321 Mass. 399 | Mass. | 1947
The plaintiff, who is trustee in bankruptcy of. T.B. Massaro Company (hereinafter called the corpora-
The liability of the defendant is established by the decree, and no question touching that is before us. The defendant did not appeal; hence it is not open to him to ask for a decree more favorable to himself (Coe v. Coe, 313 Mass. 232, 234), but he may contest any point raised by the plaintiff on the latter’s appeal. Greenaway’s Case, 319 Mass. 121, 122. The plaintiff challenges the decree solely on the ground that on the facts found the amount awarded as damages was not proper and that he is entitled to recover either $1,500 or $2,000.
Facts relevant to this issue are these: On April 7, 1941, the corporation, which dealt in barbers’ and hairdressers’ supplies in Boston, gave to the defendant (as security for a loan of $3,500 which the latter had made to it) a mortgage of all its personal property. The mortgage, which due to an oversight was undated, was recorded on April 8, 1941. (We need not discuss the legal consequences of this omission because the case has been argued by the parties on the basis that the mortgage, as the judge ruled, was not valid as against the plaintiff. See G. L. (Ter. Ed.) c. 255, § 1; Old Colony Trust Co. v. Medfield & Medway Street Railway, 215 Mass. 156.) On November 29, 1941, the defendant took
The judge found that the fair market value of the property included in the mortgage on November 29 (the date of the foreclosure and sale) “as an entire lot for use on the premises” of the corporation was $1,500. He also found that its value on that date “for the purposes of removal and resale (probably in job lots) elsewhere was $650.” (In view of the fact that the property was sold in place to Massaro for $2,000 two days later, it is not clear why the judge found that its value on the premises was only $1,500. Possibly this was due to the fact that the sale was not for cash but was financed by a note secured by a mortgage of the property.) There was no evidence that the defendant had any right to use this property on the premises of the corporation.
The plaintiff contends that, since the mortgage was invalid as to him, the foreclosure and sale by the defendant of the property included in it constituted a conversion.
As we have noted above, the allegations with respect to a fraudulent conveyance were not proved. The defendant's liability, therefore, must be taken to have been established under that part of the bill which alleges a preference. Under § 60 (b) of the bankruptcy act (52 U. S. Sts. at Large, 870; U. S. C. [1940 ed.] Title 11, § 96 [b]) the trustee in avoiding a preference is entitled to recover "the property or, if it has been converted, its value from any person who has received or converted such property,” with certain exceptions not here material. Since the defendant has disposed of the property he is hable to the plaintiff for its value. The valuations fixed by the judge were as of November 29, 1941, which the parties agree is the date at which the damages should be assessed. We are of opinion that the judge erred in holding that the plaintiff was entitled only to $650.
In proceedings to recover a voidable preference the trustee is entitled to have restored to the estate, in the event that the property has been sold or disposed of, the fair market value of the property at the time the preferential transfer was made, for the estate to this extent has been depleted. Such value is not necessarily determined by what the transferee sold it for or by what amount he credited against the debt. Anderson v. Dater, 18 Fed. (2d) 987. Jentser v. Viscose Co. 82 Fed. (2d) 236, 238. Nogi v. Greenwood, 1 Fed. Sup. 60, 63. Levy v. Rendle Contracting & Dock Building Co. 9 Fed. Sup. 1009. Remington, Bankruptcy (5th ed.) § 1717. Thus the measure of damages, as the defendant concedes, is the same as in an action of tort for conversion. In such cases the plaintiff may recover the fair market value of the property at the time and place of the conversion. State Street Trust Co. v. Lawrence Manuf. Co. 284 Mass. 355, 362. G. E. Lothrop Theatres Co. v. Edison Electric Illuminating Co. of Boston, 290 Mass. 189, 194.
It sometimes happens, as here, that certain property has
This principle is applicable here. What the property included in the mortgage was does not appear. But, as we have noted, the judge found that its value as an entire lot for use on the premises exceeded its value for removal and resale elsewhere in job lots by $850. At the time of the preferential transfer on November 29, for aught that appears, the corporation had the right to continue in its occupation of the. premises in which the property was located. The value of the property at the time of the preference, therefore, was its value on the premises. That value was $1,500. That was the amount by which the assets of the corporation were depleted and which the creditors are entitled to have restored to the estate. That the defendant, as the judge found, had no right to use the property on the premises of the corporation is not material.
The defendant cites the case of Castro v. Linchitz, 297
The decree is to be modified by striking out the paragraph numbered 1 and substituting therefor the following: 1. That the defendant Frank Palumbo pay to the plaintiff, as trustee in bankruptcy of T. B. Massaro Company, the sum of $1,500 together with interest thereon from November 29, 1941. As so modified the decree is
Affirmed with costs.
So much of the bill as alleges a fraudulent conveyance need not concern us, as the plaintiff does not now seek any relief on that ground. Moreover the judge found that this allegation was not sustained.
Decrees were also entered dismissing the bill as against all of the defendants except Palumbo, but the plaintiff did not appeal from these decrees.
The plaintiff argues in support of this contention that between August 1, 1941, when the bill for the appointment of a receiver was filed, and December 16, Í941, when the receiver was appointed, the property covered by the mortgage was in custodia legis and that the defendant's possession and foreclosure were illegal as to the plaintiff. See Rioux v. Cronin, 222 Mass. 131, 137-138; Davis v. Mazzuchelli, 238 Mass. 550.
The judge found that on November 18, 1942, the plaintiff conveyed all of the rights of the corporation and of himself as' receiver (including any claims against the defendant “arising out of the mortgage and the foreclosure thereof”) to himself as trustee in bankruptcy.