following amounts, to wit: Berney, $261.50; Nesselson, $4,803.45; Gordon, $7,793.23.
We therefore have for consideration and disposition at this time the reports of each referee and the exceptions therto.
We have carefully reviewed all the evidence and considered the reports and findings of each referee. Our conclusion is that a conspiracy did exist among the three respondents to convert the merchandise of the bankrupt corporation to their own individual uses. While there was no proof of a formal agreement among the three respondents to convert the assets of this corporation to their own use, yet we believe that the only fair inference to be drawn from all the facts and circumstances is that a conspiracy did exist among these three respondents. The evidence discloses that these three respondents were the only stockholders of the corporation; that they were its corporate officers; that each of them, at periods of time during the abstraction of goods, was in charge of the business of the corporation; that during the period involved, i.e., June 12, 1930, to January 5, 1931, a period of unprecedented business depression, there were extremely heavy purchases of merchandise by the corporation in spite of failing volume of sales by the corporation in due course of business; that certain items of merchandise were directly traced to each of the respondents; that an inventory of stock on hand was taken, which, when considered in connection with the record of purchases and sales, must have disclosed to each of them that a large amount of merchandise was unaccounted for. Yet no steps were taken by any of the respondents to have that merchandise restored to the corporation.
We regard this as a proper case to look behind the corporate shield. There is no doubt about the shortage in merchandise that should have been turned over to the trustee. These respondents, as the only stockholders and officers of the bankrupt corporation, are the ones whose duty it was to turn over and account to the trustee for all corporate assets. So far as this turn-over proceeding is concerned, they may be properly looked upon as the bankrupt. Remington on Bankruptcy (4th Ed.) vol. 5, p. 485, § 2384, we believe, correctly defines the status of corporate officers thus: "The officers of a bankrupt are subject to such summary jurisdiction as being the bankrupt."
On the whole case, we are of the opinion that the trustee's exceptions to Referee Adair's report should be sustained; that the respondents' exceptions to Referee Creps' report and order thereon should be dismissed; and that the order of Referee Creps should be affirmed and sustained. An order may be submitted accordingly.
© 1992-2004 VersusLaw Inc.