158 F. 735 (3rd Cir. 1907), 21, Davis v. Crompton

Docket Nº:21.
Citation:158 F. 735
Party Name:DAVIS v. CROMPTON et al
Case Date:December 20, 1907
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 735

158 F. 735 (3rd Cir. 1907)




No. 21.

United States Court of Appeals, Third Circuit.

December 20, 1907

Page 736

S. W. Cooper, for petitioner.

Wm. A. Carr, for appellees.

Before DALLAS, GRAY, and BUFFINGTON, Circuit Judges.

GRAY, Circuit Judge.

This case comes before us upon the petition of the trustee in bankruptcy of the Arkonia Fabric Manufacturing Company, to review, in matter of law, an order of the District Court for the Eastern District of Pennsylvania, sitting in bankruptcy, affirming certain findings of a referee in bankruptcy. The pertinent facts, as disclosed in the said petition, and in the record accompanying it, are as follows:

On September 7, 1906, a petition in involuntary bankruptcy was filed against the Arkonia Fabric Manufacturing Company, and on September 12th following, the petitioner was appointed receiver of the said company. On October 5, 1906, the said company was adjudged a bankrupt in the court below, and on the 3d of November, 1906, the petitioner was duly appointed trustee of the estate of the said bankrupt. Among other property which came into his hands, first as receiver and afterwards as trustee, were 10 looms claimed by the Crompton-Thayer Loom Company, a partnership trading under that name, and the appellee in the case before us. The claimants filed a petition in the court below, setting forth that the said looms belonged to them, and thereafter, under order of the court, upon entering into a bond in the sum of $4,000, conditioned that they would prosecute their claims before the said District Court, or referee, the said looms were delivered into their possession. The claimants thereupon submitted the question of their title to the said

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looms to David W. Amram, Esq., referee in bankruptcy, by petition, and answers were filed by the said trustee. After hearing, the referee decided in favor of the title of the claimants to the said property and against the right of the trustee in bankruptcy to hold the same. The said trustee thereupon filed a petition, asserting that the said order and judgment of the said referee was erroneous, and praying that the issue might be certified to the District Judge for review. The learned District Judge sustained the judgment of the referee in a per curiam opinion, in order, as stated by said judge, that the matter might be speedily brought before this court for a determination of the rights of the parties. The case before the referee is stated in the opening paragraph of his opinion, as follows:

'The issues in this proceeding are raised by petition of the Crompton-Thayer Loom Co., claiming title to ten looms used by the bankrupt at its mill in Philadelphia, and answers of trustee denying claimant's title. These looms were found in possession of the bankrupt at the time of bankruptcy and came into the hands of the receiver. The claimant avers that the looms were delivered by it to the bankrupt as a bailment under a contract dated April 9, 1906, which contract is in form a so-called 'installment lease' or 'bailment lease.' The trustee in bankruptcy contends, on the other hand, that the lease of April 9, 1906, does not contain the entire contract between the parties, but that the contract is to be found in a series of letters which passed between the claimant and the bankrupt, beginning January 24, 1906, and that the lease of April 9th was merely executed in accordance with the contract established by this correspondence and for the purpose of carrying out the terms thereof, and that the contract is one of conditional sale and title to the looms is now in the trustee.'

After a careful review of the evidence, which he says was 'practically entirely documentary, consisting of a file of correspondence and the book entries of the claimant,' the referee found that the real character of the contract between the claimants and the bankrupt, was not determined by the existence of the so-called installment or bailment lease, but by the real intent of the parties, as evidenced by the documentary evidence referred to, and that, under the law of Pennsylvania, the contract was one of conditional sale. Nevertheless, the referee was of opinion, and so decided that as the trustee in bankruptcy stood precisely in the shoes of the bankrupt with regard to the title to this property, and as the bankrupt had not complied with the conditions upon which alone the sale was to be complete and the title of the vendor divested, the same remained in the vendor, and was paramount to that of the trustee in bankruptcy, unless the latter complied with the conditions imposed by the contract of sale. It is admitted that, if this transaction were really a bailment by way of lease, the bankrupt, as lessee, at and before the time of the bankruptcy, would have had no title to the goods in question, except its possessory title under the lease; on the other hand, the title of the lessor remained, as it originally was, good against all the world, without exceptions. The claimants, therefore, sought to maintain that the contract with the bankrupt was such a lease. Though the court below decided that the transaction in question was one of conditional sale, it also decided in favor of claimants, that under the circumstances the

Page 738

title of the vendor was good as against the trustee in bankruptcy. The claimants, therefore, were not in a situation to ask for a review. Counsel for the appellant on this ground objected that the appellees had no right in this court to contest the finding of the court below, that the contract between the parties was not a bailment. We are of opinion, however, that in maintaining the decision of the referee, as affirmed by the District Court, the appellees may rely upon any ground disclosed by the record upon which that decision might be thought to be maintainable, even though it be not the ground upon which that decision was made. We agree, however, with the conclusion, that the transaction in this case was one of conditional sale, and not of bailment. The view we take of the rights of the parties to the issue before us, renders it unnecessary that we should discuss the grounds of our agreement with this conclusion.

That in a sale of personal property there can be a delivery, and yet the vendor retain title until the purchase price be paid, or other condition performed by the vendee, is a generally accepted doctrine in the jurisprudence of this country and of England. In many of our states, it is provided by statute that such sales, though valid between the vendor and vendee, are not so as to creditors, or as to bona fide purchasers for value...

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