This is аn action brought pursuant to the provisions of Section 60 of the Bankruptcy Act, 11 U.S.C.A. § 96, by plaintiff as trustee in bankruptcy of the American Fiberlast Company to recover as a voidable preference the sum of $2,-056.87 paid by the bankrupt to defendant on February 11, 1957.
The facts necessary to a decision in the matter have been stipulated by the parties and, as stipulated, are so found by the Court as follows:
In August or September, 1956 the American Fiberlast Company obtained a contract from Hazeltine Electronics Corporation for the construction of a twenty-one foot Radome 1 for the price of $4,-900. The purchase order for the Radome was delivered by Fiberlast to defendant and retained by him until February 11, 1957 for use in attempting to borrow money for the Corporation to perform thе contract.
On November 1, 1956 Fiberlast, by Joseph L. Brewster, its president, executed under its corporate seal and delivered to J. Riker Proctor and defendant the following instrument, which was in letter-form on the corporate stationery:
“Nov. 1, 1956
“To J. Riker Proctor and Gordon L. Drew
“Gentlemen:
“Whereas The American Fiber-last Co. has received a contract for a 21' Radome from Hazeltine Electronics Corp. totaling $4900.00 but is unable to finance the purchase of the necessary materials and labor-ío construct the dome — the American Fiberlast Co. agrees that any money advanced by Mr. Proctor and. Mr. Drew for the specific expense-of manufacturing the Radome will be paid immediately to Mr. Proctor and Mr. Drew upon receipt of Hazel-tine’s remittance irrespective of any other demands from other creditors^
“The American Fiberlast Co.
(Coi-p..
“/s/ J. L. Brewster Seal)
“by Joseph L. Brewster,
President”
Subsequеnt to November 1, 1956 defendant loaned to Fiberlast the sum of $2,056.87 for the specific purpose of permitting it to perform its contract with Hazeltine. This amount was loaned by defendant in reliance upon the instrument of November 1, and the money so loaned was in fact usеd by Fiberlast for the performance of the Plazeltine contract. With the help of these funds. Fiberlast completed the contract and received the $4,900 contract price from Hazeltine on February 11, 1957. On the-same date Fiberlast repaid to defendant, thе $2,056.87 here in issue.
Fiberlast was adjudged a bankrupt on-petition of J. Riker Proctor and two others filed on February 20, 1957. The stipulation recites that at all times material hereto Fiberlast was insolvent; defendant had reasonable cause to believe-Fiberlast was insolvent; аnd there were-in existence creditors of Fiberlast, other *497 than defendant, who have not been repaid their debts.
Section 60 of the Bankruptcy Act provides in part as follows:
Sec. 60 “Preferred creditors
“a. (1) A preference is a transfer « x x 0f any 0f ^jje property of a debtor to or for the benefit of a creditor for or on account of an antecedent debt, made or suffered by such debtor while insolvent and within four months before the filing by or against him of the petition initiating a proceeding under this Act, the effect of which transfer will be to enable such creditor to obtain a greater percentage of his debt than some other creditor оf the same class.
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“b. Any such preference may be avoided by the trustee if the creditor receiving it * * * has, at the time when the transfer is made, reasonable cause to believe that the debtor is insolvent. Where the preference is voidable, the trustee may recover the property * * *. For the purpose of any recovery or avoidance under this section, where plenary proceedings are necessary, any State court which would have had jurisdiction if bankruptcy had not intervened and any court of bаnkruptcy shall have concurrent jurisdiction.”
On the stipulated facts, the disputed payment was concededly a transfer of property by a debtor, while insolvent, made within four months before the filing of a petition in bankruptcy, for the benefit of a creditor, who had reasonable cause to believe that the debtor was insolvent, the effect of which was to prefer that creditor. Thus the only question for determination by the Court is whether or not the sum of $2,056.87 was transferred to defendant “for or on account of an antecedent dеbt.” On this issue defendant contends that the letter of November 1, 1956 was either a partial assignment or a declaration of trust by Fiberlast of a portion of the proceeds of the Hazeltine contract, and that the repayment of his loan was, in consequence, not “for or on account of an antecedent debt.” Plaintiff’s position is that the letter was a mere promise to pay out of a particular fund, and that the subsequent payment was accordingly “for or on account of an antecedent debt,” preferential and voidable.
With respect to defendant’s first contention, it is clear that if the instrument of November 1, 1956 was a partial assignment
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given as security for loans to be made to Fiberlast by defendant, no preference occurred when the corporation repaid the $2,056.87 subsequently loaned it by defendant. Doggett v. Chelsea Trust Co., 1 Cir., 1934,
No Maine case succinctly sets forth the requisites of a valid assignment. However, it is hornbook law that an assignment is an act or manifestation by the owner of a right which indicatеs his intention to transfer, without further action, that right to another. See Restatement, Contracts § 149(1)
*498
(1932). And the courts have uniformly-recognized that an agreement to pay out of a particular fund, without more, is not an assignment, but that to constitute an assignment there must be a manifestаtion of an intention by the assignor to relinquish control of the right assigned and to appropriate that right to the assignee. Christmas v. Russell, 1871,
pages 769-770):
“No particular phraseology is required tо effect an assignment, and it may be either in oral or written form; but the intent to vest in the assignee a present right in the thing assigned must be manifested by some oral or written word or by some conduct signifying a relinquishment of control by the assign- or and an appropriation to the as-signeе. * * * ” (Emphasis supplied.)
With these fundamental principles in mind, the Court turns to the interpretation and effect of the writing involved in this case. As with any written instrument, the intention of the parties controls in determining whether it constitutes an assignment. See Wolters Village Management Co. v. Merchants and Planters Natiоnal Bank of Sherman, 5 Cir., 1955,
The two Maine cases of Buck v. Swazey, 1852,
Nor does Barnes v. Alexander, 1914,
“Fairly good reasons for putting aside the strict requirements of the doctrine of equitable assignments can be found in the case оf an asserted lien by a lawyer for his fee, on the money recovered as the result of litigation, for the efforts of the lawyer bring the fund into existence. In such case it may be said, arguendo, that the lawyer asserting the lien is, in a manner of speaking, a joint adventurer, and such cases scarcely belong in the category of equitable assignments. *>r if
“Many cases are to be found sustaining the rule that a promise to pay out of a particular fund, when it shall come into existence, does not create an equitable assignment of thаt fund. As counsel for defendants on argument aptly said, in effect, that business and commerce will be greatly harmed, hamstrung, and impeded if every agreement of an Iowa farmer to pay a debt out of a crop of corn, when he shall have sold the corn, is to be hеld to be an equitable assignment of the proceeds of such corn.”
Defendant’s alternative suggestion that the November instrument constituted a declaration of trust must also fail. The Court’s construction of the instrument as a promise to pay in the future requires rejection of this argument. See 1 Scott on Trusts § 12 (2d ed. 1956). As stated in Northwestern Mutual Life Insurance Co. v. Collamore, 1905,
“A declaration of trust to be effectual, must be explicit, unconditional, and complete * * * the *500 declaration must be of a present trust, vesting the equitable title in the beneficiary thereby and irrevocably.”
On the analysis previously stated, the November instrument evidences no intent to vest equitable title to any of the proceeds of the Hazeltine contract irrevocably in defendant.
Since the November 1 instrument was neither a partial assignment nor a declaration of trust, it follows that the payment by Fiberlast to defendant on February 11, 1957 was a preference within the meaning of Section 60, sub. a of the Bankruptcy Act and may be avoided by the Trustee under Section 60, sub. b.
Judgment is accordingly ordered for plaintiff in the amount of $2,056.87, with costs.