John Manson v. John Williams

Decision Date03 May 1909
Docket NumberNo. 169,169
Citation213 U.S. 453,53 L.Ed. 869,29 S.Ct. 519
PartiesJOHN W. MANSON et al., Trustees of Estate of Henry Hudson, Appts., v. JOHN S. WILLIAMS, Trustee in Bankruptcy of Estate of Hudson Clothing Company
CourtU.S. Supreme Court

Messrs. John W. Manson and Harry r. Coolidge for appellants.

Messrs. John S. Williams and Albert S. Woodman for appellee.

Mr. Justice Holmes delivered the opinion of the court:

This is a petition by the appellee the trustee in bankruptcy of the Hudson Clothing Company, that the appellants, the trustees in bankruptcy of Henry Hudson, pay over to the appellee the proceeds of a stock of goods alleged to have belonged to the company. The referee in bankruptch made an order as prayed, which was sustained on the principal matter by the district court, 148 Fed. 305; and the decree of that Court was affirmed by the circuit court of appeals. 82 C. C. A. 475, 153 Fed. 525. A further appeal has been taken to this court. Hewit v. Berlin Mach. Works, 194 U. S. 296, 48 L. ed. 986, 24 Sup. Ct. Rep. 690.

The facts to be gathered from the opinion of the circuit court of appeals and admitted are these: Henry Hudson became the owner of a stock of goods, and desired to sell them. He also wished to help his brother James, and therefore put him in to do the selling. In the beginning he contemplated forming a corporation, turning the goods over to it, and taking most of the stock as security, but letting James take the profits. This plan, however, was allowed to slumber, and the business was carried on by James for over two years. From an early moment James adopted the name of Hudson Clothing Company, using it as a sign and in advertisements and on billheads. This was known to Henry, and when he advanced money to the business, as he did, he charged it on his books to the company. The bank account was kept with James, the bank book having the name Hudson Clothing Company above. Some of the exhibits in evidence have, besides the name of the company, the words 'Henry Hudson, Pres.' and 'James Hudson, Treas. and Mgr.' There was no act of transfer on the part of Henry, but, when he took goods from the shop, he paid for them in the same way as if he had bought them elsewhere. Both the district court and the circuit court of appeals have found as a fact that the brothers were partners, and that the goods belonged to the firm. In such cases this court, as a rule, will not disturb the findings, but it has done so in some instances (Darlington v. Turner, 202 U. S. 195, 220, 50 L. ed. 992, 1003, 26 Sup. Ct. Rep. 630); and in the case at bar the appellants contend that there really was no evidence to justify the result reached.

The appellee says that the question is concluded by the adjudication putting the company into bankruptcy, that being an adjudication against the two brothers. On the other hand, the record shows that the trustees of Henry, although they had filed a denial and answer, were not heard on that question. The principle of law is plain. The adjudication put the two brothers into bankruptcy for the purpose of administering whatever property there might be, as against all the world. But it did not establish the facts upon which it was founded, no matter how necessary the connection, except as against parties entitled to be heard Tilt v. Kelsey, 207 U. S. 43, 52, 52 L. ed. 95, 99, 28 Sup. Ct. Rep. 1. If the trustees of Henry were not entitled to be heard, it is because they had no concern with whether the alleged frim was wound up in bankruptcy or not, but only with the facts upon which creditors sought to wind it up,—that is to say, the existence of the partnership and the title to the partnership assets,—and these facts would remain open to dispute. As the trustees of Henry were not heard, it would come with bad grace from one who might have urged the foregoing considerations, to argue here that they are bound to admit anything except that Henry and his brother are in bankruptcy as partners. Furthermore, we gather from the opinion of the district judge that all parties requested him to examine the evidence, and that the defense of res judicata really was waived....

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