Court Opinion

ID: 6638445
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:43:20.34654+00
Date Added: 2024-06-11T15:59:08.920542
License: Public Domain

NETERER, District Judge
(after stating the facts as above). Elaborate briefs were filed and many matters discussed which are not before the court. The issue is submitted upon the findings of the referee. After consideration of the briefs and the record before the court, I believe that the referee is right.
Section 1153 of Remington’s Code would have application if the funds were disposed of by the state court, but in this •court, under section 64b of the Bankruptcy Act (Comp. St. § 9648), the classification of claims and order of payment are fixed. In concluding between a state law and the Bankruptcy Act, as to priority of the same class of debts, the Bankruptcy Act controls. Collier on Bankruptcy (1921 Edition) 1017; Black on Bankruptcy, 617-619; In re Crown Point Brush Co. (D. C.) 200 Fed. 882; In re McDavid Lumber Co. (D. C.) 190 Fed. 97; Dickinson v. Saunders, 129 Fed. 20, 63 C. C. A. 666; In re Slomka et al., 122 Fed. 630, 58 C. C. A. 322. To the same effect is McDermott v. Tolt Land Co., 101 Wash. 114, 172 Pac. 207. There is no provision of the Bankruptcy Act which authorizes the allowance of any part of this claim as preferred.
The objection of the trustee to the claim of the bank emphasizes the use made of the funds after being borrowed from the bank, rather than the transaction with the bank. The funds, it is urged, were paid in satisfaction of claims which had” been personally guaranteed by the president of the bankrupt corporation, and the president of the bankrupt corporation gave to the bank collateral to secure the bank in addition to the security given by the bankrupt. The fact that the money was applied to the payment of sueh claims would not of itself defeat the claim of the bank, since the money was furnished by the bank to the bankrupt in good faith. It may be that the payment of the claims by the bankrupt is a voidable preference, but that could not affect the validity of the loan or the security given. Nor would the taking of the additional collateral affect sueh loan.
The order of the referee is affirmed.