53 So. 905 | Ala. | 1910
The Montgomery Cooperage & Hardware Company was adjudicated a bankrupt, and
Another aspect of the bill, as alleged, is that for a long time prior to the proceedings referred to there had been an arrangement whereby the partnership of Winter, Loeb & Co., of which firm Jacques Loeb, the receiver in bankruptcy, was a member, had been furnishing the said Copeland and others with supplies, at the request of the bankrupt company, and charging same to the bankrupt, and the bankrupt, in turn, charging them to Copeland; that settlements of this account were periodically made between Winter, Loeb & Co. and the bankrupt, and that on the last of these settlements, which occurred a few months before the bankruptcy, the bankrupt executed its notes to Winter, Loeb & Co. for the balance due on this account; that Copeland was not a party to this settlement, but he owed the bankrupt for the supplies furnished him at its request; that subsequent to the bankruptcy, and while Jacques Loeb was acting as receiver of the bankrupt, and as a partner of the firm of Winter, Loeb & Co., he took a note for the balance due for these supplies — the amount being $1,610.49 — and a mortgage to secure the same, from said Copeland to his firm, instead of taking it to himself as receiver. As to this balance there had never been any
The bill alleges that the respondent, Loeb, represented the bankrupt estate at different times, both as receiver and as trustee, and that while acting in such trust relation he was guilty of a fraud in attempting to secure, in favor of his firm, a debt which was owing to the bankrupt estate.
The fifth paragraph of the bill sets up that there was certain litigation in the bankrupt court, as to this property embraced in the first mortgage; and it also claims the title and right to such property by reason of such proceedings in the bankrupt court. This part of the bill related solely to the property embraced in the mort
Under tbe facts alleged in tbe bill, there can be no doubt that tbe receiver, Loeb, acted in tbe matter as a trustees for tbe bankrupt estate; and as between him and tbe estate be could be held to account to tbe latter, in a proper suit and between proper parties. But that is quite a different case from tbis, wbicb seeks to bold him and bis partnership liable to tbe complainants, who claim only as purchasers of the property at tbe bankrupt sale.
■ Suppose the trustee had not taken any security or mortgage to Winter, Loeb & Co., or to himself as such trustee, though he could and should have collected the debt in full or have secured it by this mortgage; certainly these complainants could not hold him or the property which he could have obtained by proper diligence, because of his nonperformance of his duty as such trustee. Nothing was actually taken from the trust estate by his failure to use due diligence, though the estate might have enhanced in value if he had performed his duty faithfully. He, the trustee, might he held liable to the estate, in an appropriate proceeding, for failure to perform this, duty, but certainly he cannot be held liable by purchasers of the estate at such bankrupt sale, in a proceeding like this, in which neither the property nor the right thereto was sold or offered for sale. The case made by this bill puts the purchasers in no better position, than if he had merely failed to
The property sold at the bankrupt sale, and which was purchased by complainants, is described in the order of sale as follows: “All of the property, real, personal and mixed, of which the said Montgomery Cooperage & Hardware Company was seised and possessed, or to which it may have title, at the time of the filing of the •original petition in this cause, including its factory, machinery, lands, tenements, equipment, plant, rights, franchises, leases, chattels real, choses in action, timber and timber rights or contracts, accounts due or owing, promissory notes, mortgages or other securities, tools, raw material, manufactured product, book of'accounts, fixtures, contracts, except such property as may have been sold under the former orders of this court in this cause.”
The bill affirmatively shows that the act complained of by Loeb, as receiver, in taking the mortgage to his firm, occurred subsequent to the time of “the filing of the petition in bankruptcy,” and that the property thereby mortgaged (except that included in the former mortgage) was not at that time a security for any debt owing the bankrupt, and that such property was not inventoried as the property of the estate; hence it was not sold, and could not be sold, at the bankrupt sale — the only •source through which complainants claim to have acquired any rights thereto. As neither the bankrupt nor its trustee had acquired any right to this property or
It is difficult to see bow tbe complainants have any rights or equity to tbis mortgage executed by Copeland to Winter, Loeb & Co-, as against tbe mortgagees. They can have no greater right than bad tbe bankrupt, because both they and tbe trustees claim, exclusively
If the right existed which is sought to be here enforced against Winter, Loeb & Co., as to the mortgage executed by Copeland to them, it existed in behalf of the bankrupt, and not in that of the purchasers of its property at the bankrupt sale.
The rule of caveat emptor applies with full force to purchasers at judicial or quasi judicial sales.—Fore v. McKenzie, 58 Ala. 115; Bland v. Bowie, 53 Ala. 152; Clemmons v. Cox, 114 Ala. 350, 21 South. 426. The sale
Reversed and remanded.