Comparone v. M.J. Caplan Co.

• Decision Date: 20 January 1930
• Citation: 270 Mass. 74,169 N.E. 667
• Parties: COMPARONE v. M. J. CAPLAN CO., Inc.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

270 Mass. 74

169 N.E. 667

COMPARONE

v.M. J. CAPLAN CO., Inc.

Supreme Judicial Court of Massachusetts, Essex.

Jan. 20, 1930.

Appeal from Superior Court, Essex County; F. T. Hammond, Judge.

Suit by Raphael A. A. Comparone, as trustee in bankruptcy of Gedeon Guillemette, against the M. J. Caplan Company, Inc. Decree for plaintiff, and defendant appeals. Affirmed.

R. A. A. Comparone, of Lawrence, for plaintiff.

E. McAnally and M. Nicholson, both of Lawrence, for defendant.

WAIT, J.

The plaintiff as trustee in bankruptcy of Gedeon Guillemette brings this bill in equity to recover for an alleged preference, and, after a decree for the plaintiff, the defendant appeals. The judge found that Gedeon Guillemette, who was adjudicated bankrupt on July 19, 1928, had carried on a baker's business at Methuen in a building which he owned, and which he had mortgaged to one Miller on June 23, 1926, to secure payment of a note for $2,000. At the same time and to secure the same debt he gave Miller another mortgage of the personal property used in his business, which included baking utensils and apparatus, delivery automobiles and wagon, and stock in trade. The defendant, which carried on a wholesale grocery and baker's material business in Lawrence, and had been selling supplies to Guillemette, when it learned of the mortgage to Miller, refused to furnish him goods on credit; and thereupon it was arranged between Guillemette, Miller and the defendant that Miller should assign the personal property mortgage to the defendant as security for goods thereafter to be supplied to Guillemette. Miller assigned the mortgage and indorsed the note to the defendant on August 11, 1926, and the defendant continued to sell to Guillemette. Shortly after February 27, 1928, Guillemette left Massachusetts. His wife notified the defendant of his leaving, and asked its assistance in the business; and from March 1 to March 10, Caplan, an officer of the defendant, was at the bakery and assisted her. Guillemette then owed the defendant $1,386.54 on open account and $2,398.89 on notes which it had discounted-a total of $3,785.43. In the ten-day interval, Mrs. Guillementte gave the defendant a check for $515, and one for $299,86, signed by her as attorney for her husband. Both were dishonored. Notice of non-payment was given on March 9. Between the first and tenth of March Caplan secured a purchaser, one Beaulieu, who agreed to purchase Guillemette's business for $3,600. On March 10, 1928, the defendant served notice of intention to foreclose its mortgage on Mrs. Guillemette and recorded notice and affidavit of notice with the town clerk of Methuen on March 12, 1928, pursuant to G. L. c. 255, §§ 5, 6, 7. Also on March 10, Mrs. Guillemette, by virtue of a power of attorney from her husband authorizing her to deliver a bill of sale conveying all his right, title and interest in the bakery business, including all personal property used or kept in the business, all accounts receivable and the good will, executed and delivered a bill of sale of the business to Beaulieu; and Beaulieu gave the defendant his note for $2,400 payable in two years from its date, March 10, secured by a mortgage dated March 10, of all the personal property used in the business, including the stock of raw material on hand; and also gave the defendant his demand note dated March 10, 1928, for $1,200. This was the entire consideration paid by Beaulieu. On March 13, Beaulieu paid $500 and on March 19, $200 on the demand note. On March 13, its bank charged back to the defendant the amount due of one of the checks given it by Mrs. Guillemette, and on March 17 the bank was repaid the amount of the other dishonored check-a total of $816.88.

On March 10, besides the $3,785.43 due the defendant, Guillemette owed one Pappalardo, an unsecured creditor, $818.25. What else he owed, if anything, did not appear. His only assets were his house and his business. The house was worth not over $6,500, and there were mortgages on it for $8,100. The property held by the defendant as assignee of Miller was worth not more than $800. The judge found that (1) on March 10 Guillemette was insolvent, (2) the defendant ‘had reasonable cause to believe’ him to be insolvent, (3) a transfer of his property was made to Beaulieu which benefited the defendant, (4) the defendant had reasonable cause to believe that the transfer would effect a preference under the Bankruptcy Act (section 60 [11 USCA CA § 96]) and (5) that the effect of the transfer, if it stands, will be to enable the defendant to obtain a preference to the extent of the $1,200 note given by Beaulieu, and the excess of value, if any, of the $2,400 mortgage over the $2,000 mortgage. The mortgage and note for $2,400 do not exceed in value the...