Diller v. Irving Trust Co.

Second Circuit

Diller v. Irving Trust Co.

62 F.2d 1058, 1933 U.S. App. LEXIS 3931

CourtCourt of Appeals for the Second Circuit

DecidedFebruary 6, 1933

DocketNo. 217

StatusPublished

Cited by8 cases

This text of 62 F.2d 1058 (Diller v. Irving Trust Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Diller v. Irving Trust Co., 62 F.2d 1058, 1933 U.S. App. LEXIS 3931 (2d Cir. 1933).

Pincite

Opinion

PER CURIAM.

Diller, the sole shareholder of the bankrupt, sold all the shares to one Weiner, who gave her a chattel mortgage on all its assets to secure his payments of the purchase price, which was much greater than their value. The trustee attacks the transaction as beyond the corporate powers and as a fraudulent conveyance. It is not necessary for us to say anything upon the first point, because the mortgage was clearly within section 274 of the Debtor and Creditor Law of New York (Con-sol. Laws N. Y. e. 12). The property remaining in the bankrupt’s hands was “an unreasonably small capital”; indeed there was no capital at all, because Weiner’s debt was more than its value. There was indeed a consideration to support the contract as between Diller and Weiner, Diller’s transfer of the shares to him; but this was not a “fair consideration” under section 272. The consideration must be “in exchange” for the, property conveyed. The bankrupt did not, and of course could not, receive its own shares in exchange for its property. The shares passed to Weiner, and the result of the transaction was merely to give back to Diller the whole capital of the corporation, allowing Weiner to carry on the business on an expectancy of profit.

Order affirmed.

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PER CURIAM.

Diller, the sole shareholder of the bankrupt, sold all the shares to one Weiner, who gave her a chattel mortgage on all its assets to secure his payments of the purchase price, which was much greater than their value. The trustee attacks the transaction as beyond the corporate powers and as a fraudulent conveyance. It is not necessary for us to say anything upon the first point, because the mortgage was clearly within section 274 of the Debtor and Creditor Law of New York (Con-sol. Laws N. Y. e. 12). The property remaining in the bankrupt’s hands was “an unreasonably small capital”; indeed there was no capital at all, because Weiner’s debt was more than its value. There was indeed a consideration to support the contract as between Diller and Weiner, Diller’s transfer of the shares to him; but this was not a “fair consideration” under section 272. The consideration must be “in exchange” for the, property conveyed. The bankrupt did not, and of course could not, receive its own shares in exchange for its property. The shares passed to Weiner, and the result of the transaction was merely to give back to Diller the whole capital of the corporation, allowing Weiner to carry on the business on an expectancy of profit.

Order affirmed.

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Bluebook (online)

62 F.2d 1058, 1933 U.S. App. LEXIS 3931, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diller-v-irving-trust-co-ca2-1933.

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