Johnson v. Root Mfg. Co., 241 U.S. 160 (1916)

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Johnson v. Root Manufacturing Company

No. 308

Argued April 18, 1916
Decided May 1, 1916
241 U.S. 160

ERROR TO THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

An agreement was made by way of compromise more than four months before the petition was filed to pay from a fund of which the bankrupt was entitled to the residue all lienable claims, including claims of one who had waived the right to file liens, but had subsequently filed claiming the right so to do owing to failure of bankrupt to fulfill contract, and to whom payments were made from the fund within four months of the filing of the petition which the trustee brought suit to recover as preferential. Held that the earlier agreement created an equitable lien in favor of all parties thereto having color of right, and the payments thereunder did not become preferential because the amounts were not ascertained and liquidated until within the four-month period.

219 F. 397 affirmed.

The facts, which involve the right of a trustee in bankruptcy to recover an alleged preferential payment made by the bankrupt within four months of the filing of the petition under an agreement made more than four months before the filing, are stated in the opinion.