Court Opinion

ID: 8745597
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:05:39.149491+00
Date Added: 2024-06-11T17:00:39.174265
License: Public Domain

ADAMS, District Judge.
An involuntary petition was filed against David Weil on the 14th day of September, 1900, and on the 23d day of' October, 1900, he was adjudicated a bankrupt. Pending the adjudication, a receiver was appointed, who, among other things, took possession of certain raw silk and taffeta silk, which were sold by order of the court, and the proceeds are now in the possession of the trustee. Before these goods were sold, Schuster Fils et Cie., of Paris, France, filed petitions claiming the goods upon the allegations that they had been sold to the bankrupt upon false representations made by him; also that the bankrupt had refused to receive them, and the title still remained in the vendors. The claims were denied by the trustee and the issues arising out of the claims were referred to the referee in the case to take testimony and report the same, with his opinion. Such report is now before me on a motion on behalf of the trustee for confirmation. The learned referee was of the opinion that upon the testimony before him the title was in the bankrupt, and that the claims of the petitioners should be denied. There is no conflict in the evidence, none having been offered on behalf of the trustee. As I read it, the following facts appear: The bankrupt was never in direct communication with the petitioners, but in 1899 his son, who was then in his employ, and authorized to purchase goods for him, visited Paris, and bought some goods from them, after making representations which, if believed, would justify a considerable credit. At this time inquiries concerning the bankrupt were also made by the petitioners of Dun’s Mercantile Agency, and satisfactory reports were received. These goods, amounting to about $2,000, were paid for, but ’the line of -credit was not exhausted. In May, 1900, the goods in controversy were sold to Weil through the . a'gency of the son, then upon another visit to Paris, partly upon the credit already established, and partly upon new reports from Dun’s Agency, which they received from their New York agent in March, 1900. These goods were shipped in July and August, 1900. The March reports were based upon a statement made by Weil on the 7th of March, 1900. In this statement he showed assets amounting to $221,141.13 and liabilities amounting to $72,195.50. Taking the subsequent bankruptcy into consideration, the statement must have been grossly untrue, or there must have been a rapid disappearance of assets. An examination of his books showed its untruth in some particulars, and I am satisfied that it was false and misleading. -If the vendors relied upon the statements,—and there is sufficient evidence to establish such fact,—-it would seem that the misrepresentations were sufficient to entitle them to rescind the sale and claim a return of the goods. Turner v. Ward, 154 U. S. 618, 14 Sup. Ct. 1179, 23 L. Ed. 391; In re Gany (D. C.) 103 Fed. 930; In re Epstein (D. C.) 109 Fed. 874, 876; Humphrey v. Smith, 7 App. Div. 442, 39 N. Y. Supp. 1055; Bradley v. Bank, 46 App. Div. 550, 62 N. Y. Supp. 51.
Other features of the case are that Weil refused to receive a portion of the goods in question on the ground that they were not according to order, and endeavored to ’ return the other portion, *899recognizing that he was not entitled to retain them in view of his condition. This refusal to receive and attempt to return were shortly before an assignment which he had made lor the benefit of his creditors, prior to the bankruptcy proceedings. It is claimed by the trustee that the refusal and return were ineffective, because not consented to by the petitioners; but I do not think, in view of the nature of the transactions, that such consent was necessary to establish their present rights.
It follow^ that the motion to confirm must be denied, and a reference had to determine the amount of the petitioners’ recovery.