In re Richheimer

• Decision Date: 23 January 1915
• Docket Number: 2123.,2121
• Citation: 221 F. 16
• Parties: In re RICHHEIMER. [1] v. CENTRAL TRUST CO. OF ILLINOIS. ARBUTHNOT
• Court: U.S. Court of Appeals — Seventh Circuit

221 F. 16

In re RICHHEIMER. ^[1]

ARBUTHNOT v. CENTRAL TRUST CO. OF ILLINOIS.

Nos. 2121, 2123.

United States Court of Appeals, Seventh Circuit.

January 23, 1915

'The bankrupt was a coffee merchant in Chicago. Dennistoun, Cross & Co., Arbuthnot, Latham & Co., Arthur H. Brandt & Co. London bankers (and the latter designation will, for brevity be given them), have petitioned the court for an adjudication of their title, ownership, and right to the possession of certain coffee imported by the bankrupt, and alleged to have come to the bankrupt estate herein. The Continental &amp Commercial National Bank of Chicago and other banks (which for brevity will be designated as the American bankers) have filed what have been treated as cross-petitions, seeking to defeat the claims of the London bankers, and also to establish their own title to the coffee, by virtue of the transactions to be hereafter detailed. The trustee in bankruptcy makes no claim to the property, averring, in its answers to the London bankers' petition, its concurrence in the claims asserted by the American bankers. The facts are not seriously in dispute. There are some differences in the agreements entered into by the London bankers in the transactions upon which their claims rest, but not such as alter the legal aspect of their respective situations. The coffee in question was purchased and was the subject of importation by the bankrupt, from Brazilian growers or dealers. The several purchases were effected through the medium of brokers-- the transactions being evidenced by brokers' notes executed and delivered by the brokers on behalf of the Brazilian growers, and delivered to the bankrupt or his agents; such notes evidencing, according to the custom of the trade, the details of the purchase, such as quantity, quality, description of, and the price to be paid for the coffee, and calling for approved credit to be furnished upon the sales. The mode of procedure was thereupon substantially this:

'Application for credit was made to the representatives of the petitioning London bankers. There was thereupon issued to the bankrupt and in favor of the Brazilian vendors, a letter expressive of the terms of credit. For the purpose of indicating more clearly the situation, a copy of one of such letters issued by the petitioning bankers, Dennistoun, Cross & Co., is set forth:

"(A)

''No. W/5460 for . . . 1065-0-0.

"Messrs. Nossack & Co., Santos-- Sir: We hereby open a credit in your favor for one thousand and sixty-five pounds sterling to be used by your drafts on us at ninety days' sight for the purchase of 250 bags of coffee to be shipped to New Orleans for account of Messrs.. Richheimer & Co., Chicago, Ill. And we agree with yourselves as drawers and with the indorsers and bona fide holders respectively of your drafts to accept the same drawn as aforesaid on receipt of due advice, and of bill of lading (original and duplicate advice to be accompanied by one bill of lading each), together with abstract of invoice. The other bills of lading and consular invoice to be sent direct to Messrs. Westfeldt Bros., New Orleans. The bills of lading are to be made out to 'order' and indorsed in blank to you. And the negotiator will please indorse the amount of each draft on this credit. To be shipped per steamship Sallust. The marine insurance on the shipments hereunder is cared for. This credit is to be in force in Santos until July 15, 1912. Please fill up drafts as follows: 'Against your letter of credit' No. W/5460, dated New Orleans, April 15, 1912.

''We are, sir, your most obedient servants,

"Received from Messrs. Westfeldt Bros., of New Orleans, Messrs. Dennistoun, Cross & Co.'s merchandise specified in the bill of lading, per S. S. Sallust, RCC/A-- 250 B/coffee, Nossack & Co., shipper, in consideration of which we agree to hold the same on storage as Messrs. Dennistoun, Cross & Co.'s property (with liberty to sell the same, and on such sale to pay over or deliver the proceeds to Messrs. Westfeldt Bros.), until the bills of exchange drawn on Messrs. Dennistoun, Cross & Co., of London, for the purchase money of the said goods, shall have been remitted for by us or satisfactorily provided for by us, and to keep the said property insured against fire and free from incumbrance; the intention of this undertaking being to protect and preserve unimpaired the ownership of Messrs. Dennistoun, Cross & Co. in the said property.

Richheimer & Co.'

"L3163-8-6

Due in New York Aug. 23, 1912.

These three appeals are brought from several orders of the District Court in bankruptcy in the above-entitled matter against the appellants, respectively, upon their several petitions filed to establish ownership in petitioners of importations of coffee, received by the bankrupt and stored by him in public warehouses at Chicago, and so held on warehouse receipts issued to the bankrupt. The transactions in controversy are thus described by Judge Geiger, in connection with his opinion filed on the hearing below:

New Orleans, April 15th, 1912.

"Dennistoun, Cross & Co. of London,

"By their Agents in New Orleans,

"Westfeldt Brothers.' 'Attached to and forming a part of such letter of credit is a memorandum as follows:

"Received the letter of credit of which the annexed is a copy, for one thousand and sixty-five pounds sterling, in consideration whereof we hereby agree with Messrs. Dennistoun, Cross & Co., of London, to provide, previous to the maturity of the bills drawn in virtue of said credit, sufficient funds in cash, or in satisfactory bills on London, at not exceeding sixty days sight, indorsed by us, to meet the payment of the same, together with their commission. It is understood that moneys paid to Messrs. Westfeldt Bros., New Orleans, shall be taken as a payment without recourse, and that in all settlements arising under this credit the pound sterling shall be calculated at the current rate of exchange at the time of such settlement. It is further understood that each draft is to be settled to a point, with commission as above, and interest adjusted in a net rate of exchange at the time of payment. In the event, however, of settlement not being made to a point, then Messrs. Dennistoun, Cross & Co. are to furnish their account current semiannually, charging interest at the rate of five per cent. per annum, or at the current rate if it be above that.

"And we hereby recognize and admit the ownership of Messrs. Dennistoun, Cross & Co. in, and their right to the possession and disposal of, all goods, and the proceeds thereof, for which Messrs. Dennistoun, Cross & Co. may come under any engagements in virtue of this credit, as also to the possession of all bills of lading for and policies of insurance on such goods, until such time as any indebtedness or liability existing as against us in favor of Messrs. Dennistoun, Cross & Co., under the said credit or otherwise, shall have been fully paid up and discharged. In the event of their hereafter intrusting through the agency of Messrs. Westfeldt Bros., or otherwise, said goods to us for the purpose of sale or otherwise, we hereby consent that their right to repossess themselves of the same, or any proceeds thereof may be exercised at their discretion. Any proceeds of said goods coming into Messrs. Dennistoun, Cross & Co.'s hands are to be applied against their acceptances under this credit, or against any other indebtedness of ours to them, including all expenses incurred by them, and commissions of sale and guaranty.

"It is understood and agreed between Messrs. Dennistoun, Cross & Co. and us that Nossack & Co., the parties authorized to draw bills under said credit, are in all respects to be regarded as our agents, and that neither Messrs. Dennistoun, Cross & Co., nor Messrs. Westfeldt Bros., are to be under any responsibility to us in respect to the bills of lading or other documents which are required to accompany the bills drawn, nor shall any fraud or error in, or nonconformity or deficiency of, bills of lading or other documents, nor any question as to their genuineness, be any defense against our obligation for reimbursement in respect of bills actually drawn by the party designated for drawing bills under said credit. The marine insurance to be done by . . .; Messrs. Dennistoun, Cross & Co.'s charge for commission to be 1/2 per cent. on the amount used. All securities which shall be received by Messrs. Dennistoun, Cross & Co. hereunder may be held and applied by them also to secure all other indebtedness or liability existing or which may hereafter arise from us to them.

"This obligation to continue in force and to apply to all transactions, notwithstanding any change in the individuals composing the respective firms, parties to or concerned in this contract, or either of them, or in that of the user of this credit, whether such change shall arise from the accession of one or more new partners, or from the death or accession of any partner or partners.

Richheimer & Co.

"Chicago, Ill. April 18, 1913.'

'Pursuant to the transactions thus evidenced, the shipments of coffee were made, and the drafts called for by the letter of credit issued. Upon its arrival at New Orleans, the coffee was delivered to the bankrupt, who executed and delivered to the representatives of the petitioning bankers a memorandum as follows:

'As indicated, there are certain differences in the memoranda executed by the bankrupt to the petitioning London bankers, upon receipt of the property by the bankrupt; that issued to Arthur H. Brandt & Co., being as follows:

"Trust Receipt.

"Received from Messrs. Arthur H. Brandt & Co., of London, through their agents in New York, Messrs. Wessels, Kulenkampff & Co., the following goods and

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