Shiro v. Drew

174 F. Supp. 495 (D. Me. 1959)



An assignment is an act or manifestation by the owner of a right, which indicates his intention to transfer, without further action that right to another. An agreement to pay out of a particular fund, without more, is not an assignment, but to constitute an assignment there must be a manifestation of an intention by the assignor to relinquish control of the right assigned and to appropriate that right to the assignee. While no particular words are required for an assignment, the intent to transfer a present interest must be manifest, and the assignor must not retain any control over the right assigned or any power of revocation. The test is whether or not the debtor would be authorized to pay the amount directly to the person claiming to be the assignee, without further action or consent by the assignor. No particular phraseology is required to effect an assignment, and it may be either in oral or written form; but the intent to vest in the assignee a present right in the thing assigned must be manifested by some oral or written word or by some conduct signifying a relinquishment of control by the assignor and an appropriation to the assignee.


The debtor made a payment while insolvent, within four months of filing bankruptcy, for the benefit of defendant creditor, who had reasonable cause to believe that the debtor was insolvent. Plaintiff bankruptcy trustee filed an action pursuant to § 60 of the Bankruptcy Act, 11 U.S.C.S. § 96, to recover as a voidable preference the sum paid by the debtor. Defendant claimed that the debtor made a partial assignment of a portion of the proceeds of a contract in a letter, which provided that the debtor would repay funds advanced by defendant immediately upon receipt of the amount owed under the contract. The court entered judgment in plaintiff’s favor.


Was the insolvent debtor’s letter to defendant creditor a partial assignment of a portion of the proceeds of a contract to defendant, so that the payment by the debtor to defendant within months of filing for bankruptcy was not 'for or on account of an antecedent debt” and voidable under 11 U.S.C.S. § 96?




The letter did not indicate intent to transfer any immediate right to defendant creditor, but rather indicated a promise to pay at a future date. Accordingly, no assignment was intended or effected by the letter.

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