235 F. 908 | D. Mass. | 1916
The check for $502.68 was delivered to the Edison Electric Eight Company by the bankrupt, in good faith, and in order to prevent the light from being shut off in his hotel, two days before his voluntary petition in bankruptcy. It was not presented by the Edison Company directly to the drawee bank, but was deposited in another banking institution for collection and was presented through the clearing house. It was paid by the bank after the petition and adjudication, but before any of the parties, except the alleged bankrupt, knew of those facts. The institutions through which the collection was made acted, in so doing, as agents of the Edison Company.
In legal effect the case is the same as if the Edison Company itself had retained the check and had not presented it for payment until after the drawer had been adjudicated bankrupt, and had then done so in good faith and without knowledge, either on its part or on that of the drawee hank, of such bankruptcy. Upon such facts, is the payee entitled as against the trustee in bankruptcy to retain the sum received on the check ? The delivery of the check did not operate as an assignment, or segregation of the funds on deposit, nor impress those funds with any trust in favor of the payee. The check was a draft which it was the duty of the drawee to pay upon presentation as long as it had funds available therefor. Fourth Street Bank v. Yardley, 165 U. S. 634, 643, 17 Sup. Ct. 439, 41 L. Ed. 855; Holbrook v. Payne, 151 Mass. 383, 385, 24 N. E. 210, 21 Am. St. Rep. 456; Negotiable Instruments Act, Mass. Rev. Laws, c. 73, § 206. The delivery of the check was not a completed transfer of the debtor’s property. By the general law it did not extinguish his liability to the Edison Company until it was paid. Downey v. Hicks, 14 How. 240, 14 L. Ed. 404; Segrist v. Crabtree, 131 U. S. 287, 9 Sup. Ct. 687, 33 L. Ed. 125; cf. Houghton v. Boston, 159 Mass. 138, 34 N. E. 93. The Edison Company acquired no rights in the money received on the check until the actual payment thereof. The effect of the transaction is to be determined as of that time.
Upon the adjudication—which in voluntary cases like this is to be considered as immediately following upon the filing of the petition (In re Hurley [D. C. Mass.] 185 Fed. 851)—the bankrupt’s deposit came into the complete custody of the bankruptcy court. Thereafter it was no longer his property. 2 Remington on Bankruptcy, § 1274. The legal title was still in him, but he held it only for the trustee when one should be qualified; and he was unable to effect any valid transfer
It may be that, as between the trustee and the bank, the latter would be protected by reason of the agreement under which deposits are customarily accepted. See In re Zotti, 186 Fed. 84, 108 C. C. A. 196; Reed v. Mattapan Del. & Tr. Co., 198 Mass. 306, 84 N. E. 469. No such question arises between the trustee and the Edison Company.
The learned referee’s finding that the payment was not a recoverable preference is affirmed, but his further conclusion that the trustee was not entitled to recover seems to me to have been erroneous. The order of the referee dismissing the petition is vacated. The petitioner may present a draft decree in accordance with this opinion.