In re EDELSTEIN et al.

In re EDELSTEIN et al. District Court, S. D. New York. August 3, 1926. Bankruptcy <§=» 178(1) — Assignments of bankrupts’ accounts held fraudulent and void, where assignee acquiesced in bankrupts’ use of money assigned. Assignments of accounts by bankrupts held fraudulent and void, where assignee acquiesced in bankrupts’ use of moneys assigned by him. In the matter of the bankruptcy of Alexander Edelstein and Simon Sovensky, individually and as members of the firm of Edelstein & Sovensky. The referee adjudged void certain assignments of accounts by the bankrupts to Elias Levin, and the latter petitions for review. Referee’s report confirmed. The referee’s report is as follows: To the Honorable the Judges of the United States District Court for the Southern District of New York: I, Peter B. Olney, Jr., the referee in charge of the above-entitled matter, do hereby, pursuant to General Order XXVII, certify as follows: That the question certified for review is whether I erred in making my order,.dated June 7, 1926, adjudging assignments of accounts by the bankrupts to the petitioner herein, Elias Levin, were fraudulent and void, and whether my decision upon which this order was based was contrary to the weight of the evidence and contrary to law, and more specifically whether, upon the facts shown in this record, the transaction comes under the decision of the Supreme Court of the United States in Benedict,' Receiver, v. Ratner, 268 U. S. 353, 45 S. Ct. 566, 69 L. Ed. 991, 6 Am. Bankr. Rep. (N. S.) 9. I have decided that it does. There is submitted herewith the petition to review, dated June 4, 1926, the order sought to be reviewed, dated June 7, 1926, the notice of motion of Elias Levin, dated October 22, 1925, his petition, verified' the same day, the answer of the trustee, verified the 30th day of October, 1925, the stenographic record of the proceedings had before me on the return of the motion, and my memorandum of opinion herein, dated March 12, 1926. All of which is respectfully submitted. Dated New York, June 15,1926. Peter B. Olney, Jr., Referee. Henry Caplan, of New York City, for assignee. Benjamin Siegel, of New York City, for trustee. [MAJORITY — KNOX, District Judge.] KNOX, District Judge. The report of the referee will be confirmed. In view of the decision in Benedict v. Ratner, 268 U. S. 353, 45 S. Ct. 566, 69 L. Ed. 991, 6 Am. Bankr. Rep. (N. S.) 9, I do not think that any countenance can be given to the practice that prevailed between Levin and the bankrupts. He acquiesced in the use by the bankrupts of moneys that were assigned to him. Such acquiescence, when continued as it was here, was the equivalent of an agreement that the bankrupts might do what they did.