Newman v. Tootle-Campbell Dry Goods Company

• Decision Date: 17 November 1913
• Citation: 160 S.W. 825,174 Mo.App. 528
• Parties: A. NEWMAN, Trustee of the Estate of A. A. CURTIS, Bankrupt, Appellant, v. TOOTLE-CAMPBELL DRY GOODS COMPANY, Respondent
• Court: Kansas Court of Appeals

160 S.W. 825

174 Mo.App. 528

A. NEWMAN, Trustee of the Estate of A. A. CURTIS, Bankrupt, Appellant, v. TOOTLE-CAMPBELL DRY GOODS COMPANY, Respondent

Court of Appeals of Missouri, Kansas City

November 17, 1913

Appeal from Buchanan Circuit Court.--Hon. Chas. H. Mayer, Judge.

AFFIRMED.

Judgment affirmed.

McClintock & Quant and Spencer & Landis for appellant.

Robert A. Brown for respondent.

OPINION

JOHNSON, J.

Plaintiff trustee of A. A. Curtis an involuntary bankrupt, sued to recover the amount of a voidable preference which defendant a creditor of Curtis, is alleged to have received within four months of the filing of the petition in bankruptcy. The answer is a general denial. The jury returned a verdict for defendant and the case is here on the appeal of plaintiff.

Defendant is a wholesale merchant doing business in St. Joseph and Curtis, who was a retail merchant at Agra, Kansas, a town two hundred and fifty miles west of St. Joseph, was a customer of defendant. In March, 1911, Curtis was indebted to defendant on an open account and on notes given in settlement of a past due account in an amount approximating $ 1800. In the preceding month an agent of defendant had called on Curtis and obtained from him a written statement of his financial condition which showed that he not only was solvent but was in good financial condition and entitled to further credit. After receiving this statement defendant accepted and filled an order from Curtis amounting to about $ 600 but Curtis sold his business before the delivery of the goods and they were returned to defendant. The sale to which we have just referred occurred about March 20, 1911, and the first notice defendant received of it came from a mercantile agency. Defendant immediately sent an adjuster to Agra who was informed by Curtis that he had sold his business, had been paid the larger part of the purchase price and had paid all his debts except that to defendant. The adjuster testified that Curtis stated "I have settled with everyone except the Tootle-Campbell Dry Goods Company and was going to get to them to-day." The adjuster learned that Curtis still held a note of $ 600 given him in part payment of the purchase price of the business and a claim of $ 912 against a physician for an automobile Curtis had sold the physician and that both of these demands were good. Further Curtis declared that he had accounts receivable from which he expected to collect more than enough to enable him to discharge his obligations to defendant. He proposed to give the adjuster his check for $ 900 dated ahead a week and to pay the remainder of defendant's claim from the proceeds of collections. The adjuster referred this proposal to the credit man in a telegram in which he said: "Things look badly here. Whittinghill (referring to the agent who had procured the financial statement from Curtis) should have made a different report. Stock invoiced about five thousand; party paid thirty-five hundred cash and note for six months for stock. Believe Curtis has paid nearly everyone but us the thirty-five hundred checked out; about one thousand of it on a deal he will turn April first, notes from collections he insists he will get within two weeks; has about twelve hundred out considered good. . . . Banker thinks Curtis will do as above if I accept this settlement. Shall I take check and notes or open accounts? Wire instructions soon as possible."

This telegram was sent March 24, 1911, and was answered by the credit man the same day in the following telegram: "You may allow until April 1st for party to meet his entire account if he secures you absolutely. Accept no checks unless certified. Checks may be post-dated if secured, but no future settlement even on short time will be accepted unless absolutely good security given for entire account. Debtor has preferred other creditors and we would prefer to throw the estate into bankruptcy rather than submit to extensions unless unquestionably good security given. See party again and wire result. Stay on ground until something done."

Subsequent telegrams passed between the adjuster at Agra and the credit man at St. Joseph but it is not necessary to refer to their contents since they disclose nothing further relating to the knowledge the adjuster had acquired of Curtis's true financial condition at the time he made the settlement in controversy. After much negotiation and some sharp verbal controversy the adjuster finally induced Curtis to assign to defendant the note of $ 600 given by the purchaser of the business and the account of $ 912 against the physician, and the adjuster agreed that the remainder of the debt should be paid by Curtis out of the proceeds of future collections of his accounts receivable which, it appears, the adjuster believed amounted to $ 1200 of collectible accounts. Defendant realized $ 1495.15 from the assigned note and account and it is this sum plaintiff is attempting to recover in this action. It turned out that the accounts receivable, from which Curtis promised to pay the remainder of defendant's debt, did not amount to much more than $ 300, and that they were worthless. Further it became known to defendant, but not until after the payment in question had been received, that Curtis had not paid all his other creditors but owed unsatisfied debts amounting in all to about $ 1400. While at Agra and during the negotiations leading to the settlement, the adjuster made inquiries of the banker with whom Curtis had been doing business and learned from him that Curtis had paid out to creditors all of the cash received from his vendee, and the banker expressed the belief that he owed no other debts. In depositions taken and introduced by plaintiff, facts and circumstances are related by witnesses which tend to show that the adjuster, before he received the payment, had knowledge of the fact, now conceded, of the insolvency of Curtis, but this evidence is contradicted by the adjuster and we think by the testimony of Curtis. After making the settlement, the adjuster left Agra to attend to other business but returned on March 28th and on that date wrote two letters to the credit man in which he said: "Curtis has left nothing we can get; practically all his accounts collected. Think we are extremely fortunate under circumstances securing note, merchandise and order only thing saved us. . . . Curtis has skipped out owing several local bills, owes a widow here five dollars on house rent. It seems now that he was both a liar and a crook, just what I told him he was before I got through with him."

Counsel for plaintiff attack a number of the rulings of the court on instructions and on the admission of evidence, but in what we shall say on the point that the verdict and judgment are unsupported by any substantial evidence we shall answer the principal objections to the rulings on the instructions. Those addressed to the rulings on evidence have been carefully examined and are found to be without merit. It is contended that the evidence indisputably shows that by accepting the payment in question defendant obtained a voidable preference as that term is understood in the bankruptcy law which recognizes two kinds of...