Document: 385 U.S. 99 87 S.Ct. 274 17 L.Ed.2d 197 BANK OF MARIN, Petitioner,v.John M. ENGLAND, Trustee in Bankruptcy. No. 63. Argued Oct. 20, 1966. Decided Nov. 21, Edgar B. Washburn, San Rafael, Cal., for petitioner. Thomas Donovan, Francisco, respondent. Mr. Justice DOUGLAS delivered the opinion of Court. 1 The question presented by this case is whether a bank which honored checks depositor drawn before its bankruptcy but payment after it had filed voluntary petition bankruptcy, liable to trustee amount paid where no knowledge or notice proceeding. applied referee turnover order requiring petitioner pay and alternative asking same relief against payee. determined that payee were jointly trustee. District Court affirmed. Only appealed Appeals affirmed 352 F.2d 186. We granted certiorari because importance presented. Cf. Rosenthal v. Guaranty Bank & Trust Co., D.C., 139 F.Supp. 730; Mullane Central Hanover 339 306, 70 652, 94 L.Ed. 865. I. 2 advised on oral argument joint judgment rendered petitioner, bank, was full at present respondent's sole financial interest litigation protection imposition costs under our Rule 57. It therefore suggested moot. do not agree. Whatever might be result if alone involved (cf. Heitmuller Stokes, 256 359, 362, 41 522, 523, 65 990) should dismissed. are has with court served demand contribution from respecting sums satisfaction judgment. Thus still subject suit original as liability. would, therefore, strain concepts mootness we required start all over again when sues contribution. II. 3 Section 70a Bankruptcy Act, 52 Stat. 879, 11 U.S.C. § 110(a), provides vested 'by operation law' title bankrupt date filing described kinds property 'including rights action.' 70a(5). But agree bankrupt's checking accounts instantly frozen absence part drawee. succeeds only such possessed; claims defenses have been asserted petition. See Zartman First National Waterloo, 216 134, 138, 30 368, 369, 54 418. relationship debtor creditor, founded upon contract. right duty contract honor properly (Allen America, 58 Cal.App.2d 124, 127, 136 P.2d 345, 347; Weaver 59 Cal.2d 428, 431, Cal.Rptr. 4, 380 644, 647; see Anderson Luckett, 321 233, 64 599, 88 692), absent revocation gives prior time accepted bank. Hiroshima Italy, 78 Cal.App. 248 P. 947, 950. held drawer operates without more drawee's authority. F.2d, 191. doctrine harsh one runs grain decisions person deprived (Mullane supra, 314—318, 657—659; Walker City Hutchinson, 112, 77 200, 178; Schroeder New York, 371 208, 83 279, 9 255), principle recognized proceedings Act. York N.H. H.R. 344 293, 296—297, 73 299, 301, 97 333. kind 'reasonably calculated, circumstances, apprise interested parties pendency 314, 657. cannot say act per se reasonably calculated put notice. Absent his between remains unaffected duly remain before. In circumstances acquires account greater than himself. 4 70d(5), 882, 110(d)(5), provides, exceptions relevant here, 'no transfer behalf shall valid trustee.' And (with material here) an adjudication. 18f, 109, 41(f). argued force drawee 'transfer' within meaning 70d(5). Yet read these statutory words ease computer. There overriding consideration equitable principles govern exercise jurisdiction. 2a, 842, 11(a); Pepper Litton, 308 295, 304—305, 60 238, 244—245, 84 281; Securities Exchange Commission Realty Imp. 310 434, 455, 1044, 1053, 1293. said enough indicate why would inequitable hold who pays actual authority made bankruptcy. §§ 70d(5) 18f can maintained imposing liability he received voidable preference other transfer. creditor bankrupt, make him reimburse deprive preferential treatment restore category general creditor. To permit obtain recovery party benefited transaction equity. 5 Reversed. 6 HARLAN, dissenting. 7 Court, haste alleviate indisputable inequity disregards, my opinion, both proper construction most permanent interests administration. I must dissent.1 8 Act itself unambiguous. vests 'as petition.' 110(a). 70d nonetheless sustains bona fide transfers 'before adjudication receiver takes possession * whichever first occurs *.' 881, 110(d). Transactions excluded shelter are, so far pertinent, (such) 110(d)(5). petitions results law filing. situation us, remaining issue accordingly occurred September 26, day Seafoods perforce adjudicated bankrupt. understand contend, suggest presentment checks, October 2. Given California, check pro tanto drawer's until presentment, another moment possible. California Civil Code 3265e; Commercial 3409. sum, find unavoidable Act's plain value Seafoods' behalf.2 10 confine attention unadorned terms Nonetheless, Congress pointed unmistakably direction, prudence simple propriety surely require examine carefully impulses beckon us another. explains resolution two apparently contentions. am unpersuaded either permits circumvent demands. intimates, expressly deciding, shielded contractual seasonable it. vouches wider complete had. doubtless true purchaser encumbrancer, ordinarily assumes existing claims, liens, equities. Hewit Berlin Machine Works, 194 296, 24 690, 48 986. Unfortunately, maxims scarcely suffice decide case. They interstitial rules, further positive requirements permit. Baltimore Staake, 202 141, 26 580, Collier, 70.04, 954.2. several respects clothes powers denied bankrupt: A may thus avoid, although not, transactions deemed fraudulent liens obtained completed four months prohibition 67c(2). 957. 12 does assert protected 70d. instead concede that, considerations aside, bank's invalid conclude reasoned defense retained suffices preclude use power conferred If Court's meaning, traversed logic authority, enasculated given trustees 13 principal contention seems oblige release Its premise plainly equity here solvent appropriately resort; unable accept premise. This statute imprecise. Nor legislature's intentions misshapen statute's words; even cursory examination history will evidence faithfully reflect Congress' purposes. 14 1898 adjudication, contained nothing prevent dissipation interval filing.3 courts left free devise protective rules reconcile competing estate those dealt period. fulcrum proposition 'petition (in bankruptcy) caveat world, effect attachment injunction.' Mueller Nugent, 184 1, 14, 22 269, 275, 46 405. softened severity series exceptions, employing distinguishing convenience suggested. result, draftsman Chandler reforms it, consistent theory developed,' 'conducive confusion uncertainty, potentialities argument, 'bluffing,' litigation, expense delay.'4 consisted essentially 'nebulous vagarities.'5 15 stemmed chiefly sustained investigation problems Conference.6 members draftsmen. revisions they entirely restructured basis trustee's occur Their purpose, them explained subcommittee, provide 'a clear basis' issues transactions, 'lieu crazy quilt contradictory judicial statements.'7 their define 'the extent protected.'8 16 Adjudication receivership expected mark perimeters protection. Various factors choice. First, none Nugent reached adjudication.9 More important, once draftsmen elected vest filing, anxious shield debtors consequences unwarranted involuntary petitions.10 feared ruin inducing others avoid dealings him. immunize encourage debtor. need Finally, signal beginning administration, appropriate moments forbid meddling estate.11 equally offered intended principally proceedings. indications this. Most hazard section directed, debtor's credit, Thus, discussion problem subcommittee explicitly confined petitions.12 Further, 63b, closely supplements 70d, extends proceedings.13 known followed quickly routinely filing.14 certainly unknown filing.15 could any fleeting minimal.16 18 short, tailored measured transfers. uncertainty. every indication 19 fully sympathize discomfort position, escape impact what done.17 found s constitutionally impermissible.18 simply standard own conscience, concluded requires forbids. thought well settled supplement, never supersede, Collier 2.09, 171—172. language neither imprecise nor infelicitous; room interposition 20 today dilution amendments 70. disposition taken whenever strongly strictures created scheme. fear set motion protracted process 1938 resulted 'confusion uncertainty,' 'litigation, delay.' so, wipe slate momentarily clean. 21 affirm Appeals. FORTAS. 23 vacate believe controversy record. Respondent, substantial stake outcome adversary usual sense. On February 24, 1964, ruled May 19, since time. Having payment, except professional curiosity law—and apprised Appeals, Brief p. also Petition Certiorari, 4. Nevertheless, eager answer intriguing legal facing claim contribution, continued trustee, obligingly went along. respondent admittedly costs,1 incurred volunteer. 25 reasons substance case, important proceeding, 1964. basic system insist benefit contentions opposing material, merely abstract, conflict. Adverse adverse reality positions taken—are absolutely necessary. See, e.g., Muskrat United States, 219 346, 361—363, 31 250, 255—256, 55 246 (1911); People State Pablo Tulare R. 149 308, 313—314, 876, 878, 37 747 (1893); South Spring Hill Gold Min. Co. Amador 145 300, 301 302, 921, 36 712 (1892). Aetna Life Ins. Haworth, 300 227, 242—242, 57 461, 463—464, 81 617 (1937) (Hughes, C.J.); Fairchild Hughes, 258 126, 129 130, 42 274, 66 499 (1922) (Brandeis, J.). Second, peculiar depart rule. decision strip relative obligations ought resolved participate.2 657, 865 (1950). today's confirms wisdom rule 'that there controversy, involving real rights, record, dismissed.' Little Bowers, 134 547, 557, 620, 622, 33 1016. Lord Veazie, How. 251, 255, 1067. 27 below remand direction dismiss. Mechling Barge Lines 368 324, 329—330, 82 337, 340—341, 317 (1961); States Munsingwear, 340 36, 39—41, 71 104, 106—107, 95 Like addition majority, compare Fishgold Sullivan Drydock Repair Corp., 328 1105, 90 1230, Aeronautical Industrial Dist. Lodge Campbell, 337 521, 69 1287, 93 1513. negotiability proviso protect analogous circumstances. 730. proviso's legislative throws little light scope. appears inapplicable here. strictly negotiation. Second constructions consonant balance Harv.L.Rev. 548, 550. 70.68, 1502, n. (14th ed. 1964). rely proviso. despite cleavage took Everett Judson, 228 474, 568, 927. summarized McLaughlin, Aspects Bill Amend U.Chi.L.Rev. 383. Amendment (pts. 2), 40 341, 583, 615. conclusions Weinstein. Law 1938, 161. 70.66, 1495. brief Conference's work U.Chi.L.Rev., 375. Hearing House Committee Judiciary 6439, 75th Cong., 1st Sess., 212. Professor McLaughlin quoted article 341. He subsequently acknowledged area continue parties. Ibid. attached line cleavage, comparative insignificance proceedings, infra, acknowledgment reach 70.67, 1500. 1498. apparent exception, Jones Springer, 226 148, 64, 161, dredge placed hands levied sufficed ordinary limitations imposed 211. next pressing problem.' '(w)e provision (70d) cover (the petitions).' His explanation based problem. course unfairness otherwise produce. Analysis 12889, Judiciary, 74th 2d 230 (Comm.Print 1936). MacLachlan, Handbook 346. 873, 103(b). 63b 'In appointment occurs, arising favor reason transferred services provable services.' 40. County Massey, 192 199, 380. 1959 18, adopted recommendation Judicial Conference Administration. Annual Report Proceedings Conference, 1958, 28. bill endorsement Conference. H.R.Rep. 241, 86th quite improbable inadvertently scope Judge Soper's reasoning Lake Insurance Cir., 218 394, 399, persuasive: 'Whether best possible solution say. fact competent longer necessary attempt, conspicuously successful past, cases facts arise Kohn Myers, 266 353. event petitioner's provisions due process. express constitutional Art. I, 8, great swift efficient administration; purpose devised scheme balanced purposes permissible, achieve context Constitution whose them. Moyses, 186 181, 857, 1113. An unbroken establishes salvage moot Walling James V. Reuter 671, 677, 826, 829, 1001 (1944); Anchor Coal 279 812, 49 262, 971 (1929); Alejandrino Quezon, 271 528, 533—536, 600, 601 602, 1071 (1926); Brownlow Schwartz, 261 216, 43 263, 67 620 (1923); 362—363, 523—524, 990 (1921); Robertson Kirkham, Jurisdiction Supreme (Wolfson Kurland ed.); Moore, Federal Practice 54.70(5), 1311 (2d 1956). Upon vacation below, relitigate liability, respect responsible manner became nonadversary 39—40 note

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