BF Avery & Sons Co. v. Davis, 13584.

Decision Date16 November 1951
Docket NumberNo. 13584.,13584.
Citation192 F.2d 255
PartiesB. F. AVERY & SONS CO. v. DAVIS.
CourtU.S. Court of Appeals — Fifth Circuit

Leonard Farkas, Albany, Ga., for appellant.

J. Madden Hatcher, Theo. J. McGee, Columbus, Ga., for appellee.

Before SIBLEY, RUSSELL and RIVES, Circuit Judges.

SIBLEY, Circuit Judge.

The appeal is from the affirmance by the District Judge on review of a judgment of the Referee in Bankruptcy which disallowed a proof of an unsecured claim for $1,428.95, "unless within thirty days from this judgment the claimant, B. F. Avery and Sons Company, shall pay to the trustee in bankruptcy the sum of $14,264.48, which is the value of farm machinery and equipment transferred to claimant by Alaga Tractor Co. the bankrupt on Feb. 10, 1950, and also surrenders to the trustee a neon sign of the value of $131.56 and a described promissory note of one Corr of the value of $240."

An outline of the facts not in dispute is as follows: On April 13, 1949, the Avery Company1 of Kentucky made a lengthy "Dealers' Contract" with Alaga Tractor Company of Columbus, Georgia, as to the terms and conditions on which the former would fill orders of the latter for tractors and other farm machinery. The signature of the Alaga Company was attested by a notary on April 13; the approval of it by Avery Company was signed on April 26, 1949, without attestation; and the paper was recorded in the deed records at Columbus, Georgia, on June 17, 1949. Under it a large amount of machinery was shipped by Avery Company. In February of 1950 Alaga Company, having fallen behind in its settlements under the contract, by which Avery Company claims it retained title to the machinery till settled for, and also had the right on default to retake machinery on hand, announced a purpose to do this and, on February 10, 1950, took from the possession of Alaga Company $14,264.48 worth of machinery on hand, and a neon sign not furnished by Avery Company, and a note for $240 given Alaga Company by a customer, Corr, for an Avery machine sold to him. On February 18, 1950 Alaga Company was adjudicated a voluntary bankrupt. On May 18, 1950 Avery Company filed a proof of an unsecured claim for $1,428.95, being for Avery machines sold by Alaga Company, and not retaken by Avery Company on February 10, or otherwise settled for under the dealers' contract. On May 31, 1950, J. Alvan Davis, who had been appointed trustee in bankruptcy, filed objections to the claim on the grounds that the "dealers' contract" was void as to him, not describing any property conditionally sold or mortgaged and for other reasons, and that the transfer of property of the bankrupt, including the neon sign and note above referred to, within four months before bankruptcy while Alaga Company was insolvent, and while Avery Company had reasonable cause so to believe, solely in consideration of an antecedent debt and resulting in this creditor getting a greater percentage of its debt than other creditors of the same class, was a voidable preference under Section 60, sub. b of the Bankruptcy Act, 11 U.S.C.A. § 96, sub. b, and until the transferred property was surrendered the claim filed by Avery Company should be disallowed. The objection went further and prayed that an account of all financial transactions of claimant be required, with surrender to the trustee of the machinery, the neon sign, the note, and all payments made within four months of the bankruptcy, and that a judgment be given for payments in cash and for the value of property converted. The trustee however did not rest on this, for on May 24, a week before, he had filed a plenary suit in the District Court of the Middle District of Georgia in which the bankruptcy was pending, based on Sections 60, sub. b, 67 and 70 of the Bankruptcy Act, 11 U.S.C.A. §§ 96, sub. b, 107, 110, alleging that the Avery Company was of Louisville, Kentucky, but doing business in said District through Brown Cullen in that District and so present there. The allegations and prayers were similar to those above stated. On June 8 Avery Company answered the plenary suit, first moving to quash the service because Avery Company, a corporation of Delaware, had no agent in the District and Brown Cullen was not such and was only temporarily there. Subject to this motion it set up that its dealers' contract was either for conditional sales, or a consignment contract, and gave it at least an equitable lien on the property shipped by it. It denied that it took back the machinery on a debt, but asserted that in taking it acted in pursuance of legal rights contained in the dealers' contract. The Avery Company, on June 19, also answered the trustee's objections to its claim before the referee, setting up the pendency of the trustee's plenary suit, and objecting that the property in dispute was in its possession at the time of the filing of the bankruptcy petition under a bona fide adverse claim of rights, and that the referee had no jurisdiction to determine those rights, but could only disallow its debt claim till the preference alleged, if upheld, is restored. Subject to the objection to jurisdiction, the trustee's allegations of fact were denied, except that it was admitted that claimant had, on February 10, taken possession of certain property worth $10,000. A hearing was had before the referee, who on September 29, 1950 made a clear statement of the issues and elaborate "findings of fact" and "conclusions of law" in which the dealers' contract was fully examined and its effect declared, being held of no effect against the trustee; the issues of fact were determined against Avery Company and that the taking of the machinery on February 10 was a transfer by the bankrupt while insolvent in payment of a debt, as was the neon sign and the Corr note, and that they were all voidable preferences. He did find however that "at the time of filing the petition in bankruptcy neither the bankrupts nor the trustee in bankruptcy were in possession of the property transferred". He undertook further to find that Brown Cullen and two others were at the time of the transfer, and since, representing Avery Company in the Middle...

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28 cases
  • Inter-State National Bank of Kansas City v. Luther
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • April 29, 1955
    ...counterclaim for preference. In re Continental Producing Co., D.C., 261 F. 627; In re Eakin, 2 Cir., 154 F.2d 717; B. F. Avery & Sons Co. v. Davis, 5 Cir., 192 F.2d 255, certiorari denied 342 U.S. 945, 72 S.Ct. 559, 96 L.Ed. 703; Solomon v. Allied Building Credits, 8 Cir., 209 F.2d 828; In ......
  • Katchen v. Landy, 28
    • United States
    • U.S. Supreme Court
    • January 17, 1966
    ...§ 2, sub. a(7), 11 U.S.C. § 11, sub. a(7) (1964 ed.), and some lower courts have required such a procedure, B. F. Avery & Sons Co. v. Davis, 192 F.2d 255 (C.A.5th Cir. 1951), cert. denied, 342 U.S. 945, 72 S.Ct. Triangle Electric Co. v. Foutch, 40 F.2d 353, (C.A.8th Cir. 1930); see Katchen ......
  • Ray v. Beneficial Finance Co. of North Jersey
    • United States
    • New Jersey Superior Court
    • October 27, 1966
    ...makes it plain that it had no adverse claim of title to the contracts that was more than colorable. As we stated in B. F. Avery & Sons Co. v. Davis, 5 Cir., 192 F.2d 255, quoted with approval in Spach, Trustee v. Fisher, 5 Cir., 310 F.2d 328, 'Where a controversy arises as to whether there ......
  • In re Snow Camp Logging Company, 14388.
    • United States
    • U.S. District Court — Northern District of California
    • October 30, 1958
    ...supporting petitioners' statement of the rule, examination of the factual situations involved in these two cases (B. F. Avery & Sons Co. v. Davis, 5 Cir., 192 F.2d 255, certiorari denied 342 U.S. 945, 72 S.Ct. 559, 96 L.Ed. 703; and In re Tommie's Dine & Dance, D.C., 102 F. Supp. 627) shows......
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