Kerry

On October 5, 1953, Harold E. Kerry and the community consisting of himself and his wife were adjudicated bankrupt on voluntary petitions. Ruth Kerry, the wife, who was not adjudicated in her individual capacity, filed a petition to require Schneider, who was trustee of the bankrupt, to abandon the right, title and interest of Kerry in a partnership and to allow her to foreclose a purported ■“pledge” thereon. The petition was denied by the referee, and the District Court affirmed. Appeal by Ruth Kerry followed.

The history of the transaction follows. Bankrupt was the owner of about 51% of the issued shares of stock in West Tenino Lumber Company, a corporation. Ruth Kerry, considerably before the time here involved, had loaned him $29,-250.00 from her separate funds and received in pledge the shares of stock held by him. There is no question as to the validity of this transaction. Subsequently, when Kerry was becoming financially involved, by agreement Ruth Kerry permitted the pledged shares to be voted for dissolution. In lieu, she was to receive, as security for the loan, a so-called assignment of the interest in the partnership to be formed. The corporation was duly dissolved.…