In re J.M. Acheson Co.

• Decision Date: 24 May 1909
• Docket Number: 1,693.
• Citation: 170 F. 427
• Parties: In re J. M. ACHESON CO. v. MEARS et al. GINSBURG et al.
• Court: U.S. Court of Appeals — Ninth Circuit

170 F. 427

In re J. M. ACHESON CO.

GINSBURG et al. v. MEARS et al.

No. 1,693.

United States Court of Appeals, Ninth Circuit.

May 24, 1909

The J M. Acheson Company, a mercantile corporation, was, with its expressed consent, duly adjudged a bankrupt on June 2, 1908. Thereafter a receiver was appointed by consent, and all assets of the corporation were turned over to him for the benefit of all the creditors. The receiver was afterwards named as trustee. Among the claims filed against the estate was one by the firm of Ginsburg Bros., of Chicago, who set forth in their petition filed with the referee that the J. M Acheson Company owed them $2,228.50 on an open account for merchandise delivered by the firm of Ginsburg Bros. to the said J. M. Acheson Company on consignment within two years last past before filing the claim, bills for which were annexed to the petition and made part thereof. Claimants further set forth that 'the agreed value of the goods shipped by deponent's said firm to said bankrupt was $4,212.25, and all of said goods were disposed of by said bankrupt, excepting goods to the value of $1,483.75, which goods were returned by order of this honorable court. Of the moneys received for said goods which were sold, said bankrupt has paid this deponent's firm the sum of $500 only leaving said balance of $2,228.50 due this deponent's firm; that no part of said claim has been paid; that there are no set-offs or counterclaims to the same; and that this deponent has not, nor has his said firm, nor has any person by their order, or to this deponent's knowledge or belief, for their use, had or received any manner of security for said claim whatever; that no note has been received for said account nor any judgment rendered thereon; that said items of said claim became due as soon as sales of said goods were made by said bankrupt, and all funds received by said bankrupt from the sales of said goods which were not paid over to this deponent's firm were to be held in trust by said bankrupt and said funds were trust funds. This deponent is informed and believes and therefore says that said bankrupt failed to keep said trust fund separate and distinct from other funds, but wrongfully mixed and commingled the same with the money of said bankrupt, and said bankrupt has used said trust fund in payment of its employes and other running expenses, in paying other creditors, and in purchasing sundry other goods, wares, and merchandise which composed the assets of said bankrupt, which assets were taken charge of by the receiver appointed by this court. Said assets were disposed of by said receiver for the sum of . Said receiver was thereafter selected and now is the trustee of said bankrupt, and still has in his possession funds received from the sale of said assets more than sufficient in amount to satisfy this claimant's claim in full. ' The prayer was that the claim be allowed in full.

The trustee filed a general demurrer to the petition, and, after hearing, the referee, without formal action upon the demurrer, disallowed the claim of petitioners as a preferred one, but directed that it be filed as a general claim.

Petitioners sought a review of the referee's order. The District Court affirmed the order of the referee, and allowed the claim as a general one against the estate. Petitioners appealed to this court.

Clarence H. Gilbert and James Cole, for petitioners.

J. V. Beach, N. D. Simon, A. F. Flegel, and Geo. W. Joseph, for respondent.

Before GILBERT and ROSS, Circuit Judges, and HUNT, District Judge.

HUNT District Judge (after stating the facts as above).

While the claimants' petition praying that their claim be allowed as a preferred one is defective in not setting forth with more definiteness facts as to how much of the trust funds alleged to have come into the bankrupt's hands were used by the bankrupt in payment of its employes and its running expenses, or in paying its other creditors, or in purchasing sundry other goods and merchandise, nevertheless we think the petition is sufficient to show that there was a delivery to the bankrupt by petitioners of certain goods on consignment of the value of $4,212.25, such delivery having been made within two years prior to the filing of claimants' petition, and that the bankrupt had disposed of the goods so delivered on consignment except goods of the value of $1,483.75, which were returned to petitioners by order of the bankruptcy court. It also sufficiently appears that the bankrupt had only paid $500 of the money received by it from the sales of the goods so delivered to it; that the moneys received by the bankrupt were due as soon as sales of said goods were made; that all funds received by the bankrupt from the...