Case Name: LOS ANGELES CREAMERY CO. (a Corporation) et al., Respondents, v. M. LEVINSON, Appellant
Court: District Court of Appeal of the State of California
Jurisdiction: California
Decision Date: 1929-02-27
Citations: 97 Cal. App. 244
Docket Number: Civ. No. 6196
Parties: LOS ANGELES CREAMERY CO. (a Corporation) et al., Respondents, v. M. LEVINSON, Appellant.
Judges: 
Reporter: California Appellate Reports
Volume: 97
Pages: 244–253

Head Matter:
[Civ. No. 6196.
Second Appellate District, Division One.
February 27, 1929.]
LOS ANGELES CREAMERY CO. (a Corporation) et al., Respondents, v. M. LEVINSON, Appellant.
Schweitzer & Hutton and B. R. Ware for Appellant.
Each Lamar Cobb and Earl A. Littlejohns for Respondents.

Opinion:
YORK, J.
Appellant objects strenuously to the judgment on the ground that the respondents are attempting to secure a judgment from a state court in a matter, which, they contend, has been fully passed upon by a United States court.
An examination of the transcript does not bear out this objection.
This action, as we view it, is an action for an accounting for moneys received by the defendant Levinson as profits accruing from the purchase and sale of certain assets, the sale being one held unde, the jurisdiction of the United States court in a bankruptcy proceeding. The respondents also ask for a judgment decreeing that such profits were held by defendant Levinson in trust for the use and benefit of the bankrupt estate, and therefore incidentally for the plaintiffs in this case and other -creditors thereof.
The trial court in its findings found that the Los Angeles Creamery Company, Kahn-Beck Co., Leo Levy, O. L. Bishop, Chas. Winkelman, Joseph Weinblatt, Ray Levy, and M. Reingold were unsecured creditors of the bankrupt estate, and found the respective amounts due to each creditor. The trial court further found that ten per cent only of their claims had been paid and that each and all of said claims had been proved for the amounts specified in the findings. • The trial court found the particular facts as to a fraud committed by the defendant Levinson at the sale held by the trustee in bankruptcy under the order of the federal court, wherein and whereby the defendant Levinson prevented bidders at said sale from bidding the full value of the property to be sold by said trustee, and particularly by threatening to appeal from any order or judgment affirmed by the United States district court, even, if necessary, to the supreme court of the United States, and that each and every bid made at such sale was affected by such threat, and that the full value of the property sold by said bankrupt was not received because of such threat.
The trial court found in detail that a secret agreement with one Gus Compselides was made by the defendant Levinson wherein and whereby it was agreed that Compselides was to refrain from bidding at the sale, and that in the event that said Levinson, through his agent and dummy, Hardstein, was successful in purchasing the said assets at the bankrupt sale, a net secret profit to Levinson of $20,000 would be paid. That secretly at the time of the sale the defendant Hardstein represented the defendant Levinson and that Compselides, then and there secretly authorized the said Hardstein to bid the sum of $17,000 for the assets sold by the referee, with the understanding that he, Compselides, would purchase said assets, together with a certain "Coffee Shop" lease, from Levinson, for the sum of $37,000.
After finding in detail the way in which said transaction was finally consummated, the court found that defendant Levinson received a secret profit of $20,000 from Compselides and his associates; that the existence of this secret agreement was not known to any of the creditors of the bankrupt estate, nor to the trustee in bankruptcy, nor to the referee in bankruptcy, until after the referee's order confirming the sale had become final, nor until about the time of the commencement of this action.
The nearest authority among the many authorities cited seems to be the case In re Chas. Knosher & Co. v. Baxter, in an opinion by Judge Morrow of the United States circuit court of appeals for the ninth district, and concurred in by Judges Gilbert and Ross, appearing in 197 Federal Reporter beginning at page 136, but quoting from page 141. It is stated, among other things; "It is clear that, if the creditors of the bankrupt were entitled to any relief by reason of the alleged inadequacy of the price received for the stock of goods, it was not by summary proceedings, but should have been obtained through the trustee in an action against John Anisfield Company, for an accounting, and if the trustee and his attorneys were hostile to the proceeding, as intimated, but not established, he could have been required by order of the bankruptcy court to permit the use of his name in such an action with new attorneys, or, failing in that, the trustee could have been removed and a new trustee appointed with new attorneys instructed to proceed by proper action to determine the rights of the bankrupt estate in a plenary action."
This case was first filed by certain creditors for the benefit of all creditors; thereafter the trustee of the bankrupt estate, by leave of and under an order of the referee in bankruptcy of the district court of the United States for that district, acting for that court after an order for him so to do was duly made and entered, filed in this action an amended complaint, and on his complaint so filed this cause was tried and determined.
The findings made by the trial court are too voluminous to be herein set forth in full, but they are sufficient to support and justify the judgment rendered by the trial court that the plaintiff Wm. H. Moore, Jr., as trustee for the creditors of the bankrupt stock of Levy's, Inc., is entitled to recover from the defendant Levinson a portion of said $20,000, to wit, the sum of $13,333.33, together with interest thereon.
The stipulations made between the parties hereto and the evidence justified the trial court in making each of the material findings made by it.
For the foregoing reasons the judgment is affirmed.
Houser, J., concurred in the judgment.