In re Syracuse Gardens Co.

• Decision Date: 03 April 1916
• Citation: 231 F. 284
• Parties: In re SYRACUSE GARDENS CO.
• Court: U.S. District Court — Northern District of New York

231 F. 284

In re SYRACUSE GARDENS CO.

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

April 3, 1916

Olmsted Van Bergen & Searl, of Syracuse, N.Y., for trustee.

Thomas K. Smith, of Syracuse, N.Y., for New York & New Jersey Produce Co., Inc.

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

The bankrupt, Syracuse Gardens Company, a corporation of the state of New York, on the 5th day of May, 1915, was the owner of certain lands near the city of Syracuse, in the county of Onondaga, N.Y., especially adapted to the growing of onions and on that day a lease of certain of the lands was entered into between the now bankrupt and Nicola Saracino and Congeta Saracino, by and under which the Saracinos were to sow cultivate, and raise a crop of onions on said lands on shares. There were many conditions in the said lease or agreement which it is unnecessary to recite here. The Saracinos did sow onions on said lands and cultivate same, and September 2, 1915, said onions had so far grown that the harvesting thereof would soon commence, and some had been pulled; but many things were to be done before suitable for delivery. September 2, 1915, the Saracinos, by an instrument in writing, sold to the Syracuse Gardens Company, the bankrupt, their share of the onions raised on said lands and then thereon, and the harvesting of which had commenced, or soon would commence, and which agreement of sale is as follows:

'Town of Cicero, N.Y., Sept. 2, 1915.

'In consideration of the sum of fifty dollars ($50.00) paid to us, Nicolo Saracino and Congeta Saracino, of Syracuse, N.Y., receipt of which is hereby acknowledged, we herewith sell to the Syracuse Gardens Company all of our share of onions which we own through a contract with the said Syracuse Gardens Company, dated May 5, 1915, for the growing of onions on their land season of 1915. The said Syracuse Gardens Company to pay us a total of forty-five cents per bushel (A) for No. 1 good, sound, marketable onions, and fifteen cents per bushel for No. 2 grade onions, both grades to be screened over 1 1/2-in. screen and ready for loading in car. The onions to be harvested, divided and the marketable onions removed from the said land, all as provided for in contract dated May 5, 1915.

'The balance due us, after deducting from the total value of our share of the said onions the sum first mentioned above, plus the Syracuse Gardens Company's charge to us for fertilizer as per contract of May 5, 1915, plus any labor performed by the said Syracuse Gardens Company and for which a charge is provided against us in the above mentioned contract, is to be paid to us within three days from the loading of the said onions by the Syracuse Gardens Company in cars for shipment. The company to not charge the Saracinos for loading and hauling to cars.

'Witness our hands and seals the date first above written.

'Note insertion (A).

'Nicolo Saracino. (L.S.) 'Congeta Saracino. (L.S.)

'Witness: Joseph Pirro.'

All of the onions were on the premises.

The Syracuse Gardens Company had onions of its own, raised on other lands near by, and which on the 2d day of October, 1915, were being pulled and prepared for market as were the onions raised by the Saracinos and the harvesting of which had been commenced at that time. The Syracuse Gardens Company at the time the contract of purchase was made expected to pay for the onions and have same. October 2, 1915, said Syracuse Gardens Company was in fact insolvent and unable to pay its debts and obligations in full, and ought to have known this fact; but there is no proof that the company had actual knowledge of its insolvency.

On the 2d day of October, 1915, the Syracuse Gardens Company, by its president, David B. Corse, sold to the New York & New Jersey Produce Company, Inc., five cars of well-cured, good, sound, good size 1 1/2 screen yellow onions, 2,500 bushels of 56 pounds per bushel, at 70 cents per bushel; but no delivery was made, as the Syracuse Gardens Company did not have the onions ready for delivery, and in fact relied largely for delivery and fulfillment of its contract of sale with the New York & New Jersey Produce Company, Inc., upon the onions coming from the crop raised by the Saracinos. This sale of onions by the Syracuse Gardens Company to the New York & New Jersey Produce Company, Inc., was evidenced by a memorandum of sale and the receipt on account signed by the Syracuse Gardens Company, by D. B. Corse, its president, and which reads as follows:

'New York, 10/2, 1915.

'David B. Corse, President, Syracuse Gardens Company.

'Sold to New York & New Jersey Prod. Co. 5 cars of well-cured, good sound, good size 1 1/2 screen yellow onions, 2,500 bus. of 56 1bs. 70Sec. bus.

'Received payment on account of above sale $1,000.00.

'Syracuse Gardens Co., 'D. B. Corse, Pres.'

At the time of the execution of said paper or memorandum of sale, the New York & New Jersey Produce Company, Inc., paid to said D. B. Corse, the president of the Syracuse Gardens Company, the sum of $1,000 on account of such sale and purchase. The Syracuse Gardens Company paid out $500 of said $1,000 and deposited the other $500 in bank, where it still remains; but it was deposited in the name and to the credit of the Syracuse Gardens Company.

In point of fact and as has been found and as this court finds, the Syracuse Gardens Company had relied largely upon the Saracinos' crop of onions to comply with the sale made to the New York & New Jersey Produce Company, Inc., and, while it had some onions of its own in process of harvesting, it did not have anything like five cars of yellow onions or 2,500 bushels of onions of the description contained in the memorandum of sale above quoted. On the 5th day of October, 1915, as stated, the petition in bankruptcy was filed, a receiver of the property of the Syracuse Gardens Company was appointed, and all its property passed to the hands of said receiver. The Syracuse Gardens Company had not obtained title to the Saracinos' onions and, as stated, did not have onions with which to fill its contract with the New York & New Jersey Produce Company, Inc. In short, the Syracuse Gardens Company did not have the property it purported to sell to the New York & New Jersey Produce Company, Inc., and on account of which it received the said $1,000 from that company. On the 2d day of October, 1915, in short the Syracuse Gardens Company purported to sell and deliver to the New York & New Jersey Produce Co., Inc., property which it did not own or have, but which it expected to obtain from the Saracinos under its agreement with them. It received on account of this purported sale the sum of $1,000 of the money of the New York & New Jersey Produce Company, Inc. It is not the case of mere breach of an agreement to sell, but a sale of property on the 2d day of October, 1915, by the Syracuse Gardens Company, which it did not have or own and which property it never did obtain, have, or own, and the receipt by it of $1,000 of the money of the vendee.

While the Syracuse Gardens Company was insolvent and unable to pay its debts, there is no evidence that on the 2d day of October, 1915, it intended to go into bankruptcy or contemplated bankruptcy. No title to the onions passed to the New York & New Jersey Produce Company, Inc., as the Syracuse Gardens Company did not own the property it purported to sell; but of this fact the New York & New Jersey Produce Company, Inc., had no knowledge whatever.

The last-named company parted with its money to the Syracuse Gardens Company in the belief that the Syracuse Gardens Company had the property and would make delivery. No fraud was intended by the Syracuse Gardens Company; but, as matters turned, the transaction operated and operates as a fraud, and there was an utter failure of consideration. The question is, as above stated, can this court direct the return of the $500 in the hands of the Syracuse Gardens Company at the time it was adjudicated a bankrupt to the New York & New Jersey Produce Company, Inc., or does such $500 belong to the trustee in bankruptcy for the benefit of creditors, and is the New York & New Jersey Produce Company, Inc., relegated to its remedy of filing a claim and sharing in distribution? Every equity is in favor of the New York & New Jersey Produce Company, Inc., and the $500 should be returned if lawfully such return may be directed.

The Syracuse Gardens Company, by offering to sell and selling 2,500 bushels of onions of a certain quality and description impliedly represented that it owned them and would and could deliver them and in substance so stated. It did not disclose to the purchaser the fact that it did not own or have such onions, and we may safely assume it honestly expected to have them by paying the Saracinos therefor when harvested and delivered. In fact, it did not have the ability to perform its contract with the Saracinos and pay for the onions and obtain title thereto, and did not. On these implied representations above set forth, and relying thereon and the statements actually made, and because of a failure to disclose material facts, the New York & New Jersey Produce Company, Inc., parted with $1,000 of its money to the Syracuse Gardens Company, $500 of which, identified, that company had on the 6th day of October, four days later, when it went into bankruptcy, and this money passed...