Crawford v. Maddux
Before: Haynes
Synopsis
Insolvency—Sale op Goods Under Execution—Void Agreement to Prevent Competition.—Where the goods of an insolvent debtor are sold under execution and purchased by the execution creditors for a small sum, under an agreement with the agent o£ other creditors that he would not bid at the sale, in consideration that the execution creditors would pay his principals a larger sum, being the difference between the amount bid and what the execution creditors were willing to pay for the goods under competition, such agreement is against public policy, and wholly void, and could neither be enforced before payment nor remedied by recovery of the money after payment.
Id.—Action by Assignee of Insolvent—Money Paid Not Part of Insolvent’s Estate.—The amount paid under such void agreement by the execution creditors did not, because of the wrong, become the property of the execution debtor, his only remedy being to set aside the sale by reason of the fraud; and his assignee in insolvency cannot maintain any action under section 23 of the Insolvent Act of 18S0 to recover double the value of the money so paid, as being property of the debtor embezzled or disposed of with notice of the commencement of the proceedings in insolvency.
Id.—Receipt op Money by Petitioning Creditors—Trust. —Where the execution was levied upon the goods before the petition for adjudication of insolvency was filed, and the creditors petitioning for such adjudication were in no way instrumental in procuring the execution sale, and their only connection with it was through the agreement made by their agent, and the receipt of money from the execution purchasers, which was not the money of the insolvent or his creditors, no trust was created in relation thereto in favor of other creditors of the insolvent.
Haynes, C. On September 26,1889, one Goldzier obtained a judgment in a justice’s court against Granger,the owner of a drug store. An execution was issued thereon, and on October 15, 1889,-the goods were sold [223]by the constable under the execution to J. W. Husband and G. S. Turner for one hundred and ninety-six dollars, the amount of said judgment and costs.
On October 1, 1889, the Jacob Unna Co., Redington & Co., Alfred Greenebaum & Co., Whittier, Fuller & Co., and Yates & Co. (appellants here), creditors of Granger, filed a petition in the superior court praying that Granger be adjudged an insolvent debtor. The record does not disclose at what time the order to show cause was made returnable, nor when it was served upon Granger, but on December 7,1889, he was adjudged an insolvent debtor, and on August 15, 1890, Crawford, the plaintiff in this aciton, was elected assignee.
It was further alleged in the complaint, and the court found, that one A. C. Bonnell was the agent of the appellants, and as such agent agreed with Husband and Turner, who desired to purchase the store at said execution sale, that he would not bid at such sale in consideration that they, said Husband and Turner, would pay appellants the sum of seven hundred and four dollars; that Husband and Turner had represented to Bonnell that they were willing to pay nine hundred dollars for the store; “that thereafter the said Husband and Turner did bid in the said store and stock thereof for the sum of one hundred and ninety-six dollars, and the said Bonnell did refrain from bidding at said execution sale,” and that thereafter Husband and Turner paid to defendant Maddux said sum of seven hundred and four dollars; that Maddux transferred the money to the Board of Trade of San Francisco, who paid the same to defendants, the said petitioning creditors, and that they “ received the said sum of seven hundred and four dollars belonging to the insolvent estate of said W. W. Granger before the assignment therein, and, having notice of the commencement of the proceedings in insolvency, converted and appropriated the same to their own use, and refused to deliver the same when demanded by the assignee of the said insolvent estate, the plaintiff herein.”
[224]
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