In re Weissman

• Decision Date: 14 January 1929
• Docket Number: No. 4910.,4910.
• Citation: 37 F.2d 585
• Court: U.S. District Court — District of Connecticut
• Parties: In re WEISSMAN.

37 F.2d 585 (1929)

In re WEISSMAN.

No. 4910.

District Court, D. Connecticut.

January 14, 1929.

George E. Beers and William L. Beers, both of New Haven, Conn., for petitioner.

Archibald Palmer and Maxwell Green, both of New York City, for trustee in bankruptcy.

THOMAS, District Judge.

This matter is now before the court upon a supplemental hearing had before the special master pursuant to the remand of the Circuit Court of Appeals. 19 F.(2d) 769.

T. A. Shaw & Co. seek to reclaim certain goods from the trustees of the bankrupt estate. By agreement the property was sold and the proceeds have been deposited subject to final order of court.

On an involuntary petition filed November 21, 1919, Weissman was adjudicated a bankrupt. On September 26, 1919, the bankrupt placed an order for the purchase of goods with the claimant. The order was accepted and the goods delivered, part on November 14th and part on November 20th. Before accepting the order the claimant consulted R. G. Dun & Co. and obtained a credit report which set forth a copy of a financial statement issued by Weissman's office to Dun's agent in New Haven. This statement was dated August 11, 1919, and bore Weissman's typewritten signature, which was confirmed by his written statement on September 29th. The goods were sold in reliance upon this report.

To prove that the report contained a false statement of Weissman's liabilities, the claimant offered the schedules in bankruptcy which showed debts owing on November 21, 1919, of $1,300,000. Evidence was also introduced to show that the schedules were prepared by one of the bankrupt's attorneys who compiled the schedule of merchandise liabilities from the invoices which he obtained from the trustee's accountants. A tabulation of these invoices by the accountant showed an indebtedness on the date of the bankrupt's report to Dun & Co. far in excess of the amount set forth in that report. The Circuit Court of Appeals has held that the invoices were admissible in evidence to establish the fact that the report to Dun & Co. as to the amount of indebtedness on November 11, 1919, was false, and that by this evidence the claimant had established a prima facie case, which in the absence of rebuttal proof would entitle it to reclaim the merchandise delivered to Weissman, or the proceeds derived from the sale.

Since the decision of the Circuit Court of Appeals hearings have been held before the special master for the purpose of affording the trustees an opportunity to introduce evidence to rebut this prima facie case. The special master has certified the evidence taken in those hearings but with no conclusion by him respecting the sole question presented as to whether or not the trustees have succeeded in rebutting the prima facie case established by the claimant at the first trial; so the matter is here on first impression.

A careful reading of the opinion of the Circuit Court of Appeals impels the conclusion not only that the learned court is of the opinion that the claimant had established a prima facie case, but that this reclaimer should be granted unless the trustees are able to rebut the case thus established. It also is clear that the Circuit Court of Appeals, recognizing that the rights of general creditors are important, held that those creditors, through the trustees, should be given full opportunity to rebut the case already...