Hollywood Plays, Inc. v. Columbia Pictures Corp.

Woods' whole interest in the play passed, automatically and by operation of law, and regardless of statements in the schedules, to Woods' trustee in bankruptcy (U.S. Code, tit. 11, § 110; seeStephan v. Merchants Collateral Corp., 256 N.Y. 418, 422;First Nat. Bank v. Lasater, 196 U.S. 115, 119; Gray v.Gudger, 260 F. 931, 932). Thereafter the trustee sold and transferred that whole interest, formerly of Woods, to plaintiffs' predecessor, as appears without doubt from the trustee's notice of sale, his statements at the sale, the referee's order of confirmation and the trustee's bill of sale. Thus there can be no question here of any partial interest in this play being an unadministered asset of the Al Woods bankruptcy, or of any possible reopening of the estate hereafter, for disposal thereof. It is, therefore, clear beyond all doubt that the trustee got all Woods' rights and sold all those rights to plaintiffs' predecessor.

It follows that any defect in the bankruptcy vendee's title to the 50% could only have come about because Woods, between 1929, when he unquestionably owned 50%, and 1931, when he was adjudged bankrupt, somehow, in some manner, at some time and to some person undisclosed, transferred out a 25% interest. Whether or not he did so is in its essence a question of fact. As the sole suggested basis for an affirmative answer to that question, we have defendant's speculation or guess, with nothing to support it except the listing by Woods, in his bankruptcy schedules, of a 25% interest, not a 50% interest. As against that mere guess, there is the much more reasonable one that, in setting down his claimed ownerships in scores of plays — good, bad and indifferent — Woods just simply made a mistake as to the quantum of his rights in "Ladies' Night".

But, what is more important, we have in this record, as against that guess that Woods somehow got rid of 25% before his bankruptcy, much more than a contrary guess. First, we have the fact that Woods owned 50% at least up to 1929. Second, we have the presumption that such ownership continued (Chapman *Page 70 v. Town of Taylor, 136 N.Y. 663; Cuyler v. Wallace,183 N.Y. 291; Claris v. Richards, 260 N.Y. 419, 423; Matter ofA.O. Brown Co., 183 F. 861, 863). Third, we have the fact that Woods before the bankruptcy, and the bankruptcy sale vendee thereafter, were treated always as 50% owners, as to royalties, etc. Finally, we have the Trial Justice's remarks on this matter in his opinion, which remarks cannot be read other than as a finding that Woods' bankruptcy trustee had, and sold, a 50% interest; that finding was, by failure to find otherwise, affirmed by the Appellate Division, and the only opinion in that court (the Presiding Justice's dissent) did not even mention the matter. We cannot make a contrary finding.

A contract vendee should not be forced to take a doubtful title, but he cannot escape liability for nonperformance by erecting his vague and baseless speculations into substantial doubts. Even if this be no more than a matter of judgment — as to whether this supposed break in the title is real and important — then both courts below have given us their judgment that it is not.

The judgment should be affirmed, with costs. [See 299 N.Y. 683. ]

LOUGHRAN, Ch. J., LEWIS and CONWAY, JJ., concur with FULD, J.; DESMOND, J., dissents in opinion in which DYE, J., concurs.

Judgments reversed, etc.