Thad Bryant in the Matter of E. M. Newton & Company, Bankrupts, Appt., v. Swofford Bros. Dry Goods Company

• Decision Date: 24 May 1909
• Docket Number: No. 172,172
• Citation: 214 U.S. 279,29 S.Ct. 614,53 L.Ed. 997
• Parties: THAD A. BRYANT, Trustee in the Matter of E. M. Newton & Company, Bankrupts, Appt., v. SWOFFORD BROS. DRY GOODS COMPANY
• Court: U.S. Supreme Court

214 U.S. 279

29 S.Ct. 614

53 L.Ed. 997

THAD A. BRYANT, Trustee in the Matter of E. M. Newton & Company, Bankrupts, Appt.,

v SWOFFORD BROS. DRY GOODS COMPANY.

No. 172.

Argued April 22, 23, 1909.

Decided May 24, 1909.

The record in this appeal, transmitted to this court from the circuit court of appeals, contains the following findings of fact and conclusions of law:

1. On July 20, 1904, Ernest M. Newton and John F. Newton, partners as E. M. Newton & Company, merchants at wholesale and retail in Arkansas, and Swofford Bros. Dry Goods Company, a corporation, of Kansas City, Missouri, engaged in the wholesale dry goods business, entered into a written contract as follows:

Know all men by these presents: That Mr. E. M. Newton & Company of New Lewisville, Lafayette county, Arkansas, a copartnership composed of E. M. Newton and J. F. Newton, party of the first part, had this day purchased from Swofford Bros. Dry Goods Company and said Swofford Bros. Dry Goods Company, party of the second part, has sold to said E. M. Newton & Company, certain goods upon the following expressed conditions:

1. Said goods shall be selected by said first party from sample or from stock of said second party at Kansas City, Missouri, and same shall be shipped to said first party upon their request to New Lewisville, Arkansas, from which place they shall not be removed without the written consent of said second party, save and except that said first party shall have the right to sell said goods in the ordinary course of business, but not otherwise.

2. Said second party shall prepare at time of shipment full and complete invoices of the goods so sold and selected, and shall deliver copies of said invoices by mail or otherwise to said first party. Such invoices shall consist of itemized list of the articles so sold and shipped, with the price and value of each article, and shall show also the credit terms upon which the same are sold, and the rate of discount, if any, which is to be allowed upon payment of the purchase price in cash upon delivery or at an earlier date than that specified in said credit terms.

3. The title to and right to immediate possession of all the goods so sold and shipped by said Swofford Bros. Dry Goods Company and of the proceeds derived from the sale of the same by the first party, whether in cash or note or book account, shall be vested and remain in said Swofford Bros. Dry Goods Company until the full purchase price and the agreed value of the same shall be paid by said E. M. Newton & Company to said Swofford Bros. Dry Goods Company in cash; and any and all notes, checks, and accepted drafts shall not be considered as payment, but merely as evidence of indebtedness. And upon taking possession of any notes and book accounts derived by said first party from the sale of said goods or any part thereof, said Swofford Bros. Dry Goods Company shall have the right to collect the same, either in its name or in the name of E. M. Newton & Company, by suit or otherwise, and in case of disputed notes and accounts against persons of doubtful solvency, said second party may compromise and settle the same, or may extend the time of payment thereof in such manner and upon such terms as may to it seem advantageous, and any new notes taken thereafter, whether in the name of Mr. E. M. Newton & Company, or in the name of said Swofford Bros. Dry Goods Company, shall be held and considered in all respects the same as the original evidence of indebtedness.

4. This contract and the terms thereof shall apply to all future orders given by the E. M. Newton & Company, and to all future sales and shipments made to them by said Swofford Bros. Dry Goods Company; so long as any part or portion of the purchase price of the goods sold and delivered hereunder shall remain unpaid, said Swofford Bros. Dry Goods Company shall have the right to terminate this contract at any time, and said E. M. Newton & Company may terminate the same at any time by paying in full in cash whatever balance of the purchase price of the goods purchased and shipped shall then remain unpaid. Delivery of the goods, properly packed and marked, to a common carrier at Kansas City, Missouri, consigned to the first party, as above specified, shall be deemed and considered a full and complete delivery thereof by said second party, and all freight and transportation charges shall be paid by said consignees. The acceptance of goods subsequently sold and shipped by the first party, and the placing of the same in their stores and warehouses at New Lewisville, Arkansas, or elsewhere, shall be held and considered sufficient to bring such goods within and under the terms hereof, shall be mentioned or referred to in the order so given or in the invoices given and delivered with each invoice.

Said first party shall keep all goods purchased hereunder properly insured at their expense for the benefit of second party; but the loss or destruction of such goods by fire or otherwise shall not cancel the indebtedness thereof, but said first party shall still remain liable to second party for any part of the purchase price remaining unpaid.

In witness whereof the parties above named have hereunto placed their hands and seals in duplicate this 20th day of July, 1905.

E. M. Newton & Co.,

Swofford Bros. Dry Goods Co.,

Signed by Wm. Moore, Sec.

2. The contract was not filed or recorded.

3. Pursuant to the contract, and prior to June 30, 1905, the dry goods company delivered to the Newtons goods of the value of $15,369.57. The latter paid on account thereof the sum of $2,059.01. On June 30, 1905, the unpaid balance was $13,310.56.

4. The goods delivered under the contract were placed by the Newtons in their stock with other goods obtained from other parties, but they were of such character and contained such marks as rendered them capable of being identified and separated. It was contemplated by the parties that the Newtons might sell the goods so delivered in the usual course of their business. The Newtons did not keep separate accounts of their resales of the goods, nor did the dry goods company require them to make reports thereof.

5. On June 30, 1905, when the Newtons were insolvent and the dry goods company knew it, they surrendered to the dry goods company, as belonging to it under the provisions of the contract, goods of the value of $5,337.21, notes to the amount of $1,684.32, and customers' accounts to the amount of $8,277.04. The goods were so surrendered by the Newtons as being the unsold part of those delivered under the contract, and the notes and accounts as representing proceeds of their sales of like goods. Actual possession was taken by the dry goods company.

6. In fact, the goods surrendered to the goods company were, with slight exception, goods that had been delivered under the contract; but only about one half in amount of the notes and accounts surrendered represented proceeds of other goods delivered under the contract.

7. On July 3, 1905, three days after the surrender of the property as above mentioned, the Newtons filed their voluntary petition in bankruptcy, were adjudged bankrupts, and Thad. A. Bryant was appointed receiver. In one of the schedules attached to the verified petition in bankruptcy the dry goods company was listed as a secured creditor, with a statement of the facts upon which its rights were based, and recitals of the surrender to it of the goods, notes, and accounts, that the notes and accounts were proceeds of the goods furnished by the dry goods company under the contract and resold by the Newtons to their customers, and that the goods, notes, and accounts were then in possession of that company.

8. After the appointment of the receiver in the bankruptcy proceeding he demanded from the dry goods company possession of the goods, notes, and accounts mentioned. The demand was refused, but afterwards the dry...