241 F. 459 | 3rd Cir. | 1917
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 ot Kaplan & Myers, bankrupts. The referee sustained the claimants’ petition, but the-District Court dismissed it. 236 Fed. 260.
“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 tire 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 show
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 lie docs 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 meetings held for the election of trustee. We are of the opinion that the reservation of Hall evidenced his intention to hold on to whatever rights ho had in his shares of stock, and Hiere is nothing in Ms conduct which should preclude him, after he had discovered that the shares had been returned to the assignee in bankruptcy, from reclaiming them as his own property.”
We see no valid distinction between Thomas v. Taggart and the case now before us. As it seems to us, the referee was justified in coming to the following conclusion:
“In the present case the claimants, within a period of two weeks after their claim had been filed, gaining knowledge of the fraud perpetrated upon thorn, instituted these reclamation proceedings. In my opinion, the fact that they had theretofore filed their proof of claim without any knowledge of the fraud does not bar them.”
We are unable to agree that the claimants made a final election when they filed their proof of debt. So far as appears, they did not then know that they had been the victims of a fraud, and without such knowledge, or notice that would be equivalent thereto, an election was not required. And, when they afterwards learned’the facts that seemed to point to the fraud, we do not think they were bound to withdraw their proof of debt while the reclamation proceeding was still unde
It follows, therefore, that the claimants,should have been allowed to recover the fund held by the trustee. But before they receive it they should be required to abandon so much of their proof of debt as relates to the value of the goods reclaimed and sold, thus leaving the proof of debt to stand' only as to' the other goods that were not reclaimed, but had no doubt been disposed of by Kaplan & Myers before the date of the bankruptcy.
The order of the District Court is reversed.