U.S. Supreme Court
Vetterlein v. Barnes, 124 U.S. 169 (1888)
Vetterlein v. Barnes
Argued December 8, 1887
Decided January 9, 1888
124 U.S. 169
In a suit by a stranger against a trustee to defeat the trust altogether, the cestui que trust is not a necessary party if the powers or duties of the trustee with respect to the execution of the trust are such that those for whom he holds will be bound by what is done against him as well as by what is done by him.
In a suit in equity by an assignee in bankruptcy to set aside a fraudulent transfer of the bankrupt's assets, this Court agrees with the court below chanroblesvirtualawlibrary
that the evidence shows that the transferee had no valuable pecuniary interest in the transferred property, and that the transfer was made to prevent it from coming into the hands of the assignee in bankruptcy.
Bill in equity. The case as stated by the court was as follows:
In and prior to the year 1867, the firm of Vetterlein & Co. -- composed of Theodore H. Vetterlein, Bernhard T. Vetterlein, Theodore J. Vetterlein, and Charles A. Meurer, and doing business in Philadelphia -- assisted one J. Kinsey Taylor by lending him money and acceptances. In the summer of that year, for the security of the firm, Taylor caused his life to be insured, the policies taken out by him being assigned to Theodore H. Vetterlein as security for Taylor's liability to the firm. In July, 1869, Meurer retired from the firm, Taylor's indebtedness to it being at that time nearly $50,000. In December, 1869, Theodore J. Vetterlein also left the firm. The remaining partners went on with the business at the same place, under the same name, and with the same stock of merchandise, taken at valuation.
On or about the 18th of July, 1870, the policies -- which, under some arrangement had been reduced in amount -- were assigned by Theodore H. Vetterlein to Bernhard T. Vetterlein and Theodore J. Vetterlein, as trustees for the wife and children of the assignor.
In the District Court of the United States for the Southern District of New York, sitting in bankruptcy, Theodore H. Vetterlein and Bernhard T. Vetterlein were adjudged bankrupts. The adjudication was made February 7, 1871, upon a petition of certain creditors of the bankrupts, filed December 28, 1870.
Taylor died July 1, 1871. Due proof of his death was made by B. T. Vetterlein and T. J. Vetterlein, and they were proceeding to collect the insurance moneys when the present suit was brought in the district court, August 10, 1871, by Barnes, assignee in bankruptcy of Theodore H. Vetterlein and Bernhard T. Vetterlein, against the bankrupts, Theodore J. Vetterlein, and the insurance companies. The principal object of the suit was to enjoin B. T. and T. J. Vetterlein from collecting chanroblesvirtualawlibrary
the amounts due on the policies. Barnes contended that as assignee in bankruptcy, he was entitled to receive these insurance moneys, which are less in amount than Taylor's indebtedness to the bankrupts. His claim was sustained by the district court, and, upon appeal to the circuit court the decree of the former court was affirmed.