause remanded for further proceedings in accordance with this opinion.

It is so ordered. Footnotes

[Footnote *] 'If a bankrupt shall ... have made a transfer of any of his property, and if, at the time of the transfer, ... and ... within four months before the filing of the petition in bankruptcy, ... the bankrupt be insolvent and the ... transfer then operate as a preference, and the person receiving it or to be benefited thereby, or his agent acting therein, shall then have reasonable cause to believe that the enforcement of such ... transfer would effect a preference, it shall be voidable by the trustee and he may recover the property or its value from such person . ...' Section 60b, 11 U.S.C. 96(b), 11 USCA 96(b).