This section contains the nature of the case and procedural background.

The Hub Carpet Company made an assignment of receivables to D to secure an existing loan of $15,000. It included all accounts receivable then outstanding and all which should thereafter accrue in the ordinary course of business. A list of the existing accounts was delivered, and updated lists were to be delivered to each month. D was given the right, at any time, to demand a full disclosure of the business and financial conditions; to require that all amounts collected be applied in payment of his loans, and to enforce the assignment although no loan had matured. Until D exercised his rights, the company was not required to apply any of the collections to the repayment of D's loan nor to replace accounts collected by other collateral of equal value nor to account in any way to D. The existence of the assignment was to be kept secret. Indebtedness was to be incurred, as usual, for the purchase of merchandise and otherwise in the ordinary course of business. Prior to September 17, the company collected about $150,000, all of which it applied to purposes other than the payment of D's loan. The outstanding accounts enumerated in the list delivered September 23 aggregated $90,000. Hub was adjudicated bankrupt in involuntary proceedings commenced September 26, 1921. P, who was appointed receiver and later trustee, collected the book accounts of the company. D filed a petition in equity praying that the amounts so collected be paid over to him. He used the agreement entered into four months and three days before the commencement of the bankruptcy proceedings. P claimed that the original assignment was void under the law of New York as a fraudulent conveyance. The District Judge decided against P and ruled that the assignment executed in May was not fraudulent in law. It ruled that by delivery of the list of the accounts outstanding on September 23, D's equity in them had ripened into a perfect title to the remaining accounts; and that the title so perfected was good as against the supervening bankruptcy. The court ordered that D's loans were to be paid. from collections made from accounts enumerated in any of the lists. The Court of Appeals affirmed. The Supreme Court granted certiorari.

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