In the Matter of William Rakestraw Co., Inc., Bankrupt. Marin Foods, Inc. v. Walter J. Hempy, Trustee in Bankruptcy

In this bankruptcy case, Marin Foods, Inc. (Marin), an unsecured creditor of the bankrupt corporation William Rakes-traw Co., Inc., (bankrupt), appeals from a District Court order denying its petition for review of, and approving and confirming certain orders of the Referee in Bankruptcy, which were issued during the administration of the bankrupt’s estate.

By Agreement of Sale, dated February 11, 1965, Marin agreed to sell Gary’s Market in Marin County, California, to William Rakestraw, (Rakestraw), the Agreement expressly providing that it would bind and inure to the benefit of the parties, their heirs, successors, and assigns. On the same date, the parties also executed two sets of escrow instructions and a Management Contract, under which Rakestraw was to manage Marin’s liquor business in the market for a percentage of the profits. By a Supplement to the Agreement, also dated February 11, 1965, Rakestraw agreed to assume Marin’s secured obligations to several specifically designated creditors.

It was the understanding of the parties that Rakestraw would form a corporation which would assume his obligations and liabilities arising from the transaction. The corporation,…