Benedict v. Ratner, 268 U.S. 353 (1925)

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Benedict v. Ratner

No. 11

Argued October 5, 1923
Decided May 25, 1925
268 U.S. 353

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. By the law of New York, a transfer of property, as security for a debt, which reserves to the transferor the right to dispose of the property or to apply its proceeds for his own uses is fraudulent and void as to creditors. P. 360.

2. This rule applies to the assignment of present and future book accounts as well as to assignment of chattels, since it does not result from the retention of ostensible ownership by the assignor, but from the fact that the reservation of dominion by him is inconsistent with the effective disposition of title and creation of a lien. P. 361.

3. Held that an assignment made by a mercantile corporation, more than four months before it was adjudged bankrupt, of its present and future accounts receivable as security for a loan was void under the above rule, so that delivery of a list of accounts, and payments made within the four months, were inoperative to perfect a lien in the assignee, but were unlawful preferences, under the Bankruptcy Act. P. 364.

282 F. 12 reversed.

Certiorari to a judgment of the circuit court of appeals which affirmed an order of the district court requiring a receiver and trustee in bankruptcy to pay over money collected from accounts receivable to a creditor of the bankrupt claiming them as security under an assignment, and denying the trustee’s petition that the creditor be required to pay over collections made by him under the assignment.