109 F. Supp. 642 | S.D. Cal. | 1953
The petition of Taylor Manufacturing Company, a corporation, and Ellis R. Taylor, filed November 14, 1952, to review the Order of the Referee on turn-over proceedings, dated November 7, 1952, heretofore heard, argued and submitted, is hereby decided as follows:
The Order of the Referee is modified by excluding from the Order the items denominated (3) in the Schedule set forth below. The findings as to Items (3) are disapproved as unsupported by the evidence. The turn-over Order is affirmed as to Items (1), (2) and (4) in the total amount of $7631.70. The findings of the Referee as to such three items are affirmed.
As so modified, the Order is affirmed.
Counsel for the Trustee will prepare formal order in accordance with Local Rule 7.
Comment
On October 7, 1952, the Referee in Bankruptcy, after a hearing on a petition for a turn-over, filed by the receiver of the bankrupt, made an order directing Ellis R. Taylor and Taylor Manufacturing Company, a corporation, to surrender and deliver to the Trustee herein the following property, proceeds and moneys. (The car number refers to the number appearing on the schedule received in evidence as the receiver’s Exhibit No. 3) :
(1) Funds wrongfully withdrawn from the corporation’s bank account $ 600.00
(2) Moneys realized upon the sale of the reclaimed floored automobiles in excess of the loans thereon:
(3) Entire proceeds from the sale of the following described automobiles:
(4) Proceeds from the sale of the floored automobiles:
A study of the voluminous record and transcript leads to the conclusion that there is substantial evidence in the case to sustain the finding of the referee that the respondent is properly chargeable with the appropriation of the items we have marked (1), (2) and (4). Rule 52, .Federal Rules of Civil Procedure, 28 U.S. C.A.; Order 36, General Orders in Bankruptcy, 11 U.S.C.A. following section 53. A clear preponderance of the evidence showed that when difficulties arose as to the bankrupt, which were accelerated by the fact that respondent Taylor secured the arrest on charges of grand theft of the only three responsible officers of the bankrupt other than himself, he proceeded to apply to debts owed to himself the sum of $600 in the bank arid caused to be removed to his garage and parked on a side street certain automobiles which were later either sold by him or seemed to have vanished. At the time, Taylor was the vice-president and general manager of the company. Granted that he had certain rights as to items No. 3, to which we shall refer presently, he had no right to appropriate money or property to the liquidation of debts either in the form of dishonored checks or otherwise. In that respect, he was a creditor like any other creditor and could not by acting in a dual capacity, secure for himself an advantage or preference over the others. The money and property so appropriated by Taylor being the property of the bankrupt, and the bankrupt not doing any business following the middle of February, 1952, Taylor could not relieve himself of the responsibility as the possessor and holder of the property at the time of the bankruptcy by tendering his resignation to the secretary-lawyer of the company, — a resignation which was never accepted by the Directors. For there is no evidence of any meeting ever being held to act upon such resignation. Hence, at the time of bankruptcy, there was sufficient possession in the bankrupt through Taylor to satisfy the requirements as to jurisdiction required by bankruptcy law. See, Taubel-Scott-Kitzmiller Co., Inc., v. Fox, 1924, 264 U.S. 426, 44 S.Ct. 396, 68 L.Ed. 770; Thompson v. Magnolia Petroleum Co., 1940, 309 U.S. 478, 60 S.Ct. 628. 84 L.Ed. 876; Gardner v. New Jersey, 1916, 329 U.S. 565, 67 S.Ct. 467, 91 L.Ed. 504; In the Matter of Kansas City Journal-Post Co., 8 Cir., 1944, 144 F.2d 819, 823; Cline v. Kaplan, 1944, 323 U.S. 97, 98-99, 65 S.Ct. 155, 89 L.Ed. 97; Honeyman v. Hughes, 9 Cir., 1946, 156 F.2d 27, 28-29; and see the writer’s opinion In re Christ’s Church of the Golden Rule, D.C. N.D.Cal.1948, 79 F.Supp. 42, 44. Taylor could not by the fiat of his unaccepted resignation, turn his possession and custody as vice-president and general manager of the bankrupt into his possession as controlling stockholder of Taylor Manufacturing Co.