225 F. 262 | E.D.S.C. | 1915
This matter comes up for a hearing upon two petitions to review an order made by the referee in bankruptcy herein on the 3d day of March 1915, holding that the assignment of certain notes and mortgages made by the bankrupt to the American Agricultural Chemical Company were good, although the assignments were not recorded, and holding, also, that the assignment of certain accounts made by the bankrupt to the American Agricultural Chemical Company were not good, because neither the agreement to assign the same nor the- assignments had been recorded.
From the facts it appears that the American Agricultural Chemical Company, a company carrying on a* fertilizer manufacturing and selling business in the state of South Carolina, entered into a written
Pursuant to this contract the American Agricultural Chemical Company shipped and delivered to the bankrupts fertilizers of the value, of $9,358.16, which fertilizers Floyd & Hayes sold and disposed of to their customers. This agreement was not recorded. On June 20, 1914, and more than four months prior to the filing of the petition in bankruptcy herein, Floyd & Ha.yes executed and delivered to the American Agricultural Chemical Company an assignment of all the notes, mortgages, and open accounts taken by them from the purchasers of the fertilizers so shipped to them and representing the proceeds thereof. The notes and mortgages were actually turned over to the American Agricultural Chemical Company, but in the case of the open accounts there was turned over to the Chemical Company a list, with a written assignment of all these accounts; that being the only delivery which, from the nature of the case, was possible, there being no other written evidence of the indebtedness which Floyd &■ Hayes could turn over to the American Agricultural Chemical Company. About September 1, 1914, the notes and mortgages and assigned accounts were returned by the American Agricultural Chemical Company to Floyd & Hayes for collection, and a trust receipt given by Flo\ d & Hayes to the American Agricultural Chemical Company, stating that they had received all such from it for the purpose only of collection and remitting the proceeds to the American Agricultural Chemical Company. The bonds and mortgages and accounts so assigned were tinder the agreement of January 14, 1914, in effect collateral security for the obligations of Floyd & Hayes to the Chemical Company for the fertilizers at the agreed price. Floyd & Hayes were on the 1st day of January, 1915, adjudicated bankrupts in this court on their own petition.
At the first meeting of the creditors, which was held on the 18th day of January, 1915, the American Agricultural Chemical Compand offered for proof its claim against the bankrupt estate for $7,381.-
Upon this application and objection the referee ruled that the notes and mortgages, having been actually assigned and delivered to the American Agricultural Chemical Company, were in its possession from the time of assignment until they were returned to the bankrupts for the purpose of collection, and that under the law of South Carolina the assignments of notes and mortgages were not necessary. to be recorded, and therefore the assignments of those notes and mortgages ' to the American' Agricultural Chemical Company were valid against all parties under the decision made by the Supreme Court of South Carolina in Bank v. Greenville, 97 S. C. 299, 81 S. E. 634. The referee also ruled, however, with regard to the open accounts, that the same rule did not apply. Fie based this ruling upon the decision of the Circuit Court of Appeals of the United States for the Fourth Circuit in the case of Townsend v. Ashepoo Fertilizer Company, reported 212 Fed. 97, 128 C. C. A. 613, which holds such an assignment to be a transaction in the nature of a mortgage, and necessary to be recorded under the provisions of the recording act of South Carolina. Civ. Code 1912, § 3542. It will be thus seen that the decision in the present controversy depends upon the question whether or not the decision of the Supreme Court of the state of South Carolina in Bank v. Greenville is to be held as controlling upon this court in this matter, or whether the decision of the Circuit Court of Appeals of this circuit in the case of Townsend v. Ashepoo Fertilizer Company is to be held as controlling.
The two decisions are irreconcilable. In the case of Townsend v. Ashepoo Fertilizer Company, the Circuit Court of Appeals for this circuit held that accounts or debts were embraced within the meaning of the word “property,” and as such, when assigned by way of security, they were included within the operation of the statute of the state of South Carolina requiring mortgages of all personal property to be. recorded. In the case of Bank v. City of Greenville, 97 S. C.
It is therefore ordered and decreed that the order of the referee, made March 3, 1915, and sought to be reviewed herein, is hereby approved and confirmed as to so much as holds that the assignment by the bankrupts, Floyd & Hayes, of the notes and mortgages referred to in the report, to the American Agricultural Chemical Company, are good and valid in the hands of the American Agricultural Chemical Company as against all parties. It is further ordered and decreed that the order and ruling of the said referee that the assignments of the open accounts were not valid as against the trustee in this case, because the assignments -were not recorded, be and the same is hereby disapproved and overruled. It is further ordered and adjudged that the said referee do- allow the American Agricultural Chemical Company to prove its claim against the bankrupt estate, after deducting therefrom the value of all open accounts, notes, and chattel mortgages assigned to it as collateral security, as being duly and properly assigned to it, and that such open accounts, notes, and chattel mortgages be and the same are hereby decreed to be the property of the said American Agricultural Chemical Company, who are entitled to possess, sue for, and recover upon the same to the extent that may be necessary to fully pay and discharge the obligations of .Floyd & Hayes for which the same are held as collateral security.