Fels v. Geo. Lueders & Co.
| Decision Date | 07 December 1917 |
| Docket Number | 3035. |
| Parties | FELS v. GEO. LUEDERS & CO. et al. In re J. RHEINSTROM & SONS CO. |
| Court | U.S. Court of Appeals — Sixth Circuit |
W. H Mackoy and S. M. Johnson, both of Cincinnati, Ohio, for appellant.
Leo J Brumleve, Jr., of Cincinnati, Ohio, for appellees.
Before KNAPPEN and DENISON, Circuit Judges, and KILLITS, District judge.
The bankrupt had been engaged in putting up and selling 'Maraschino' cherries. In the distribution among creditors of the assets of owners or operators of manufacturing establishments, section 2487 of the Kentucky Statutes gave to those who had furnished materials or supplies for the carrying on of the business a lien 'upon so much of such property and effects as may have been involved in such business, and all the accessories connected therewith.'
In Central Trust Co. v. Lueders, 221 F. 829, 137 C.C.A 387, this court held the statute constitutional, and the bankrupt's business that of operating a 'manufacturing establishment,' and affirmed the order of the District Court adjudging the claim of Lueders & Co. a prior claim upon the property and effects of the bankrupt involved in its business. An application for writ of certiorari to review that decision was denied. 238 U.S. 634 35 Sup.Ct. 938, 59 L.Ed. 1499. As against general creditors the liens of Leuders & Co., Nicholas & Co., and others similarly situated must be held established.
The present appeal involves only the claimed priority (over the liens for materials and supplies on the part of Lueders & Co., Nicholas & Co., and others similarly situated) of the asserted lien of Fels & Co. upon certain of the bankrupt's running accounts receivable, created in the course of business, under a pledge thereof to secure loans of money.
The furnishing of materials and supplies by the appellees, at least in amount sufficient to exhaust these accounts, antedated their pledge to Fels & Co. One of the grounds on which the latter's claimed priority is rested is that the liens for materials and supplies did not ripen until bankruptcy occurred, and that such inchoate liens as were created by the furnishing of the materials and supplies are subordinate to the fixed rights meanwhile acquired by Fels & Co. in the same property. This contention must be rejected. Section 2488 expressly declares the liens for materials or supplies 'superior to the lien of any mortgage or other encumbrance thereafter created. ' This we think means 'created after the materials or supplies are furnished. ' The case in this aspect is ruled by Louisville Woolen Mills v. Tapp, 239 F. 463, 52 C.C.A. 341, where, construing section 2488, this court held a lien for materials superior to the landlord's lien for rent created subsequent to the furnishing of the materials.
The remaining ground of asserted priority is that the accounts pledged to Fels & Co. were...
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