111 F. 503 | D. Mass. | 1901
Wilcox, a creditor of the bankrupt, sued him and garnished Post & Flagg less than four months before the filing of the petition. Thereafter he proceeded to judgment, took out execution, and collected from Post & Flagg the amount due him from the bankrupt, in the belief that it had been duly recovered under a valid garnishment, and that there had thus been effected a full settlement of the judgment rendered against the bankrupt. The judgment was entered satisfied. At that time Wilcox knew that bankruptcy proceedings were pending, and that Swift’s trustee claimed the debt owed by Post & Flagg. As Post & Flagg had ’been informed of the bankruptcy, they took a bond from Wilcox to indemnify them in case of loss. Still later Wilcox was notified that the bankrupt’s seat in the New York Stock Exchange had been sold. The rules of the exchange gave Wilcox a lien upon the proceeds of the seat for the amount of the bankrupt’s debt to him, and he was invited to prove his claim against the bankrupt in the manner prescribed by the rules. To this notice he replied that he had already made a settlement with the bankrupt, and that he relinquished whatever claim he had against the bankrupt’s membership. The trustee brought suit against Post & Flagg to recover their debt to the bankrupt’s estate. As the garnishment made by Wilcox was void under section 67 of the bankrupt act, the payment by Post & Flagg to Wilcox did not avail them to resist the trustee’s suit. Wilcox was called upon under his bond of indemnity, and agreed with the trustee that the trustee’s suit against Post & Flagg should be settled by the payment by Wilcox of the money due the trustee from Post & Flagg. The payment was made, and the trustee received and applied the same in full settlement of his.suit. Wilcox ’ now seeks to 'prove against the bankrupt’s estate, and to reinstate his lien upon the proceeds of the bankrupt’s seat in the stock exchange, which have been paid over to the trustee.
While none of the cases cited in argument are exactly like the case at bar, yet the latter does not differ substantially from casesv in Which it has been held that a creditor who has relinquished a security
The trustee argued that, as he did not and could not recover from Wilcox the money paid Wilcox by Post & Flagg, the bankrupt’s debt to Wilcox remains satisfied by the satisfaction obtained of the judgment recovered against the bankrupt. He contended that the bond given by Wilcox to Post & Flagg is not to be taken as part of the transaction, but as something with which the trustee has no concern. But it is not clear that the truslee was without remedy directly against Wilcox, and, moreover, considering the botid of indemnity in connection with the negotiations between Wilcox and the trustee, and with the settlement they both entered into, it appears to me that equity will treat the payment to the trustee by Wilcox as a restitution made by Wilcox of money belonging to the bankrupt’s estate which had come into Wilcox’s hands, thus reviving Wilcox’s claim. In the Condon Case, above cited, the creditor took the proceeds of goods of the bankrupt sold on execution. These proceeds he subsequently paid over to the trustee, believing himself bound in law to do so. If his belief had been correct, can it be supposed that his claim against the bankrupt would have been satisfied by the levy of execution? It was suggested that in this case Wilcox sought to secure an unfair advantage by realizing under his garnishment. If he did so,—if he sought to evade the bankrupt act,—lie cannot now app'eal to the equitable consideration of this court; but the agreed facts state expressly that he received payment from Post & Flagg in the belief that the money had been duly recovered from them under a valid attachment. He knew of the bank
It was urged further that Wilcox cannot now get the benefit of his lien, because that lien can be established only according to the ' rules of the stock exchange, out of whose hands the money had passed. But the rules of the stock exchange do not establish any method of formal proof as a condition precedent to the existence of the lien. They establish the lien generally, and then provide for the ascertainment of the amount of the debt. As that amount is found in the agreed statement of facts, Wilcox should be permitted to prove therefor, and to receive satisfaction out of the proceeds of the seat, as far as those proceeds will go.
The judgment of the referee is modified accordingly, but the creditor will recover no costs of this proceeding. Pie must pay the costs of the suit against Post & Flagg, taxed as between solicitor and client.