Court Opinion

ID: 9641780
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:40:14.235286+00
Date Added: 2024-06-11T18:10:39.699121
License: Public Domain

SWAN, Circuit Judge
(concurring in result).
I agree in the result but I would place decision upon a simple ground. To justify the set-off the debtor’s trustee must prove that the debtor had a cause of action against the appellant. That is to say, he must prove that $6,000 of the money of Dolomite 3 Corporation was misappropriated to pay debts of Dolomite Marine Corporation. There was no misappropriation if Dolomite 3 was indebted to Dolomite Marine and received credit on that debt for its payments to the appellant. The trustee made no proof that such was not the fact. There is much in the record to suggest that it may have been. The building of the vessel was to be financed under-the contract of December 14, 1937 by the terms of which $250,000 was to be advanced by a bank; and of this sum $30,000 was to be paid to Dolomite Marine to reimburse it for expenditures already made for “shipyard and dock preparation.” It is entirely possible that the $6,000 paid to the appellant by the checks of Dolomite 3 was treated by it and its parent corporation as part of this $30,000 reimbursement to which the parent was entitled by the December contract. If so, the payments to *929appellant were not ultra vires and there was no misappropriation of money of Dolomite 3.
The majority opinion states that the trustee failed to support his burden of proving the three checks to be illegal transactions, but expresses the view that such failure should result in remanding the case for a finding on this question of fact, except that the trustee for other reasons must lose in any event. In my opinion the trustee’s failure to prove the check payments illegal necessitated a decision against him. Having tried his case and failed to put in adequate proof of his alleged cause of action, he loses. There is no more occasion for a remand for further evidence than in the ordinary case where a plaintiff fails in his proof. I would rest decision on this ground and think it unnecessary to consider the other matters discussed in the opinion.