In re Canfield

• Decision Date: 14 February 1912
• Docket Number: 134.
• Citation: 193 F. 934
• Parties: In re CANFIELD.
• Court: U.S. Court of Appeals — Second Circuit

193 F. 934

In re CANFIELD.

No. 134.

United States Court of Appeals, Second Circuit.

February 14, 1912

On appeal from an order of the District Court in bankruptcy confirming a report of the special master and ordering that William H. Burden within five days reassign certain accounts to Clarence S. Houghton, receiver in bankruptcy.

The following agreement was entered into between the bankrupt and William H. Burden, the appellant:

'This agreement, made this 14th day of December, 1910, between Abram L. Canfield, of the borough of Manhattan, city of New York, party of the first part, and William H. Burden, of the same place, party of the second part, witnesseth:

'That in consideration of the premises and the mutual covenants and agreements hereinafter mentioned, and of the sum of one dollar paid by the party of the second part to the party of the first part at and before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged the parties hereto have agreed as follows, viz.:

'I.-- The party of the first part shall assign and transfer to the party of the second part approved accounts due from reputable debtors, and the party of the second part shall pay therefor a sum equal to seventy-five per cent. of the total amount thereof, not to exceed over ten thousand dollars, unless he shall elect to advance a larger sum.

'II.-- The said accounts shall be for goods sold and delivered in good faith to the respective persons against whom the accounts exist, and in all cases, the said goods shall have been accepted by such persons.

'III.-- All accounts assigned under this agreement shall result from the sale of goods shipped either from the place of business of the party of the first part in the city of New York, or from one of the following factories:'

(Here follows a list of 10 companies.)

'IV.-- Where the goods shall be shipped from the place of business of the party of the first part, the original shipping receipts covering the shipment referred to in the account shall be submitted to the party of the second part for his inspection at the time of the assignment of the account, and where the goods shall be shipped from one of the factories aforesaid, the invoice sent by the said factory to the party of the first part shall be submitted in like manner.

'V.-- The party of the first part shall act as the agent of the party of the second part in collecting the said accounts, but as remittances shall be received therefor, the checks and drafts shall be immediately delivered to the party of the second part, so indorsed as to make them payable to him.

'VI.-- The party of the first part hereby guarantees that each account so to be assigned will be paid within ten days after the same shall become due, and if any such account shall not be so paid, the party of the first part shall pay to the party of the second part the full amount thereof, after ten days' notice in writing, and thereupon the party of the second part shall reassign the same to the party of the first part; and if the party of the first part shall fail to so pay the amount of any such unpaid account, the party of the second part, at his election, may revoke the agency of the party of the first part to collect any of said accounts then uncollected.

'VII.-- The party of the second part shall be entitled to compensation for the labor and services to be performed, and time to be expended, by him in making the examinations required by the terms of the bond executed by the Fidelity & Casualty Company of New York, and delivered simultaneously herewith, which compensation is to be measured by computing one per cent. per month upon whatever part of the advance shall remain uncollected on the said accounts, and for the period that the same shall remain uncollected.

'VIII.-- Until all said accounts shall have been collected or reassigned, the party of the second part shall have the right to examine at all reasonable times, the books of accounts and vouchers of the party of the first part, which examination may be made either personally or by his duly authorized agent.

'IX.-- When the amount collected on said accounts and turned over to the party of the second part shall amount to the total sum advanced thereon, with interest at the rate of six per cent. per annum, and the party of the second part shall have received out of said collections his compensation for services as above mentioned, and all disbursements made or liabilities incurred, for exchange, or for attorney's fees, or other expenses, in and about the collection of said accounts, he shall reassign to the party of the first part all accounts then uncollected.

'X.-- Until the termination of this contract by mutual consent, all further purchasers of accounts by the party of the second part from the party of the first part shall be subject to the terms hereof.'

Canfield paid the premium for the bond conditioned to indemnify Burden against loss arising from the unfaithfulness of Canfield in collecting assigned accounts. The services to be performed by Burden were to require Canfield to deliver a statement of the due date of each assigned account and, if payment were not made within 20 days, to himself make demand upon the debtor for the amount due; to require a responsible employe of Canfield to certify that each account assigned represented a bona fide and actual shipment in pursuance thereof; to make a monthly examination of Canfield's books, accounts and vouchers and a comparison between all unpaid accounts on his own list and such accounts on Canfield's books.

On January 18, 1911, a petition in bankruptcy was filed against Canfield and a receiver appointed. On that date he owed Burden $10,512.72.

The receiver proceeded to collect the accounts assigned to Burden, whereupon Burden instituted reclamation proceedings in the District Court praying that the...