In re Kranich , 174 F. 908 ( 1909 )

J. B. McPHERSON, District Judge.

When Charles Kranich was adjudged a bankrupt, whatever right he may then have had to recover the money that was afterwards found to be in his wife’s possession passed by operation of law to his trustee. It was a right of property which the statute laid hold upon and transferred to the trustee for the benefit of the creditors. But when its existence was disclosed it was seen, also, that it might never be fruitful. The wife claimed to be the sole .owner of the fund, and the conflicting testimonj'- that has been taken showed that the trustee’s road to recovery would certainly not be unobstructed, and might also be tedious and expensive. Under the circumstances the proposed compromise of the claim against her— which has been, approved by the creditors as well as by the referee — ■ seems to me a judicious settlement of the dispute.

The order of the referee approving the compromise is therefore affirmed.

The bankrupt,' forecasting a possible profit to himself in case the trustee should go on with the litigation against the wife and recover the whole fund — for the fund is large enough to pay all his debts and leave a surplus for himself — has filed a bill in equity in the court of common pleas of Philadelphia county, seeking to restrain his wife, her counsel, and his trustee in bankruptcy, from carrying out the proposed compromise. The remaining matter now before the court for decision is a petition asking that he be restrained from further prosecuting the suit. It is clear, I think, that the bankrupt had no right to bring the action, ire has no legal title to the fund in controversy, for the title is now in his trustee; and, moreover, he cannot be permitted to ask the common pleas to interfere with the administration of can estate in bankruptcy.

The restraining order is therefore granted as prayed.