ERROR TO THE COURT OF APPEALS OF THE STATE OF GEORGIA
White, McKenna, Holmes, Day, Hughes, Van Devanter, Lamar, Pitney, McReynolds
MR. JUSTICE McREYNOLDS delivered the opinion of the court.
Lesser brought suit in the City Court of Atlanta against Gray and another, once members of Inman & Co., for damages alleged to have resulted from breach of contract by the firm. A demurrer was sustained and final judgment rendered for defendant; this was affirmed by the Court of Appeals of Georgia (8 Ga. App. 605); and the matter is here upon writ of error.
A motion to dismiss must be denied. Plaintiff in error seasonably set up and claimed that, because the bankruptcy court adjudicated his debt to be not provable (Re Inman & Co., 175 Fed. Rep. 312), the proceedings in bankruptcy and discharge of defendant constituted no bar to a recovery thereon in the state court. A Federal issue is raised and we cannot say that it is too frivolous to give jurisdiction. Rector v. City Deposit Bank, 200 U.S. 405, 411.
The following summary adequately indicates the essentials of the original petition:
Inman & Co., a copartnership composed of Gray and
others, in July, 1907, agreed to purchase from Lesser 500 bales of patches -- cotton bagging -- to be delivered during the twelve months commencing September 1, 1907. About one-third was delivered and paid for prior to May 4, 1908, at which time an involuntary petition in bankruptcy was filed against the firm and its members. Shortly thereafter all were adjudicated bankrupts. Trustees were appointed, and in July, 1908, Gray obtained his discharge. Prior to the bankruptcy proceedings there was no breach or disavowal of the contract and thereafter no demand for further deliveries nor offer to make any.
In February, 1909, Lesser presented a claim against the estate for his alleged loss. The trustees objected on several grounds. Among others these were specified: "That said claim is not a provable claim in bankruptcy under the provisions of the Bankrupt Act; that said claim on its face shows that at the time of the filing of the petition in said cause, and at the date of adjudication, the merchandise, the subject-matter of the claim, had not been delivered to the bankrupts as provided under the contract of sale therein set forth, but that all of said merchandise that had been delivered, to wit, the amount of 174 bales had been paid for. . . . Said proof shows that at the date of the adjudication, as well as the filing of the petition, no breach of said contract had occurred. . . . Your trustees show that the contract set forth is not such a contract as is avoided by an adjudication in bankruptcy, and, therefore, that the same is not a provable debt."
The referee disallowed the claim, and the United States District Court approved his action for reasons stated in a written opinion incorporated in the petition.
"Petitioner shows that the defendants have failed under said contract to accept and pay for 326 bales of patches at the contract price, and petitioner having retained said goods, defendants are indebted to him for the ...