The New York herald., 1876-09-03
UNITED STATES SUPREME COURT.
DECISIONS.

~>SS~'~O~'e"
WASHINGTON, Sept 2, 1875
PROPERTY FKAUDu
LENrLY OBTAINED ONE THE BAYKRUprs.
No 1874 Jonu Montgomery, Jr., assignee Of Stewart
Porter Il Co, plaintiff in error, va. The Bucyrus Ma
chine Works, in error 10 the Circuit Court for the
Western district OF Missouri There can be Ques-
ton the conceded facts Of the Case that Stewart
Porter and Wallace were Co partners under the firm
name OF Stewart Porter Co.. SO tar as the transac-
on and contract with the defendant are concerned.
and Rat they bound it by the dulles and ob!iga-
arising out OF that relation. The firm of Stewart
Porter Co. formed at Sedala, Mo-, In January.
1870 by Stewart and Porter to deal agricultural i'm.
pie m ents with view to add Wallace, II he chose to
JOIN it, and of the partnership taken for
this purpose Wallace was sent by Stewart and
Porter after this To Ohio where the works OF the
defendant manufacturing corporation were situated,
to make contracts with II as their partner II
he elected to become SUCH This election
a member of tho Hrm There no necessity that he
should sign any articles OF copartnershp Wallace,
when he reached OHIO elected 10 join the nrm Pur.
suant the express authority conferred upon him by
his associates business he entered Of
purchase with the defendant to whom ne represented
the Hrm, consisting OF Stewart Porter and hmscif
was solvent dong good business and that Porter
was wealthy. Previous to this the defendant knew
nothing OF the nrm but relying on the truth of hia
statements parted with It's property TO firm composed
OF Stewart Porter and Wallace; did It learn that
Wallace had retired from tho firm until after proceed
ings IN bankruptcy were commenced against Stewart
and Porter. II dealt throughout, 1t had commenced,
with q firm composed OF the three persons, and. 20
far as II IS concerned, the urfn was not changed.
1t Is true before it closed its dealings II
acted the belief that this firm insolvent but
this mistaken belief, the firm owed one
else and the firm composed oi Stewart and Porter,
which insolvent, not indebted to the defend
ant BY the terms Of the contract made by Wallace
on behalf OF the firm with the corporation, ono car
load Of machines sold and delivered at the tnno,
there was further agreement 10 I'LL all orders ~
Practicable. From time TO time orders were
made and machines forwarded. They were generally
shipped direct to tho different persons who had
gagged 10 sell them lor Stewart Porter Co., and the
proceeds OF those machines. when sold. were
devoted, with the consent Of all parties,
to discharge the deDt due the corporation
and the uusold machines were returned il
OF fraud and follow the property or Its proceeds whcr
they could be found. This II did not do because
it's agents and officers had TO believe that
Wallace had actually misled them to its injury until
after the machines were all sent forward But equity
and good conscience required that the proceeds VI
property obtained from 1t by fraud should be paid
it, that the property itself, II unsold, be returned
This recognized by Stewart Porter L. Wallace. aud
the arrangement oy which this done il binding on
them and the corporation. The machines did not
lose their identity, nor can II be said that
they formed part Of the permanent stock Of
that they can be considered as having thereby OBJ
tanned credit Their creditors, therefore, have no
right complain, tho settlement made In the
1t made the corporation knew that Porter &
Stewart insolvent does render fraudulent
uuder the Bankrupt law The transaction by which
part OF the machines got back is held TO DO
equitable and is said that II cannot be defeated BY
the sideraton that Wallace, after h9had made the
contract was allowed to retire from the firm The
corporation having always dweli with the firm Of
Stewart, Porter Wallace and having no information
tina, 1t composed until after the bankruptcy
OF Stewart Porter and the receipt Of the proceeds
its property frauduently procured from II, the
corporation Is held not liable to the assignee OF Stewart
& Porter for such proceeds. Affirmed.
Mr. Justice Davis delivered the opinion.