England

The Burlingame Products Co., Inc., was adjudicated a bankrupt and appellant was appointed trustee. On his petition the referee ordered appellee, MacKay, a stranger to the proceeding, to show cause why he should not be required to turn over his assets to the trustee. MacKay demurred to the petition as stating no ground for relief but his demurrer was overruled. After taking evidence the referee made findings and entered an order requiring MacKay forthwith to turn over to the trustee “all MacKay’s assets,” or at least so much thereof as, added to the assets of the estate, will be sufficient to pay all administration expenses and also to satisfy in full all creditors of the bankrupt. On petition to review the district judge reversed the order and the trustee appeals.

The turn-over procedure has long been a familiar device employed in the administration of bankrupt estates. Hitherto its use has been confined to instances where it is claimed that a third person is withholding specific property alleged to belong to the estate of the bankrupt. Here the referee’s order literally stood the procedure on its head. Under the guise of what is termed “piercing the corporate veil,” the trustee…