In re B. & R. Glove Corporation, 51.

• Citation: 279 F. 372
• Decision Date: 18 January 1922
• Docket Number: 51.
• Parties: In re B. & R. GLOVE CORPORATION.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

279 F. 372

In re B. & R. GLOVE CORPORATION.

No. 51.

United States Court of Appeals, Second Circuit.

January 18, 1922

This cause comes here on a petition to revise an order of the United States District Court for the Southern District of New York and also upon an appeal from the said order. The bankrupt is a corporation organized under the laws of the state of New York and on December 31, 1920, when an involuntary petition in bankruptcy was filed against it, was engaged in the business of manufacturing gloves in the city of New York. The reclaiming creditor is a business corporation organized under the laws of the state of New York, and is doing business in the city of New York, dealing in glove leather.

The reclaiming creditor claims that the bankrupt corporation on December 10, 1920, and also on December 16, 1920, by means of false and fraudulent representation, and also by means of false statement of financial condition obtained merchandise namely, glove leather of various types, and that the representations made by the bankrupt on that financial statement, which he gave to the claimant, was false, and was known to the bankrupt and its various officers to be false at the time it was given, and that at the time of the purchase the bankrupt corporation concealed from claimant its true financial condition. It is admitted that some of the merchandise so sold to the bankrupt subsequently came into the hands of the receiver, and was in his hands at the time this proceeding was instituted being on the premises of the bankrupt when the receiver took possession.

Cohen Gutman & Richter, of New York City (Theodore B. Richter and Samuel Conrad Cohen, both of New York City, of counsel), for appellant.

George S. Kebabian, of New York City, for appellee.

Before ROGERS, HOUGH, and MANTON, Circuit Judges.

ROGERS Circuit Judge (after stating the facts as above).

The order involved was entered in the District Court on April 13 1921, in a reclamation proceeding instituted by Garo Keshishian & Co., Inc., to recover from the receiver of the alleged bankrupt certain property which had come into his possession as such receiver. The order adjudged and decreed that the receiver turn over to the reclaiming petitioner certain property which was the subject of the reclamation proceeding. The receiver, feeling himself aggrieved by such order and being in doubt whether the order ought properly to be reviewed by appeal or by petition to revise, appealed to this court and likewise filed in this court a petition to revise. As both the appeal and the petition to revise involved the same identical questions and were based upon the same record, the attorneys for the receiver entered into a stipulation with the attorneys for the reclaiming petitioner, by which it was agreed that the proceedings arising upon the appeal and those arising upon the petition to revise should be consolidated and heard on one record. That stipulation was presented to one of the judges of this court, who signed an order directing the clerk of this court to combine the records upon the appeal and petition into one record and so certify the same to this court.

Before proceeding further in the consideration of this matter, it is advisable to state the limits of the jurisdiction of the court in cases brought here in this way. It is to be observed that, while there is authority for holding that the remedies by petition to revise and by appeal are cumulative, and that the one is not exclusive of the other, it is now the generally accepted opinion that this is not the law, and that the remedies are mutually exclusive. Globe Bank v. Martin, 236 U.S. 288, 295, 35 Sup.Ct. 377, 59 L.Ed. 583; Matter of Loving, 224 U.S. 183, 187, 32 Sup.Ct. 446, 56 L.Ed. 725; Coder v. Arts, 213 U.S. 223, 29 Sup.Ct. 436, 53 L.Ed. 772, 16 Ann.Cas. 1008; In re Craig Lumber Co. (C.C.A.) 266 F. 692; Youtsey v. Nizwonger, 258 F. 16, 18, 169 C.C.A. 154; In re Engine Co., 249 F. 633, 161 C.C.A. 543; Henkin v. Fousek, 246 F. 285, 159 C.C.A. 15; In re Jacobs, 241 F. 620, 154 C.C.A. 378; In re Lumber Co., 240 F. 8, 153 C.C.A.

44; Wuerpel v. Commercial Germania, etc., Bank, 238 F. 269, 151 C.C.A. 285; Courtney v. Shea, 225 F. 358, 140 C.C.A. 382; Pindel v. Holgate, 221 F. 342, 137 C.C.A. 158, Ann. Cas. 1916C, 983; Bothwell v. Fitzgerald, 219 F. 408, 413, 135 C.C.A. 212; Salsburg v. Blackford, 204 F. 438, 12 C.C.A. 624; Kirsner v. Taliaferro, 202 F. 51, 120 C.C.A. 305; In re Martin, 201 F. 31, 37, 119 C.C.A. 363; Barnes v. Pampel, 192 F. 525, 113 C.C.A. 81; Brady v. Bernard & Kittinger, 170 F. 576, 580, 95 C.C.A. 656; O'Dell v. Boyden, 150 F. 731, 80 C.C.A. 397, 10 Ann.Cas. 239; In re McMahon, 147 F. 684, 77 C.C.A. 668; Davidson v. Friedman, 140 F. 853, 72 C.C.A. 553; Dickas v. Barnes, 140 F. 849, 72 C.C.A. 261, 5 L.R.A. (N.S.) 654. And such is the rule in this circuit. Feder v. Goetz (C.C.A.) 264 F. 619, 620; In re Rose Shoe Mfg. Co., 168 F. 39, 40, 93 C.C.A. 461.

But the fact that an appeal and a petition to revise are both filed, both relating to the same subject-matter, would not defeat the right to have the matter determined on the merits in whichever proceeding the court might decide to be appropriate. Fisher v. Cushman, 103 F. 860, 43 C.C.A. 381, 51 L.R.A. 292. We will dismiss in such a case the remedy improperly taken and decide the case upon the other. Hendricks v. Webster, 159 F. 927, 87 C.C.A. 107. As the remedies are exclusive, it is necessary to consider which of them is appropriate to the cause presented, and which we are authorized to entertain.

This is a proceeding by a creditor of the bankrupt to reclaim property in the hands of the receiver, and this court in the case of In re Toole, 270 F. 195, held that a reclamation by a third party of his own property in the hands of a trustee is a controversy arising in bankruptcy proceedings, and the proper remedy is appeal under section 24a, and not a petition to revise under section 24b of the Bankruptcy Act (Comp. St. Sec. 9608). And as the remedies are exclusive we must dismiss the petition to revise and hear the matter on the appeal.

The court, on petition to revise, cannot review questions of fact, but only questions of law. See In the Matter of Nagel, 278 F. 105, decided by this court; Feder v. Goetz, supra; In re De Ran, 260 F. 732, 171 C.C.A. 470; In re Bolognesi, 254 F. 770, 166 C.C.A. 216; Bassett v. Evans, 253 F. 532, 165 C.C.A. 202; In re Shelly, 242 F. 251, 155 C.C.A. 91. But in the case of appeals the whole case is brought up, both law and facts. In re Rouse, Hazard & Co., 91 F. 96, 33 C.C.A. 356; In re Richards, 96 F. 935, 37 C.C.A. 634.

It appears that on June 2, 1920, the alleged bankrupt delivered to the claimant a statement of its financial condition as of March 10, 1920. Upon the strength of the condition shown on that statement the claimant sold to the alleged bankrupt on credit certain merchandise which was subsequently paid for. There were no further transactions between the parties until the transaction herein involved. In the month of December, 1920, the salesman of the claimant called upon the alleged bankrupt and endeavored to sell it some merchandise. At that time, according to the testimony of the claimant's salesman, the following took place: He took samples of glove leather to the bankrupt at its place of business, and met its president, and tried to make a sale. The president inquired the prices, and the salesman informed him. The president said the prices were too high, but finally they came to an agreement about the prices, and then the salesman said he wanted a cash payment. The president informed him that the company could not pay cash, as it had none at the time, but that they would collect quite a little to pay up all the bills by the first of the year, and he proposed a trade acceptance for 30 days. The salesman told him that he would speak to Mr. Keshishian about it; the latter being the treasurer of the claimant corporation to which the salesman belonged. On his cross-examination the following took place:

'Q. You didn't see any financial statement at that time, did you? A. No.

'Q. You asked him for cash, and when he refused to give cash, you simply took his word to the effect that he had outstanding bills sufficient to meet his obligations? A. Yes; that is what he told me at the time.

'Q. And that is all you had to do with it at the time? A. Well, I spoke to Mr. Keshishian.'

The president of the bankrupt then saw Mr. Keshishian himself, and a sale on credit was agreed to; one sale being made on December 10th, and another on December 16th. The bankrupt stated through its president at that time that it wished to make two payments, one half on January 25th, and the other half on February 25th, and this was assented to by Mr. Keshishian. The latter stated that, in the interview regarding these two credit sales in December, no reference was made by either of them to the financial statement of June 2d. He was asked by the commissioner as follows:

'Q. Did you allude to the statement in December? A. No; I did not.

'Q. Did he say anything about the statement in December? A. No; he did not.

'Q. Did you ask him anything about his present condition? A. Without my asking, when he said that he was so busy, and I had the information already that he had many accounts collectible with which he could pay all his debts early in January, those things gave me satisfaction, gave me confidence.

'Q. Well, give me the whole of the conversation that you had in December with this officer of the company? A. The conversation with him was to the effect that he had many orders, that he was very busy, and that he was going to ship out much goods before the end of the year, whereas his competitors were not so busy; that was all

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