186 F. 220 | E.D. Mich. | 1910
Upon the petition of the Schufeldt Company for reclamation of goods, and the supplemental petition of the- same company claiming the book accounts which accrued from the sale of goods disposed of before the adjudication, the referee found in favor of the petitioner and ordered the return to the Schufeldt Company of about 200 gallons of liquors which had been shipped by it to the bankrupt, awarded to the Schufeldt Company $114.13 in the hands of the trustee as the proceeds of other similar goods, and further awarded to the Schufeldt Company book accounts which had accrued to the bankrupt by the sale of other similar goods and which were uncollected at the date of the adjudication, and which had a face value of about $3,600. This finding was upon the theory -that in the transactions in question the bankrupt had been factor and the Schu-feldt Company had been consignor, and that the goods, until sold, and then the substituted accounts, belonged to the corisignor.
The trustee brings this, petition for review and assigns several errors, which can be grouped as follows:
(1) The dealings between the Schufeldt Company and the Monongahela Company contemplated the sale by the latter in Michigan, and as a wholesale liquor dealer, of the liquors furnished for that purpose by the former, and that, because the bankrupt at the date of the arrangement had no license under Michigan laws, to do this business, the contract was invalid, and neither party is entitled to any legal remedy.
(2) The transactions amounted to a doing of business within the state of Michigan by the Schufeldt Company, and it cannot ask any aid from the courts, because it had not qualified itself, under Michigan laws, to do business, as a foreign corporation, within that state.
1. The Liquor License.
The annual license of the Monongahela Company as a wholesale liquor dealer expired May 1, 1909. A contract between the parties! looking to the shipment and sale of liquors to and by the Monongahela Company, as the factor for the Schufeldt Company, was made April 24th, and under that contract goods were shipped, before May 1st, amounting to about $1,500. Payments on account were made in July and August amounting to about $1,200, and a large amount of goods was returned. It does not appear whether any of the goods shipped or received before May 1st entered in their original form or in the form of substituted accounts into the award made by the referee; and the proofs furnish no means of determining this question.
The original arrangement of April 24th did not extend to any particular amount, and the Schufeldt Company was under no obligation
I think the lack of license by the Monongahela Company until May 28th is immaterial for these reasons:
Second. Even if some shipments are involved, which were made before May 28th, it is even less probable that those sales by the consignee to its customers which remain unpaid for were made before that date; and I do not see how the absence of a license when the goods were shipped and received, although it might involve the immediate relations of the parties, would prevent the contemplated relations from coming into force as soon as the consignee was legally qualified to do the expected business. In the case of Niagara Falls Co. v. Wall, 98 Mich. 158, 57 N. W. 99, relied upon by counsel for the trustee, it appeared that the impediment preventing the consignee from lawfully doing the expected business continued until the contract had been rescinded by one party for a breach by the other; manifestly, a different situation from one where both parties continue after the temporary impediment is removed.
2. The Foreign Corporation.,
It is argued that this arrangement was a mere subterfuge for a warehouse and distributing sales agency, and should be treated accordingly. Whatever the rule as to an ordinary consignment for sale by a factor, it may very well be that if a nominal consignment account was in fact a subterfuge for such an agency, and was adopted to eváde a statute regulating or taxing doing' business within the state, the form might be overlooked, and the relation might bé treated according to its substance; but in this case there is no evidence tending to show any such subterfuge.
The trustee’s counsel .especially urges that the Wilson act (26 Stat. I,. 313 [U. S. -Comp. St. 1901, p. 31771) takes the liquor traffic outside the rule of the Butler Bros. Case, and he relies on the Delamater-South Dakota Case, 205 U. S. 93, 27 Sup. Ct. 447, 51 L. Ed. 724. I río not so understand the force of this Delamater Case. The substantial matter now involved is whether the dealings in question come within the established definition of interstate commerce. The Wilson act did not, in the least, modify this definition. It only yielded to the states the right to make police regulations which, except for such permission, would have remained within the exclusive power of Congress; and, since the Wilson act and prior to this controversy. Michigan had not legislated under such permission. Hence in April or July, 1909, the right of a foreign corporation to act in Michigan'as a part of interstate transactions was the same whether its business was in liquors or in rubber boots.
Perhaps no further accounting will be actually necessary because it may be apparent from the facts not now before me that there is a sufficient general balance in the account against the bankrupt to exhaust its interest in the unpaid accounts, in which case it will have no lien. 12 Am. & Eng. Encyc. (2d Ed.) 679; McGraft v. Rugee, 60 Wis. 406, 19 N. W. 530, 50 Am. Rep. 378.
8The assignment of accounts will be modified so as not to prejudice any existing lien, and, if necessary, an accounting will be had pursuant to the order filed herewith. It goes without saying that counsel will not go to the expense of such accounting, unless it seems that there is a substantial amount coming to the trustee, and that the Schu-feldt Company will make a full statement of the condition of the accounts transferred to it so that the trustee can determine whether to proceed formally.
There is no occasion for awarding any costs to either party.