242 F. 251 | 3rd Cir. | 1917
This dispute arises upon the following facts:
Shelly was a building contractor, and on November 3, 1913, undertook to erect a mill for $76,000 at Paterson, N. J., for E. & Z. Van Raalte, a corporation. Sections 4 and 9 of the contract are as follows:
“Sec. 4. Should the contractor at any time during the progress of said work refuse or neglect to supply a sufficiency of materials or workmen, the owner shall have power to provide materials and workmen, after three (3) days’ notice, in writing, being given, to finish the said work, and the expense shall be deducted from the amount of the contract”
“Sec. 9. All work and materials delivered on the premises to form part of the works are to be considered the property of the owner and are not to be removed without its consent; but the contractor shall have the right to remove all surplus materials after the completion of the work.”
The contract was duly recorded in the clerk’s office of the proper county. On November 29 Shelly applied for a payment on account, and on December 2 received the architect’s certificate for $3,000; this sum being paid him on December 5. Ten days later the petition in bankruptcy was filed, and at that time materials appraised at $1,787.-52 were on the ground, but not yet incorporated in the building. The receiver (who is now the trustee) claimed the property as the bankrupt’s, and a claim was also made by the Van Raalte Company on two grounds: (1) That the materials had already been paid for by the $3,000; and (2) that sections 4 and 9 gave them a right superior to the receiver’s or the trustee’s. By agreement the company used the property in completing the building, undertaking tO' pay its value to the trustee if the dispute should be decided in his favor. The total cost of the building to the company was more than $79,000. The referee and the District Court decided in favor of the company, the court’s opinion being reported in 235 Fed. 311, and in this proceeding
In this view of the mutual rights of the parties, it was held that no unlawful preference had been created by the advances that were made. There was no new and independent contract, but merely a recognition of the old contract and a furtherance and consummation of its intent. The court turned then to the contention of counsel for Spencer, the trustee, to the effect that, even although this contract might be good between the parties and their immediate representatives, it could not bind bona fide judgment creditors, and that, as these could have levied upon the materials without regard to the contract, the trustee had ac
If this course of reasoning be sound — and it is the law of this court, from which we have no present intention to depart — the Duplan Case rules the controversy in hand, and the amendment of 1910 has not given the trustee a right superior to the right of the Van Raalte Company. Under this amendment, the trustee takes the status of a lien •creditor as of the time the petition in bankruptcy was filed (Border Nat. Bk. v. Coupland [C. C. A. 5] 240 Fed. 355, - C. C. A. -), and such a lien would have been subordinate to the owner’s right. The essential features of sections 4 and 9 are the same as the features in the earlier decision, and the other facts do not materially differ. We need not discuss situations that are not before us; our decision is restricted to the facts presented on this record.
The order is affirmed.