Rabalsky v. Levenson

Pierce, J. On May 19, 1914, the defendant Mandell sold to one Samuel Weisgold, who is not made a party to this bill, the merchandise and fixtures owned by him at 22 Cambridge Street [291] in Boston. The purchase price was $850. Acting upon the advice and with the assistance of his attorney at law, the defendant Abraham Levenson, Mandell (the seller), in good faith and with an honest purpose to fulfill the requirements of St. 1903, c. 415, prepared and Weisgold (the purchaser) received a list of his (Man-dell’s) merchandise creditors; and thereafter, conforming to the statutory requirement, due notice of the sale was given to such creditors. Solely because of their mistaken interpretation of the statute they failed to prepare a list of, or to notify, the general creditors. These creditors were the defendant Levenson, with a valid claim of $320; the defendants composing Levenson Brothers, with a joint judgment obligation of $24.22, and a further claim of joint liability upon four, promissory notes aggregating $37.48, There was also a joint indebtedness of $26.27 due to the defendant the Edison Electric Ilhiminating Company of Boston. Upon the delivery of the merchandise and fixtures Weisgold placed in the hands of the plaintiff the entire consideration for the sale, $850, under an agreement between Weisgold, Mandell and the plaintiff that the plaintiff should pay therefrom all the merchandise creditors and should pay the balance, if any, to Mandell. In execution of this trust the plaintiff paid, in discharge of the claims of all merchandise creditors, the sum of $702, and thereupon the balance of $148 became due and payable to Mandell. With the execution of the trust Mandell gave, and Levenson received, in good faith, in partial payment of his claim of $320, an assignment in writing of any balance in the plaintiff’s hands remaining after the payment of the merchandise creditors. Due notice in-writing of this assignment was served on Rabalsky on or about May 20, 1914. A trustee writ, in which were named the members of Levenson Brothers as plaintiffs, and those of Mandell Brothers as defendants, and the present plaintiff and the Cosmopolitan Trust Company were summoned as trustees, issued from the Municipal Court of the City of Boston, on May 22,1914. On the same day (May 22, 1914) another writ issued from the Municipal Court and was duly served. In this writ the Edison Electric Illuminating Company of Boston was named as plaintiff, the members of Mandell Brothers were named as defendants, and Rabalsky, the present plaintiff, and the Cosmopolitan Trust Company were summoned as trustees. [292] Notwithstanding the good faith of all parties and their honest effort to comply with the law, they failed to do so; and the sale of the stock of merchandise, but not that of the fixtures, was voidable by the creditors. Callus v. Elmer, 193 Mass. 106. Kelly-Buckley Co. v. Cohen, 195 Mass. 585. Adams v. Young, 200 Mass. 588. There were open to the creditors a number of remedies both at law and in equity, but, omitting the right of seizure on execution, no one of them could be pursued successfully without an adjudication to which the purchaser was made a party. It was entirely possible, by trustee process, to make the purchaser a trustee or garnishee. Thomas v. Goodwin, 12 Mass. 140. Burlingame v. Bell, 16 Mass. 318. Hastings v. Baldwin, 17 Mass. 552, 557. As to the effect of payments by the grantee of indebtedness of the grantor, see Pierce v. Le Monier, 172 Mass. 508; Adams v. Young, 200 Mass. 588, 591. As above stated, the purchaser, Weisgold, was not made a party to this bill, nor was he summoned as trustee in the action at law. In the trustee process the depositary was named as trustee, and the only way he was chargeable was by an adjudication that he held in his hands and possession the goods, effects and credits not of Weisgold, but of the debtor Mandell. He confessedly did hold money payable to Mandell, but that money, at the time of the service of the trustee process, was assigned to Levenson to pay a claim justly due in excess of the sum so held. Because of the assignment he could not have been charged in trustee process, and he was bound in law to recognize the assignment and to pay over the money remaining as a balance in his hands to the bona fide assignee. It follows that the decree of the Superior Court must be reversed and a decree must be entered directing the plaintiff to pay the balance in his hands, $148, to the assignee Levenson. Ordered accordingly.