Barker Piano Co. v. Commercial Security Co.
| Decision Date | 17 December 1918 |
| Citation | 105 A. 328,93 Conn. 129 |
| Court | Connecticut Supreme Court |
| Parties | BARKER PIANO CO. v. COMMERCIAL SECURITY CO. et al. |
Appeal from Superior Court, Hartford County; Edwin B. Gager, Judge.
Action of interpleader by the rustee in bankruptcy of the Barker Piano Company against the Commercial Security Company and J H. Shale, trustee. Judgment for plaintiff, and defendants appeal. No error as to the Commercial Security Company; error as to J. H. Shale, trustee.
Other clauses provided for the repurchase by Barker Company of defaulted contracts, or for the substitution therefor of other acceptable contracts of equal value, for the execution of satisfactory assignments and guaranties, and for the collection of installments at the Barker Company's place of business by an agent of the Commercial Company. By another instrument the vice president of the Barker Company was appointed such agent at a salary of $5 a year, but the finding is that the collections were made in the name of and by the clerks of the Barker Company. Interest was to be computed on the total amount of unpaid monthly balances on contracts, less interest on the 20 per cent. reserve held by the Commercial Company. The conditional vendees of pianos were not notified that these contracts had been assigned to the Commercial Company until about a week before proceedings in bankruptcy were brought against the Barker Company in July, 1914, and until after the Commercial Company knew that the Barker Company was insolvent. Up to the appointment of the trustee in bankruptcy the Commercial Company had paid to the Barker Company about $9,000 more than it had received back, and the trustee now has in his hands over $10,000 collected on contracts assigned to the Commercial Company.
On March 31, 1913, the Barker Company made a contract with Shale, trustee, the other appealing defendant, which in form and result was substantially the same as the transaction already summarized, although Shale, trustee, paid no money to the Commercial Company, except $1,000, less brokerage, but furnished the Barker Company with credit which enabled it to buy pianos on credit from the American Piano Company and its subsidiary companies. Under this arrangement contracts of the face value of $7,798 had been assigned to Shale, trustee, for which he had furnished cash and credit of $3,884.10, when the trustee was appointed. The trustee now has in his hands about $3,000 collected on contracts assigned to Shale, trustee. It seems to be agreed that Shale, trustee, has furnished cash and credit to the Barker Company in excess of collections received by him on assigned accounts, although the amount of such excess is not stated in the findings. Notice of the assignment was not given by Shale, trustee, to the conditional vendees, until shortly before the institution of the bankruptcy proceedings, and after Shale, trustee, knew that the Barker Company was insolvent.
Arthur L. Shipman, of Hartford, and W. Lee White, of New York City, for appellants.
John T. Robinson and Stewart N. Dunning, both of Hartford, for appellee.
As stated on the appellants' brief the appeals raise two main questions to which all others are incidental: (1) whether or not the Superior Court erred in holding that the transactions between the appellants and the Barker Company constituted loans and pledges rather than sales; and (2) even if the transactions constituted loans, whether or not the trustee was obliged to pay to the appellants, respectively, the unpaid portions of principal advanced, with interest. We take up first the claim of the Security Company. By the law of Illinois-in accordance with which the parties stipulated that the contract was to be interpreted-as well as by the law of this state the first question is to be answered by ascertaining the real intent of the parties as expressed in their contract and exhibited by their conduct. The Barker Company assigned to the Commercial Company all its right, title, and interest in and to the contracts in question and in and to the property therein described, and the question is whether such assignments were intended to transfer the general property in these choses in action or whether they were intended to convey to the Commercial Company whatever special property might be necessary to secure the repayment, with interest, of moneys advanced. In the Supreme Court of Illinois and in the Circuit Court of Appeals of this circuit contracts of this type have been held to be contracts for loans on security, although purporting on their face to be contracts for the purchase and sale of accounts. Mercantile Trust Co. v. Kastor, 273 Ill. 332, 112 N.E. 988; Dorothy v. Commonwealth Co., 278 Ill. 629, 116 N.E. 143, L.R.A. 1917E, 1110; In re Grand Union Co., 219 F. 353, 135 C. C. A. 237.
An effort is made to distinguish these cases but the differences are of detail. The controlling fact in all of them is that the original installment of the so-called purchase price (77 per cent. of the face of the account in the Kastor Case, 78 per cent. to 73 per cent. in the Dorothy case 70 per cent. in the Grand Union Case, and 72 per cent. and 80 per cent., respectively, in the cases at bar) constitutes the entire outlay which the alleged purchaser makes in respect of any account, and the right to the repayment of it, with interest and brokerage charges, constitutes the entire interest which the alleged purchaser acquires in any assigned account. For example, the Commercial Company, on assignment of a guaranteed piano contract on which $500 was payable in 10 equal monthly installments, would under the contract in question pay the Barker Company $360, 72 per cent. of the face value of the contract, and, assuming that all subsequent installments of the purchase price were promptly paid, it would receive in the course of 10 months $500, out of...
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