Law Commons^™

Some Problems Arising Out Of Deposits To Pay Principal And Interest On Bonds, Paul P. Lipton

Michigan Law Review

Since Lawrence v. Fox contracts students have been puzzled by the numerous and varying relations that may arise when A, the debtor, delivers money to B to pay C, his creditor. Equally puzzling and much more complicated are the rights and relations of the obligor, trustee and bondholders with respect to sums deposited with the trustee to pay principal and interest on bonds.

The insolvency during recent years of many large trust companies that had been named as trustees in indentures securing corporate bonds, having on hand at the time of their failure large sums of money which …

Taxation - Federal Income Tax - Distinction Between Sale And Tax Exempt Reorganization Under Section 112, Henry J. Merry

Michigan Law Review

The recent Supreme Court decision in Le Tulle v. Scofield, disapproving the views of four out of five circuit courts of appeals, appears to add a new and more specific requirement to the already complex law on the subject of statutory reorganization under the Revenue Act of 1928 -- that the consideration received by the transferor corporation include some stock of the transferee corporation. In the subject case, the Gulf Coast Irrigation Company transferred substantially all its assets to the Gulf Coast Water Company in exchange for $50,000 in cash and $750,000 in mortgage bonds, four-fifths of which matured …

Bills And Notes-Bonds Payable At Office Of Trustee Which Becomes Insolvent After Deposit According To Agreement But Before Bonds Presented, Ralph W. Aigler

Michigan Law Review

By the terms of a trust mortgage securing a large bond issue the debtor agreed that it would punctually pay the principal and interest of every bond according to the terms of the bond and coupons and would "deposit the necessary funds for such purpose with the trustee at least five days prior to the respective due dates." For the maturities of March 1st and September 1st, 1931, the requisite funds were deposited. Plaintiff's coupons of March and his bonds and coupons of September were not presented on the due dates and not until after the trustee had failed and …

Banks And Banking - Bank Collection Code - Preference For Certified Check On Drawee Bank's Insolvency

Michigan Law Review

The petitioner accompanied a bid on construction work with two certified checks drawn on the M Bank and payable to the government. On rejection of the bid the checks were returned, but in the meantime the drawee bank had been closed. The petitioner presented the checks to the receiver of the defunct bank who refused to honor them as preferred claims. An Illinois statute provided that when a bank has presented to it for payment an item drawn upon such bank, and such bank shall fail after having charged such item to the account of the drawer but without having …

Bankruptcy - Fraudulent Transfers -Trustee's Assignee

Michigan Law Review

Since bankruptcy proceedings contemplate a sale of the debtor's assets, the importance of knowing what the trustee may sell is at once obvious. One must, however, go further and inquire as to the rights of purchasers from the trustee. This question assumes importance to the trustee, since it determines what he may sell, and is also important to the purchaser, since it determines what he may buy. The answer determines the efficiency of our bankruptcy machinery. In this comment we propose to consider one phase of this general question: May the trustee assign his right to set aside a fraudulent …

Constitutional Law - Bank Reorganization Legislation - Composition With Depositors And Other Creditors, Maurice S. Culp

Michigan Law Review

Twenty States and the federal government now have laws permitting the reorganization and reopening of insolvent or failing banks. The usual statute provides for the reorganization of a bank upon some plan approved by a large majority of the general creditors of the institution; the plan must also have the approval of state banking officials and of a court of general jurisdiction, although the last is by no means a universal requirement. The reorganization, when approved, becomes binding upon all depositors and general creditors of the bank regardless of consent. By the terms of a few statutes, non-assenting creditors are …

Receivers - Consent Receivership Not Allowed In Michigan

Michigan Law Review

A general creditor filed a bill alleging that the defendant corporation's assets as shown by its books have a value in excess of its indebtedness but that it cannot meet its current obligations although its assets, when converted into money would be sufficient to meet them and continue its business; that several suits have been instituted by defendant's creditors and that if executions are issued and levies made, defendant will be compelled to cease operations and losses will be suffered by all of defendant's creditors, whereas, if a receiver is appointed to operate its business their claims may be paid …

When Is A Corporation Insolvent?, Floyd Mathew Rett

Michigan Law Review

There is general unanimity that as to real persons "insolvency" means the inability of a debtor to pay his obligations as .they fall due in the usual course of business - even though the value of his assets exceeds the aggregate of his liabilities. But the question - when is a corporation insolvent - the question to which this paper is devoted, is one with very varied answers. The answers may vary both with the nature of the corporation concerned and with the type of transaction involved. There are, however, two conventional definitions of corporate "insolvency," with occasional variations and …