Rosenfeld v. Siegfried

BLAND, P. J.

— I. The certified copy of the order of the Federal court, adjudicating the Mechanics’ Clothing Manufacturing Company a bankrupt, was a copy of a judgment of a Federal court and was competent evidence under the provisions of section 3135, Revised Statutes 1899. When such a judgment is offered to prove a fact collateral to the main issue, it is not necessary that anything more than an exemplified copy of the judgment itself be produced. Lee’s Adm’x v. Lee, 21 Mo. 531; Seymore v. Newman, 77 Mo. App. 578.

II. One of the issues raised by the pleadings was the financial condition of the clothing company at the time it had the transaction with defendant. Its books of account were competent evidence on this issue and the testimony of the witness, Parks, who had examined the books, in respect to the amount of stock the books showed the company to have on hand, was competent under the rule that where voluminous book accounts are to be put in evidence it is competent to prove by an accountant, who has made an examination of the books, the result of such examination. State v. Findley, 101 Mo. 217; Greenleaf on Evidence (16 Ed.), sec. 563. The evidence of the witness, Tolies, consisting of a transcript from his stenographic notes of the evidence given by defendant in his deposition before the referee in bankruptcy (defendant waiving the right to' insist on the witness testifying from the notes), it seems to us, was clearly admissible as admissions by defendant against his interests, and we are unable to understand what further preliminary steps were necessary to qualify the witness to testify in respect thereto, other than to produce the witness and put him under oath.

III. Defendant was not prejudiced by the admission of the list of allowed claims against the clothing company for the reason that his own witnesses testified that the liabilities of the bankrupt were greater than was shown by the list, and there is ample evidence aliunde that the clothing company -was hopelessly insolvent on January 1, 1899.

IY. It is contended by appellant that the first instruction given for plaintiff is erroneous in that it fails to instruct the jury as to the good faith, or want of good faith, of the defendant in the purchase of the goods and that there is no evidence that the defendant did not pay a present value for the goods. The instruction is as follows:

“The court instructs the jury that, under the national bankruptcy .law? all conveyances and transfers of property made or given by a person or corporation adjudged a bankrupt, within four months prior to the filing of the petition in bankruptcy, with the intent and purpose on the part of the bankrupt to hinder, delay or defraud its creditors or any of them, are null and void, as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration; and all property of the debtor so conveyed or transferred shall be and remain a part of the assets and estate of the bankrupt, and shall pass to his trustee, whose duty it shall be to recover and reclaim the same, by legal proceedings, or otherwise, for the benefit of the creditors. The court further instructs you that the petition in bankruptcy against the Mechanics’ Clothing Manufacturing Company was filed on the first day of May, 1899, and that said company was thereafter duly declared and adjudged to be a bankrupt, and that the plaintiff in this case is the duly qualified trustee in bankruptcy of said company. If, therefore, you believe from the evidence that at- any time within four months prior to the first day of May, 1899, the Mechanics’ Clothing Manufacturing Company transferred or conveyed to the defendant a lot of clothing with the intention on its part of hindering, delaying or defrauding its creditors, or any of them, you will find in favor of the plaintiff, provided you also find from the evidence that the defendant, at the time of the transfer to him, did not pay a present fair consideration for such clothing.”

The instruction was drawn in exact conformity with section 61 (e), of the Bankruptcy Act of 1899, which controls in this action. The difficulty about the instruction is as to the sufficiency of the evidence to support it. If the goods were purchased at all they were purchased on the sixteenth day of January, 1899, and paid for on that day by the two notes of the defendant, which were in three days thereafter discounted by the clothing company and afterwards paid by the defendant to the holders. An inference may be drawn that the purchase was not in good faith from the subsequent conduct of the defendant and the chief officer of the company in respect to the sale of the goods, and a jury might draw such an inference. At any rate we are not prepared to say that there was no evidence from which such an inference might not be drawn.

Y. Error is assigned for the giving of the third and fourth instructions for plaintiff. They are as follows:

“The court instructs the jury that an insolvent corporation has no right to transfer any of its property to pay one of its creditors in full, if the effect of such transfer will be to enable any such creditor to obtain a preference, or to obtain a greater percentage of his debt than other creditors, and if you find from the evidence that the defendant, prior to May 1, 1899, had delivered to the Mechanics’ Clothing Manufacturing Company his two promissory notes aggregating $959.94 for the accommodation of said company, the defendant thereby became a creditor of said company to the amount of said notes, and if you find from the evidence that during the month of March, 1899, the said company was insolvent within the definition given to you by the court, and while so insolvent transferred to the defendant, clothing or merchandise to secure him against the payment of said notes, or for the purpose of paying the defendant the amount of said notes, and if you find from the evidence that the defendant at the time of receiving or accepting said goods had reasonable cause to believe that said Mechanics’ Clothing Manufacturing Company intended by transferring such merchandise to defendant to give him a preference over other creditors, your verdict must be for the plaintiff.

“The court instructs the jury that if you believe from the evidence that the Mechanics’ Clothing Manufacturing Company, at the time of making the transfer to the defendant, was actually insolvent, and intended to prefer the defendant over its other creditors by making the transfer to him, and that the insolvent condition of said company and its intention to prefer him over other creditors, were known to the defendant, or that the means of knowledge were at hand, and might have become known to him if he had used such knowledge, or if you believe that such facts and circumstances were known to the defendant as clearly ought to have put a prudent man upon inquiry, you will find that the defendant had reasonable cause to believe that the debtor was insolvent and that a preference was intended to be given him by such transfer.”

Section 60 (a and b) of the Bankruptcy Act of 1899, provides as follows:

“(a) A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors of the same class.

“(b) If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of the petition and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person.”

It is not essential that the court should have informed the jury of the source of the law as declared in the instructions, as defendant’s counsel contended. The more serious contention is, that instruction number four is opposed to the law as declared in this State, in that it told the jury that knowledge that the clothing company intended to make a preference should be imputed to the defendant if the means to obtain such knowledge were at hand and might have become known to him if he had used such knowledge, or if the jury believe--that facts and circumstances were known to him, as clearly— ought to have put a prudent man upon inquiry. The rights .and liabilities of the parties are controlled by the bankrupt .act and when the State law comes in conflict with it, it must yield. In Pepperdine v. Bank, 84 Mo. App. 234, on the .authority of In re Eggert, 98 Fed. Rep. 843; Dutcher et al. v. Wright, 94 U. S. 553; Toof et al. v. Martin, 13 Wall. 40, we held that where a debtor is insolvent within the meaning of the bankrupt act, and the creditor hás knowledge of the insolvency, or where he has such information as would put a prudent man on inquiry and receives a payment, it follows as a necessary inference that it was intended as a preference and, hence, fraudulent. The instructions are in harmony with this decision and.are approved.

YI. There were two counts in the petition and a general verdict to which no objections were made or exceptions saved. As indicated by the verdict, the finding was probably on the first, count of the petition. It was largely in excess of the damages proven under either count. This mistake of the jury, however, was cured by the remittitur, and as we fail to find any prejudicial error in the record, and as the evidence is clear that the judgment is for the right party and for the correct gmount, we affirm it.

All concur.