In re Sol. Aarons & Co.

Second Circuit

In re Sol. Aarons & Co.

193 F. 646, 113 C.C.A. 514, 1912 U.S. App. LEXIS 1079

CourtCourt of Appeals for the Second Circuit

DecidedJanuary 29, 1912

DocketNo. 151

StatusPublished

Cited by10 cases

This text of 193 F. 646 (In re Sol. Aarons & Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

In re Sol. Aarons & Co., 193 F. 646, 113 C.C.A. 514, 1912 U.S. App. LEXIS 1079 (2d Cir. 1912).

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Opinion

PER CURIAM.

The petitioners must establish three propositions to entitle them to rescind the sale in question-: (1) That the bankrupt [647]*647was insolvent at the time of the purchase of the matting. (2) That ■ he bankrupt concealed its insolvency from the petitioners. (3) That the bankrupt intended not to pay for the goods.

[1,2] Assuming that the petitioners can establish the first proposition, and that the bankrupt was insolvent at the time when the order for the goods -was placed with the petitioners, the second proposition 'loes not follow. It is not contended that the officers of the bankrupt made any false statements or were guilty of any positive fraud. Fraudulent concealment in this case must be established by silence, if at all. But we think it is not so established, because we are unable to see that the bankrupt was under any obligation to speak or to disclose its financial condition to the petitioners; no request for any statement having been made. Moreover, if fraudulent concealment in addition to insolvency were shown, we think that the petitioners wholly fail to establish the third essential proposition — that the bankrupt intended not to pay for the goods. Practically the only ground for claiming that these goods were bought with intent not to pay for them is the fact that they were delivered to Talcott and an advance obtained thereon. This may be a suspicious circumstance, but it does not in and of itself establish fraud, nor of itself justify the inference of an intent to defraud. Indeed, the inference might be drawn that the bankrupt pledged the goods to obtain money needed in its business until they could be sold. There is some evidence tending to show that some of the merchandise was never delivered to Talcott and that other merchandise was taken out of pledge and sold.

Claimants ought not to he allowed to repudiate a sale and reclaim goods, and thus obtain a preference over other creditors, except in a case where the proof is clear. This is not such a case. In this case, as already shown, no false statements or false representations were made. The petitioners themselves proved their debt, and, apparently only thought of reclamation proceedings when it was ascertained that most of the goods had been delivered to Talcott.

The order of the District Court is affirmed, with costs.

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PER CURIAM.

The petitioners must establish three propositions to entitle them to rescind the sale in question-: (1) That the bankrupt [647]*647was insolvent at the time of the purchase of the matting. (2) That ■ he bankrupt concealed its insolvency from the petitioners. (3) That the bankrupt intended not to pay for the goods.

[1,2] Assuming that the petitioners can establish the first proposition, and that the bankrupt was insolvent at the time when the order for the goods -was placed with the petitioners, the second proposition 'loes not follow. It is not contended that the officers of the bankrupt made any false statements or were guilty of any positive fraud. Fraudulent concealment in this case must be established by silence, if at all. But we think it is not so established, because we are unable to see that the bankrupt was under any obligation to speak or to disclose its financial condition to the petitioners; no request for any statement having been made. Moreover, if fraudulent concealment in addition to insolvency were shown, we think that the petitioners wholly fail to establish the third essential proposition — that the bankrupt intended not to pay for the goods. Practically the only ground for claiming that these goods were bought with intent not to pay for them is the fact that they were delivered to Talcott and an advance obtained thereon. This may be a suspicious circumstance, but it does not in and of itself establish fraud, nor of itself justify the inference of an intent to defraud. Indeed, the inference might be drawn that the bankrupt pledged the goods to obtain money needed in its business until they could be sold. There is some evidence tending to show that some of the merchandise was never delivered to Talcott and that other merchandise was taken out of pledge and sold.

Claimants ought not to he allowed to repudiate a sale and reclaim goods, and thus obtain a preference over other creditors, except in a case where the proof is clear. This is not such a case. In this case, as already shown, no false statements or false representations were made. The petitioners themselves proved their debt, and, apparently only thought of reclamation proceedings when it was ascertained that most of the goods had been delivered to Talcott.

The order of the District Court is affirmed, with costs.

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193 F. 646, 113 C.C.A. 514, 1912 U.S. App. LEXIS 1079, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-sol-aarons-co-ca2-1912.

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