Erie R. Co. v. Dial

• Citation: 140 F. 689
• Decision Date: 18 November 1905
• Docket Number: 1,413.
• Parties: ERIE R. CO. v. DIAL.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

140 F. 689

ERIE R. CO. v. DIAL.

No. 1,413.

United States Court of Appeals, Sixth Circuit.

November 18, 1905

J. L Zimmer, for appellant.

F. M Hagan, for appellee.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS Circuit Judge.

This is an appeal from an order of the District Court, made in the matter of the bankruptcy of the Victor Rubber Company denying a claim for preference in the disposition of the bankrupt's estate.

The claim as presented to the referee was founded upon the following facts: The Victor Rubber Company was engaged in the manufacture and sale of rubber tires at Snydersville, Ohio. Being in want of crude rubber, it bought certain quantities thereof in New York of Earle Bros., Thompson & Co., Lionel Hagenaers Company, and William Wright & Co., respectively, to be shipped by rail and delivered at Snydersville upon payment of the purchase price. The goods were shipped accordingly on bills of lading with drafts attached in each case for the price of that shipment. And the invoices stated that possession of the goods would not be given until payment of the draft. There was no freight station at Snydersville, but the petitioner, the Erie Railroad Company, had constructed a switch and platform near the rubber company's factory where it received and delivered freight from and to the rubber company, and, to some extent, other parties. The freight agent at Enon, a mile and a half distant, had charge of the freight business at Snydersville. The course of business was for the railroad company to unload freight destined to the rubber company upon the platform, from whence it was taken by the employes of the rubber company, and in a few instances the goods had been taken away before they were paid for, although the terms of shipment required collection on delivery; but no general custom sanctioning such a proceeding was known to the shippers, nor, indeed, is it established that such a practice in that regard had prevailed as would bind the railroad company on future shipments. The goods in question were unloaded upon the platform on their arrival, and in each instance they were removed by the Victor Rubber Company forthwith and before the freight agent at Enon could, in the ordinary course of business, come for the freight charges or for the price agreed to be paid for the goods. The first shipments arrived on a Saturday evening, and the agent came Monday morning and demanded the freight and the price of the goods. The latter was not paid. In the other cases the goods were unloaded in the evening and were removed by the rubber company before the agent arrived on the following morning to collect freight and purchase money. In each instance when he arrived the rubber had been put in the 'wash' and was already being prepared for use in the factory. The demands for the price were unavailing, and the rubber was, with other materials, converted into tires and these in turn mingled with old stock. Some of the new tires were probably sold before the bankruptcy proceedings were begun, but whether the proceeds have come into the hands of the trustee does not clearly appear. But we gather that the larger part was sold by the receiver or the trustee, and that the proceeds are in the assets. The rubber company shortly after became bankrupt.

The several vendors of the rubber, except Wright & Co., pursued the railroad company for its negligence in permitting the rubber company to get possession of their goods without paying for them. The railroad company settled with those parties by taking an assignment of their claims against the rubber company, paying therefor the amount of the claims. The case of the Wm. Wright Company will be referred to further on. There does not appear to have been any formal answer or other pleading of the trustee to the claims of the petitioners, and the matter seems to have been disposed of on the question of the sufficiency of the case as exhibited by the petitioners. The questions are whether the railroad company is entitled, either by way of subrogation or by virtue of the assignments, to stand in the place of the vendors of the rubber; and whether, if so, it is entitled to follow the proceeds thereof into the hands of trustee...