No. 154 | 2d Cir. | Feb 11, 1908
The explanation of this order is found in earlier decisions of this court, made in this same proceeding. 134 F. 341" date_filed="1904-12-20" court="2d Cir." case_name="In re Waterloo Organ Co.">134 Fed. 341, 67 C. C. A. 255; 154 Fed. 657, 83 C. C. A. 481. At the time of bankruptcy the bank held 21 $500 bonds of the bankrupt corporation. It was contended that they had been issued without consideration and were void. It was shown that they were taken as collateral security at a time, when the company was indebted to the bank on its own and indorsed negotiable paper in the amount of about $30,000; that the company wanted a larger amount of discounts, and that under an agreement then m.ade and upon collateral then furnished (including the bonds) the bank increased the discounts by much more than $10,500, so that at the time of filing petition in bankruptcy it held $11,000 notes of the corporation and about $49,000 of customers’ notes indorsed by it.
This court held on the first appeal that consideration for the bonds was sufficiently shown and that the bank could prove them as a claim. On the second appeal the trustee contended that the bank should deliver to him $10,500 of the notes which the bank produced, made or indorsed by the organ company; and it was held that the same notes could not be used to make out a valuable consideration for the bonds and also be independently proved upon as existing indebtedness, and we directed that the bank must elect whether it would make the bonds good by allowing the consideration it gave for them (these notes) to be covered into the bankrupt estate, or would press its claim as a general creditor on the notes, leaving the bonds without consideration. In discussion of the question the phrase was used “the $10,500 represented by these company notes”; but it is quite apparent from both opinions that no differentiation was made between organ company paper and customer’s paper indorsed by it, upon which the bank had advanced money subsequent to the transfer of the bonds. It now appears that some of the corporation notes (part of the $11,000) have passed out of the possession of the bank; but that is immaterial, so long as the bank can deliver the $10,500 in notes made or indorsed by the organ company.
The order is affirmed, with costa