Randolph v. Scruggs, 190 U.S. 533 (1903)

Randolph v. Scruggs

No. 272

Argued April 23-24, 1903
Decided May 18, 1903
190 U.S. 533

CERTIFICATE FROM THE CIRCUIT COURT

OF APPEALS FOR THE SIXTH CIRCUIT

Syllabus

1. A claim for professional services rendered to a bankrupt in the preparation of a general assignment, valid under the law of the state where made, is not entitled to be paid as a preferential claim out of the estate in the hands of a trustee in bankruptcy when the adjudication in involuntary bankruptcy was made within four months after the making of the assignment and the assignment was set aside as in contravention of the bankrupt law.

2. A claim for professional advice and legal services rendered such an assignee prior to the adjudication of bankruptcy against the assignor, the assignment providing that the costs and expenses of administering the trust should be first paid, is not entitled under the deed to be proven as a preferential claim against the bankrupt estate, but, so far as the assignee would be allowed for payment of the claim, it may be preferred in the right of the assignee.

3. On the facts in this case, a claim against such an assignee for legal services rendered at his employment in resisting an adjudication of involuntary bankruptcy against the assignor is not allowable as a preferential claim when the necessary effect of the adjudication would be to set aside the assignment under which the assignee was acting.

4. The claim for services to the assignor for the preparation of the deed of trust to the assignee may be proved in the bankruptcy proceedings as an unsecured claim.

The case is stated in the opinion of the Court.