McKee v. Paradise, 299 U.S. 119 (1936)

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

1. An agreement whereby an employer undertook to make specified deductions from the wages of its employees as they accrued and to pay over the amounts deducted to a welfare association maintained on their behalf, held to have created the relation of debtor and creditor between the employer and the association as to amounts which the employer had charged to the employees and credited to the association but had not paid over to the association as the agreement contemplated nor placed in any special fund. P. 121.

2. Upon the bankruptcy of an employer owing money under an agreement of this kind, held that the mere failure to pay as stipulated afforded no round for fastening a constructive trust upon the bankrupt’s general assets in favor of the association. P. 122.

80 F. 2d 478, reversed. District Court affirmed.

Certiorari, 298 U.S. 647, to review the reversal of an order disallowing a preferential claim in a bankruptcy case. Two appeals were taken to the Circuit Court of Appeals, one under § 47 and the other under § 48, Title 11, U.S.C., these resulting in two decrees of that court, to review which two writs of certiorari were granted here.