Court Opinion

ID: 5408124
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:04:49.956719+00
Date Added: 2024-06-11T08:30:40.257177
License: Public Domain

Russell, J.
The objection that the trustee in bankruptcy would not have a right to follow the moneys, due from the Equitable Life Assurance Company to the bankrupt, upon the charge that the assignment of the contracts to the' bankrupt’s wife was a preference made within four months of bankruptcy, and also upon the charge that the assignment was fraudulent as against creditors because the two claims are inconsistent, is not well founded. The bankrupt may well seek to prefer an alleged creditor who is friendly to him, and also retain such a right by secret connivance with that creditor which will enable him to hold the benefits in whole or in part for future use, and so the transfer be unlawful within the provisions of the Bankrupt Act.
Whatever interest the bankrupt had in the contracts was assignable, and the defendant wife claims her right and such power of assignment by the bankrupt. If she had a right to take an assignment from him, the trustee gained by the proceedings whatever interest the bankrupt had in the contracts, and that interest is to be determined by the status of the contracts and the ownership thereof under the provisions' of the Bankrupt Act. If the assignment to the wife was valid, the bankrupt had no longer any interest, and the transfer to the trustee in bankruptcy carried no interest whatever. But, if that transfer to the wife was subject to the provisions of the National Law to further its object in-giving to thv trustee all -the bankrupt’s property, including that fraudulently transferred and that given to creditors for preference within four months of bankruptcy, then the trustee took the rights the bankrupt had in the contracts before the assignment to the wife if he chose to follow his privilege. If this action had been brought by the trustee his right to recover would have appeared to be clear. Instead of bringing an action however, by order of the District Court he was directed to transfer the interest of the bankrupt to a purchaser upon a sale made by him, which he did. It will not be assumed that these orders and sale attempted to assign an interest which was nothing if the assignment to the wife were absolute. The intention and effect was to assign whatever right the trustee in bankruptcy had, and that right was the same as the one which the trustee himself could reach, for by the orders for the sale and the. sale the trustee parted with every interest he had in the bankrupt’s contracts. *641Otherwise the proceeding would have been a confessedly futile one by the United States Court.
¡Nor is the right of action by the trustees a purely personal one. So far as he acts within the obligations of official duty his power to perform is personal, but so far as he undertakes to pass property rights he assigns all that he can assign, and it is a wholesome rule that he can dispose of property interests which may be the subject of litigation, allowing others interested to carry on the burden, while he himself promptly distributes all the proceeds realized to the creditors, and within a reasonable time terminates his trust.
Let judgment go in favor of the plaintiff for the relief asked for in the complaint, with costs against the defendant Matilda L. Madden.
Judgment in favor of plaintiff, with costs against defendant Matilda L. Madden.