12 Jun Appeals Court Holds More Than Mere “Mistake” Required for Imposition of Constructive Trust; Bankruptcy Trustee Entitled to Mistaken $90,000 Deposit into Debtor’s Account
The Eighth Circuit Bankruptcy Appellate Panel recently reversed a Minnesota bankruptcy court’s ruling that under Minnesota law, a chapter 7 trustee was not entitled to $90,000 which had been mistakenly deposited by a bank president into the debtor’s bank account before he filed bankruptcy. The bankruptcy court had ruled that because the deposit was a mistake, a constructive trust should be imposed on the funds, meaning that the debtor never actually owned the funds. The bankruptcy court therefore denied the chapter 7 trustee’s demand that the funds be turned over, citing the mistaken nature of the deposit.
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