Chicago Title & Trust Co. v. John A. Roebling's Sons Co.

• Decision Date: 08 February 1901
• Court: U.S. District Court — Northern District of Illinois
• Parties: CHICAGO TITLE & TRUST CO. v. JOHN A. ROEBLING'S SONS CO. et al.

107 F. 71

CHICAGO TITLE & TRUST CO. v. JOHN A. ROEBLING'S SONS CO. et al.

United States Circuit Court, N.D. Illinois.

February 8, 1901

The following is the substance of the report:

The Diamond Electric Company, a corporation, on April 21, 1898 was engaged in the business of manufacturing electrical supplies, with a plant at Peoria, Ill. Being indebted to John A. Roebling's Sons Company, defendant, in the sum of $3,500 for merchandise, it represented to the defendant that it had assets largely in excess of its liabilities, but needed ready money. The defendant thereupon advanced to it the sum of $6,500 in cash, taking a judgment note for $10,000, payable on demand, with an understanding that the same be paid in monthly installments. The first installments not being paid, the defendant pressed for payment in June 1898, and in July, 1898, placed the note in the hands of its attorney. During the summer of 1898 numerous demands were made for payment. On the occasions when it was pressed for payment the Diamond Electric Company, through its president made repeated representations to the defendant that its assets largely exceeded its liabilities, and trial balances and other written statements were exhibited, showing a large margin of assets over liabilities. On September 27, 1898, the defendant entered judgment on the note in the circuit court of the United States, and execution issued and on the same date the marshal levied on all the plant, machinery, and stock of the Diamond Electric Company at Peoria. A sale was duly advertised, and on October 11, 1898, the property was sold by the marshal to the defendant for $7,500; and the defendant later sold the property so purchased to outside parties for enough to pay its claim against the Diamond Electric Company in full. On September 28, 1898, the Diamond Electric Company made an assignment in the county court to David H. Roblin, assignee, who took possession of the assets not levied upon, which consisted largely of accounts and bills receivable. On July 1, 1898, the bankruptcy act was passed, and on November 11, 1898, the creditors of the Diamond Electric Company other than the defendant filed an involuntary petition in bankruptcy against it. On February 10, 1899, it was adjudicated bankrupt. On March 17, 1899, the complainant was appointed trustee, and on June 21, 1899, filed its bill against the defendant to recover the value of the plant and stock sold under execution under the defendant's judgment. The plant levied upon by the defendant comprised a large part of the assets of the Diamond Electric Company. The amount realized by the assignee in the county court, and later by the trustee from the collection of the accounts and bills receivable and from the sale of the other assets, was insufficient to pay the remaining creditors, other than the defendant, in full.

The master found that at the time of the entry of the judgment by the defendant, September 27, 1898, the assets of the bankrupt were $41,473.19; that out of this total the property levied on and sold under the defendant's execution was worth $27,684.19. The master reached these conclusions on the basis of a going concern. The total liabilities he...