231 F. 679 | 6th Cir. | 1916
This case involves two separate petitions for reclamation of certain agricultural machinery and implements sold by petitioner to the bankrupts, and which passed into the possession of their trustee in bankruptcy before the purchase price was paid. The property involved in the first petition was sold under written contract of October 20, 1911; that involved in the second petition under contract of December 21, 1912. As to the latter property the asserted right to reclaim depends solely upon whether, as claimed by petitioner, the original sale to the bankrupts was a conditional one, with title reserved in the seller until payment of the purchase price, or whether, as claimed by the trustee, it was an absolute sale, with attempt to reserve a lien by instrument required by the Michigan statute to be filed, and so invalid as against the trustee in bankruptcy for failure to so file.
Petitioner's claim under the first petition rests not only upon an alleged original retention of title under the sales contract of 1911, but also upon a so-called warehouse receipt given by bankrupts to petitioner on December 21, 1912, in connection with a settlement for goods sold to bankrupts under the 1911 contract. The referee denied both petitions to reclaim, and his order was affirmed by the District Court.
The dominant character of the two contracts of sale here in question must, as was the one involved in the Stoughton Wagon Company Case, be held to be that of absolute sale, with attempt to retain title for the purchase price, provided wc are to adhere to our decisions in the Westveer and Mowry Cases. This dominant character of absolute sale is shown not only by the absence of express provision (which was in fact found in the Stoughton contract) that the title to the goods sold and their proceeds shall remain in the seller until settlement is made, and by the provision that such goods and proceeds are to be held by the vendees as collateral security (although in trust for the vendor’s benefit and subject to its order) until the vendee’s indebtedness to the vendor .is paid; but by the further requirement that all goods be settled for at fixed times, whether already sold by the vendees or not, the fact that all past due accounts are made to draw interest, that the goods and their proceeds, which by paragraph 7 are to be surrendered to the vendor on demand, are not by such surrender to become its property except as they are to be credited to the vendees and “considered as payment on account” (the notes and accounts so turned over to be indorsed and guaranteed by the vendees), and that countermand by the vendees is forbidden except upon payment “of 20 per cent, of the net amount thereof as agreed liquidated damages.”
It follows that the second petition for reclamation was properly denied, as was the first petition so far as it rests upon an asserted reservation of title in petitioner under the sales contract of October 20, 1911.
As to the warehouse receipt: November 6, 1912, the bankrupts gave petitioner their unsecured note for $702, due October 1, 1913/ which covered binders and mowers then on hand and for which the bankrupts were entitled to be carried another season. This note drew interest after maturity. Settlement for the remaining indebtedness was not then had, apparently because bankrupts were not prepared to pay. December 21, 1912, petitioner took bankrupts’ note for $873.75, due six months from date, in payment for all indebtedness, exclusive of the binders and mowers referred to, which were represented by the earlier note for $702, and thus for all other goods, whether sold or unsold. This note for $873.75 drew interest from date, and was secured by “a bunch of farmers’ notes” amounting to $773.32 owned by the bankrupts (containing no title clause and turned over to petitioner without reference to whether or not they were taken for goods received by bankrupts under the Wood contracts) and by a mortgage on real estate worth from $250 to $300. On the same day bankrupts gave petitioner a so-called warehouse receipt, whose pertinent provisions (omitting the property described) are printed in the margin.
This receipt included not only the binders and mowers represented by the $702 note of November 7th, but also $260 worth of goods whose purchase price was included in the note for $873.75 given on the same December 21st. The receipt was never filed or recorded anywhere, and the goods covered by it remained continuously in the bankrupts’ possession, having been removed to another building only because of the sale of the building in which they had been contained. It was expressly agreed when the receipt was given that in case, and to the extent, of shipments on petitioner’s order, credit was to be given bankrupts on their paper. No shipments were ever made or directed, although bankruptcy did not occur until July, 1913.
It follows from these views that the judgment of the District Court should be affirmed with costs.
“This will certify that J. B. Fruchey, implement dealers of Beaverton, in the county of Gladwin and state of Michigan, have received of the Walter A. Wood Mowing & Reaping Machine Company . ------ as its property the following described goods: ......I agree to store without expense to said company the above property, safely and securely housed in building located at......
“I further agree to deliver, without expense to said company, all the above property f. o. b. cars Beaverton, Michigan, promptly upon request of said company or its authorized agents for shipment to such company to such point as may be directed.
“It is understood and agreed that the title to the above described property is now, and shall remain, vested in said company, and that such property shall, under no circumstances, be removed from the location described, or otherwise disposed of, without the express written consent of said company.’
Italics ours.