In re Heinsfurter

• Decision Date: 19 August 1899
• Docket Number: 725.
• Parties: In re HEINSFURTER.
• Court: U.S. District Court — Southern District of Iowa

97 F. 198

In re HEINSFURTER.

No. 725.

United States District Court, S.D. Iowa, Eastern Division.

August 19, 1899

Ira R Tabor, for claimant.

Isaac Petersberger, for defendant.

WOOLSON District Judge.

The evidence introduced before the referee in the proceeding to prove up the contested claim accompanies the certificate of the referee. The facts in the case, so far as the same relate to the actual transactions of the parties, are not in dispute. In brief, these are as follows: Heinsfurter, the bankrupt, was in the year 1898 engaged as a merchant with principal store at Davenport, Iowa, but with a branch store at Erie, Ill. On September 9th of that year, at the solicitation of the traveling salesman of the claimant, the Guthman, Carpenter & Telling Company, Heinsfurter gave claimant an order for goods for his Erie store. Heinsfurter was not asked for, not did he give, any statement to the said salesman as to his financial condition at that time. Shortly after giving this order, the agent or representative at Davenport of the Wilber Mercantile Agency called upon Heinsfurter for a statement as to his financial condition stating that he wanted it for such agency. Heinsfurter states that he told the representative that he could make him no statement, but could only give him a statement made to Dun and Bradstreet last January, and that this representative could look that up, and that he then gave him a copy of such statement. Heinsfurter testifies that this statement was, at the time it was made to Dun and Bradstreet, a truthful statement of his financial standing, as obtained from his books. The evidence shows that, at the date of purchase of the goods ordered through said salesman, Heinsfurter was in fact insolvent (accepting for such term the definition given in the bankruptcy statute), but that from time to time, as necessity therefor existed, his relatives had come to his assistance, and 'tided over' his immediate financial difficulties, and that, if such assistance had been given in the fall of 1898, he might, at least for the time, have continued his business. Instead of this assistance, his sister, who was a large creditor, demanded a chattel mortgage on all his goods, as security for the indebtedness to her and thereupon he moved the Erie stock to Davenport, and on November 17, 1898, he gave his sister the chattel mortgage demanded. Subsequently the stock went into the hands of a receiver. The Guthman, Carpenter & Telling Company instituted in the state court a suit in replevin for the goods sold by them to Heinsfurter, and declared the contract of sale to him to be rescinded, on the alleged fact that, at the time of his purchase of said goods from them, Heinsfurter was insolvent, and fraudulently bought said goods with the intention, then held by him, not to pay for the same, etc. Under the writ of replevin issued in such suit, there were taken and returned to said replevying plaintiffs 186 pairs of shoes, identified by said plaintiffs as part of the goods by them sold and delivered to Heinsfurter. This replevin suit has not been prosecuted to judgment. The referee finds the value of said goods so returned to said plaintiffs under said replevin writ to be $200, while said claimant avers the same to be but $184.55. Upon February 24, 1899, said Guthman, Carpenter & Telling Company filed its verified proof of debt with Referee Helmick, wherein it claims that the goods by it sold to Heinsfurter which were not taken under said writ of replevin had been sold by Heinsfurter or the said receiver, and that there is due to the claimant from the estate of said bankrupt the difference between the aggregate amount which Heinsfurter, under his order and purchase, was to pay (said aggregate is conceded to be $350.45) and the value of the goods returned under said writ, which difference claimant alleged to be $165.90. Perhaps the most direct method of presenting the situation as asserted by said claimant is to copy a portion of its proof of debt as filed with the referee. After averring the sale and delivery of the goods, and the fraudulent intent, etc., of said Heinsfurter with reference thereto, it says:

Claimant further states that, as soon as it heard of the fraudulent intention of said Heinsfurter, it immediately caused to be rescinded, and did rescind, the said contract of sale to said Heinsfurter; that it so elected to rescind the same as soon as it was informed of the fraudulent conduct and intention on the part of Heinsfurter, of the giving of the chattel mortgage above referred to, and of transferring above-described property from Erie, Ill., to Davenport, Iowa, without the knowledge or consent of the claimant, with intention of defrauding the claimant.

After reciting the institution, as above stated, of said action in replevin, and that goods to the value of $184.55 were returned thereunder to said claimant, and that the value of the goods not returned as commanded in the writ was $165.90, and that such goods not returned had been sold by Heinsfurter and the receiver, the claim herein is stated as follows:

Claimant alleges, and so charges the fact to be, that prior to the contract of sale by it to said Heinsfurter, and as an inducement thereto, the said Heinsfurter made false and fraudulent representations as to his assets and liabilities, with reference to his financial standing, which was done for the purpose and with the intent to procure said merchandise from claimant, in fraud of its rights, and with the intention not to pay for the same; that the said Heinsfurter took, appropriated, and converted to his own use the goods, wares, and merchandise described in claimant's petition in replevin in the district court of Scott county, Iowa, which petition is here referred to, and made a part of this record in this matter.

The petition is not attached or exhibited by copy, or otherwise referred to than in the above extract. But the briefs of the counsel are on the basis, justified by the language of this proof of debt, that the replevin action described and included the entire goods originally bought from claimant by Heinsfurter.

Claimant further alleges that it rescinded the contract of sale to said merchandise, and asks that its claim be allowed by the referee in the sum of $165.90, for the wrongful and fraudulent conversion and detention of said property.

The objections filed against this claim are, in substance: (1) That claimant, having elected to proceed in the state court in replevin of said property, is estopped from proving any claim here, since, having replevied, it cannot prove its claim in whole or in part in bankruptcy; (2) if this is a claim in tort, it has not been reduced to judgment or liquidation, and no order has ever been made by the court allowing or directing its liquidation as a debt; (3) the claim as presented is not a provable debt, under the statute.

The referee held that said replevin action did not estop claimant from proving up its claim in bankruptcy; that for goods converted the claim may be proven without having the same first liquidated by judgment; that said bankrupt bought said goods in good faith, in the ordinary course of business, and that the title thereto rested in him; that the goods replevied by claimant constituted a payment on the claim, and a preference by claimant received, and that until said preference, to wit, the value of the goods replevied, found to be $200,...