237 F. 357 | 3rd Cir. | 1916
The Dance Dumber Company was adjudged bankrupt in January, 1913, and the pending appeal is from the allowance of a claim presented by the George F. Dancé Company against the estate. The basis of the claim is two unpaid notes, aggre-, gating $5,591, bearing date in November and December, 1912, respec-' tively, each made by the bankrupt to the claimant’s order. The referee rejected the claim, but the District Court allowed it. 224 Fed. 598. The notes are the last of a series that began in February, 1909, and the controversy about them will be sufficiently explained by an outline of what occurred between the bankrupt, the claimant, and a third party, Cameron Dance.
The claimant, &. Pennsylvania corporation organized in 1907, was a lumber dealer in the city of Reading. In August, 1908, it decided to go out of business, and with that end in view the board of directors resolved that the corporate property should be sold as soon as this could be done without a sacrifice. How much was disposed of during the next few months we do not know; but a considerable stock was still on hand in January, 1909. On the 23d of that month, Cameron Dance, 'who owned none of the claimant’s shares, and was not connected with its business, offered to buy the unsold lumber and equipment, and to
On February 20, Cameron had not yet organized his company—■ the bankrupt’s certificate of incorporation is from the state of Delaware, and bears the date of February 19—but on March 6 (the .organization having meanwhile been effected) he made a formal offer to sell, and the bankrupt agreed to buy, the lumber he had bought from the claimant in January and February, with any accretions since made thereto, and with the good will of the claimant, “so far as the same is connected with the lumber business formerly carried on by that company.” A valuation of $25,000. was agreed upon, and in payment thereof the whole capital stock of the bankrupt ($25,000) was to be issued to Cameron, “his nominees or assigns.” He was elected secretary and treasurer, and in effect managed all the company’s affairs. So far as appears, the details of the transaction between Cameron and the bankrupt were not known to the claimant.
On April 10, the claimant’s treasurer - reported to his board that the bankrupt had been organized, and “that hereafter the notes given by J. Cameron Fance personally to this company for the lumber and equipment purchased by him for himself and his assigns would be renewed and paid in part from time to time by the Fance Fumber Company.” Thereupon the board resolved:
“That this company accept from the Lance Lumber Company its notes ¿nd checks in renewal and part payment respectively of the notes of Mr. J. Cameron Lance now held by this company, the first of which said notes will be due May 1, 1909.”
As already stated, this was the existing arrangement between Cameron and the claimant, and it was faithfully carried out for nearly four years. During this period the notes originally signed by Cameron were renewed by the bankrupt (except on one or two occasions, when Cameron signed the notes), and all the payments, either of principal or of interest, were made by the bankrupt out of its own funds. And this was done, although Cameron ceased to be the .bankrupt’s treasurer in October, 1910, and was succeeded in that office by another person.
Much of the trustee’s argument relies on certain transactions between Cameron and the bankrupt in reference to the $25,000 of cap? ital stock that was issued to pay Cameron for the lumber, and for present purposes we may concede that these transactions were loose and irregular. But we do not regard them as decisive in the present
The order allowing the claim is affirmed.