Davenport Savings Bank v. Chicago, Rock Island & Pacific R. Co.

Decision Date29 June 1916
Docket Number30775
Citation158 N.W. 737,176 Iowa 745
PartiesDAVENPORT SAVINGS BANK, Appellee, v. CHICAGO, ROCK ISLAND & PACIFIC R. CO. et al., Appellants
CourtIowa Supreme Court

Appeal from Scott District Court.--WILLIAM THEOPHILUS, Judge.

ACTION for the conversion of two automobiles, with their accessories. Trial to a jury, and, at the conclusion of the testimony, the trial court directed a verdict, in plaintiff's favor, against the Pennsylvania Company, for the value of the property. After entry of judgment, the Pennsylvania Company appealed.

Reversed.

Loesch Scofield & Loesch and Cook & Balluff, for appellants.

Wilson Grilk & Wilson, Isaac Petersberger and Lane & Waterman, for appellee.

DEEMER J. EVANS, C. J., LADD and PRESTON, JJ., concur.

OPINION

DEEMER, J.

On April 4th, 1913, the Midland Motor Company, a corporation doing business in Moline, Illinois, delivered two automobiles and accessories to the Chicago, Rock Island & Pacific Railway Company, at East Moline, Illinois, for shipment to Pittsburg, Pennsylvania, and received a bill of lading from the railway company, showing a consignment "to the order of the Midland Motor Co. Notify John L. Kitter, 2179 Webster Ave., at Pittsburg, Penn." This bill of lading was endorsed in blank by the Midland Motor Company. The Midland Motor Company was indebted to the plaintiff, the Davenport Savings Bank; and, on April 18th, 1913, it drew a draft for the purchase price of the automobiles on John L. Kitter, attached the same to the bill of lading, and delivered both to the bank, as security for a part of the indebtedness it was then owing the bank. It seems that, on the day the bank took the draft and the bill of lading, it had a settlement with the Midland Motor Company, at which it was found that the motor company owed the bank $ 12,000; and an extension of time was then given for a period of 30 days, a note for the amount of the balance due being executed on April 18th, 1913. The draft and bill of lading were received by the bank, as collateral security to this loan. The Rock Island Railway transported the automobiles to Chicago, where they were delivered to, and accepted by, the Pennsylvania Company; and it transported the same to Pittsburg, and, upon arrival, notified John L. Kitter. Kitter refused to receive the property, and it was stored, awaiting directions from the consignor. Upon receipt of advises from the Midland Motor Company, the Pennsylvania Company returned the machines to Chicago, and there delivered the same to the Midland Motor Company, at its office in that city. Learning of this transaction, the bank notified the railroad company of its claim to the goods, and demanded the return thereof to it, or payment of the value thereof. In the meantime, the Midland Motor Company had gone into bankruptcy, and the trustee had taken possession of the machines, so that the railway company could not secure and return the property. This suit was then commenced to recover the value of the machines, and the trial court, upon issues joined, directed a verdict for plaintiff, against the Pennsylvania Company.

If this were all of the case, it would not be difficult of solution; but defendants pleaded in defense that, before the redelivery of the property to the Midland Company, it had been adjudged a bankrupt; and one McCollough had been appointed and was acting as trustee in bankruptcy, and that said trustee in bankruptcy took possession of the automobiles, being, in law and in fact, entitled thereto. Defendant further averred that the matter in controversy had theretofore been adjudicated by one E. U. Henry, a referee in bankruptcy, in the southern district of the United States court for the northern division of Illinois, in a matter before him as such referee; and that, in said proceeding, it was adjudged that plaintiff herein was not the owner of the property in controversy, but that the title, possession and ownership thereof, were in the trustee in bankruptcy, E. D. McCollough.

In reply, the plaintiff denied that the referee in bankruptcy made any such order as defendant pleads; averred that the said referee was without jurisdiction to make any order binding on this plaintiff, and further averred that, whatever the order of said referee, the same was without authority, and was and is, illegal and void. To sustain the defenses pleaded, defendant railway company offered a transcript of the proceedings before E. U. Henry, referee in bankruptcy for the United States district court, southern district of Illinois, northern division, together with the papers and files bound therewith, to which plaintiff objected, because incompetent, irrelevant and immaterial, in that the proceedings were not binding upon it, and, save for showing the filing and disallowance of plaintiff's claim, immaterial and irrelevant. They were also objected to because not properly exemplified. These objections were sustained.

Defendant then offered the finding of the referee in bankruptcy, on a claim filed by the plaintiff with said referee, to the effect that the objections filed to said claim, by the trustee in bankruptcy, were good, and should be sustained; and plaintiff's claim was disallowed, unless it should surrender to the trustee its preference, obtained through the transfer of the bill of lading, and certain payments made to it by the bankrupt, within four months of the adjudication of its bankruptcy.

The objections filed to plaintiff's claim were: (1) no indebtedness; (2) that plaintiff received the automobiles from the bankrupt while it was insolvent, knowing, or having reasonable cause to believe, that it was insolvent; (3) that the draft and bill of lading for the automobiles were given to the plaintiff for a past due indebtedness; (4) that certain payments were made on plaintiff's claim which were preferences under the bankruptcy law.

The certificate to the transcript of the order of the referee was in this language:

"I hereby the above to be a true and exact copy of my record in this matter. Dated at Peoria, Illinois, Jan. 6th, 1915. Edward U. Henry, Referee in Bankruptcy, Southern District of Illinois, Northern Division."

The objections to this offer were practically the same as to the papers. Defendant then offered to plaintiff a notice from the referee in bankruptcy of the filing of the objections to its claim, and of the place and date fixed for the hearing of the same: namely, Peoria, Illinois, November 24th, 1913. This was objected to by plaintiff, for the reason that it did not state the purpose of the hearing before the referee, and was insufficient, under Section 57 of the Bankruptcy Act (30 Stat. at Large 544, ch. 541), and did not confer any jurisdiction on the referee to adjudge the validity of plaintiff's claim, and for the further reason that it was not properly exemplified. These objections were sustained. The defendant then offered the papers and proceedings in a case brought by the trustee in bankruptcy against the plaintiff herein, in the United States district court for the southern district of Iowa, Davenport division, in which the trustee brought action to recover five automobiles, received by plaintiff herein from the Midland Motor Company at the same time it took the bill of lading, with the draft attached, for the two automobiles in question. These were objected to as incompetent, immaterial and irrelevant, and insufficient to establish a plea of former adjudication, or an estoppel.

The petition filed by the trustee in the United States district court for the southern division of Iowa, discloses that the trustee was seeking to recover the five automobiles therein referred to, which had been received by the plaintiff herein at the time it took its assignment of the draft and bill of lading for the automobiles in controversy, on the theory that, when plaintiff received the said five machines, the Midland Motor Company was insolvent, which fact plaintiff herein well knew, or had reasonable cause to believe; that the transfer thereof was made within four months of the time the Midland Company was adjudged to be a bankrupt, and that the transfer thereof constituted a preference which was void; and that the trustee was entitled to the possession of the machines, and to an order on plaintiff to return the same to him, the trustee.

He also pleaded the proceedings and order before the referee in bankruptcy for the United States district court of Illinois, hitherto referred to, as an adjudication binding, not only upon the trustee, but also the plaintiff herein, as well, and bottomed his right to recover the five machines upon this order of the referee, as well as upon the ground of preference. While an issue was tendered in the suit in the United States district court for the southern district of Iowa, the case had not gone to trial at the time this action was decided; but, since the determination of this action in the court below, the suit by the trustee against the plaintiff herein has been tried, resulting in a judgment in favor of the trustee, and against this plaintiff. See 226 F. 309. To complete the record, it should be stated that, during the trial and before the submission of the case either to the court or jury, defendants' counsel discovered the defect in the certificate of the referee in bankruptcy, to his order disallowing plaintiff's claim, and the following proceedings were had:

"Mr Cook: Now, Your Honor, it developed yesterday that, in Defendants' Exhibit 2, the referee in bankruptcy, in certifying that record, inadvertently left out the word 'certify,' and that was not discovered by defendants' counsel until the point was raised yesterday afternoon in argument by Judge Waterman that the word 'certify' was not in the certificate. ...

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  • Davenport Sav. Bank v. Chi., R. I. & P. Ry. Co.
    • United States
    • Iowa Supreme Court
    • June 29, 1916
    ...176 Iowa 745158 N.W. 737DAVENPORT SAV. BANKv.CHICAGO, R. I. & P. RY. CO. ET AL.No. 30775.Supreme Court of ... two automobiles and accessories to the Chicago, Rock Island & Pacific Railway Company at East Moline, Ill., for ... was indebted to the plaintiff, the Davenport Savings Bank, and on April 18, 1913, it drew a draft for the ... ...

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