MARION MACH. FOUNDRY & SUPPLY CO. v. GIRAND et al. In re McCLEERY, 285 F. 160

BRYAN, Circuit Judge. November 16, 1920, the petitioner, the Marion -Machine Foundry & Supply Company, sold to C. G. Mc-Cleery a set of rig irons on credit, upon condition that McCleery would then pay a past-due debt. McCleery gave his check for $613.09, the amount of the past-due debt, and received the rig irons. The check was promptly presented, but payment was refitsed by the bank upon which it was drawn because of lack of sufficient funds to meet it. Thereupon the manager of the company interviewed McCleery, who stated he would wire to his brother for money.

November 19, 1920, an involuntary petition in bankruptcy was filed against McCleery, and the rig irons were subsequently sold by the receivers for $1,340.79. The petitioner filed a petition for the return to it of the proceeds of the sale. The referee held the sale by McCleery was valid, and this action was affirmed on review by the District Judge. It is not claimed that actual fraud was shown, hut petitioner contends that it is entitled to the money held in lieu of the rig irons, because the sale was made only upon condition, which was never performed. We are of opinion that the contention is well founded.

It is not necessary to show actual fraud. It is sufficient if in equity and good conscience the proceeds of the sale of the rig irons ought to be paid over to the petitioner. In re American Knit Goods Mfg. Co., 173 Fed. 480, 97 C. C. A. 486; In re New York Commercial Co., 228 Fed. 120, 142 C. C. A. 526; Ramey v. Allison, 64 Tex. 697. The case is not affected by the fact that petitioner accepted a check which was not paid. In re Perpall, 256 Fed. 758, 168 C. C. A. 104. The question involved is presented both by appeal and by petition to superintend and revise.

We are of opinion that the appropriate proceeding is hv petition under

section 24b of the Bankruptcy Act (Comp. St. § 9608). The question presented is a purely legal one, and arose in an ordinary, administrative proceeding in bankruptcy. In re Loving, 224 U. S. 183, 32 Sup. Ct. 446, 56 L. Ed. 725. The appeal is dismissed. The petition to superintend and revise is granted, with directions that the proceeds of sale of the rig irons he paid over to petitioner. other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes