257 F. 631 | 6th Cir. | 1919
In October, 1912, the appellant, J. R. Gooch, sold to parties in Birmingham, Ala., a general store owned by him for some time at Gravel Hill, Tenn. At that time, and for nearly two years theretofore, one of the bankrupts (Smith) had clerked for Gooch in this store at a salary from $25 to $35 per month. ' Smith continued in the employ of the purchaser of Gooch’s store until the merchandise was moved to Birmingham in the early summer of 1913. Soon thereafter Smith began business for himself at Gravel Hill, at the same time buying from Gooch 38 acres of land with a frame store building thereon and other improvements. He bought this land altogether on credit, executing long-time notes for the payment, involving him in an indebtedness of over $3,000 for the purchase; Gooch retaining title to the property until the consideration was paid. Shortly after the Gooch stock had been removed to Birmingham, a portion of it was returned to Gravel Hill by one Dunker, who bought the old Gooch brick store building from Gooch’s vendee. This real estate was bought by Dunker entirely on credit, a trust deed upon the goods and store real estate being given as security. The trust was foreclosed in the summer of 1914 and bought at public sale by Gooch. At this time, Smith, in addition to his debts to many other parties, owed Góoch about $600, unsecured, besides the debt on tire land, and $800 to a bank on which Gooch was security.
In July, 1914, Crow, the other bankrupt, went into partnership with Smith at the suggestion of Gooch. Crow seems to have contributed no • money, but expected to put in $1,000 in the fall. His connection with Smith' lasted but a month, during which time the firm of Crow & Smith bought of Gooch the Dunker store and brick building on credit for $6,746.47. The Dunker stock of goods, which had been bought by Gooch at the sum of $250, to which had been, added about $200 of new goods, was figured into this trade for more than $1,600. The circumstances show that the valuation of $6,715.41 for the Dunker assets, real and personal, even figured on what the parties called a credit basis (that is, adding to the assumed present value the interest on the deferred payments), was very much exaggerated. Gooch retained title to the property sold by him to Crow & Smith, pending the ' payment of the consideration notes, and, in addition, required and received personal security on the note first due which was in the sum 'of $1,646. This note he sold before maturity to a relative. Crow-retiring in August, 1914, Smith struggled along with the business until September, when he made an assignment which was followed by involuntary bankruptcy, the adjudication occurring October 24, 1914. .His liabilities were about $18,000; the unsecured claims amounting to $8,711. His assets consisted of the two parcels of real estate, bought from Gooch, the title to each of which still remained in Gooch .to secure the purchase money, and upon which Gooch’s claims were for a greater amount than their real values, and personal property scheduled at $6,509.33, which includes the matter involved in this con
Two or three days after the partnership was formed, Smith met Gooch in Memphis. Together they went to the Memphis Furniture Manufacturing Company’s place of business, where, upon a property statement, Smith bought a bill of furniture aggregating $964 on the credit of the partnership, all without the knowledge or authority of Crow. Of this bill of furniture, Smith permitted Gooch to take items amounting to $623.32, shipping these goods to Birmingham, to which place Gooch had removed. The consideration for this transaction was the liquidation of the first note due from Smith to Gooch, given for the purchase of the 38 acres of land and a credit of $127 on the second note of that series; neither of said notes having matured. Taler in 1914 proceedings in bankruptcy were begun against the partnership.
The trustee in bankruptcy began an action in the District Court to recover $623.32 from Gooch, being the value of the furniture so purchased, on the ground of preference, and from the decree of that court against Gooch, the latter appeals.
The court below heard and apparently credited this direct testimony. These matters alone seem to compel the conclusion that Gooch knew or had reason to know at the time of the furniture deal that he was receiving a preference from an insolvent. If anything else were necessary to make the decision of the fact certain against appellant, it would be the nature of the transaction itself. It taxes credulity to be asked to believe that Gooch took two-thirds of the bill of furniture, purchased entirely on credit and charged to the partnership, and applied it to the liquidation, pro tanto, of a debt owing him by a partner before the debt matured, all in good faith with the creditors either of Smith or of the firm of Crow & Smith. Having done this while in possession of all the facts concerning the business of either of the bankrupts, which Gooch in his testimony is willing to admit he possesses, and as we are advised by the whole record, we find no difficulty in resolving the question of the fact of notice against appellant. We may do this without reference, even, to the general rule that when, as here, findings of a master, concurred in by the court below, are in review, they are presumed to have been correct in the absence of error or mistake appearing on the record. Furrer v. Ferris, 145 U. S. 132, 12 Sup. Ct. 821, 36 L. Ed. 649; Camden v. Stuart, 144 U. S. 104, 12 Sup. Ct. 585, 36 L. Ed. 363; Tilghman v. Proctor, 125 U. S. 136, 8 Sup. Ct. 894, 31 L. Ed. 664; Kimberly v. Arms, 129 U. S. 512, 9 Sup. Ct. 355, 32 L. Ed. 764.
There remains but one other question: On the motion of the trustee there were brought into the record, on the hearing of the exceptions, the two bankruptcy records. There was proof satisfactory to the court below that the parties used these records before the master and that it was orally stipulated that the same might be used for all pertinent purposes in the hearing upon the exceptions. We find no prejudicial error in the disposition of this matter below. These considerations dispose of this case.
The decree and order of the court below, that the trustee have and recover of the defendant, J. R. Gooch, the sum of $735.14, with all costs of the case, with execution, were proper, and are affirmed.