Berg v. Plitt

Offutt, J., delivered the opinion of the Court. The trustee in bankruptcy of the Geiser Manufacturing Company gave notice by advertisement that the assets of the bankrupt, including real and personal property, would be sold at public auction on the premises at Waynesboro, Pennsylvania, on July 7th, 1938. Learning of the sale, a group of junk and scrap iron dealers formed a pool, and agreed among themselves that one member of the pool should bid on the personal property, that if he succeeded in buying it he would then offer his bargain at a private auction limited to members of the group, and that, if at that auction the bargain were sold at a higher price than that bid at the public auction, the excess would be divided equally among the group. Among the members of the group were Samuel J. Berg, the appellant in this case, Joseph and Nathan Brenner, trading as Joseph Brenner & Son, Clarence Plitt, H. Klaff & Co., Incorporated, and Max Bailis, representing Max Bailis & Sons.

Bailis at the public auction bought the machinery and personal property of the bankrupt, exclusive of “inventory and repair parts,” for $40,300, and the trustee so reported the sale. After the sale the members of the group met in a hotel in Waynesboro, and the right which Bailis had secured of taking the property at $40,300, which for convenience is referred to as the bargain, was offered for sale to any member of the group who might bid for it. Samuel J. Berg, trading as Berg Brothers Company, acting for himself, for Joseph Brenner & Son, and for H. Klaff & Co., Incorporated, was the highest bidder at $3300, and the bargain was sold to him for that price. Under an agreement between them, Berg, Klaff & Co., and Brenner & Son, each had a one-third interest in the bargain, and the Brenners and the Klaff Company each paid to Berg $2000 to reimburse him for a cash deposit of $6045 which he had paid to the trustee, and to Klaff ¹⁶⁰ & Co., which acted as treasurer for the pool, the Brenners and Berg each paid $1100, which was one third of the amount bid at the private auction for the bargain.

Subsequently the Brenners assigned their one third interest in the bargain to Clarence M. Plitt. Through various mesne proceedings Berg, with the consent of the trustee, was substituted for Max Bailis as purchaser of the bankrupt’s property. Exceptions to the sale were overruled, and the sale to Berg, as substituted purchaser, finally ratified and confirmed, whereupon the trustee demanded that Berg complete the transaction by paying the balance of the purchase money and taking title to the property. After some delay the trustee peremptorily set the office of the bankrupt at Waynesboro, and January 31st, 1939, as the place and time for final settlement, and- so notified Berg, the substituted purchaser, and he in turn notified Plitt and Klaff, and instructed them each to be present “prepared with certified check.” Berg then telegraphed the trustee that he would be present to discuss matters preliminary to final action.

At the place and time appointed Berg, Klaff, Louis M. Silberstein, attorney for Berg, Klaff and Plitt, the trustee, and Sidney B. Needle, an attorney representing Berg, were all present. The trustee tendered Berg a paper purporting to be a bill of sale for the property sold to him by the trustee, and demanded the balance due on the sale. Berg refused to complete the purchase, and thereafter the court ordered that the deposit be retained by the trustee as liquidated damages, and the property resold. In connection with the litigation growing out of the exceptions to the trustee’s sale, Plitt and Klaff deemed it expedient to employ an attorney to aid in securing a ratification of the sale to Berg, and they employed Louis M. Silberstein.

Silberstein said that he was also employed by Berg, but Berg denied that, and it is undisputed that, while Plitt and Klaff each paid one third of his fee, Berg has paid him nothing. ¹⁶¹ After Berg had finally refused to complete his purchase at the bankrupt’s sale, Plitt and Klaff & Co., Incorporated, brought these actions to recover from him the $2000 and the $1100 respectively which each of them had paid to him to reimburse him for the money which he had advanced for each of them for the cash deposit, and for the price paid to Klaff as treasurer for the pool for the purchase of Berg’s interest in the bargain. The trial of the case resulted in a verdict and judgment for the plaintiff in each case, for $3516.67 in Plitt’s case, $3379.17 in Klaff & Co.’s case, and from those judgments these appeals were taken. The judgment in the Plitt case included the $2000, the $1100, and one third of the attorney’s fee, $416.67, and that in the Klaff case the same three items less $137.50, being the proportionate share of each member of the pool in the $3300 bonus which Klaff & Co. held as treasurer for the pool. The record in each case submits fourteen exceptions, of which thirteen relate to questions of evidence and one to the rulings on the prayers.

Comprehension of the significance of these exceptions may be aided by a brief statement of the conflicting theories of the parties as to their respective rights under the several transactions from which these actions arise. The plaintiffs contend that they and Berg, the appellant, entered into a valid agreement under which Berg bought from Brenner & Son the bankrupt’s property for the joint account of all three, that each was to pay one third of the purchase price which Bailis & Sons had bid for it, and one third of the bonus which Berg had paid for the bargain, that they each paid Berg one third of the cash deposit required of him by the trustee, one third of the bonus which he had paid to the pool, and one third of the fees charged by the lawyer for his services rendered in opposing exceptions to the sale, that Berg as the substituted purchaser was alone authorized to complete the sale to him, that he wrongfully and without any valid excuse refused to complete, and that in consequence it ¹⁶² was vacated, that thereupon he became obliged to restore to them the money which they had paid him in reliance upon his undertaking to complete the sale, and to reimburse them for money paid for legal services in procuring the ratification of the sale to him. The defendant on the other hand contends that the agreement between members of the pool that the bankrupt’s property was to be bid in by one member for the account of the others tended to suppress bidding at the sale, was against public' policy and void, and that any contract based on rights derived from that agreement fell with it, but that, apart from that, Berg did not wilfully or wrongfully refuse to complete the sale, that the bill of sale tendered him by the trustee was for less goods than he bought, and that he was justified in refusing to accept it, since he was under no obligation to go ahead with the sale and pay the balance of the purchase price unless and until the trustee tendered him a bill of sale for all the property which he bought, and he also contended that as he did not employ the lawyer he was not obliged to pay him. The first six exceptions relate to the admission in evidence of testimony tending to prove that Berg had joined Plitt and Klaif in employing Silberstein as an attorney to represent them in defending the sale to Berg, that Plitt and Klaff each paid him one third of his fee of $1250, but that Berg had paid him nothing.

These exceptions were not argued in this court, in the absence of any damage prayer are unimportant, and will be treated as abandoned. Rules of the Court of Appeals, Rule 37, sub-section 4. In the course of the examination of Louis M. Silberstein, a witness for plaintiffs, he referred to the meeting at the bankrupt’s office in Waynesboro on January 31st, 1939, and said that a discussion occurred there which “consumed * * * practically the whole afternoon.” He was then asked on cross examination, “There was a lot of discussion there amongst the buyers as to what they had gotten and had not?” An objection to that question was ¹⁶³ sustained. That ruling appears to be free from error.

The so called question, embodied in the seventh exception, was in form a statement of fact and not a question at all. But apart from that, there is nothing in the statement to indicate that it referred to any transaction in which any party to these cases was interested. The eight and ninth exceptions refer to the action of the court in admitting in evidence an order of the United States District Court of the Middle District of Pennsylvania, directing the trustee to retain as liquidated damages the sum of S6045 paid by Berg to him as a cash deposit on account of the sale. The order was unquestionably relevant to the issues in the case, and while it does not appear that the exhibit was properly authenticated, no objection to it was made on that ground, although the court suggested that it understood the objection went to its relevancy alone.

Since the defendant made no reply to that suggestion the court was justified in assuming that the objection that the paper was not authenticated was waived. It also appeared that there was an appeal from that order which at the time of the trial had not been decided. The tenth exception relates to the refusal of the court to admit in evidence a copy of the bill of sale tendered by the trustee to Berg. The bill of sale was a vital element of the defendant’s case.

If it did not include everything he bought at the sale he was justified in refusing to consummate the purchase, and he was entitled to show that as a defense to the charge that he wilfully refused to complete the sale. If the original was filed in the bankruptcy proceedings in the District Court, a certified copy thereof would have been the best evidence of its contents. If it was not so filed, that fact should have been shown, as well as the fact that the original could not be obtained, to warrant the introduction of a copy. Jones on Evidence, secs. 209, 212, 217.

There was no such showing, so that, while the bill of sale was relevant, the paper offered as a copy of it was on the proof in the case inadmissible and properly excluded. ¹⁶⁴ In the examination of Sidney B. Needle, he stated that “I know at the meeting with the representative of the trustee, the purchasers of the inventory and parts were also making the claim.” An objection to the statement was sustained, and that ruling, which is the subject of the eleventh exception, seems to be free from error, as the statement referred only to collateral and wholly irrelevant matters. In the examination of Berg, the witness, after explaining why he had not completed the sale on January 31st, 1939, was asked, “Will you tell his Honor the character of merchandise that was bought through the bid given by Mr. Bailis.” An objection to the question was sustained, and that ruling is the subject of the twelfth exception. Following that ruling, Berg was asked whether he knew what Bailis had bought. The defendant also objected to that question.

The court, without ruling on the objection, said that so much of the catalogue or list of items to be sold as related to the personal property would be admitted, and then said: “Now, then, you have in what he hoped to buy and the other side objects to your trying to show by him what he actually got or might have gotten the following January. If they object the objection will be sustained.” Defendant then made an offer of proof, and the court said: “You put that in and Mr. Ward objects and I overrule it and give Mr. Ward an exception. It is inadmissible but it saves time and makes no difference in my decision in the cases,” and defendant then repeated the offer in these words: “The Defendant offers to prove that the Plaintiff, Clarence M. Plitt told him that the Defendant would be held responsible if the Defendant did not get all the merchandise and machinery bought by Max Bailis & Sons; that the representative of the Trustee in Bankruptcy tendered to the Defendant on January 31st, 1939 a Bill of Sale from which was excluded a substantial quantity of merchandise and machinery of the value of fifteen thousand dollars (§15,-000.00) or more which had been sold at the sale to Max Bailis & Sons, and the said representative would not get ¹⁶⁵ the merchandise and machinery so excluded; and that a great deal of the merchandise and machinery excluded from the sale to Max Bailis & Sons was included in the resale.” No objection was made to that offer, and defendant was then asked this question: “Q. Tell his Honor whether or not you were ready, willing and able to complete your part of the transaction which we have been talking about if the trustee had delivered to you or he was prepared to deliver to you or had offered to deliver to you the goods and merchandise that had been bought by Max Bailis and Sons.” An objection to that question was sustained and that ruling is the subject of the thirteenth exception. The ruling involved in the twelfth exception appears to be free from injurious error.

The question was a proper one, but as there was no dispute as to the character of the merchandise bought by Bailis