254 F. 768 | 2d Cir. | 1918
George D. Chapman, trustee in bankruptcy of the Syracuse Candy Works, Incorporated, filed a bill in equity against Edward A. Hunt, praying that he be decreed to hold in trust for the complainant certain moneys collected by him upon accounts receivable assigned to him by the Candy Works.
January 13, 1915, Hunt, who had been an' incorporator, director, and stockholder of the Candy Works, ceased all connection therewith and was given a written agreement with the Candy Works, which was then entirely solvent as follows:
The Candy Works assigned to Hunt good outstanding accounts receivable to the amount of $6,000 to secure Hunt against loss by virtue of his accommodation indorsement of its notes held by the City Bank of Syracuse for $9,100 and any renewals thereof. It was further agreed that this should be a continuing collateral security, and that to such end the treasurer of the Candy Works should collect the
“For value received the undersigned, Syracuse Candy Works, Incorporated, does hereby sell, assign, and' ’transfer the within mentioned accounts to Edward. A. Hunt in accordance with the terms and conditions o£ our agreement with said Hunt, bearing date January 13, 1915.
"Syracuse Candy Works, Inc.,
“By G. It Itowe, President.
“Theima M. Smith, Treasurer.”
The Candy Works finally covenanted for additional assurance as follows:
“We do also agree that we will execute any other or further papers or agreements that may be necessary to carry this assignment or the assignments of any other accounts substituted for these accounts or substituted for any accounts that may be substituted for these accounts.”
This agreement was carried out until April 16, 1916, when Hunt was given a list of accounts receivable aggregating $3,369.74.
May 13, 1916, an involuntary petition in bankruptcy was filed against the Candy Works and an adjudication followed. The District Judge held that the transaction of April 18, L916, was an entirely new and independent one, constituting a transfer within four months of the filing of the petition to Hunt, a creditor by virtue of his indorsement, who knew the Candy Works was insolvent, voidable by the trustee as a preference under section 60b (Comp. St. § 9644), and also void as a fraud upon creditors under section 67e of the Bankruptcy Act (Comp. St. § 9651). We cannot so regard it. It was, indeed, a new writing of a new date, but more in pursuance of the Candy Works’ covenant of further assurance than as a new and independ
The decree of the District Court must be modified in the following respects: Hunt is entitled to retain the proceeds of all the accounts assigned to him under the writing of April 18, 1916, which he has received, and to recover from the trustee the proceeds of such accounts as he has not received, which can be traced into the funds in the hands of the trustee, and, when these amounts have been ascertained, to be permitted to file his claim for the balance due him.
The decree is reversed, and the cause is remanded to the District Court, with instructions to enter a decree in accordance herewith.