Edwin Clapp & Son, Inc. v. Knorr

Citations

• 106 Kan. 733
• 189 P. 936
• 1920 Kan. LEXIS 643

Syllabus

<p>SYLLABUS BY THE COURT.</p> <p>Bankruptcy — Claim Filed by Creditor — Dividend Accepted — Estoppel. On a salé of a stock of goods, only a part of the purchase price was paid. The vendee was given possession of the goods and the right to conduct the business, to buy and sell goods with limitations on the indebtedness that might be incurred, and the extent of the goods that> should be carried in stock. The vendor reserved the right to sell and dispose of the stock if the installments of the unpaid purchase price were not paid as agreed upon or if the other conditions of the agreement were not observed, and any surplus remaining was to be turned over to the vendee. Before all- the payments were made, the vendee failed in business and was adjudged a bankrupt. With knowledge of the contract relations between the vendor and vendee, a creditor who had sold goods on the credit of the vendee joined with the vendor in electing a referee in bankruptcy. Its claims, as well as that of the vendor, were presented to the referee and allowed, and together they procured an adjudication to be made that the vendee was the debtor and that the vendor was a general creditor of the bankrupt estate. Dividends were accepted by the creditor on the basis that the vendor was a creditor, but subsequently it brought this action against the vendor to recover the balance of its claims, on the theory that the vendor was owner of the stock and the principal debtor. Held, that the creditor is precluded from denying the facts adjudicated in the bankruptcy proceeding, and from resorting to the vendor for the recovery of its claims.</p>