Bristol v. Mills

Opinion by Beaver, J., That an act of bankruptcy was committed by the sale by T. Webster to the plaintiff, in which a preference was given plaintiff by an allowance of overdue wages on the purchase money of the store, is not denied and is expressly ruled in Johnson v. Wald, 35 C. C. A. 522. It is also distinctly admitted that, if the contest in the feigned issue from the judgment, in which the appeal is taken, concerned the property which was sold, the defendant would be entitled to the judgment whiclf he recovered. The only question raised in the case is whether or not the money for which the goods sold, which was paid into court, is [111] to be regarded as equivalent in law to the property itself. Webster sold his stock of goods to Bristol, the plaintiff, execution creditors subsequently levied thereon, a feigned issue was awarded to try the title, plaintiff refused to give bond for the forthcoming of the goods and asked the court to direct them to be sold, and they were thereupon directed to be sold. Before the trial of the feigned issue, the creditors of Webster petitioned the court “ to stay proceedings until appointment of trustee in bankruptcy ” and the case was continued until the next term. On March 18, 1899, Cross, who had in the mean time been appointed trustee of the bankrupt’s estate, petitioned the court for leave to take the money, the proceeds of the sale of the property by the sheriff, out of court and, on August 7,1899, the court made this decree: “ Upon due consideration of the witliin petition, the prayer of the said petitioner to be allowed to intervene in above case is granted and he, the said William Cross, trustee, is hereby made party defendant in said case, and the sheriff of Erie county is hereby directed to pay into court the amount realized from the sale of the personal property of said Townsend Webster, as within stated, to abide the event of the issue.” This order was, so far as the money was concerned, practically identical with what the plaintiff himself asked previously as to the disposition of the goods, his motion being “ for an order directing the sheriff of Erie county to sell said stock of merchandise and pay the proceeds thereof into court to await the determination of the issue in said cause, which motion was granted.” There can be no question as to the authority of the court to order the sale of perishable property or of such as cannot be conveniently kept by the sheriff. The plaintiff himself asked for the sale and that the fund arising therefrom should be paid into court to await the determination of the issue. Cross, the trustee in bankruptcy, was allowed to intervene as a defendant, it is true, after the sale was made but before the money arising therefrom was paid into court, the direction to the sheriff to pay the money into court being a part of the decree permitting Cross to intervene as defendant. The court had control of the money arising from the sale of the personal property of the bankrupt as fully to all intents and purposes as it could have had of the property, if it had not been sold. The plaintiff pe [112] titioned for the sale, and the payment of the proceeds into court to await the determination of the issue was granted in the terms prayed for. It is “ sticking in the bark ” for him to say now that because the bankrupt act of 1898 does not in specific terms give the trustee the right to money arising from the sale of personal property, title to which passed as of the date of the adjudication in bankruptcy, that, therefore, the general creditors should be deprived of the benefits of the provisions of the bankrupt act and that the plaintiff himself should profit by what is declared by the act to be a fraud against the other creditors. In other words, although he cannot take advantage of his own fraud so long as the property remains in his hands or in the custody of the law, it is only necessary, by his own act and upon his own petition, to convert the property into money to enable him to do so. The proposition answers itself. The fund paid into court took the place of and stood for the personal property sold by the sheriff and the court below was not only justified in saying but was bound to say that the fund belonged to the trustee in bankruptcy of Webster’s creditors. Money is one form of property and as such should be transferred to the trustee by a bankrupt: In re Purvine, 37 C. C. A. 446. This principle is applicable here. The judgment is affirmed.