Woods v. Rapoport

222 P. 220, 128 Wash. 140, 1924 Wash. LEXIS 979
CourtWashington Supreme Court
DecidedJanuary 18, 1924
DocketNo. 18190
StatusPublished
Cited by4 cases

This text of 222 P. 220 (Woods v. Rapoport) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Woods v. Rapoport, 222 P. 220, 128 Wash. 140, 1924 Wash. LEXIS 979 (Wash. 1924).

Opinion

Mitchell, J.

This is a suit by the trustee in bankruptcy of the estate of Mrs. Anna M. Hahn, to recover $2,589 and interest from the appellant, Jacob Rapoport, trading as Jacob Rapoport & Company, it being alleged that the appellant, as a creditor, received certain property from Mrs. Hahn under circumstances claimed by the trustee to constitute a voidable preference. The defendant being a nonresident of the state, the action was commenced by the attachment of his property here, whereupon he entered a general appearance and made answer. Findings and judgment were entered against the defendant, from which the appeal has been taken.

The complaint alleged, in substance, that Mrs. Hahn was adjudged bankrupt on December 22, 1921, on a petition filed against her November 23, 1921; that the matter was referred to a referee in bankruptcy for further proceedings, as required by the bankruptcy act; that creditors were called on to prove their claims and appoint a trustee; that appellant filed proof of his claim of debt against the bankrupt in the sum of $2,-006.50, with the referee; that the appellant had sold and delivered to the bankrupt, a merchant in Seattle, goods of the value of $4,595.50, which included thirty-two garments shipped to her in September, 1921; that, on October 28, 1921, he received from her a return of twenty-eight of the garments, for which he gave her a credit of $2,589, leaving a balance due him in the sum of $2,006.50; that the trustee filed duly verified objections with the referee against the claim of $2,006.50, on the ground that the return to the appellant of the twenty-eight garments constituted a voidable prefer[142]*142ence; that the hearing on the objections resulted in an order and judgment by the referee, dated July 27, 1922, in substance as follows: That, on the date to which the hearing had been continued, the trustee appeared in person and by his counsel, and that the claimant did not appear in person or by counsel; that witnesses were sworn and evidence taken, whereupon the facts were found to be, in effect, that prior to October 28,1921, the appellant sold and delivered to Mrs. Hahn goods of the value of $4,595.50, all of which was due and payable on that date; that the petition in bankruptcy against Mrs. Hahn was filed on November 23, 1921, upon which she was, on December 22, 1921, adjudged to be a bankrupt; that, within four months next preceding the filing of the petition in bankruptcy, the appellant received from Mrs. Hahn as payment on account of $4,595.50, goods of the value of $2,589, for the balance of which appellant’s claim was filed; that, at all times during the four months just preceding the filing of the petition in bankruptcy, Mrs. Hahn was insolvent, and that on October 28, 1921, when the appellant received goods from her and gave credit therefor on account, the appellant had reasonable cause to believe that she was then insolvent, and that the transfer of such goods, enabling the appellant to receive a greater percentage on his claim than other creditors of the same class, constituted a voidable preference recoverable by the trustee under § 60 of the bankruptcy act of 1898, with amendments. The conclusion or formal order and judgment of the referee being:

“Oidered, adjudged and decreed, That the claim of Jacob Eapoport & Co., on file herein stand as proven as an unsecured claim against the estate of Anna M. Hahn, bankrupt, in the sum of $2,006.50, to be disallowed unless said claimant shall surrender to the trustee of said estate within thirty days from the date [143]*143of this order the twenty-eight (28) women’s coats or the snm of $2,589, their value, constituting the voidable preference obtained by said claimants over the other creditors'of said bankrupt.”

The complaint further alleged the refusal of the appellant to surrender the preference or its value, and that the assets of the estate were about $2,113, while its liabilities amounted to $40,500. The demand of the complaint was for judgment in the sum of $2,589 and interest.

The answer of the appellant alleged that he did not sell any goods to Mrs. Hahn, but delivered them to her on consignment, reserving the title in himself, and took back from her the twenty-eight garments as his own property, and that, at that time, they were reasonably worth only $1,000.

A supplemental complaint was filed alleging that, after the commencement of this action, the appellant filed a petition in the original bankruptcy proceedings to set aside the referee’s judgment of July 27, 1922, and for a rehearing of the issues determined by that judgment; that the petition was denied by the referee, and that upon review taken to the United States district court, the referee’s ruling was in all respects approved and affirmed by the judgment of that court. The allegations of the supplemental complaint were admitted by the appellant.

At the trial the respondent relied mainly on the record and proceedings before the referee in bankruptcy and in the United States district court, and objected to any proof under the allegations of the answer to the effect that the appellant had made a consignment rather than a sale of the goods delivered to Mrs. Hahn. The trial judge held with the respondent that the orders and judgments in the bankruptcy proceedings were res adjudicata on that question and precluded [144]*144defendant from again trying in this action the question as to whether or not the receipt of the twenty-eight garments constituted a voidable preference. Judgment was directed accordingly by the superior court in the full amount sued for, but, upon reconsideration, the question as to whether the former proceedings were conclusive upon the subject of the value of the twenty-eight garments the case was reopened and testimony taken upon that issue only. Thereupon judgment was entered in favor of the plaintiff for the amount prayed for.

The first contention of the appellant is that the referee was without jurisdiction to make the “findings, conclusions and judgment” entered on July 27, 1922. The argument is that, as the goods returned were never in the actual or constructive possession of the bankruptcy court, but in the possession of the appellant under a claim of right, the only remedy was a plenary suit by the trustee in a court of competent jurisdiction in the territory or district of the appellant’s residence. In this connection it is contended by the appellant that “the judgment of the referee orders the appellant to surrender the goods or to pay to the trustee the sum of $2,589. It is in all respects a judgment in personam.”

The provisions of the bankruptcy act and many decisions of the courts are cited to show that a plenary suit is required to recover property alleged to belong to a bankrupt estate. We need not review them. The obvious fallacy in the argument is that the proceeding before the referee was not one to recover property, nor was the judgment one requiring the appellant to surrender the goods or pay the value thereof. It was not a judgment in personam. The judgment was not upon proceedings commenced by the trustee, but upon proceedings commenced by the appellant himself upon the [145]*145proof and filing of his claim against the bankrupt estate. Upon the claim being presented to the referee, he proceeded as required by § 57 of the bankruptcy act. U. S. Comp. Stat. 1901, vol. 3, p. 3443. Subd. d of the section provides that proven claims shall be allowed upon presentation, unless objections to their allowance be made by parties interested, while subd.

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Cite This Page — Counsel Stack

Bluebook (online)
222 P. 220, 128 Wash. 140, 1924 Wash. LEXIS 979, Counsel Stack Legal Research, https://law.counselstack.com/opinion/woods-v-rapoport-wash-1924.