(1) In general.
Whatever belongs to the bankrupt, except his exemptions, passes to the trustee, as we have seen (subject, of course, to all valid liens held by third persons), no matter in whose possession it may be.
(2) Property of bankrupt on consignment with another.
This belongs to the bankrupt and the trustee can reclaim it.
(3) Property bailed for other purposes.
Wherever the property of the bankrupt is in other hands on any sort of bailment, it passes to the trustee subject to valid liens of those who possess it.
(4) Recovery of property in other's possession.
Where property is adversely held and not given up upon demand, the necessity of a plenary suit to recover it has been discussed in another connection.
The trustee may sue upon any claim for damages to the bankrupt's property, or arising out of a contract, express or implied.
Whenever, at the time of the filing of the petition, the bankrupt has a right to sue on account of injuries to his property, or for breach of, or to enforce contracts, express or implied, the trustee may sue on such rights, or if suit is already pending may become a party of the suit and prosecute it for the benefit of creditors.
Thus a trustee of a bankrupt corporation can enforce the stock liability of its stockholders.134
If the right to sue, or the pending suit is for personal injury, as distinguished from property injury or injury to the estate, the trustee does not succeed to the rights of the bankrupt.
Thus in Sibley v. Mason,135 plaintiff was suing for personal injuries when he was made bankrupt. Objection was made to his right to prosecute the suit. The court held that such a cause of action did not pass to the trustee.
A trustee may elect to reject property of a burdensome nature.
The trustee may reject title to property which is of no value to the estate. " It is well settled that assignees in bankruptcy are not bound to accept property which, in their judgment, is of an onerous and unprofitable nature, and would burden instead of benefitting the estate, and can elect whether they will accept or not, after due consideration and within a reasonable time, while if their judgment is unwisely exercised, the bankruptcy court is open to compel a different course."136 This was prior to the act of 1898, but is the accepted principle applied under the present act.137 For instance, a lease having no value as a convertible asset, may be rejected by the trustee so that the title remains in or reverts to the bankrupt.138
134. In re Eureka Furniture Co., (D. C. Pa.) 170 Fed. 485; Petition of Stuart, (C. C. A. 6th Cir.) 272 Fed. 938.
135. 196 Mass. 125.