141 F. 802 (5th Cir. 1905), 1,459, Southern Pine Co. v. Savannah Trust Co.

Docket Nº:1,459.
Citation:141 F. 802
Case Date:December 12, 1905
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 802

141 F. 802 (5th Cir. 1905)




No. 1,459.

United States Court of Appeals, Fifth Circuit.

December 12, 1905

Wm. E. Kay and Wm. W. Gordon, Jr., for appellants.

T. M. Cunningham, Jr., for appellee.

Page 803

The referee in bankruptcy, before whom this cause was primarily heard, filed the following statement and findings of fact:

'On June 27, 1904, the Savannah Trust Company, trustee in bankruptcy of the Georgia Car & Manufacturing Company, made application to this court for leave to sell 50 box cars, alleged to be the property of the bankrupt estate. On the same day the Southern Pine Company of Georgia and John Schwarz, sheriff of the superior court of Chatham county, Ga., interposed objections to the sale of the cars, reciting that a certain bail trover action had been filed by them against the car company, prior to the bankruptcy proceedings, in the superior court of Chatham county, Ga., by virtue of which these cars and the siding, lining, and roofing contained therein had already been levied on under the proceedings in the superior court, and alleging that the title to the boards was in the pine company, and that the possession was in the superior court through its sheriff, of which it had been summarily deprived by the United States marshal under receivership proceedings in the present bankruptcy case, and praying that the property be restored to the custody of the superior court, or that the sale be suspended until the issue in the superior court be determined. The trustee filed its answer to these objections. The answer, in brief, denied the legality of the levy by the sheriff of the state court, it being within four months prior to the bankruptcy proceedings, by reason of which it became invalidated; alleged that the marshal took possession peaceably and without opposition by any one at the time, and delivered it to the receiver, and he in turn to the trustee; denied the claim of title by the pine company in the lumber; alleged that its claim amounted in value to only $1,136.06 and that it would be inequitable to delay the sale when sufficient of the proceeds could be held up to protect the claim, which can be litigated in the bankruptcy court; and, lastly, denied that the claim to the lumber and cars, or the proceeds of their sale, is preferential or has any priority. A hearing was had on July 8, 1904, at which evidence was taken and the objections to the jurisdiction, as well as the merits of the controversy, were argued; but afterwards, by a stipulation between counsel, it was agreed that the objections to the jurisdiction would be withdrawn, and that the claim case be determined by this court, proceeding as an intervention, using the testimony already taken, and any additional evidence which might be offered. It appears from the

Page 804

evidence that the principal office of the pine company was located at Savannah, Ga., and that one of its mills was located at Nicholls, Ga. The business of the pine company consisted in manufacturing lumber into boards at Nicholls, and selling them through its office at Savannah. It had special facilities for getting out the class of lumber required for the siding, lining, and roofing of cars. The car company was located near the junction of the Atlantic, Coast Line Railway with the Ogeechee Road, about one mile from Savannah, and, as its name indicates, was engaged in manufacturing cars.

'Mr. Foster, president of the car company, and Mr. Stillwell, secretary and treasurer of the appellant, entered into certain business arrangements respecting the furnishing of boards. The boards were to be shipped to the pine company at Savannah; but before the boards should come into the possession of the car company the pine company was to be paid cash, and Mr. Foster was to see that this be done. Upon the first shipment from Nicholls, Ga., to the pine company at Savannah, Ga., the latter was paid cash before the boards were removed from its yards. Later Mr. Foster complained about mixing his books, because of the difference between the mill's checking and his checking, and asked Mr. Stillwell to allow him (Mr. Foster) to check the cars up, and said that if this was done he would act as trustee for the pine company, and he would guaranty that the boards would not leave his possession until the cash was paid to the pine company at its office. Mr. Stillwell consented, and the lumber was sent on this basis and delivered to Mr. Foster. The principles and terms of this agreement as to a modus vivendi, so entered into and acted upon, were never altered or expressly changed between them subsequently. Later on Mr. Stillwell was called out of the city on business. During his absence, and that also of Mr. Foster, the boards now in controversy were delivered without prepayment of cash being made by the car company, and, owing to a press of business, it was overlooked by the young man in the pine company's office, whose duty it was, presumably, to have required payment. In the meanwhile, the boards were taken by the car company and used up in the construction of 50 box cars. Mr. Stillwell testifies that this was the true nature of the transaction, and that on his return he had a conversation with Mr. Foster, in which he taxed the latter with having received the boards as trustee for the pine company, and with wrongfully permitting them to get into the possession of the car company. In reply, Mr. Foster testified that he did not remember the exact language of the conversation. He did not deny Mr. Stillwell's version of it, but he said that Mr. Stillwell put the word 'trustee' in his mouth. Notwithstanding the testimony of Mr. Foster, which denies this view of their relations in other parts of his testimony, especially any undertaking to be personally liable, we think that a fair and reasonable conclusion from the entire testimony is that Mr. Stillwell was correct in his statement of the transaction. On the whole, we find that the arrangement was that the goods were to be sold for cash, to be paid for at or before the delivery, and that the prepayment of the purchase price was a condition precedent of the sale. The delivery was a qualified delivery, merely for the purpose of checking up the lumber. A bona fide delivery was wanting in this case.'

The hearing before the referee resulted in a judgment in favor of the appellant, the Southern Pine Company, against the appellee, as trustee in bankruptcy of the Georgia Car & Manufacturing Company, for the sum of $1,136.08, representing the value of the boards sold by the Southern Pine Company to the Car Company, with interest thereon at the rate of 7 per cent. per annum from December 18, 1903, the same to be paid out of the proceeds arising from the sale of the 50 box cars. Upon review of the proceedings, the District Court set aside the order of the referee; and from the order thus made the Southern Pine Company has appealed to this court.

Page 805

Before PARDEE and SHELBY, Circuit Judges, and MAXEY, District Judge.

MAXEY, District Judge, after stating the facts as above, .

In the consideration of this case, application of legal principles will be made to the facts as found and reported by the referee. The record discloses conflicts in the testimony, particularly as to the witnesses Stillwell and Foster, the chief actors in the contract to sell the boards which were used by the Georgia Car & Manufacturing Company in the construction of its cars. Upon the trial of the issues before him the referee had the opportunity of seeing and hearing the witnesses, and he was therefore in a better position to judge of their credibility than are courts, which have before them nothing but the printed record. The established rule in such cases, from which we see no reason for departing in the present instance, seems to be that the findings of fact, dependent upon conflicting testimony, by a judge, master, or a referee, who sees and hears the witnesses testify, have every reasonable presumption in their favor, and should not be set aside or modified, unless it clearly appears that there was error or mistake on his part. Tilghman v. Proctor, 125 U.S. 136, 8 Sup.Ct. 884, 31 L.Ed. 664; Camden v. Stuart, 144 U.S. 104, 12 Sup.Ct. 585, 36 L.Ed. 363; Callaghan v. Myers, 128 U.S. 617, 9 Sup.Ct. 177, 32 L.Ed. 547; In re West (D.C.) 116 F. 767; In re Stout (D.C.) 109 F. 794; In re Lafleche (D.C.) 109 F. 307; In re Waxelbaum (D.C.) 101 F. 228; In re Rider (D.C.) 96 F. 811.

The principal question in the present case is whether the appellant is in a position to assert title to the boards, as against the appellee, the trustee in bankruptcy of the car company. To determine this question resort must be had to the contract of the parties, and effect should be given to the intention therein expressed, unless such intention should be found to be in contravention of the statute law of Georgia. It appears from the record that the appellant sold or contracted to sell to the car company certain boards, to be used in the manufacture of cars. The boards were sold for cash, and payment was to be made at or before their delivery. Upon the first shipment cash was paid before the boards were removed from the yards of the appellant. Subsequently, as a matter of convenience to Foster in checking up the cars, and upon his assurance that the boards would not be delivered to the car company until payment was made, delivery to him was permitted by Stillwell for the purpose suggested; and during the absence of Stillwell and Foster, and through oversight on the part of an employe' in the office of the appellant, the boards went into the hands of the car company without prepayment of cash, and were used by it in the construction of the cars. It is evident that, upon entering into the arrangement for the sale and purchase of the boards, the parties contemplated purely a cash...

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