In re Levinson

297 F. 490, 1924 U.S. Dist. LEXIS 1728

• Court: District Court, W.D. Washington
• Decided: March 27, 1924
• Docket: No. 6258
• Status: Published

Opinion

NE'ÍERER, District Judge

(after stating the facts as above). The notes in issue were out of commerce, and title could only be transferred in harmony with the provisions of the Bankruptcy Act (Comp. St. §§ 9585-9656). Segen v. Fabacher, 136 La. 568 67 South. 369, 34 Am. Bankr. R. 89; In re Frazin, 181 Fed. 307, 104 C. C. A. 529.

Clinton, as trustee, could acquire no title. Schofield v. Baker (D. C.) 212 Fed. 504, affirmed 221 Fed. 322, 136 C. C. A. 320, and 243 U. S. 114, 37 Sup. Ct. 333, 61 L. Ed. 626. Nor can he profit by his omission to schedule the asset or failure to challenge the trustee’s attention thereto upon his own resignation, and he now asserts, no interest, except for the creditors of the Brown estate. The notes were unpaid, were an indebtedness of Levinson, and were an asset of the A. L-Brown estate, and as such passed to the trustee. First National Bank v. Lasater, 196 U. S. 115, 25 Sup. Ct. 206, 49 L. Ed. 408.

Did Clinton, after acceptance of bid and receipt of bill of sale, have such color of title as will support proof of claim? If so, Booth, as the beneficially interested party, may be substituted. On its face the bill of sale conveyed title. Color of title is an apparent, but legally insufficient, title. 3 Bl. Com. 309. Color of title, under the statute of limitations, is appearance of title, but in fact no title. Cameron v. U. S., 148 U. S. 301, 13 Sup. Ct. 595, 37 L. Ed. 459. A void tax deed, for failure to comply with the statute, affords color of title. Lantry v. Parker, 37 Neb. 353, 55 N. W. 962; Van Gunden v. Iron Co., 52 Fed. 838, 3 C. C. A. 294; Irev et al. v. Mater et al., 134 Ind. 238, 33 N. E. 1018.

The claim was filed within a year. All parties were advised within one year after adjudication. Section 57n, Bankruptcy Act; In re Roeber, 127 Fed. 122, 62 C. C. A. 122; In re Ellis, 252 Fed. 483, 164 C. C. A. 399. While the bill of sale conveyed no title as against the creditors, it did give color of title to the asset. The bankrupt has no interest in it as against the creditors, and no creditor is objecting. All interest in the notes was vested in the Brown estate and its trustee. The transfer by Hill, trustee of the Brown estate, to Clinton, gave to Clinton color of title to support the proof of claim, and Booth, the present trustee., may properly be substituted as the real party in interest for the creditors. This substitution does not change the relation of the indebtedness, or make available to the bankrupt the limitation of section 9641, Comp. Stat., and General Order 21. Lilly v. Tobbein, 103 Mo. 477, 15 S. W. 618, 23 Am. St. Rep. 887; Harlan v. Loomis, 92 Kan. 398, 140 Pac. 845; McDonald v. State, 101 Fed. 171, 41 C. C. A. 278; In re McCarthy Portable Electric Co. (D. C.) 205 Fed. 986; In re Coleman & Titus (D. C.) 286 Fed. 303; In re Patterson-MacDonald Ship-bldg. Co. (C. C. A.) 293 Fed. 190.

The order of the referee is reversed, with direction to substitute the trustee, Booth, for Clinton, and allow tire claim.