195 F. 414 | 6th Cir. | 1912
Phipps was adjudicated bankrupt on his voluntary petition June 24, 1910. May 26, 1909, Rode & Horn had contracted with Phipps for the purchase from the latter of 1,000,-000 feet of lumber, to be cut by the latter and piled by him at Hampton or Plato, Tenn., on land leased by Phipps to Rode & Horn for the purpose. Rode & Horn agreed to advance $7.50 per thousand feet on all lumber when so piled at the places named, and to ship all lumber as soon as delivered by Phipps to the railroad, completing payment therefor within 20 days from invoice, less a deduction of 2 per cent. Phipps further agreed “to secure the $7.50 paid by mortgage on the lumber.” This contract was not recorded under the statutes of Tennessee relating to chattel mortgages and liens. July 31, 1909, Phipps mortgaged to King certain timber and lumber to be cut therefrom (including the lumber to be cut for Rode & Horn) for $6,000, one half that amount being for money advanced, the other half for indorsements to be made by King for Phipps. This mortgage was duly filed and recorded. The mortgage expressly authorized Phipps to manufacture the timber into lumber, and to remove the same to Plato, and there pile it, the mortgage lien to attach to the, lumber so manufactured, removed, and piled, but with express authority to Phipps to incumber the lumber so piled to Rode & Horn for not exceeding $7.50 per thousand feet, to the extent of advancements made to Phipps on the particular lumber incumbered, such mortgage to be a first lien upon the lumber, Phipps, however, not to ship the same until he had deposited in a bank named, for King’s benefit, $2 for each thousand feet shipped. After the bankruptcy, Rode & Horn filed their petition with the referee, alleging, in substance, the delivery by Phipps to them of 283,000 feet of lumber at Hampton, Tenn., ready for shipment; that petitioners had not only advanced $7.50 per thousand upon this lumber, but had paid in full its purchase price, and that the lumber belonged to petitioners' and was in their possession ready for shipment, although the bankrupt had included it in his schedules as a part of his estate,
“Notice is hereby given that proof of s:iid deeds of trust and of the claims and rights of the beneficiaries thereunder is demanded, and each of said instruments and each of said claims hereby challenged.”
The petition contained this clause:
“As to what portion of the other funds or payments shall be held to be due petitioners must be determined by the court when the question of petitioners’ ownership of the lumber referred to and petitioners’ right to have returned to them the $900 payment shall be passed upon. A settlement of these matters will be necessary in order to establish the exact amount of pe-, titioners’ claim.”
King also presented his claim as a prior lien against the lumber by virtue of his mortgage. The referee found King had a first lien oil all the lumber in question, subject, however, to the lien in favor of Rode & Horn to the extent of $7.50 per thousand feet on the particular lumber on which they had so advanced; the latter having, as between themselves and King, a first lien to that extent, but that Rode & Horn stand on an equal footing with general creditors as respects said lien for advancements, held that Rode & Horn should account to King for $2 per thousand feet on 70,000 feet of lumber shipped from Hampton. He also held that the transaction in regard to the check for $917.52 was not fraudulent, that the check belongs
If, however, this is a bankruptcy proceeding, revision may be had in matter of law under section 24b, and the review may include the rank or priority of the claims (see Barnes v. Pampel, 192 Fed. 525, decided by this court January 3, 1912, and cases there cited). Plaintiff in error filed in the court below a petition entitled therein, but addressed to the judges of this court, praying for an appeal and writ of error and a “revision in matters of law and of fact.” The assignment of errors asked that the “same may be reviewed upon appeal and writ of error or review.” The bond is conditioned for prosecuting “appeal or petition for revision.” While in the later proceedings
As the failure to allow an appeal seems to have been purposeful on the part of the district judge, and seems to have been acquiesced in by the plaintiffs in error until after the expiration of the six months allowed by statute for taking appeal, the case will be treated as here on writ of error.
3. Rode & Horn’s Lien. We also think the question of the 'existence, as between King and Rode & Horn, of a lien to the extent of $7.50 per thousand- in favor of the latter, for advances actually made upon the specific lumber, both at Hampton and at Plato, is not open to question. Both the referee and the District Judge have so found, and neither King nor general creditors are complaining. We pass for the present the question whether this lien, as between Rode & Horn and general creditors, belonged to the former, or whether it passed 'to the latter, as was held by the court below.
“All mortgages and trusts of personalty shall be In writing, and proved and registered as hereinafter provided, to be valid against the creditors of the bargainor, or purchasers under him for value and without notice.” t
The District Judge was of opinion that, under this statute, “general creditors, although not armed with process, must be treated as ‘creditors of the bargainor’ yvithin the meaning of the statute, and that hence, even if the original contract be regarded in equity as equivalent to a mortgage, yet being unregistered, it confers upon Rode & Horn no priority over general creditors, and therefore is not a lien against the bankrupt’s estate.” If the construction so put upon the Tennessee statute is the correct one, the conclusion reached was right, and in determining this question we must adopt the construction as accepted by the highest court of Tennessee. Thompson v. Fairbanks, 196 U. S. 516, 25 Sup. Ct. 306, 49 L. Ed. 577; York Mfg. Co. v. Cassell, 201 U. S. 344, 26 Sup. Ct. 481, 50 L. Ed. 782; In re Doran (C. C. A. 6) 154 Fed. 467, 471, 83 C. C. A. 265; In re Huxoll, supra. Expressions are to be found in several of the Tennessee decisions to the general effect that an unregistered mortgage is void as to creditors. There are several decisions recognizing the invalidity, of an unregistered mortgage as against execution and attaching cred
“Any of said instruments not so proved, or acknowledged and registered, or noted lor registration, shall lie null and void as to existing or .subsequent creditor's of, or bona fide purchasers from, tbe makers without notice.”
Of the statute just quoted, it was there said:
“In Chester v. Greer, 5 Humph. 34, it is decided that creditor means a judgment creditor; Judge Turley saying: 'On the part of J. >1. & J. S. Green-way, who file tlieir bill in behalf of themselves and other creditors of ¡Samuel G. Chestin', it. is contended that, the deed of trust is void as to them for want of registration in proper time, these debts having been contracted before the registration of the deed. To this it is answered that though by the provisions of the 12th section of the Act of 1831, c. 90, all deeds and other instruments mentioned in the last section of the act and not registered as therein provided, are void as to existing or subsequent creditors, yet by this is meant judgment creditors, and not creditors in pais.’ In Birdwell v. Cain, 1 Cold. 303, Judge Wright says: ‘A purchase, if made or trust taken before the judgment existed, does not. by reason of the nonregistration of the deed become infected with turpitude: and, if it be afterwards registered before other creditors acquired liens upon the property embraced in the deed, as to them it takes effect from its date, and they cannot call in question its validity.’ Our law authorizing the bringing of suits by creditors without judgment, attacking conveyances as made to hinder and delay creditors, does not change or in any way affect the rule established by the cases cited, as the Jaw applies as well to registered as to unregistered deeds.”
Tu Insurance Co. v. Shoemaker, 95 Tenn. 72, 84, 31 S. W. 270, it was held that a deed conveying lands from husband to wife is valid
5. The Further Rights of Rode & Horn in the Plato Lumber. Their claim that they are entitled to this lumber must be overruled. So far as the rights of general creditors are concerned, it would seem enough to say that the lumber was never actually delivered by the bankrupt to Rode & Horn as their lumber. As to this, the District Judge said:
“There is no evidence of any prior delivery or of any conduct of the parties which would show their intention to make delivery and pass title to Rode & Horn at any time prior to its being loaded on the cars; and I find, no evidence whatever in the record of any delivery of this lumber which would operate to pass title to Rode & Horn under the executory contract of sale.”
The most that can be claimed is that they had paid the bankrupt an amount sufficient to cover this lumber, but this did not necessarily pass title to the lumber. As between King and Rode & Horn, we think it clear that the latter acquired no interest beyond the lien for $7.50 per thousand advanced. King’s mortgage was a present, subsisting security. It was duly filed. Rode & Horn had notice of it. It was not intended to release the mortgage lien except as to sales by Phipps actually completed. Except as to actual sales, King’s lien was merely opened to the extent of allowing Rode & Horn’s lien for advances to attach.
8. The Item of $634.38. In view of the referee’s finding of the absence of fraud, which finding was affirmed by the District Judge, this item was rightly disallowed.
For the reasons stated, the order of the District Court will be affirmed, except so far- as it gave to general creditors the benefit of the lien of $7.50 per thousand foj advances made by Rode & Horn upon the lumber in question, and except so far as it denied to Rode & Horn ownership of the Hampton lumber. As to these two excepted matters, the order of the District Court is reversed, and the cause remanded for further proceedings not inconsistent with this opinion.