Joseph K. Brinig, Jr., Trustee of the Estate of Esskay Sales Company, a Corporation, Bankrupt v. American Credit Bureau, Inc.

Appellant, trustee in bankruptcy for the Esskay Sales Company (“Esskay”), appeals from a summary judgment rendered in favor of American Credit Bureau, Inc. (“Credit Bureau”), an Arizona collection agency, in an action by the trustee against Credit Bureau and certain of Credit Bureau’s assignors, to recover as voidable preferences payments totaling $17,491.08 that Credit Bureau received from Esskay. Of this sum, Credit Bureau collected $13,000 from Esskay during the four months anteced-ing March 11, 1964, the date upon which the involuntary bankruptcy petition was filed against Esskay. During the same period, Credit Bureau remitted to its assignors 80 percent of the money collected, and it retained 20 percent as its commissions. The remaining receipts were collected by Credit Bureau after the bankruptcy petition was filed.

The questions presented are these: (1) In respect of those payments received by Credit Bureau and remitted to its assignors during the four months preceding bankruptcy, is Credit Bureau liable to the trustee as the recipient of a voidable preference within the meaning of sections 60, sub. a(l), 60 sub. b of the Bankruptcy Act ( 11 U.S.C. §§ 96 (a) (1), 96(b))?…

(concurring and dissenting):

I agree with my colleagues that the trustee may not recoup from Credit Bureau the funds that it paid over to its assignors before bankruptcy. However, I would allow recovery by the trustee of the money that Credit Bureau retained as its commissions. The full beneficial interest in the portion of the claim against Esskay to which such money is allocable was assigned to Credit Bureau. As to that portion of the claim, Credit Bureau “stood in the shoes” of its assignors. It therefore owned a debt and became a “creditor,” within the meaning of the Bankruptcy Act, in the same manner as would any other person who had received an assignment of a claim.

Credit Bureau unquestionably gave full and valid consideration in return for the portion of the claims that it held; but so, presumably, did all of the general creditors, for whose benefit the preference laws were established. I can see no good reason why Credit Bureau should stand in a better position than the other general creditors.

439 F.2d 43 Joseph K. BRINIG, Jr., Trustee of the Estate of Esskay Sales Company, a Corporation, Bankrupt, Appellant. v. AMERICAN CREDIT BUREAU, INC., Appellee. No. 23284. United States Court of Appeals, Ninth Circuit. Feb. 22, 1971. Beverly McConnell (argued), of Wilson & McConnell, Phoenix, Ariz., for appellant. Jerold Kaplan (argued), of Kaplan, wilks & Abrams, Phoenix, Ariz., for appellee. Before ELY and HUFSTEDLER, Circuit Judges, and GRAY, * District judge. HUFSTEDLER, Circuit Judge. 1 Appellant, trustee in bankruptcy for the Esskay Sales Company ('Esskay'), appeals from a summary judgment rendered in favor of American Credit Bureau, Inc. ('Credit Bureau'), an Arizona collection agency, in an action by the trustee against Credit Bureau and certain of Credit Bureau's assignors, to recover as voidable preferences payments totaling $17,491.08 that Credit Bureau received from Esskay. Of this sum, Credit Bureau collected $13,000 from Esskay during the four months anteceding March 11, 1964, the date upon which the involuntary bankruptcy petition was filed against Esskay. During the same period, Credit Bureau remitted to its assignors 80 percent of the money collected, and…