Case Name: HAZARD v. WIGHT
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1910-05-04
Citations: 122 N.Y.S. 837
Docket Number: 
Parties: HAZARD v. WIGHT.
Judges: 
Reporter: West's New York Supplement
Volume: 122
Pages: 837–840

Head Matter:
HAZARD v. WIGHT.
(Supreme Court, Appellate Division, Fourth Department.
May 4, 1910.)
Bankruptcy (§ 140 )—Administration of Estate—Property Vesting in Trustee—Ownership.
Several persons who had conducted a crockery business owed defendant $750, and one of them became bankrupt. At the request of such persons, defendant agreed to purchase the bankrupt stock, which was appraised at $17,000, and to continue the business on condition that he be paid the amount due him and $1,000 in addition to the amount he paid for the stock, which was $5,250, and thereafter the corporation represented by plaintiff trustee in bankruptcy was organized, and the stock turned over to it under an agreement that defendant should be repaid the amount of his indebtedness, and a number of shares of the corporation were transferred to him as collateral security for the payment thereof. Defendant afterwards surrendered his claim for $1,000. The indebtedness was paid from the assets of the corporation and other sources, whereupon defendant resigned as president and director and transferred his shares as directed by one of the organizers of the corporation. No one became a creditor of the corporation relying on any facts which were concealed in the transaction between defendant and it, such transaction being open, and defendant only received the amount actually owing him. Held, that the trustee in bankruptcy of the corporation was not entitled to recover the money received by defendant on the ground that it belonged to the corporation.
[Ed. Note.—For other cases, see Bankruptcy, Dec. Dig. § 140. ]
Spring and Robson, JJ., dissenting.
Appeal from Trial Term, Oneida County.
Action by Frederick H. Hazard, as trustee in bankruptcy of the Utica Crockery Company, against Resell E. Wight. From a judgment dismissing the complaint, plaintiff appeals.
Affirmed.
' Argued before McLENNAN, P. J., and SPRING, WILLIAMS, KRUSE, and ROBSON, JJ.
Edmund J. Wager, for appellant.
Vasco P. Abbott, for respondent.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
McLENNAN, P. J.
One Madoc prior to June 21, 1906, was conducting a crockery business in the city of Utica, N. Y., and went into bankruptcy owing-the defendant $350, and one Pike, who had formerly been associated with Madoc in such business, owed defendant $400. One Wilcox had been employed by Madoc as bookkeeper. Prior to June 21, 1906, the bankrupt stock of Madoc had been appraised at upwards of $17,000. Pike and Wilcox applied to the defendant to induce him to purchase said stock, and turn it over to them, so that they might continue the business of Madoc. The defendant agreed to make such purchase upon condition that he should be paid the amount owed him by Madoc and Pike and $1,000 in addition to such amount as he might pay for the stock of goods, and he subsequently bid and paid for such stock of goods and fixtures the sum of $5,250. Soon thereafter the plaintiff corporation was organized at a capital stock of $10,000, and the goods purchased by the defendant, being the bankrupt stock of Madoc, was turned over to it. It was agreed at the time of the incorporation of the plaintiff company that the payments should be made to the defendant until he was fully paid, and as a part of such agreement or transaction 98 shares of stock of the plaintiff corporation were transferred to the defendant as collateral for the payment of his said indebtedness, upon the payment of which indebtedness said stock was to be transferred at the direction of Wilcox. The defendant thereafter surrendered his claim for $1,000 for services and expenses, thus reducing the indebtedness to $5,750. Such indebtedness was paid from sources outside of the assets of the company, and also from the assets of the company'. When the full amount of such indebtedness to the defendant was paid, he transferred his 98 shares of stock which he had as collateral, and his interest in the corporation ceased. There is no suggestion in the evidence that the defendant had at any time re-' ceived any money from said corporation which it did not actually owe him for the goods which he had actually transferred to it and the finding of the referee is to that effect. There was no concealment of the transaction. There is no pretense that any creditor of the plaintiff corporation became such relying upon any facts which were concealed or undisclosed by the defendant so far as his transactions with the corporation were concerned.
The statement in appellant's brief that the defendant sold the aforesaid merchandise and fixtures to the corporation for $10,000 and took in exchange for them 98 shares of the capital stock is not borne out by. the evidence. $Such 98 shares of stock were transferred to him as collateral to the indebtedness which the corporation owed him for goods actually paid for by him and delivered to it. He did not make a cent out of the transactions, and no one was deceived by any transaction which he had with it.
It seems to me that the judgment is right, and should be affirmed, with costs.
Judgment affirmed, with costs. All concur, except SPRING and ROBSON, JJ., who dissent.