Buffum

This is an appeal from an order made in bankruptcy approving the claim of Peter Barceloux Company for the sum of $35,-832.10. This claim has been before this court and considered by us in the case of Peter Barceloux Co. v. Buffum, 61 F.(2d) 145 . A short history of that litigation is essential to a consideration of the appeal now before us.

The Peter Barceloux Company, a family corporation, was managed by H. J. Barceloux. In the course of this management H. J. Barceloux became indebted to the Peter Barceloux Company in a large sum — approximately $35,000. Some of this indebtedness was evidenced by promissory notes, and part by book account. To secure these obligations H. J. Barceloux gave a written pledge of his stock in the Peter Barceloux Company with some other corporate stock. That company subsequently sold the stock at a pledgee’s sale. More than four months thereafter Henry J. Barceloux filed a voluntary bankruptcy proceeding. The trustee in bankruptcy brought a plenary suit in equity in the bankruptcy court to recover the value of the stock which had been hypothecated by H. J. Barceloux, alleging that the pledge and the sale thereunder were both parts of a scheme to…