Wartell v. Moore
Wartell v. Moore
Opinion of the Court
This case involves the right of a bankruptcy trustee to recover a preference under section 60b of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 562 [Comp. St. § 9644]). The bankrupt, White, carried on a commission business in poultry, eggs, etc. For the sake of buying into that business, he had borrowed $1,500 from Wartell, with the expectation that the loan would be carried for some time. Eater White took Kaufman into partnership, and they continued the same business. On November 20, 1915, White bought out Kaufman, took over the business and all its assets for himself, and promised Kaufman to pay all the partnership debts. These amounted to about $6,000. On November 26th he repaid Wartell the $1,500 loan, making payment out of the assets thus recently taken over. On December 29th, he filed a voluntary petition in bankruptcy. If the partnership debts assumed by him be included in his liabilities, he was insolvent on November 20th, and continuously thereafter.
The trustee’s action to recover this Wartell payment as a preference was brought at law, and tried in the court below before a jury. The only question rightly preserved for review in this court is whether a verdict should have been instructed for Wartell, and the case, upon its facts, is not such that we are inclined to consider any error now alleged, and as to which there is any deficiency for lack of exception. More specifically, the only question is whether the evidence tended to show that there were other creditors of the same class as Wartell, who were prejudiced by the payment to him. His argument is that on November 26th he was a creditor of White as an individual; that all the other creditors had no claim against White, excepting as a member of the partnership of White & Kaufman; that all the husiness assets were then in the individual estate of White; that Wartell was entitled to priority in these assets as against the partnership creditors; and that he did not receive a larger percentage than other creditors of the same class, because there were no others of the same class.
Certain aspects of this question argued by counsel present difficulties which we think it not necessary to meet. When counsel for Wartell presented his motion to direct a verdict, and insisted that the proofs did not show the existence of any other creditors of the same class as Wartell, the court said that it seemed as though there must be, among the body of creditors who had proved their claims, some who had become creditors after he had resumed business in his individual capacity, and who therefore would be individual rather than partner-’ ship creditors, even if it should be thought that the partnership creditors, existing on November 26th, could have in this proceeding no other status. Wartell’s counsel said that this was a matter to be
We think the position on which counsel relied to escape the force of these facts is untenable. Creditors who have been dealing with a partnership, and who continue to furnish credit to the concern after it has become the personal business of one . of the partners, and who have no notice of. the change, have a right to enforce their new debt against the old partnership; but this is an option. The truth is that the debt accrued against the new concern, but the old partners are estopped to make this defense, because, by failing to give notice, they had misled the creditors. Surely, in tire absence of any exercise
. The judgment is affirmed.
Reference
- Full Case Name
- WARTELL v. MOORE
- Status
- Published