In re Kaplan & Myers

• Decision Date: 19 April 1917
• Docket Number: 2200.
• Citation: In re Kaplan & Myers, 241 F. 459 (3rd Cir. 1917)
• Parties: In re KAPLAN & MYERS. v. AMERMAN. FREDERICK, VIETOR & ACHELIS
• Court: U.S. Court of Appeals — Third Circuit

241 F. 459

In re KAPLAN & MYERS.

FREDERICK, VIETOR & ACHELIS v. AMERMAN.

No. 2200.

United States Court of Appeals, Third Circuit.

April 19, 1917

William J. Wilcox, of Scranton, Pa., Percival H. Granger, of Philadelphia, Pa., William A. Wilcox, of Scranton, Pa., and J. Howard Reber, of Philadelphia, Pa., for appellants.

Edwin C. Amerman and Aaron V. Bower, both of Scranton, Pa., for appellee.

Before BUFFINGTON, McPHERSON, and WOOLLEY, Circuit Judges.

McPHERSON Circuit Judge.

In this case we are asked to review a proceeding for reclamation instituted by the firm of Frederick, Vietor & Achelis (hereinafter called the claimants) against the trustee of Kaplan & Myers, bankrupts. The referee sustained the claimants' petition, but the District Court dismissed it. 236 F. 260.

The facts are these: Acting on behalf of themselves and of two other mercantile houses, the claimants sold certain goods-- or delivered them and thus completed the sale-- to the bankrupt firm after January 29, 1915, and before October 30 the day when the involuntary petition was filed. A receiver was appointed forthwith, but the bankrupts contested the petition, and there was no adjudication until December 13. On February 3, 1916, the schedules were filed and the first meeting of creditors was held. At this meeting the claimants filed a proof of debt, but took no part in the meeting. Their proof contained the following paragraph, written in pen and ink:

'That the filing of this claim is not construed as a waiver of the right of said claimant to follow any of their merchandise, in whosesoever hands it may now be, including the receiver in bankruptcy, providing same was delivered thru misrepresentation.'

The trustee qualified on February 10 and took possession of the goods and books of the bankrupts. The goods had been open to examination, and perhaps the books also, but it was not until testimony was taken that the probability of previous fraud by the bankrupts in representing their condition became apparent. On February 16 the claimants presented the petition now before us, asserting fraudulent misrepresentation to them concerning the bankrupts' financial condition for the purpose of obtaining goods on credit. The goods reclaimed were afterwards sold, but the proceeds are still in the hands of the trustee subject to the final disposal of the pending petition. The referee found as facts-- and the District Judge accepted his findings-- that on January 29, 1915, the bankrupts mailed to the claimants a statement purporting to represent their financial condition, and showing a surplus of assets amounting to nearly $50,000, among the assets being outstanding accounts due and owing to the bankrupts amounting to nearly $30,000; that the bankrupts were at that time insolvent; that the statement 'was a false and fraudulent misrepresentation and misstatement intended by the bankrupts to secure a false credit'; and further, 'that the claimants relied upon the correctness of this statement, and were induced to part with their goods upon the strength of the misrepresentation.'

Upon these facts we are of opinion that the dispute before us is ruled by Thomas v. Taggart, 209 U.S. 391, 392, 28 Sup.Ct. 519, 52 L.Ed. 845. In that case Hall had a speculative account with Berry & Co., the bankrupts, and had deposited certain shares of stock in place of a cash margin. He claimed these shares from the trustee, and was met by the fact that he had already filed a claim for their value against the bankrupt estate. It appeared, however, that his proof contained a stipulation:

'That by filing notice of this claim he does not waive any right of action that he now has to recover possession of said certificates or the value thereof against either of the bankrupts or any person in whose possession they may be found,' etc.

And it was therefore held that the claimant had a right to recover the specific shares-- the court saying:

'In this claim the essential question is as to the effect of Hall's proof of his claim in bankruptcy as a waiver of his right to recover the shares of stock covered by the receipt. We are of the opinion that, in view of the reservation just made, there was nothing in Hall's conduct amounting to an election to pursue his claim as a creditor in bankruptcy, which now prevents his recovery of the certificates of stock in question. It is true that he voted at the first meeting of the creditors on December 19, 1904, upon an informal ballot for trustee in bankruptcy, and at the formal election of trustees on December 21, 1904, Mr. Hall did not vote, though the referee finds that he participated actively at the

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