176 Iowa 745 | Iowa | 1916
On April 4th, 1913, the Midland Motor Company, a corporation doing business in Moline, Illinois, delivered two automobiles and accessories to the Chicago, Rock Island & Pacific Railway Company, at Bast Moline, Illinois, for shipment to Pittsburg, Pennsylvania, and received a bill of lading from the railway company, showing a consignment “to the order of the Midland Motor Co. Notify John L. Kitter, 2179 Webster Ave., at Pittsburg, Penn.” This bill of lading was endorsed in blank by the Midland Motor Company. The Midland Motor Company was indebted to the plaintiff, the Davenport Savings Bank; and, on April 18th, 1913, it drew a draft for the purchase price of the automobiles on John L. Kitter, attached the same to the bill of lading, and delivered both to the bank, as security for a part of the indebtedness it was then owing the bank. It seems that, on the day the bank took the draft and the bill of lading, it had a settlement with the Midland Motor Company, at which it was found that the motor company owed the bank $12,000; and an extension of time was then given for a period of 30 days, a note for the amount of the balance due being executed on April 18th, 1913. The draft and bill of lading were received by the bank, as collateral security to this loan. The Rock Island Railway transported the automobiles to Chicago, where they were delivered to, and accepted by, the Pennsylvania Company; and it transported the same to Pittsburg, and, upon arrival, notified John L.
If this were all of the case, it would not be difficult of solution; but defendants pleaded in defense that, before the redelivery of the property to the Midland Company, it had been adjudged a bankrupt; and one McCollough had been appointed and was acting as trustee in bankruptcy, and that said trustee in bankruptcy took possession of the automobiles, being, in law and in fact, entitled thereto. Defendant further averred that the matter in controversy had theretofore been adjudicated by one E. U. Henry, a referee in bankruptcy, in the southern district of the United States court for the northern division of Illinois, in a matter before him as such referee; and that, in said proceeding, it was adjudged that plaintiff herein was not the owner of the property in controversy, but that the title, possession and ownership thereof, were in the trustee in- bankruptcy, E. D. McCollough.
In reply, the plaintiff denied that the referee in bankruptcy made any such order as defendant 'pleads; averred that the said referee was without jurisdiction to make any order binding on this plaintiff, and further averred that, whatever the order of said referee, the same was without authority, and was and is, illegal and void. To sustain the
Defendant then offered the finding of the referee in bankruptcy, on a claim filed by the plaintiff with said referee, to the effect that the objections filed to said claim, by the trustee in bankruptcy, were good, and should be sustained; and plaintiff’s claim was disallowed, unless it should surrender to the trustee its preference, obtained through the transfer of the bill of lading, and certain payments made to it by the bankrupt, within four months of the adjudication of its bankruptcy.
The objections filed to plaintiff’s claim were: (1) no indebtedness; (2) that plaintiff received the automobiles from the bankrupt while it was insolvent, knowing, or having reasonable cause to believe, that it was insolvent; (3) that the draft and bill of lading for the automobiles were given to the plaintiff for a past due indebtedness; (4) that certain payments were made on plaintiff’s claim which were preferences under the bankruptcy law.
The certificate to the transcript of the order of the referee was in this language:
“I hereby the above to be a true and exact copy of my record in this matter. Dated at Peoria, Illinois, Jan. 6th, 1915. Edward U. Henry, Referee in Bankruptcy, Southern District of Illinois, Northern Division.”
The objections to this offer were practically the same as to the papers. Defendant then offered to plaintiff a notice from the referee in bankruptcy of the filing of the objections
' The petition filed by the trustee in the United States district court for the southern division of Iowa, discloses that the trustee was seeking to recover the five automobiles therein referred to, which had been received by the plaintiff herein at the time it took its assignment of the draft and bill of lading for the automobiles in controversy, on the theory that, when plaintiff received the said five machines, the Midland Motor Company was insolvent, which fact plaintiff herein well knew, or had reasonable cause to believe; that the transfer thereof was made within four months of' the time the Midland Company was adjudged to be a bankrupt, and that the transfer thereof constituted a preference which was void; and that the trustee was entitled to the possession of the machines, and to an order on plaintiff to return the same to him, the trustee.
He also pleaded the proceedings and order before the referee in bankruptcy for the United States district court of Illinois, hitherto referred to, as an adjudication binding, not
“Mr. Cook: Now, Your Honor, it developed yesterday that, in Defendants’ Exhibit 2, the referee in bankruptcy, in certifying that record, inadvertently left out the word ‘certify,’ and that was not discovered by defendants’ counsel until the point was raised yesterday afternoon in argument by Judge Waterman that the word ‘certify’ was not in the certificate. I don’t know what the effect of that may be, but there is nothing for a jury to determine here anyway, and we would like to have, and the defendants, Pennsylvania Company and Chicago, Rock Island & Pacific Railway Company, now ask that the further hearing of this case be postponed for five days, in order that we may have an opportunity to have a correct certification made. It is one of those things that ought not to turn the result of a law suit, and I don’t know what the effect of it may be in the higher courts. I didn’t notice it until Judge Waterman called attention to it yesterday. If the word ‘certify’ was in there, I would be willing to stand on the certification, but I do not know what the certification is worth without it.
“Mr. Petersberger: The plaintiff resists the request for*753 an adjournment or continuance, not only for the fact that there is no statement accompanying the professional statement of counsel showing any ground therefor, but for the further reason that the objection is not made as required by law, so that the same can be intelligibly passed upon by the court; and for the additional reason that it is a matter of right, and not a discretionary matter, and the plaintiff in this case stands upon its rights to have this case determined at this time.
“The Court: The plaintiff’s resistance is sustained, and the application for a continuance is overruled.”
Again, it should be stated that plaintiff introduced in evidence the following paper, filed with the referee in bankruptcy on November 22d, 1913:
“In the District Court of the United States for the Southern District of Illinois.
"In the Matter ot the Basirpptcy ] APPM“; of the Midland Moter-Co. f *,0“ 01 *1“ D»“P»rt Savings Bank.
“The Davenport Savings Bank of Davenport, Iowa, a secured creditor, who have heretofore filed their claim in this matter for the purpose of participating in the proceedings at the first meeting of creditors, responding to the objections to which claim, which have been set for hearing at Peoria on Nov. 24, 1913, respectfully represents:
‘ ‘ That the value of the securities held by this claimant has not yet been fully determined so that the necessary allowance can be made for the purpose of establishing the amount of its claim over and above the value of such securities. That, accordingly, this claimant is not prepared at this time to intelligently take up the objections filed herein to the allowance of its claim, and accordingly asks that the hearing on said objections be continued until such a time as the amount, if any, which this secured claimant may have against the*754 above named bankrupt, can be properly presented for allowance as an unsecured claim.”
Thereafter, the following record was made with reference thereto:
“Mr. Petersb&rger: In view of the ruling of the court which is made as to certain exhibits offered by the defendants, the plaintiff now, in accordance with the statements made in introducing Exhibit K, now withdraws Exhibit K from further consideration by the court in connection with this matter.
“Mr. Cook: The defendants Pennsylvania Company and Chicago, Rock Island & Pacific Railway Company object to the withdrawal of the paper, plaintiff’s Exhibit K, and insist that the same become a part of the record and remain so for the purposes of appeal or the further progress of this ease; and, that the same having been offered in evidence, it cannot be stricken out of the record so that the defendants may not have the advantage of it in the higher courts.
“The Cowt: The motion to withdraw is sustained, and the paper may be withdrawn as evidence, but the paper is to be retained with the record for the purpose of appeal. ’ ’
Preliminary to a discussion of the legal propositions, it is well to give the chronology of events. The bill of lading for the two ears in question was issued April 4th, 1913. Plaintiff and the Midland Motor Company had a settlement of their accounts, on April 18, 1913; and the Midland Company, on that date, executed its note to plaintiff for the sum of $12,000, due on demand, after May 18th of the same year. The Midland Company, on the same date, drew its draft for the purchase of the machines on John L. Kitter, and transferred the same to plaintiff. On April 6th, 1913, the Rock Island Company delivered the machines to the Pennsylvania Company, at Chicago, Illinois. Upon arrival of the cars at Pittsburg, Pennsylvania, the Pennsylvania Company notified Kitter of their arrival, and Kitter refused to accept or pay for the same, and the autos were then stored in a warehouse
II. We have already pointed out the error of the trial court in denying defendant the right to a postponement of the case, in -order to obtain a correction of the referee’s certificate to the order made by him, and in taking out of the ease plaintiff’s response to the objections filed to its claim before the referee; and, in view of this holding, and the conclusion reached on the other branch of the case, the judgment must be reversed.
It is not necessary that the parties be the same, or that the property be identical. There was such privity between the parties to the proceeding before the referee, and the parties
Assuming, then, that the order made by the referee upon plaintiff’s claim be properly established, we think that it became and is binding, not perhaps, strictly speaking, as an adjudication of plaintiff’s claim, but as a finding of fact upon an issue involved on that hearing which is conclusive upon the plaintiff here. 2 Black on Judgments, Section 506 (Ed. of 1891); Peachey v. Frisco Gold Mines Co., supra. We reach the conclusion that the judgment must be, and it is,—Reversed.