In re Coan & Ten Broeke Manuf'g Co.

5 F. Cas. 1112, 6 Biss. 315

Opinion

BLODGETT, District Judge.

The controlling quesiion in this case is, whether the proceeds of these consigned carriages came within the clause in the 14th section of the bankrupt act [of 18G7 (14 Stat. 522)], which provides that “no property held by the bankrupt in trust shall pass by such assignment.”' It is true that in examining the text-books and cases on the subject of trusts, we find many expressions like these, — that a factor or agent is a trustee for his principal, that a bank is a trustee for its depositors, and even that a debtor is a trustee for his creditor. The courts of New York and Massachusetts have frequently decided cases upon these principles, and, founded upon such expression, the counsel for petitioners has framed his argument, that they have a lien upon these proceeds as a species of trust fund, and are entitled to payment, to the exclusion of the general creditors of the bankrupt.

A proper construction, however, of .this clause in the bankrupt act, will only apply it to property still held in specie, and which can be distinguished from the other property of the bankrupt, or where the proceeds constitute a separate and distinct fund, not to cases where they have become mingled with the general assets of the bankrupt, even by his wrongful act.

Here there is no consigned property in the hands of the assignee which the petitioners can claim as belonging to themselves, nor any distinct fund which can be recognized or traced as the specific proceeds of the property sent on consignment by these petitioners. The petition must, therefore, be dismissed.