201 F. 169 | D.N.J. | 1912
On November 2, 1911, a petition in bankruptcy was filed against Abe Ripman, in the United States'District Court for the Eastern District of Pennsylvania. On November 8th that court appointed Herman O. Hark receiver of said estate; and on December 11th, this court, on the petition of such receiver, appointed John G. Hughes “ancillary receiver to take charge of the assets of the above-named alleged bankrupt within the jurisdiction of this court and to preserve and dispose of the same as this court may hereafter order.”
In his petition seeking such appointment, the receiver alleged, inter alia, that Ripman, a few days prior to the filing of the petition in bankruptcy, being the owner of a certain store.át Pleasantville in this district, where he was conducting business in the name of the United Cut Price Dry Goods Stores Company, transferred the same to his sister, Mrs. A. Solotist, but that he still continued to exercise control over it; that he (the receiver) expected to prove that such transfer was intended to defraud the creditors of the bankrupt; that the contents of such store, consisting of fixtures, dry goods, and notions of the probable value of $4,000, were about to be sold by said bankrupt; and that it was absolutely necessary for the preservation of such assets for the benefit of such creditors that an ancillary receiver be appointed.
. On December 15th, said Annie Solotist presented a petition to this court, alleging, inter alia, that she was a resident of New Jersey and the owner of said store and the stock of merchandise, having purchased them from the bankrupt on October 20, 1911, for the sum of $4,000; that the said ancillary receiver had taken it out of her possession without authority in law, but under the color of his office; that such conduct was illegal, and prevented her from carrying on her lawful occupation; that she purchased said merchandise in good faith for her own use, without being aware that said bankrupt was in financial difficulty, and in no wise to defraud his creditors; that said bankrupt in no wise exercised ownership or control of said merchan-' dise or business; and that she controlled and managed the same for her own use. Her prayers are:
“That the said John G. Hughes, ancillary receiver, may discover by what right he has taken into his possession goods, wares, and merchandise of your petitioner, and of the premises wherein the same are contained; that the said ancillary receiver may be ordered to surrender the same to your petitioner ; or that your petitioner have leave to commence her action against the said ancillary receiver to replevin the same.”
In the answer to Mrs. Solotist’s petition, filed December 18, 1911, the ancillary receiver, in addition to putting in issue many of the allegations of the petition, in substance, alleged that on the date he took possession (December 12th) he found such petitioner and the bankrupt in possession; that, upon notifying them of his appointment as ancillary receiver and his demand for possession, they withdrew from the said store and surrendered possession thereof to him.
Upon a reference of the issues raised by such petition and answer, and the taking of considerable testimony, the special master found that such transfer was made with intent to defraud creditors, and that the petitioner was not a purchaser in good faith for a present
As to lack of jurisdiction: The exceptant insists that she is an adverse claimant in possession and not subject to the summary jurisdiction of the bankruptcy court. By the Bankruptcy Act, § 2 (as amended by Act June 25, 1910, c. 412, §§ 1, 2, 36 Stat. 838, 839 [U. S. Comp. St. Supp. 1911, p. 1491]), the bankruptcy courts are empowered to (clause 3) appoint receivers to take charge of the property of bankrupts whenever absolutely necessary for its preservation; (clause 6) bring; in additional persons in the bankruptcy proceedings when necessary for the complete determination of a matter in controversy; (clause 7) cause such estates to be collected and determine controversies in relation thereto, except as by the act otherwise provided; (clause 15) make such orders, issue such process, and enter such judgments, in addition to those specifically provided for as may be necessary for the enforcement of the provisions of this act; and (clause 20) exercise ancillary jurisdiction over persons or property within their respective territorial limits in aid of a receiver or trustee appointed in any bankruptcy proceedings pending in any other court of bankruptcy.
As to the bona tides of such transaction; This involves the application of the test contained in section 67e of the Bankruptcy Act and the state laws adopted by it. This section nullifies all conveyances of any part of the bankrupt’s property made within four months of the filing of the petition in bankruptcy with the intent to hinder, delay, or defraud any of his creditors “except as to purchasers in good faith and for a present fair consideration.” It also nullifies all conveyances made by him within the same period while insolvent, which under the state laws are null and void, as against his creditors.
“Sec. 1. The sale in bulk of the whole or a large part of the stock of merchandise and fixtures, or merchandise or fixtures, otherwise than in the ordinary course of trade, and in the regular and usual prosecution of the seller’s business, shall be void as against the creditors of the seller, unless the purchaser shall, in good faith and for the purpose of giving the notice herein required, make inquiry of the seller and receive from him a list in writing of the names and places of residence or business of and indebtedness to each and all of such creditors, and unless the purchaser shall, at least five days before the consummation of the sale, give personal notice of said proposed sale to each of the creditors of the seller as appearing on said list, or use reasonable diligence to cause personal notice to be given to them, or shall deposit in the mail a registered letter of notice, postage prepaid, addressed to each of the seller’s said creditors at his post office address, according to the written information furnished; provided, however, that no proceedings at law or equity shall be brought against the purchaser to invalidate'any such voidable sale after the expiration of ninety days from the consummation thereof.”
The petitioner admits that she did not make the inquiries or ghe the notices to the creditors of the seller, required by the New Jersey act. It is contended, however, on the part of the petitioner, that as the bankrupt’s main business, which he carried on in Philadelphia, was wholesale, while that carried on by him at Pleasantville was retail, and as such sale embraced only his retail business, such transfer was not a “bulk sale” within the meaning of such act; that “the statute condemns bulk sales only when the bulk sale involves the business en
The stock of merchandise in the Pleasantville store embraced all that the bankrupt had in this state, and all that he had in the retail business anywhere. The entire stock in such store was sold in bulk, and the sale was obviously not in the ordinary course of the bankrupt’s trade or business. This sale, while not ipso facto void, was voidable at the instance of the creditors injured or affected thereby. Dickinson v. Harbison, 78 N. J. Law, 97, 72 Atl. 941.
The transfer of the merchandise in the Pleasantville store was contrived and consummated in fraud of the bankrupt’s creditors, and is within the inhibition of section 67e of the bankruptcy act, and is void as against such creditors.
_ The exceptions to the master’s findings are overruled, and the petition is dismissed, with costs to be taxed.