S. B. Huffman, Trustee of the Estate of Newcomb Interests, Inc., a Corporation, Doing Business as Casa Del Rey Hotel, Bankrupt v. Harry A. Farros

This is a controversy between a trustee in bankruptcy and an alleged equitable owner of a liquor license. We agree with the conclusion of the district court, sitting in review upon an order of a referee in bankruptcy, that the trustee in bankruptcy, on behalf of the creditors of the bankrupt, cannot hold title to the liquor license because he acquired such title subject to a constructive trust in favor of the claimant, appellee herein. 171 F.Supp. 704 .

Appellee, Harry A. Farros, had been the proprietor of a business conducted at premises in Santa Cruz, California. As such, he possessed and owned an on-sale general liquor license issued by the State Board of Equalization of California. On July 25, 1946, appellee made a lease of the premises to Newcomb Interests, Inc., the bankrupt in this case. In conjunction with the lease, and without receiving any new or additional consideration, appellee made a transfer of the liquor license to the lessee, and caused said On-Sale General Liquor License No. P-6259-C to be transferred to and to stand thereafter in the name of the lessee, Newcomb Interests, Inc., a corporation doing business as Casa Del Rey Hotel. Paragraph 26 of this lease…