253 Mass. 19 | Mass. | 1925
This is an appeal from a final decree of a single justice of this court whereby the trustee in bankruptcy of the estate of Charles Ponzi, upon a petition to intervene as a claimant, was adjudged to be entitled to receive the dividends on certain moneys deposited by one Louis H. Schaffer in the Hanover Trust Company and assigned by Schaffer to the plaintiff in this suit.
The facts taken from the report of the master concisely stated are as follows: In August, 1920, when the Hanover Trust Company was taken over by the bank commissioner, there was a deposit balance of $10,302.08 standing in the trust company to the credit of one Louis H. Schaffer. February 12, 1921, Schaffer duly filed a proof of claim against the Hanover Trust Company for the above stated amount, and a certificate of proof of claim was issued by the bank commissioner but was never delivered. On the same date Schaffer assigned his claim to the plaintiff, Goldie Levenbaum, who made demand upon the bank for the certificate and for the payment of a dividend of twenty-five per cent which, by an order of this court, the commissioner had been authorized to pay. The commissioner refused to deliver the certificate or to pay the dividend to Louis H. Schaffer or to Goldie Levenbaum because the trustees in bankruptcy of the estate of Charles Ponzi gave notice to the defendants that they claimed that the deposits were assets of the Ponzi estate. After the plaintiff brought this suit, the trustees in bankruptcy of Ponzi asked leave to intervene in the proceedings to establish their claim to the deposit and to all dividends payable thereon, as assets in bankruptcy of Ponzi, inasmuch as the deposit consisted of payments made to Schaffer by Ponzi both as commissions and upon Ponzi notes.
About Christmas, 1919, Schaffer was told by Ponzi that he was to launch a scheme with a negligible capital, in which he desired Schaffer to invest. The scheme as outlined was one of sending American money to Italy, changing it into Italian lire at the rate of $5 worth of lire for one American dollar, buying international reply coupons with the pro
Ponzi had his first transaction on December 20, 1919, and his last on August 9, 1920. “He made no investments of any kind, so that all the money he had at any time was solely the result of loans by his dupes.” Cunningham v. Brown, 265 U. S. 1, 8. In view of the business actually done, Ponzi was of necessity hopelessly insolvent from the start. He was petitioned into bankruptcy August 9, 1920, and was adjudged bankrupt on October 25, 1920; the intervening petitioner is now his trustee in bankruptcy.
All money received by Schaffer from Ponzi prior to July 23, 1920, by way of commissions or in payments of notes, he invested in the name of his wife in Ponzi notes, his wife having no money other than what he gave her. Before July 23,1920, Schaffer kept his account in the Cosmopolitan
Against the total deposits of $23,028.75, the account shows check withdrawals of $12,726.67, leaving a balance of $10,302.08 which the trustee seeks to hold as voidable preferences or fraudulent transfers. We assume without a review of the reported evidence that the plaintiff is a purchaser for value without notice of Schaffer’s rights against the bank.
As against Schaffer the facts found by the master, above succinctly stated, establish that Ponzi was insolvent in December, 1919, and continued to be insolvent until the filing of the petition in bankruptcy on August 9, 1920, and the adjudication in bankruptcy on October 25, 1920; that the payments of money were each of them made within four months of the filing of the petition; that Schaffer thereby was enabled to receive a greater percentage of his debt than any other creditor of the same class; and that Schaffer, receiving the payments, had reasonable cause to believe that such payments would effect a preference. In these circumstances the trustee in bankruptcy under the bankruptcy act § 60 (a) and (b) could recover the “property or its value” from Schaffer. Cunningham v. Brown, supra.
Schaffer having deposited the payments in the Hanover Trust Company, the question arises, Can the trustee follow that property or that credit into the trust company and hold it against the plaintiff, who became an assignee of the fund in the bank after the petition in bankruptcy and after the
Holding, as we do, that the trustee has the right on equitable principles to follow the trust fund through the creditor into the bank of the creditor, and that the illegal payments from the fund to the creditor are traced and identified by the facts found by the master, Hewitt v. Hayes, 205 Mass. 356, there remains the further question, whether the plaintiff, as the assignee in writing of a nonnegotiable chose in action, and a purchaser for value without notice, took the legal title or an equitable title to the chose in action. . The statute, G. L. c. 231, § 5, upon which the plaintiff relies in support of. the contention that she acquired the legal title by the written assignment, gives a new remedy but does not alter or affect the substantive rights as they existed at common law. Leach v. Greene, 116 Mass. 534. Wright v. Graustein, 248 Mass. 205, 208, 210. Carozza v. Boxley, 203 Fed. Rep. 673. Myers v. Davis, 22 N. Y. 489. Bentley v. Standard Fire Ins. Co. 40 W. Va. 729. Watkins v. Angotti, 65 W. Va. 193. The right of an assignee of a chose in action to bring an action depends upon the law of the forum. American Lithographic Co. v. Ziegler, 216 Mass. 287. The right of the trustee to avoid the preferential payments to Schaffer conferred by the bankruptcy law, § 60 (a) and (b), is a right which is prior in time to the equitable right of the plaintiff derived from the assignment of the legal right of Schaffer, and must prevail. Williston on Contracts, § 438, and cases collected. The conclusion that the trustee in bankruptcy can seize by appropriate proceedings the right of Schaffer to reach the preferential deposit made by him in the Hanover
Schaffer, having assigned his entire claim to the plaintiff, was not a necessary party to the suit brought by the plaintiff, although he might properly have been joined on the motion of the plaintiff when the trustee was allowed to intervene as a claimant.
Decree affirmed.