Court Opinion

ID: 8786223
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:35:47.320829+00
Date Added: 2024-06-11T17:03:05.411060
License: Public Domain

LACOMBE, Circuit Judge
(dissenting). I am unable to concur with the majority, as in my opinion the trustee has nothing which he can transfer. The right which the amendment gave him to institute a- suit, as a judgment creditor could,- to set .aside a conveyance, as fraudulent, was given to him for the purpose of securing a ratable division of all the bankrupt’s estate among all his creditors. If he transfers this right to a single creditor, who in the event of success will secure for himself the property covered by the alleged fraudulent conveyance, the very object of the amendment, as it seems to me, is defeated. Usually the sale will be illusory. There is no real market for such a thing. Some particular creditor having inside information will often avail of it to secure a preference. It seems to me contrary to public policy to allow the trustee to transfer a right, given to him for the benefit of all, to some one who, possessed of secret information may be willing to buy it.
In another way such practice may work injustice. Often the transferee of a fraudulent conveyance has a bona fide claim against the bankrupt. If the trustee sets aside the conveyance, the transferee may prove his bona fide claim against the estate and .get whatever dividend he may be entitled to. In the event, however, of such a sale as this, the estate would usually be wound up and distributed before the action to set aside conveyance came to trial. In that event the transferee may lose, not only the property conveyed to pay the debt due him, but also the debt itself.
For these reasons I dissent.