Irving Trust Co. v. Maryland Casualty Co.

83 F.2d 168 (2nd. Cir. 1936)

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Nature of the Case

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Facts

The bankrupt is a Delaware company, doing business in New York. An involuntary petition was filed against it on the 13th of October, 1932, and P was appointed its trustee. On January 6, 1932, the company was indebted to four surety companies, with which on that day it entered into two contracts on separate dates by which it promised to transfer to the companies or their nominees in payment of its debts to them certain personal property and to procure the transfer by three of its subsidiaries of certain other real and personal property. The chattels consisted of the supplies, furniture, and the like; the other personalty was made up of mortgages, mortgage bonds secured by real property, insurance policies, assignments of rent, accounts receivable, and cash. P alleged that at the time of the contracts the bankrupt was insolvent, or in imminent danger of insolvency; that the transfers were intended to prefer the surety companies, as they well knew or had cause to know; and that in performance of the contracts the subsidiaries conveyed the real property and chattels thereon to nominees of the surety companies, and the bankrupt transferred the bonds, mortgages, accounts, etc., to the companies themselves. The preferences were more than four months old when the petition filed and the judge ruled that the transfers were not voidable under section 67c of the Bankruptcy Law. The judge decided that section 114 applied only to the liability of officers, directors, and stockholders of foreign companies and did not make unlawful the transfers themselves. The bill was dismissed and P appealed.