201 F. 93 | 2d Cir. | 1912
Lead Opinion
The order appealed from permits the trus^tee to sell his interest in certain real estate, together with his right to set 'aside-as fraudulent a conveyance of such property by the bankrupt to his wife, in alleged fraud of creditors. The trustee is unable to prosecute a suit for this purpose for he has no funds. . The-.creditors have been asked to contribute, but have declined to do so. The trustee cannot wind up the estate and procure his own discharge with this interest and right of action undisposed of. It is of some value, for he has already received an offer of $301 therefor. In such circumstances, what is to be done? Is there any alternative but to sell whatever interest and right he possesses ?
The order of the District Court does not pass upon the validity of--'the transfer of the real estate; there is nothing in the order itself or in the opinion of the court deciding that the transfer was fraudulent; that question must.be decided when the proper action is brought to set it aside.
The order is affirmed.
Dissenting Opinion
(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.