261 A.D. 572 | N.Y. App. Div. | 1941
“ Let’s Go to Murray’s, Inc.,” which conducted a restaurant in Tuckahoe, filed on January 27, 1939, a debtor petition for an “ arrangement ” under chapter 11 of the Bankruptcy Act in the United States District Court for the Southern District of New York. Thereupon the court enjoined creditors from interfering with or transferring the debtor’s property until further order. The debtor continued in business and remained in possession of its property until September 19, 1939, when, because the “ arrangement ” failed of consummation, the debtor was adjudicated a bankrupt and plaintiff became its trustee in bankruptcy. After the filing of the petition for “ arrangement,” the debtor opened and from February 3 to August 11, 1939, kept a checking account with defendant bank, which had notice of the “ arrangement ” proceeding. One Murray E. Birnbaum was the chief factor of the debtor. In March and April, 1939, Birnbaum indorsed five certified checks aggregating $3,189.15, drawn on other banks to the order of the debtor, by writing the name of the debtor and affixing thereto “ Murray E. Birnbaum, Trustee,” and procuring the cash therefor from defendant. On March 1, 1939, and May 2, 1939, defendant cashed for Birnbaum two checks aggregating $800, drawn on the debtor’s said account and signed as the five checks were indorsed. Birnbaum had not been authorized to act as trustee of the debtor. The moneys, amounting to $3,989.15, were used by Birnbaum for his own purposes. The five checks which were cashed, and the account of the debtor with the bank on which the said two checks were drawn, represented receipts in the business of the debtor conducted after the petition for “ arrangement ” had been filed and before its failure.
An “ arrangement ” means any plan of an insolvent debtor for the settlement, satisfaction or extension of the time of payment of his unsecured debts, upon any terms. (Bankruptcy Act, §§ 306, subd. 1, 323, as added by the act of June 22, 1938.) In such proceeding the court has exclusive jurisdiction of the debtor and his property, wherever located. (§ 311.) When a petition is filed, such as the one in this case, the jurisdiction, powers and duties of the court, the powers of its officers, and the rights of the debtor, are the same as if a voluntary petition for adjudication in bank
Upon the foregoing provisions dealing with an “ arrangement,” respondent argues that the property rights of a debtor are the same as those of a bankrupt in the ordinary bankruptcy proceeding and that this view is confirmed by section 70 of the Bankruptcy Act, which provides that the trustee of the estate of a bankrupt shall be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition in bankruptcy or of the original petition proposing an arrangement or plan under the act. On this basis, respondent says, since the funds in question came out of the conduct of the business after the filing of the petition for “ arrangement,” they are after-acquired property, the title to which does not vest in the trustee in bankruptcy and, therefore, it was not guilty of a conversion.
True it is that the funds are after-acquired property, but they are not after-acquired property of the debtor, as such.
Under the act, the debtor is permitted to remain in possession and to conduct the business, but the title of the debtor is the title of a trustee. (§ 342.) Thus, while the title of the one who becomes trustee after the failure of the “ arrangement ” and adjudication in bankruptcy vests as of the date of the filing of the petition, it is expressly provided that, during the pendency of the “ arrangement ” proceeding, the debtor holds title as a trustee; and from
No other question is raised.
The order granting defendant’s motion for summary judgment and the judgment entered thereon should be reversed on the law, with ten dollars costs and disbursements, and the motion for summary judgment denied, with ten dollars costs.
Carswell, Johnston and Adel, JJ., concur; Close J. not voting.
Order granting defendant’s motion for summary judgment and the judgment entered thereon reversed on the law, with ten dollars costs and disbursements, and the motion for summary judgment denied, with ten dollars costs.