In re Calvi

• Decision Date: 24 March 1911
• Parties: In re CALVI.
• Court: U.S. District Court — Northern District of New York

185 F. 642

In re CALVI.

United States District Court, N.D. New York.

March 24, 1911

E. C Baker, for petitioning creditors.

B. & C B. Johnson, for George Calvi.

F. W Youmans, for Horace Infusino.

RAY District Judge.

This proceeding involves the title to certain goods, wares, and merchandise, largely rubber goods, purchased by Frank Calvi of the petitioning creditors and others prior to October 1 1910, and delivered to said Frank Calvi on credit at Delhi. The value of such goods is about $2,500. A part of the goods were found in the possession of George Calvi at Andes, N.Y., when the petition herein was filed. The remainder thereof were found in the possession of Horace Infusino at the former place of business of said Frank Calvi in Delhi, N.Y. The involuntary petition herein was filed October 24, 1910, and a receiver of the property of said Frank Calvi was appointed, who duly qualified. The order appointing the receiver was accompanied by an injunction directed against the said George Calvi and Horace Infusino enjoining and restraining them from disposing of the said goods so found in their possession. The said George Calvi and Horace Infusino came in and submitted themselves to the jurisdiction of the court, and moved to vacate the injunction, and claimed to be the bona fide owners of said goods, and thereupon an order was made referring it to Andrew J. McNaught, Jr., one of the referees in bankruptcy, as special master, to take proofs and report to the court with findings of fact as to whether or not the said George Calvi and Horace Infusino had purchased of Frank Calvi the said goods, wares, and merchandise found in their possession, respectively, in good faith and for a full and fair new consideration prior to the institution of the bankruptcy proceedings. The reference has been executed, and the said special master has made his report, to which exceptions have been filed by the petitioning creditors. On or about the 7th or 8th day of October, 1910, the said Frank Calvi, the bankrupt, disappeared from Delhi with his family, and he has not been found or heard of since. He was served with a writ of subpoena herein by publication and adjudication has been duly made.

Frank Calvi ran a small boot and shoe store in the village of Delhi, Delaware county, N.Y., and was generally supposed to be moderately prosperous in business, and honest. He had built up a fair credit with the trade, and had a fair commercial standing. Prior to the spring and summer of 1910, his purchases had been moderate, but at about that time he increased his orders with various merchants, and ran in debt for goods purchased of parties away from Delhi in a sum in excess of $3,000.

October 6th his goods on hand at Delhi were of the value of about $2,500, and mostly unpacked; that is, they were in the packages or boxes in which they were shipped to him by the merchants from whom purchased. He lived with his family in the store, and his household belongings, aside from wearing apparel, were worth less than $25. Frank Calvi had a bank account with a bank in Delhi, and October 1, 1910, after making a deposit of $62.82, the balance to his credit in said bank was the sum of $870.14. It seems from the evidence that his account was written up and his checks on this account surrendered some time between the 1st and the 6th day of October. Cotober 6th the balance to his credit was $870.14. While doing business between those dates he made no deposit. A few days prior to October 6th, said Horace Infusino went to Delhi from a place in the state of Pennsylvania, where he had been at work as shoemaker and shoe repairer. He claims that he had between $600 and $700 in money upon his person, and that he contemplated buying a boot and shoe business. On the 6th day of October, George Calvi, a young unmarried man, 22 years of age and a second cousin of Frank Calvi, who was doing a small business at Andes, Delaware county, a few miles from Delhi, purchased of Frank Calvi certain boxes of the goods referred to which had not been unpacked, and same were removed to Andes. It is not denied that these goods were of the value of about $1,000, a little less than that. George Calvi claims that he paid for these goods so purchased the fair value thereof with his own money, and that he paid for same in cash in the store of said Frank Calvi in the evening, and he is corroborated by a fellow countryman of the Calvis, who says he was present and saw the money counted out in payment for the goods. George Calvi says he was ignorant of the fact that his cousin Frank Calvi was owing for these goods and others as above stated. No notice of this sale or proposed sale in bulk was given to the creditors of Frank Calvi, and the evidence fails to show that George Calvi took pains to inform himself on the subject. In fact, he took the bills for these goods rendered to Frank Calvi by the sellers thereof and checked up the merchandise. The bills were not receipted. He says that Frank Calvi told him he had sent check in payment, it is presumed, to the firm or firms of whom the goods had been purchased. On the day or day before this alleged sale took place, George Calvi drew from the bank the exact balance to the credit of Frank Calvi, $870.14, on a check of Frank Calvi's made that day. George Calvi says that he used this money, with some other money which he had, to pay Frank Calvi for the goods so purchased. On the face of things and standing alone, it would appear that the payment for these goods sold and delivered to George Calvi was made to Frank Calvi with his own money as it had been in the bank in the name of Frank Calvi and deposited by him from time to time. It was made up of the balance to his credit, taking into account deposits upon which checks had been drawn at various times. The force of this is sought to be broken, and the special master finds is broken, by the testimony of George Calvi, who testifies that from time to time he had loaned to Frank Calvi various sums of money, and that the indebtedness of Frank Calvi to him on the 6th day of October, 1910, was just $870.14, the exact sum Frank Calvi had to his credit in bank on that day.

He says that he had notes or receipts, writings of some kind, to show for this money, but that on receiving it from Frank Calvi by check on the 6th he surrendered to Frank Calvi such evidences of indebtedness. George Calvi further testifies that he got his money from Frank Calvi at this time for the purpose of going to Binghamton or elsewhere to purchase a large addition to his stock of goods, having determined to largely increase his business at Andes; that, when he made this purpose of his known to Frank Calvi, Frank proposed to sell to him the goods which he had in his store and which he did sell and deliver as above stated.

The petitioning creditors say that this is an improbable story, especially when taken in connection with the sale of the remainder of the stock to Infusino and the business George Calvi had been doing at Andes, and what must have been his financial condition. George Calvi says that he had worked about 10 months for Frank at Delhi, and then went to Andes, where he worked about 10 months for Frank, who ran the business there, and that he then bought out the business at Andes from Frank paying about $131 therefor. It is contended that at his age running such a business at Andes he would not have been able to loan this amount of money to Frank Calvi, especially as it appears from the statement of George Calvi that he had other money to the amount of about $800, several hundred dollars of which was deposited in the bank at Andes. It may be that this alleged payment was a sham, and that the money paid over in the evening by George Calvi to Frank Calvi belonged to Frank. This involves the conjecture or speculation that the goods were left with George Calvi or turned over to him to dispose of and remit the proceeds to Frank Calvi.

Under the personal property law of the state of New York, such a sale in bulk is presumed to be fraudulent, unless five days' notice of such sale or proposed sale has been given to the creditors of the vendor. In Sprintz v. Saxton, 126 A.D. 421, 110 N.Y.Supp. 585, this provision has been held valid as a rule of evidence. Presumptively, then, this sale in bulk of these goods by Frank Calvi to George Calvi was fraudulent and void. The burden was placed on George Calvi and Frank Calvi to show that the sale was not fraudulent; that is, that the goods were sold in good faith and for a full and fair consideration. The burden was also upon George and Frank Calvi to show that there was no purpose or intent on their part to cheat or defraud the creditors of Frank Calvi, especially the creditors who had sold these particular goods to Frank on credit. If George Calvi had reason to believe that Frank Calvi was disposing of his goods to him with the intent to take the proceeds and leave the country, leaving his creditors unpaid, he was a party to a fraud, and, in view of the statute referred to requiring notice of such sale to the creditors which was not given, he could not shield himself from the consequences by showing that he paid Frank Calvi full value for the goods with his own money.

He attempts to avoid this phase of the situation by his statement that Frank Calvi told him he had sent check in payment for the goods.

George Calvi also testifies that Frank Calvi told him, as did his family, that he was going to leave Delhi and go to New York. The probability is that with the proceeds of these goods and such other property as he had he has returned to Italy. George Calvi, as stated, paid $131 for the stock and business at Andes two years before. He had purchased to replenish his stock of Frank Calvi from time...