Court Opinion

ID: 8830461
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:01:48.105219+00
Date Added: 2024-06-11T17:04:54.801973
License: Public Domain

MAYER, Circuit Judge
(after stating the facts as above). We have set forth the three papers supra, so as that the questions involved may be fully understood. We pass by the contention that' the agreement of Spiegel was with Finkelstein, and not with Columbia Shoe Company. We assume that it was with the latter. Spiegel, in his affidavit, did not state that the money he collected from Ajax and Smith was for shoes made out of the leather furnished under the agreement of March *46725th; but we lay aside this and certain other questions raised in order to reach the fundamental points presented.
It being admitted that, at the date of the filing of the petition in bankruptcy, Spiegel did not have possession of the money in controversy, we next inquire (1) whether he had title thereto; and (2) whether or not his claim is colorable. In the agreement of March 25, 1921, there is no language of the kind familiarly used in transferring accounts, such, for instance, as found in Hub Carpet Co., 282 Fed. 12. If Spiegel did not take shoes in payment of leather, then Columbia Shoe Company could either turn over accounts to Spiegel, or collect the money due it and turn over the money thus collected to Spiegel. Such an agreement did not presently assign the accounts to Spiegel, nor transfer the title to the accounts to Spiegel. It was nothing more at best than an agreement to turn over to Spiegel the accounts before collection or the proceeds after collection. No one could seriously urge that, by virtue of the agreement of March 28th, Spiegel could have maintained an action for conversion against Columbia Shoe Company in event of breach.
The power of attorney of April 27th added nothing to title. If anything, it denied title. It merely permitted Spiegel to act as attorney in fact for Columbia Shoe Company, so as to enable Spiegel to make collections and to deposit in the corporation’s name and to draw drafts, etc., in its name. This power of attorney was not in any sense a power coupled with an interest. Such a power, of course, presupposes a legal interest in the res over which the power is to be executed. 31 Cyc. 1043. In this case, the situation as to revocation of the power of attorney would, of course, have been different, if Spiegel had had title to the accounts.
When the petition was filed, the property of the bankrupt was at once in custodia legis, and the power of attorney was revoked by operation of law. Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405; Lazarus v. Prentice, 234 U. S. 263, 34 Sup. Ct. 851, 58 L. Ed. 1305. Spiegel, therefore, had not power nor right to interfere with the bankruptcy court, by taking and withholding property, actually or constructively, in the possession of the bankruptcy court.
In the case of In re Midtown Contracting Co., 243 Fed. 56, the adverse claimant had taken possession of the property prior to bankruptcy, and in all the cases, where summary proceedings have not been permitted, it will be found that the property prior to bankruptcy had been owned or possessed by the party adverse to the trustee prior to bankruptcy. For illustrations see Matter of Wood (C. C. A.) 278 Fed. 355; Matter of Eddy (D. C.) 279 Fed. 919; Charles H. Brown Paint Co. v. Bockhold (C. C. A.) 269 Fed. 139; Matter of Franklin Brewing Co. (C. C. A.) 263 Fed. 512; In re Joseph R. Marquette, Jr., 254 Fed. 419, 166 C. C. A. 51; In re Phœnix Planing Mill (D. C.) 250 Fed. 898.
* Where, however, the adverse claimant cannot show title and has not possession at the time of filing the petition in bankruptcy, his claim to hold money collected after the date of filing a petition in bankruptcy must be regarded as colorable. The mere fact that an argument can be made in favor of a claimant does not render a debated question of *468law a substantial question. When it appears, as in this case, that under no tenable theory can property in custodia legis be taken by an outsider, then the right to summary determination in the bankruptcy court is clear. The fundamental (but not the only) test is possession.
• Where, as here, the property in the eyes of the law was- in possession of the bankruptcy court, procedure should be to move to reclaim in appropriate proceedings, and not to do acts which in .effect amount to taking away property from the court’s possession.
The order is reversed, without costs, and the District Court is instructed to grant the application of the trustee.