152 F. 844 | S.D.N.Y. | 1907
The bankrupt was engaged in the manufacture of silk; and one of the raw materials of such manufacturing business was “Japanese filatures,” meaning threads of silk reeled off from the cocoon and imported from Japan.,
Peabody & Co. are “foreign commission merchants,” acting for whomsoever employs them as “buyers and agents throughout the world.” On August 25, 1905, the bankrupt ordered Peabody & Co., in writing, to buy 27 bales of filatures to be shipped from Japan. The order produced is in effect a contract for the purchase of the merchandise specified, and provides specifically “silk to be ■ taken by buyer upon arrival of goods,” and that “buyers” are to receive an “allowance” should sea water damage exceed 5 per cent.; excuses Peabody & Co. from “accidents of the seas” and other specified “unavoidable casualties,” and also declares that Peabody &' Co. “are hereby given a prior lien upon the goods covered by this order, or an equivalent value, until payment has been made.” On September 18, 1905, the goods were invoiced or billed to the bankrupt, the invoice stating the terms of payment (as did the order) “If % 90 days or net 6 months note”; ' and also stating that “H. W. P. & Co. retain a prior lien upon the under-noted goods until payment has been made.” On or about the same date the consignment was physically delivered to the bankrupt. There is no evidence as to any further course of dealing between the parties, nothing shown as to the frequency of similar transactions between them, and the court is left in entire ignorance of the method or methods of contract fulfillment actually pursued.
On the facts above stipulated or apparent from the bankruptcy record, the court is asked to declare a lien in favor of Peabody .& Co. upon such of the filatures as passed into the possession of the trustee by adjudication following petition filed on January 4, 1906, or, in the alternative, to adjudge that at such time Peabody & Co. were owners
The transaction in question somewhat resembles that shown in Gregory v. Morris, 96 U. S. 619, 24 L. Ed. 740. It undoubtedly sought to create a charge upon the property, and here, as in the case cited, the charge or lien must be regarded as of the nature of a mortgage, if any analogy can be found in ordinary legal terminology. It is admitted that regarded as a mortgage the lien asserted is void as against the trustee in bankruptcy under the law of New York, by Skilton v. Codington, 185 N. Y. 80, 77 N. E. 790, inasmuch as the instrument creating the lien was not filed in accordance with law. It is also admitted that, could the transaction be regarded as a conditional sale, it is valid under the law of the same state as interpreted in Hewit v. Berlin Machine Works, 194 U. S. 296, 24 Sup. Ct. 690, 48 L. Ed. 986. But, under the authority of the same decision, it is asserted that, inasmuch as the trustee has no better right or title to the bankrupt’s property than belongs to the bankrupt or to his creditors at the time when the trustee’s title accrues, the contract of August 25, 1905, should be regarded as conferring an equitable lien — a something which is neither a mortgage nor a conditional sale, but a partial reservation of' interest on the part of a vendor, not obnoxious to any law of the state of New York, and within the equity of the bankruptcy act as interpreted in the case last cited. It must be admitted that no actual fraud is shown or suspected in this transaction, and that the courts of this state have gone far in upholding the validity of hypothecations of personal property even where the goods hypothecated were to be turned into money by the mortgagor, bailee, or conditional vendee, provided
- An order may be entered deciding that the applicants have no lien upon the goods in possession of the trustee.