In re Walter J. Schmidt & Co.
United States District Court for the Southern District of New York
298 F. 314 (1923)
- Written by Serena Lipski, JD
Facts
Walter J. Schmidt & Co. (Schmidt) (debtor) filed for bankruptcy. Cole, Schrader, Bonynge, and Salmond (creditors) were individuals who had claims to money in Schmidt’s account held by the Lincoln Trust Company. The bankruptcy receiver recognized the account as a constructive trust for Cole, Schrader, Bonynge, and Salmond. The account did not contain enough money to pay back each creditor. The bankruptcy special master divided the trust-fund account so that the creditor who had last deposited funds was paid first, and so on. Salmond received nothing from the account. Schrader was the last to be paid, and he did not receive the entire amount owed to him. Schrader objected, arguing that the creditors should have each received a pro rata share of the account.
Rule of Law
Issue
Holding and Reasoning (Hand, J.)
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