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appears, all accounts which had arisen after the date of the assignment, and were enumerated in the monthly list of accounts outstanding which was delivered to Ratner September 23. Benedict resisted the petition on the ground that the original assignment was void under the law of New York as a fraudulent conveyance; that, for this reason, the delivery of the September list of accounts was inoperative to perfect a lien in Ratner; and that it was a preference under the Bankruptcy Act. He also filed a cross-petition in which he asked that Ratner be ordered to pay to the estate the proceeds of certain collections which had been made by the company after September 17 and turned over to Ratner pursuant to his request made on that day. The company was then insolvent and Ratner had reason to believe it to be so. These accounts also had apparently been acquired by the company after the date of the original assignment.

The District Judge decided both petitions in Ratner's favor. He ruled that the assignment executed in May was not fraudulent in law; that it created an equity in the future acquired accounts; that because of this equity, Ratner was entitled to retain, as against the bankrupt's estate, the proceeds of the accounts which had been collected by the company in September and turned over to him; that by delivery of the list of the accounts outstanding on September 23, this equity in them had ripened into a perfect title to the remaining accounts; and that the title so perfected was good as against the supervening bankruptcy. Accordingly, the District Court ordered that, to the extent of the balance remaining unpaid on his loans, there be paid Ratner all collections made from accounts enumerated in any of the lists delivered to Ratner; and that the cross-petition of Benedict be denied. There was no finding of fraud in fact. On appeal, the Circuit Court of Appeals affirmed the order. 282 Fed. 12. A writ of certiorari was granted by this Court. 259 U. S. 579.

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The rights of the parties depend primarily upon the law of New York. Hiscock v. Varick Bank of N. Y., 206 U. S. 28. It may be assumed that, unless the arrangement of May 23 was void because fraudulent in law, the original assignment of the future acquired accounts became operative under the state law, both as to those paid over to Ratner before the bankruptcy proceedings and as to those collected by the receiver;' and that the assignment will be deemed to have taken effect as of May 23. Sexton v. Kessler, 225 U. S. 90, 99. That being so, it is clear that, if the original assignment was a valid one under the law of New York, the Bankruptcy Act did not invalidate the subsequent dealings of the parties. Thompson v. Fairbanks, 196 U. S. 516; Humphrey v. Tatman, 198 U. S. 91. The sole question for decision is, therefore, whether on the following undisputed facts the assignment of May 23 was in law fraudulent.

The Hub Carpet Company was, on May 23, a mercantile concern doing business in New York City and proposing to continue to do so. The assignment was made there to secure an existing loan of $15,000, and further advances not exceeding $15,000 which were in fact made July 1, 1921. It included all accounts receivable then outstanding and all which should thereafter accrue in the ordinary course of business. A list of the existing accounts was delivered at the time. Similar lists were to be delivered to Ratner on or about the 23d day of each succeeding month containing the accounts outstanding at such future dates. Those enumerated in each of the lists delivered prior to September, aggregated between $100,000 and $120,000. The receivables were to be collected by the company. Ratner was given the right, at any time, to

1 Williams v. Ingersoll, 89 N. Y. 508, 518-520; Coats v. Donnell, 94 N. Y. 168, 177. See Rochester Distilling Co. v. Rasey, 142 N. Y. 570, 580; MacDowell v. Buffalo Loan, etc. Co., 193 N. Y. 92, 104. Compare New York Security & Trust Co. v. Saratoga Gas, etc. Co., 159 N. Y. 137; Zartman v. First National Bank, 189 N. Y. 267.

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demand a full disclosure of the business and financial conditions; to require that all amounts collected be applied in payment of his loans; and to enforce the assignment although no loan had matured. But until he did so, the company was not required to apply any of the collections to the repayment of Ratner's loan. It was not required to replace accounts collected by other collateral of equal value. It was not required to account in any way to Ratner. It was at liberty to use the proceeds of all accounts collected as it might see fit. The existence of the assignment was to be kept secret. The business was to be conducted as theretofore. Indebtedness was to be incurred, as usual, for the purchase of merchandise and otherwise in the ordinary course of business. The amount of such indebtedness unpaid at the time of the commencement of the bankruptcy proceedings was large. Prior to September 17, the company collected from accounts so assigned about $150,000, all of which it applied to purposes other than the payment of Ratner's loan. The outstanding accounts enumerated in the list delivered September 23 aggregated $90,000.

Under the law of New York a transfer of property as security which reserves to the transferor the right to dispose of the same, or to apply the proceeds thereof, for his own uses is, as to creditors, fraudulent in law and void.2

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2 Griswold v. Sheldon, 4 N. Y. 580; Edgell v. Hart, 9 N. Y. 213; Russeil v. Winne, 37 N. Y. 591; Southard v. Benner, 72 N. Y. 424; Potts v. Hart, 99 N. Y. 168; Hangen v. Hachemeister, 114 N. Y. 566; Mandeville v. Avery, 124 N. Y. 376; Skilton v. Codington, 185 N. Y. 80; Zartman v. First National Bank, 189 N. Y. 267; In re. Marine Construction & Dry Docks Co., 135 Fed. 921, 144 Fed. 649; In re Davis, 155 Fed. 671; In re Hartman, 185 Fed. 196; In re Volence, 197 Fed. 232; In re Purtell, 215 Fed. 191; In re Leslie-Judge Co., 272 Fed. 886. Compare Frost v. Warren, 42 N. Y. 204; also Lukins v. Aird, 6 Wall. 78; Robinson v. Elliot, 22 Wall. 513; Smith v. Craft, 123 U. S. 436; Means v. Dowd, 128 U. S. 273; Etheridge v. Sperry, 139 U. S. 266; Huntley v. Kingman, 152 U. S. 527; Knapp v. Milwaukee Trust Co., 216 U. S. 545.

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This is true whether the right of disposition for the transferor's use be reserved in the instrument or by agreement in pais, oral or written;* whether the right of disposition reserved be unlimited in times or be expressly terminable by the happening of an event;o whether the transfer cover all the property of the debtor' or only a part;' whether the right of disposition extends to all the property transferred' or only to a part thereof;10 and whether the instrument of transfer be recorded or not.il

If this rule applies to the assignment of book accounts, the arrangement of May 23 was clearly void; and the equity in the future acquired accounts, which it would otherwise have created, 12 did not arise. Whether the rule applies to accounts does not appear to have been passed upon by the Court of Appeals of New York. But it would seem clear that whether the collateral consist of chattels

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Edgell v. Hart, 9 N. Y. 213, 216; Zartman v. First National Bank, 189 N. Y. 267, 270.

* Russell v. Wynne, 37 N. Y. 591, 595; Southard v. Benner, 72 N. Y. 424, 432; Potts v. Hart, 99 N. Y. 168, 172-173.

5 Southard v. Benner, 72 N. Y. 424, 430; Potts v. Hart, 99 N. Y. 168, 172.

6 Zartman v. First National Bank, 189 N. Y. 267, 270. 7 Zartman v. First National Bank, 189 N. Y. 267, 269. 8 Russell v. Winne, 37 N. Y. 591; Southard v. Benner, 72 N. Y. 424. Potts v. Hart, 99 N. Y. 168, 172.

10 Russell v. Winne, 37 N. Y. 591, 593; In re Leslie-Judge Co., 272 Fed. 886, 888.

11 Potts v. Hart, 99 N. Y. 168, 171. N. Y. Personal Property Law, § 45; Laws, 1911, c. 626, authorizes the creation of a general lien or floating charge upon a stock of merchandise, including after-acquired chattels, and upon accounts receivable resulting from the sale of such merchandise. It provides that this lien er charge shall be valid against creditors provided certain formalities are observed and detailed filing provisions are complied with. It is possible that, if its conditions are performed, the section does away with the rule that retention of possession by the mortgagor with power of sale for his own benefit is fraudulent as to creditors.”

12 Field v. Mayor, etc. of New York, 6 N. Y. 179.

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or of accounts, reservation of dominion inconsistent with the effective disposition of title must render the transaction void. Ratner asserts that the rule stated above rests upon ostensible ownership, and argues that the doctrine of ostensible ownership is not applicable to book accounts. That doctrine raises a presumption of fraud where chattels are mortgaged (or sold) and possession of the property is not delivered to the mortgagee (or vendee).13 The presumption may be avoided by recording the mortgage (or sale). It may be assumed, as Ratner contends, that the doctrine does not apply to the assignment of accounts. In their transfer there is nothing which corresponds to the delivery of possession of chattels. The statutes which embody the doctrine and provide for recording as a substitute for delivery do not include accounts. A title to an account good against creditors may be transferred without notice to the debtor 14 or record of any kind.15 But it is

13 Smith v. Acker, 23 Wend. 653; Griswold v. Sheldon, 4 N. Y 580, 590; Edgell v. Hart, 9 N. Y. 213, 218; Conkling v. Shelley, 28 N. Y. 360. The statutes to this effect merely embody the commonlaw rule. But, in New York, an additional statute provides that unrecorded chattel mortgages under such circumstances are absolutely void as to creditors. New York Lien Law, $ 230; Laws, 1909, c. 38, § 230, as amended 1911, c. 326, and 1916, c. 348. See Seidenbach v. Riley, 111 N. Y. 560; Karst v. Kane, 136 N. Y. 316; Stephens v. Perrine, 143 N. Y. 476; Russell v. St. Mart, 180 N. Y. 355. See Stewart v. Platt, 101 U. S. 731, 735. Compare Preston v. Southwick, 115 N. Y. 139; Nash v. Ely, 19 Wend. (N. Y.) 523; Goodwin v. Kelly, 42 Barb. (N. Y.) 194. In the case of a transfer of personal property by sale, retention of possession creates a rebuttable presumption of fraud. See Kimball v. Cash, 176 N. Y. Supp. 541; also New York Ice Co. v. Cousins, 23 App. Div. 560; Rheinfeldt v. Dahlman, 43 N. Y. Supp. 281; Tuttle v. Hayes, 107 N. Y. Supp. 22; Young v. Wedderspoon, 126 N. Y. Supp. 375; Sherry v. Janov, 137 N. Y. Supp. 792; Gisnet v. Moeckel, 165 N. Y. Supp. 82. In order to create a valid pledge of tangible personalty, there must be a delivery to the pledgee. In re P. J. Sullivan Co., 247 Fed. 139, 254 Fed. 660.

14 Williams v. Ingersoll, 89 N. Y. 508, 522.

15 Niles v. Mathusa, 162 N. Y. 546; National Hudson River Bank v. Chaskin, 28 App. Div. 311, 315; Curtis v. Leavitt, 17 Barb. (N. Y.)

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