In re Wilkesbarre Furniture Mfg. Co.

Citations

• 130 F. 796
• 1904 U.S. Dist. LEXIS 277

Syllabus

<p>1. Bankruptcy — Funds—Distribution—Collateral Attack.</p> <p>Where money was awarded to a lien creditor of a bankrupt as the result of an audit after hearing, she was protected in the possession of the fund by the order of the referee until such order was vacated by a direct proceeding for that purpose.</p> <p>2. Same — Trust Funds — Misappropriation—Preference.</p> <p>Where a trustee of a bankrupt corporation, who was also a member of a firm, appropriated money belonging to the firm to pay a misappropriation of the funds of the bankrupt corporation, and the creditors of the firm, which also became bankrupt, took no steps to stay the distribution of the funds of the corporation pending bankruptcy proceedings against the firm, nor to follow the firm’s funds so misappropriated, they were not entitled to claim that such funds awarded to a lien creditor of the corporation constituted a preference which the firm’s trustee was entitled to recover.</p> <p>3. Same — Reclaiming of Trust Funds.</p> <p>Misappropriated trust funds in the hands of a trustee In bankruptcy should be followed and reclaimed by appearing before the referee and making claim to them before they have been distributed to other parties.</p>