Spratlin v. Colson Bros. ( 1902 )

Terral, J.,

delivered the opinion of the court.

W. A. Spratlin, trustee -of the -estate of Waller & Harris, bankrupts, sued Oolson Bros, in the chancery court of Tunica county for the- value of a stock of goods, wares, and merchandise sold to them by Harris, one of said firm of bankrupts, within a month of the adjudication of them as bankrupts. Harris, upon selling'the stock of goods to Oolson Bros., left the state, whereupon Waller filed his petition to have said firm adjudicated and declared bankrupts, which adjudication, in due course of law, was made. Hpon said adjudication Spratlin was appointed trustee of the estate of said- bankrupts, and duly qualified as such by giving the bond required by the referee in- bankruptcy. Debts to an amount greater than $Y00 were proven against said estate, whereupon Spratlin filed his petition in the chancery court of Tunica county alleging the adjudication of said Waller & Harris as bankrupts, his appointment and qualification as trustee, and the existence of said debts so proven against said estate. The petition further alleged that said sale of said stock of goods by Harris to Colson Bros, was an act of bankruptcy, made with a view to defraud the creditors of said firm, and accepted by Colson Bros. with, knowledge of its fraudulent purpose. The petition charged that the sale of the said stock of goods of Waller & Harris to Colson Bros, was void: (1) Because said sale was made by Harris alone, without the concurrence of Waller; and (2) because said sale was intended to defraud the creditors of said copartnership of Waller & Harris, of which fraudulent purpose said Colson Bros, were cognizant. All the allegations of the petition were denied by the answer of Colson Bros., but not under oath, answer upon okth being waived by the bill. The deposition of John A. Davis, referee in bankruptcy, was taken, and he exhibits with his deposition a copy of the record adjudicating said Waller & Harris to be bankrupts, the appointment and qualification of Spratlin as trustee, a list of the debts proved against the estate of said bankrupts, the petition filed as the basis of said proceedings in bankruptcy — all duly certified by said referee, but certified by him only. Depositions of other persons were taken, showing that the stock of goods sold by Harris to Colson Bros, was all the property owned by Waller & Harris, and was sold for $600, and, as a consequence, under the bankrupt law, said sale was an act of bankruptcy as to them. The answer of Colson Bros, alleged them to be tona fide purchasers of said stock of goods without knowledge of any evil intent on the part of Harris in making said sale, and the evidence upon this point would have authorized the chancellor to have found Colson Bros, free from any intention to defraud in the purchase of said stock of goods. It was also in evidence that Waller & Harris had determined to sell their stock of goods, and to quit the mercantile business, and at the time of the sale made by Harris they were on the lookout for a purchaser. Upon the motion of Colson Bros., the court suppressed the deposition of Davis, the referee in bankruptcy, and dismissed the petition of Spratlin; from which action an appeal is taken here.

1. Upon what ground the court suppressed the .deposition of John A. Davis, the referee in bankruptcy, we do not understand. The matters in the bankruptcy proceeding certified by him were essential to show a right of action in Spratlin, unless the .certification was rendered unnecessary by § 1797, code 1892. That proceedings in bankruptcy may be certified by the referee only is provided for by sec. 21d of the United States bankrupt act of July 1, 1898.

2. The sale by Harris singly of the stock of goods in solido of Waller & Harris, being without any suspicious circumstances, as the intention of the firm to sell out the business was well known in the community, was valid. Stegall v. Coney, 49 Miss., 761, 768.

3. If, however, the action of the court be predicated upon the ground that Colson Bros, are purchasers for value of said stock of goods without notice of any fraud upon the part of Harris, the case should have been dismissed; and upon this point the finding of the chancellor is supported by the evidence, or, at least, it cannot be said to be manifestly wrong. Bankr. Act, sec. 67e; Coll. Bankr. (3d ed.), 369.

Affirmed.