Bernstein

There are presented in this case an appeal and cross-appeal from an order of the District, Court disallowing a claim filed in bankruptcy proceedings. Appellee and cross-appellant Laugharn is the trustee in bankruptcy of one Jack Dave Sterling and of numerous oil companies, of each of which Sterling was the general man *617 ager and sole stockholder. At the approximate time that Sterling was adjudicated bankrupt each of his companies was likewise adjudicated. Because the funds of each company and the funds of Sterling were so inextricably intermingled at the date of adjudication, the proceedings of all were consolidated. We are not concerned here with the propriety of such treatment of the corporations, Sterling, and the creditors.

Claimants against the commingled assets of Sterling and his companies were divided by the District Court into two general classes. The first of these comprised general creditors, and the second a number of holders of fractional interests or “percents” in petroleum products garnered from one or another of the various wells owned by Sterling’s companies. The claim in issue here is of the latter class.

One of Sterling’s companies was the Lion Petroleum…

(concurring).

The record discloses that on August 12, 1935, some two weeks after the sale to Bernstein, Sterling transferred the sum of $10,000 to the Lion Petroleum Corporation on account of the sale of the Bernstein per cents. The transfer was made from the Huntington Investment Company, one of Sterling’s numerous corporations. While the transaction may have been at the expense of parties interested in the Huntington Investment Company, there is no evidence to that effect, and no complaint is being made on that score.

It thus appears, without contradiction, that the Lion Petroleum Corporation actually received the full amount required by the permit to be paid for the Bernstein per cents. This being true, the questionable character of - Bernstein’s conduct becomes immaterial. However, there is no occasion for this court’s undertaking to rationalize his behavior. He knew the requirements of the permit; and he had no reason to believe that the $4,000 rebate which he received would come from any source other than the general jackpot into which his $10,000 check went. So far as he was concerned, he manifested an entire willingness to participate in a fictitious transaction…