sum here in question was earmarked in the cash book as "Advance Dues".
(13) On May 20, 1941 the Consistory transferred the sum of $11,785.50, representing advance dues covering the fiscal year from May 30, 1941 to May 30, 1942, from its general checking account to the Lodge, which opened a new account therefor, never previously having had one.
Conclusions of Law
(1) The fund here involved $11,785.50 was held in the Philadelphia National Bank by the Consistory, bankrupt, under an account designated "Bodies of the Ancient Accepted Scottish Rite in Philadelphia" as owner and not as "fiscal agent" or in any fiduciary capacity for any of the other subordinate bodies, to wit: the Lodge, Council and the Chapter.
(2) No consideration was given by the Lodge to the bankrupt in exchange for the $11,785.50, which it received.
(3) According to law and the facts the trustee should be awarded judgment in the sum of $11,785.50 with interest from May 20, 1941.
The contention of the trustee in bankruptcy here is that the fund involving $11,785.50, transferred by the bankrupt three days before the filing of its voluntary petition, were funds of the bankrupt and no consideration having passed in the transfer, under the Bankruptcy Act, it must be set aside. The transferee, the Lodge, contends that the Consistory held the fund as a fiduciary, in the capacity of fiscal agent for the three subordinate lodges, the Lodge, Council and the Chapter, and accordingly could transfer it to the Lodge without any consideration, inasmuch as it held the same as indicated as a fiduciary.
Upon an examination of the record which is somewhat complicated as to details, one is very definitely persuaded to the contention of the trustee, when all the various factors involved are considered, which have been hereinabove set out under findings of fact, and which would serve no good purpose by repetition. It can be readily seen that brushing aside technicalities, and having resort only to the realities that inhere in the situation, it must be concluded that this fund was held by the bankrupt as owner and hence no transfer could be made without a fair consideration. True, the by-laws recite that the Consistory is the fiscal agent for the subordinate bodies, yet in reality, in the actual practical conduct of the relationships existing between the lower bodies and the Consistory, such is not the case. Judge Kirkpatrick in a kindred case, involving the identical fund, stated as follows: "The relation of the Consistory to the subordinate bodies is described in the by-laws of the three organizations as that of their 'fiscal agent.' Some of the confusion existing in the minds of the claimants has evidently arisen from the use of this term. The Referee has found that, to whatever extent the Consistory may have been an agent in the technical sense, it took the funds turned over to it as owner, unimpressed by the obligations which would normally arise on a principal-agent relationship." In re Philadelphia Consistory Sublime Princes Royal Secret 32 Degree Ancient Accepted Scottish Rite, D.C., 49 F.Supp. 98, 99.
There was here an almost complete identity of membership, that is members of the subordinate bodies were all members of the Consistory; a membership card was issued in the name of the Philadelphia Consistory and one became exempt upon the payment of dues in the Consistory, from dues in any of the subordinate bodies, leaving in reality the three subordinate bodies as merely stepping stones to the main objective, membership in the Consistory. From the identity in membership alone it can be seen that the real purpose in becoming affiliated with the body, was to achieve membership in the Consistory, there being no complete finality in any of the subordinate bodies as evidenced by their lack of funds, payment of any expenses incurred by them being paid out of the general fund of the Consistory. To be realistic, and not technical to permit this transfer to the Lodge to stand, one must honestly say, would be to permit membership in one association to transfer funds to the same membership under a different name to the detriment of their bona fide creditors.
Accordingly, judgment is to be entered for the plaintiff in the sum of $11,785.50 with interest from May 20, 1941.
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