2 F.(2d) 772 The pilot of the Challamba asserted that he was making full speed ahead until after the collision, and that he had not changed it since taking a direct course below the bend of the river. The pilot of the Halco testified that, upon observing the near situation of the Solano, the vessel being almost alongside when he noticed her, and about 50 feet off, he considered the position one of some danger and gave the signal for half speed ahead, in order to, as he phrased it, "drop out of the box"; that as the Solano came on, the Halco was swung around toward port; that he gave the order to "hard aport" the helm, which was immediately done, but that his ship would not answer to the rudder and continued to sheer to port, whereupon he signaled for full speed astern; that an instant later the bow of the Halco collided with the Challamba. a twin screw motorboat, was the fastest, wheelsman of the Halco said: "We seemed while the Solano had an advantage over the to go ahead; it brought the Challamba's Halco in speed of about a knot and a half. stern right against our rigging again. As Each vessel was at all times in charge of the Solano came up, it looked like the Chalan experienced river pilot. As they pro- lamba was coming back or had decreased ceeded downstream, the Challamba passed her speed." the Solano and drew up to the Halco, leaving the Solano perhaps a quarter of a mile behind. The Challamba was very close to the Halco when a bend in the river was turned, this point in the testimony being referred to as the place where the hull of the wrecked steamer Welsh Prince was located. From this point downward for a distance of about two and a quarter miles the navigable channel is shown by the charts to mark a practically straight course and, except for the first mile or so, to have a width of a thousand feet or more, within which width the depth of the water is in excess of 30 feet, which it was shown would be more than sufficient to sustain vessels of the draft of either of the three here concerned. As the vessels proceeded down this straight course, the Halco in the lead held the center of the channel, and all three traveled at their full normal speed. This speed was probably accelerated somewhat by an ebb tide, which, as nearly as can be ascertained from the evidence, was at its first stage. Proceeding thus, the Challamba overhauled the Halco and essayed to pass on the port side. This she did at a distance of from 100 to 150 feet. Meanwhile the Solano had approached the Halco and began to overlap her on the starboard side. The evidence varies somewhat as to what the relative positions of the Halco and Solano were during the events which immediately transpired, but it is a fair deduction from all of the evidence to say that the Solano was fairly abreast of the Halco when the latter's direction was changed from straight ahead to port. The witnesses for the Halco, including the pilot and the steersman, testified that the Solano as she came alongside at a distance of about 50 feet seemed to take the Halco along with her, and that during that action the Halco's bow sheered to port and the ship was forced in the direction of the starboard quarter of the Challamba, which had, the moment before, almost if not entirely cleared the Halco. The testimony of the witnesses of the Halco and of the Challamba agreed upon the point that, notwithstanding the Challamba had almost if not quite gone past the Halco, at the approach of the Solano the Halco seemed to catch up, and that she did, the moment before the collision, gain on the Challamba. As the The Solano did not stop, but continued on her way uninjured. The wheelsman of the Halco fully corroborated the pilot. He testified that the order to "hard aport" the helm was quickly executed, and that one of the mates standing by seized the wheel and lent his assistance, but that the ship failed to respond. The captain of the Halco was not on the bridge at the time, but looking over the side he saw the Solano coming close and, as he testified, shouted a protest to her pilot. The pilot of the Solano denied that he was as close to the Halco as the latter's witnesses placed him, and said that he was about 100 feet away, and his captain made the distance twice that much. Neither of the overhauling vessels gave any signals of their desire to pass nor received any signals from the Halco indicating that the way was open. The Challamba was at fault in this respect, but it occupied the superior position with respect to the Solano of having practically if not fully passed the Halco before the Solano's bow lapped the stern of the latter. It was apparent then to the Solano that she was bound to add to the danger of the Halco's situation by attempting to pass at least until the Challamba was well ahead. If she had waited and had then needed more room to make the passing, she could have without doubt secured it by the exchange of proper and usual signals with the navigator of the Halco. It was her duty in any event to have signaled and 774 2 FEDERAL REPORTER, 2d SERIES (d) 1120. POTTER v. WALKER. 1924.) March, awaited a response from the Halco indicat- 1. Fraudulent conveyances 47-Bulk Sales Gen. St. Conn. 1918, § 4749, providing that the sale of all or a large part of the stock in trade of a retail business shall be void as against creditors, unless notice of the intended sale shall previously be filed and recorded in the office of the town clerk, held not applicable to a sale made by a retail dealer, not from the stock in his store, but of other merchandise bought in large quantities as a wholesale dealer. 2. Bankruptcy 178(1)-Sale of merchandise of bankrupt held fraudulent and voidable. owned by bankrupt corporation, which was A sale of new merchandise, purchased and largely indebted, by its president, at a place usual course of business, for from 60 to 65 other than its place of business, and not in the per cent. of its wholesale value, held fraudulent and voidable by the trustee in bankruptcy of the corporation under Bankruptcy Act, § 67e (Comp. St. § 9651). 3. Bankruptcy 186(1)-Fraudulent purchaser liable for full value of property transferred. I am convinced that the responsibility for the collision lies with the Solano alone, and that she should satisfy the Halco's claim for the damage suffered. The Challamba's damage was nominal, but whatever it amounts to, the Solano should answer for it also, as well as for the costs. Counsel for the Halco will prepare the decree. As it will be necessary to appoint a commissioner to take evidence and report the amount of damage, it is preferred that the person to be appointed be agreed upon by the parties. In a suit by the trustee of a corporation under Bankruptcy Act, § 67e (Comp. St. § 9651), to recover the value of property sold in fraud of creditors to a purchaser chargeable with notice of the fraud, where the sale was made by the president of the corporation individually, and there was no evidence that bankrupt received the proceeds, the purchaser cannot claim credit for the amount paid, but is liable for the full value. In Equity. Suit by Mary G. Potter, trustee in bankruptcy of the J. H. Small Shoe Company against Frank Walker. Decree for complainant. Lesser Brothers, of New York City (William Lesser and Samuel L. Miller, both of New York City, of counsel), for plaintiff. Jacob J. Lazaroe, of New York City (Arthur C. Mandel, of New York City, of counsel), for defendant. CAMPBELL, District Judge. This is an action in equity brought by a trustee in bankruptcy against an auctioneer to set aside a certain transfer of goods made by the bankrupt, through its president, to the defendant on or about September 22, 1922. In the bill of complaint two causes of action are alleged: The first, that the sale was made in violation of chapter 232, Statof Connecticut; the second, that the sale utes 1918, § 4749, of the Laws of the State and transfer were made by the bankrupt while it was insolvent and unable to pay its debts, and with intent on its part to hinder, delay, and defraud its creditors existing at that time, and to place its property beyond the reach of its creditors, in all of which the defendant knowingly participat 2 F.(2d) 774 ed, and that said sale and transfer were in ness. direct violation of the provisions of section 67e of the Bankruptcy Law (Comp. St. § 9651), and were not made in good faith and for a present fair consideration. The bankrupt was engaged in the retail shoe business at No. 1287 Main street, Bridgeport, Conn. The defendant contends that the bankrupt was also engaged in the wholesale shoe business at what he calls a warehouse, but what in reality was an old barn belonging to Max Cedarbaum, the father-in-law of J. H. Small, the president of the bankrupt, which barn is also located at Bridgeport, Conn., but on another street some distance from the Main street store. The bankrupt was incorporated on June 24, 1919, and one of the purposes of the corporation as set forth in its certificate was "to buy, sell, and deal in generally shoes of all kinds and descriptions, at wholesale and retail. In the Shoe & Leather Mercantile Agency General Rating Book for January and July, 1921, and January, 1922, under the heading "Connecticut, Bridgeport," the name of J. H. Small Shoe Company appears with the address, and "Wholesale boots and shoes," and for July, 1922, "Wholesale and retail boots and shoes." The defendant was not a subscriber of such agency or said rating book. The address given in said rating book for 1921 was 1277 Main street, and for 1922 it was 1285 Main street. The bankrupt had billheads with the address 1287 Main street, Bridgeport, Conn., on which the words "Wholesale Shoes" were printed in red, the type being of good size, easily read. Defendant's son and employee testified that the word "wholesale" appeared on the window of 1287 Main street, but this is denied by J. H. Small, president of the bankrupt. The business carried on at 1287 Main street was clearly that of a retail and not a wholesale dealer in shoes, and it seems hard to believe that any one could in good faith consider the barn as the place where a wholesale business was conducted. No evidence was offered which in my opinion showed that the bankrupt was actually engaged in the wholesale shoe business at Bridgeport, Conn., but I cannot say that defendant, his son and employee, in the light of their knowledge or the information they had received at the time of the purchase, knew that the bankrupt was not engaged in the wholesale, but was engaged solely in the retail, business. [1] Chapter 232, Statutes of 1918, § 4749, of the laws of the state of Connecticut, reads as follows: "Sale of Certain Busi Any person who makes it his busito buy commodities and sell the same in small quantities for the purpose of making a profit, and any person having any interest in any barber shop, dental parlor, restaurant, shoe shining or hat cleaning business, or any fixtures used therein, who intends to sell, assign or deliver, not in the regular course of business, the whole or a large part of the stock in trade or fixtures, or any interest in such barber shop, dental parlor, restaurant, shoe shining or hat cleaning business, or in the fixtures used in connection therewith, shall, not less than fourteen nor more than thirty days prior to such sale, assignment or delivery, cause to be recorded in the town clerk's office in the town where such vendor conducts such business, a notice of his intention to make such sale, assignment or delivery, which notice shall be in writing and shall describe in general terms the property to be sold, assigned or delivered and all conditions of such sale, assignment or delivery, and the parties thereto; and such notice shall be signed by such person or in his name by his attorney. Any sale made in violation of any provision hereof shall be void as against any creditor, provided, this section shall not apply to any sale, assignment or transfer when the instrument by which such sale, assignment or transfer was made has been filed for record at least fourteen days in the town clerk's office of the town in which such business was being conducted." This statute clearly applies to the sale of a large part of the stock in trade of a retail business and not to the sale of the stock in trade of a wholesale business, and therefore it cannot apply in the instant case because no part of the stock in trade of the retail business was sold and transferred but only part of the stock in trade purchased by the bankrupt in large quantities, under the guise, at least, of being in the wholesale business. Connecticut Steam Brown Stone Co. v. Lewis, 86 Conn. 386, 85 A. 534, 45 L. R. A. (N. S.) 495, cited by plaintiff, does not in my opinion sustain the plaintiff's contention, because as I read that decision the court holds that the facts in each case must govern, and under the facts in this case I cannot hold the sale to be void simply by reason of the failure to file the 14-day notice provided in said Connecticut statute, supra. [2] The second cause of action is based upon fraud, and it is immaterial whether the goods were purchased in large or small quantities. The facts with reference to the sale sought Shoe Company, but closed the bargain, and to be set aside are as follows: The J. H. Small Shoe Company, the bankrupt, was engaged in the retail shoe business at 1287 Main street, Bridgeport, Conn., and also had a large quantity of new shoes, many of which were in the cases in which they had been shipped from the manufacturers or dealers to the bankrupt within 2 months prior to the sale to defendant, which shoes were stored in a barn belonging to the father-in-law of J. H. Small, the president of the bankrupt, located at 75 James street, Bridgeport, Conn., some distance from the bankrupt's store. The bankrupt through J. H. Small, its president, who owned all but two shares of its capital stock, had been buying in large quantities for a short time before the date on which the sale in question took place. The bankrupt was not engaged in business as a wholesale dealer, although it advertised as such. In February, 1921, J. H. Small had made a sale to D. Koch, an auctioneer, who paid by check drawn to his order by the defendant, and some time shortly before the sale the bankrupt had made a sale to the same auctioneer named Koch, who was friendly to the defendant. The defendant was an auctioneer and J. H. Small called at the defendant's place of business a day or two before September 12, 1922, about making a sale of some merchandise, and saw William Walker. On September 12, 1922, William Walker, the son of the defendant, who was associated with his father in business, with the approval of the defendant, went with Sol Dunn, an employee of the defendant, to the retail store of the bankrupt at Bridgeport, arriving in the morning, and they were taken by said J. H. Small to the barn which they call a warehouse, where the said Walker and Dunn looked over the shoes that were offered, making a list, putting an arbitrary price on the same, and paying no attention to the makes or the wholesale values, after which said Walker and Dunn went over the list and made up the total they were willing to pay, which list has been lost or destroyed. The said J. H. Small demanded $8,000, and Walker offered $5,500, and J. H. Small finally accepted the same, although the value of the said shoes was at least $8,500. Walker and Dunn made no inquiries why said Small desired to sell new shoes, some of which were unpacked, at the prices they offered, nor did they make any inquiry as to the financial condition of the J. H. Small paid $50 in cash on account, and agreed to pay the balance in a certified check and remove the goods the next day, whereupon the said Small gave said Walker a receipt, of which the following is a copy (the words "Paid by check. Joseph H. Small" being added on the 13th day of September, 1922, when said check was delivered): "Amount of pairs 2,366. Total. "Received $50 deposit on shoe stock comprising of 66 cases, 27 Pea Boxes of ladies, mens, boys La. Gts. & Chd. shoes bought from Mr. Small on premises of 75 James St., Bridgeport, Conn. This stock to be free and clear of all kind and nature. "To be paid to Mr. Small by check (certified)." The said Walker and Dunn then returned to New York. On the 13th said Walker and Dunn returned to Bridgeport, met Small at the retail store, and then all three went to said barn, where they loaded said shoes on a truck, gave the certified check to Small for $5,450, and took said goods to New York. The certified check for $5,450 was drawn by the defendant to the order of William L. Walker, and indorsed by him in blank, and was never indorsed by said J. H. Small or the bankrupt, but by some person to whom Small delivered the same. J. H. Small did not remember what part of the proceeds of the said sale went to pay any of the creditors of the bankrupt. The high quality and character of the shoes is shown by the advertisement of their sale issued by the defendant. The sale made to the defendant as aforesaid made the said J. H. Small Shoe Company insolvent, and the sale made by the bankrupt to the defendant in New York 16 days later added the finishing touch, resulting in the bankruptcy of said company; an involuntary petition being filed on October 7, 1922. The sale on September 29th did not take place within the jurisdiction of this court, and I can do nothing with reference to it except to consider it in relation to the sale in question in determining whether the defendant was a purchaser in good faith without notice on September 12th, or was engaged with Small, or had notice that Small was engaged in perpetrating a fraud on the creditors of the bankrupt on September 13th. The liabilities of the bankrupt as shown by its schedules were $37,049.05. On 2 F.(2d) 774 September 12, 1922, the bankrupt was indebted for merchandise in the sum of $18,903.29. After the bankruptcy the merchandise of the bankrupt which was left sold for about $3,000. The defendant, although present through all the trial, did not take the stand. Section 67e of the Bankruptcy Act, on which plaintiff relies, reads as follows: "That all conveyances, transfers, assignments, or incumbrances of his property or any part thereof, made or given by a person adjudged a bankrupt under the provisions of this act subsequent to the passage of this act and within four months prior to the filing of the petition, with the intent and purpose on his part to hinder, delay, or defraud his creditors, or any of them, shall be null and void as against the creditors of such debtor, except as to purchasers in good faith and for a present fair consideration; and all property of the debtor conveyed, transferred, assigned, or encumbered as aforesaid shall, if he be adjudged a bankrupt, and the same is not exempt from execution and liability for debts by the law of his domicile, be and remain a part of the assets and estate of the bankrupt and shall pass to his said trustee, whose duty it shall be to recover and reclaim the same by legal proceedings or otherwise for the benefit of the creditors. The sale was not made in the ordinary course of business at a regularly established place of business, but at a barn which by courtesy was called a warehouse. The sale and removal of the goods, it is true, were made in the daytime but the sale was made in a hurry. The method of arriving at the value of the goods was unusual because the defendant's witnesses who attended to the valuing of the goods say that they paid no attention to the make or wholesale value in fixing the price they would give but simply put an arbitrary price on the shoes per pair. The shoes sold were new shoes, not shopworn, and most of them in the very boxes in which they came from the manufacturers but a short time prior thereto, and were sold at a price far below the wholesale value. Payment was not made by a check drawn to the order of the corporation or indorsed to its order, the first payment of $50 having been made in cash, and the balance of $5,450 by a certified check drawn to the order of the son of defendant and by him indorsed in blank; by which action of the defendant J. H. Small individually was given the opportunity to obtain the whole sum. All of these facts show that the sale was not made in the ordinary course of business, and the purchaser was placed on notice. Walbrun v. Babbitt, 83 U. S. 577, 21 L. Ed. 489; Dokken v. Page (C. C. A. 8th Cir.)`17 Am. Bankr. Rep. 228, 147 F. 438, 77 C. C. A. 674. Neither the name of the corporation nor of J. H. Small, the president of the corporation with whom the agents of the defendant dealt, appears as an indorser on said check, nor does it appear that any part of the amount paid by the defendant went into the possession of the corporation. No list of the shoes purchased was retained by the defendant, the only description contained in the receipt given to defendant's agent being "66 Cases of Pea Boxes of Ladies, Mens, Boys, La. Gts. and Chd. Shoes bought from Mr. Small on premises of 75 James St. Bridgeport, Conn."; at the top being the words, "amount of pairs 2,366 total." The fact that the agents of the defendant realized that the purchase and sale was not in the ordinary course of business is shown by the receipt, in which it is stated: "This stock to be free and clear," and then there was added after the balance of the receipt was written, with a different pencil and in what appears to be a different hand, the words "of all kind and nature." This receipt was made out by the defendant's agents, the choice of the words was theirs, and the purpose of such words by the defendant, his agents, or servants in such receipt is clear, because his son says they were used by them generally because he was afraid he might slip sometimes. This of itself placed the defendant on notice. Bentley v. Young (D. C. N. Y.), 31 Am. Bankr. Rep. 506, 210 F. 202, affirmed in 34 Am. Bankr. Rep. 365, 223 F. 536, 139 C. C. A. 126. The sale was not made at the place of business of the bankrupt shown on the receipt but at the barn, and this was sufficient to put the defendant, his servants, or agents on notice. The defendant was an auctioneer of long standing, his son and employee were men of some experience, trusted by the defendant to make a purchase on his account in a sum of over $5,000, and therefore they were put on notice by the way in which the transaction was conducted, and notice to them was notice to the defendant. In the face of the manner in which the sale was conducted I do not see how the agents of the defendant could have thought that it was a sale fairly made in the regular course of business, nor do I believe that the evidence warrants any |