American Lumber & Mfg. Co. v. Taylor

ACHESON, Circuit Judge. As the learned District Judge said in his opinion: “Briefly summed up, the defense here set up consists of a statement alleged to falsely show solvency, made to a mercantile agency for the purpose of deceiving wholesale lumber dealers.” It is not averred in the affidavit of defense that the statement to the mercantile agency was made for the specific purpose of deceiving the defendant, nor is it alleged that any artifice was practiced on the defendant to induce the sale of the lumber in question upon credit. The items entering into the statement to the mercantile agency are not given, nor is it stated in what particulars it was false. Here the defendant contented itself with the general allegation that, by the written statement to the mercantile agency, G. W. Weigel & Co. falsely “represented their good assets to be upwards of $38,000 in excess of their liabilities,” whereas they were in fact totally and hopelessly insolvent. We cannot say that the District Judge erred in holding that the allegations of the affidavit of defense were not sufficiently specific to prevent judgment, especially in view of the cases of Wessels v. Weiss Bros., 156 Pa. 591, 27 Atl. 535, and Greene v. Fondersmith, 200 Pa. 625, 50 Atl. 209, relating to the rescission of an executed sale of personal property on the ground of alleged false representations by the purchaser as to his financial condition. But aside from the question of the insufficiency of the affidavit of defense, there was a fact appearing in the case fatal to the defense. The suit was for the value of two coal barges which were on the docks of the bankrupts, G. W. Weigel & Co., nearly completed, at the time of the bankruptcy. Into the construction of these 'barges some of the lumber which the defendant had sold to G. W. Weigel & Co. had entered, together, however, with other lumber which never belonged to the defendant, but was the absolute property of G. W. Weigel & -Co. Could the defendant, by a rescission for fraud of the sale of lumber, take possession of and acquire title to these barges? We think not. By the sale and delivery to G. W. Weigel & Co. the legal title to the ■lumber—voidable, it might be—had passed to the purchasers, and before attempted rescission they had used the particular lumber in question in the construction of these barges. If the barges had been built wholly of the defendant’s lumber, a different question-would have been presented. But in fact in the construction of the barges a considerable quantity of other lumber was used. The lumber which formerly be [323] longed to the defendant had lost its identity, and could not he separated from- the other lumber with which it had been incorporated in the construction of the barges. Indeed, the defendant did not attempt to re-, claim any specific lumber which had gone into the barges. The defendant well understood that it could not acquire title to the barges by an attempted rescission of its sale of the lumber which had gone into them in connection with other lumber, and hence a bill of sale of the barges was executed by G. W. Weigel & Co. to the defendant. Plainly, the transaction, upon the evidence, was an unlawful preference by the bankrupts to the defendants, and the trustee in bankruptcy had a right to recover the value of the barges. The judgment of the District Court is affirmed.