117 F. 746 | W.D. Mo. | 1902
This cause has been certified to the court by John Montgomer)L Jr., referee in bankruptcy, at the instance of the Missouri Moline Plow Company, petitioner, for review. The controversy grows out of the following facts, substantially:
Some time prior to the adjudication in bankruptcy against Morris Fraizer, the Missouri Moline Plow Company, under a written agreement with said Fraizer, of date December 14, 1901, sold and delivered to said Fraizer a list of goods, consisting of certain agricultural implements. The said Fraizer, upon the receipt of the goods, or upon monthly balances, at his option, was to execute notes to the said company for the amount to be paid for the goods. The contract contained the following provisions:
*747 “The second party [that is, Fraizer] agrees that the title to and ownership of the implements which may be shipped as hereinafter provided shall • remain in the party of the first part [the Moline Company]; and their proceeds, in case of sale, shall be the property of the Missouri Moline Plow •Company, held subject to their order, until full payment shall have been made for said goods or said notes, and until any judgment rendered therefor •or thereon is paid in full. If the purchaser under this contract sells out, fails, or becomes insolvent, or any member of the purchaser’s firm fails, •sells out, or becomes insolvent, or dies, all accounts and notes for goods bought under this contract, including renewal notes, in whose hands soever •said notes shall be, shall then become due and payable, whether the notes be given in payment for the goods or accounts, or collateral security thereto.”
At the time of the adjudication in bankruptcy, the bankrupt held •certain goods sold and shipped to him under the foregoing agreement, .and the same were taken possession of by the trustee in bankruptcy. Said Missouri Moline Plow Company thereafter presented its petition to the referee in bankruptcy for an order on the trustee to turn ■over and deliver said goods to the petitioner. The contract aforesaid was neither acknowledged nor recorded in the county where Morris Fraizer, the vendee, resided, and where the goods were delivered. On this statement of facts, the referee denied the petition, .and the petitioner asks to have this ruling reviewed.
Section 3412 of the Revised Statutes of Missouri, 1899* declares that:
“In all cases where any personal property shall be sold to any person, to be paid for in whole or in part in installments, or shall be leased, rented, hired or delivered to another on condition that the same shall belong to the person purchasing, leasing, renting, hiring or receiving the same whenever •the amount paid shall be a certain sum, or the value of such property, the -title to the same to remain to the vendor, lessor, renter, hirer or deliverer, of ■the same, until such sum, or the value of such property, or any part thereof, •shall have been paid, such condition, in regard to the title so remaining until such payment, shall be void as to all subsequent purchasers in good faith, and creditors, unless such condition shall be evidenced by writing executed, acknowledged and recorded as provided in cases of mortgages of •personal property.”
The state supreme court, in Collins v. Wilhoit, 108 Mo. 451, 18 S. W. 839, holds that the term “creditors,” as employed in the foregoing statute, applies to all creditors of the vendee, whether prior or subsequent. The case at bar is therefore ruled by the decision of •the court of appeals of this circuit in Re Pekin Plow Co., 112 Fed. 308, 50 C. C. A. 257, in which it is held that although the term “creditor,” employed in a correlative statute, means a creditor “armed with légal process” (that is, one who has taken legal steps to enforce his right as a creditor), yet all creditors of an involuntary bankrupt, .after adjudication in bankruptcy and the presentation of their claims, become creditors, within the meaning of the statute aforesaid, and the various provisions of the bankrupt act; that a trustee chosen under the bankrupt act of 1898 “becomes the representative of all the creditors, and is possessed of their rights to attack fraudulent conveyances”; and that he becomes vested by operation of law of all the property which prior to the filing of the petition in bankruptcy the insolvent debtor could by any means have transferred, “or which ¡might have been levied upon and sold under judicial process against
Other reasons occur to my mind in support of the ruling of the referee, but all argument is concluded by the ruling of the court of appeals in the Pekin Plow Co. Case, supra.
It results that the exceptions to the referee’s decision are overruled, and his findings and conclusions are affirmed.
On Rehearing.
August 27, 1902.
In the opinion heretofore filed, on exceptions by the intervener, the Moline Plow Company, overruling the exceptions to the referee’s action denying the claim of the intervener, the court followed the ruling of the court of appeals of this circuit in Re Pekin Plow Co., 50 C. C. A. 257, 112 Fed. 308. Petitioner has filed a motion for rehearing, directing the attention of the court to the fact that the case ruled by the court of appeals was a proceeding in involuntary bankruptcy; whereas the case at bar is a voluntary proceeding. The contention is that the ruling of the court of appeals rested upon the proposition that a petition in involuntary bankruptcy.is an adversary proceeding taken by the creditor against the bankrupt, and that the institution of such adversary action places the creditors in the position of “using the courts of law and their process for the collection of their debts,” within the meaning of the term “creditors,” employed in section- 3412, Rev. St. Mo. 1899, quoted in the former opinion herein. It may be conceded that, as a general rule, courts are not concluded by a decision beyond the particular facts and principles of law arising therein. But it must likewise be conceded that, in applying the ruling of a court in a given case, its reasons assigned, and the underlying principles of law asserted, should guide in carrying them into another cause,—especially so in construing the same statute in pari materia. Why should there be any difference in respect of a conditional sale, in effect fraudulent against creditors under the Missouri statute, when the bankrupt is declared to be'bankrupt in a voluntary or involuntary proceeding? 'In both instances the bankrupt estate becomes amenable to the operation of the bankrupt act. The postulate announced by the court in Mueller v. Nugent, 184 U. S. 14, 22 Sup. Ct. 269, 46 L. Ed. 405, “that the filing of a petition is a caveat to all the world, and in effect an attachment and injunction,” in the very necessities of the whole scheme and spirit of the bankrupt act, must apply as well to a voluntary as an involuntary proceeding. The moment the petition is filed the proceeding is in rem. It, in legal effect, sequesters all of his property interests for the benefit of all of his creditors, pari passu, as if seized under attachment or a writ of execution. His whole estate passes into custodia
“These provisions evince an unquestionable intent on the part of congress to make all creditors of the bankrupt parties to the proceeding, when once instituted. The effect of the institution of such proceeding is to forthwith sequester and appropriate all the property of the bankrupt to the payment of his debts pro rata and equally.”
The trustee in bankruptcy acquires the same property rights and interests and privileges, and has the same duties and obligations imposed upon him, under a voluntary as under an involuntary proceeding. He acquires no less and no greater rights and interests than the trustee in an involuntary proceeding, under section 70a, “to all the property which prior to the filing of the petition he [the bankrupt] could by any means have transferred, or which might have been levied upon and sold under judicial process against him.” When Judge Adams, speaking for the court of appeals in Re Pekin Plow Co., said, “The trustee chosen under the act of 1898 becomes the representative of all creditors, and is possessed of their right to attack fraudulent conveyances,” etc., the language, by its natural force, applies as well to a trustee in a voluntary as in an involuntary proceeding. It is also observable in the foregoing case that the court attached much importance to subdivision “g” of section 59 of the bankrupt act, which declares that “a voluntary or involuntary petition shall not be dismissed by the petitioner or petitioners or for want of prosecution or by consent of parties until after notice to the creditors,” and also subdivision “a” of section 67, which provides that “claims which for want of record or for other reasons would not have been valid liens as against the claims of the creditors of the bankrupt shall not be liens against his estate.” This provision first appears in the bankrupt act of 1898. What was the claim of the creditors of the bankrupt as against the property sold and delivered to the bankrupt by the vendor under an instrument of writing unacknowledged and unrecorded? Admittedly, it was the right to institute legal proceedings, and, under writs, to seize such property and appropriate it to the payment of their debts. As against creditors, both prior and subsequent, who sought the aid of the courts and judicial process, such vendor’s claim was void. The moment of the institution of the proceedings in bankruptcy, such creditors, as already stated, by operation of law, became adversary parties; and the clear expression of the act is that the claim of such vendor shall thereafter be no more a lien against the bankrupt’s estate than he
The logic of the ruling of the court of appeals in Re Pekin Plow Co., in my judgment, sustains the conclusion of the referee that it should apply to the instance of a voluntary as well as an involuntary bankrupt. Therefore the motion for a rehearing is denied.