Finance Guaranty Co v. Oppenhimer

• Decision Date: 23 January 1928
• Docket Number: No. 170,170
• Citation: 72 L.Ed. 443,48 S.Ct. 209,276 U.S. 10
• Parties: FINANCE & GUARANTY CO. v. OPPENHIMER
• Court: U.S. Supreme Court

276 U.S. 10

48 S.Ct. 209

72 L.Ed. 443

FINANCE & GUARANTY CO.

v OPPENHIMER.

No. 170.

Argued Jan. 13, 1928.

Decided Jan. 23, 1928.

Mr. S. M. Brandt, of Norfolk, Va., for petitioner.

Mr. Joseph M. Hurt, of Richmond, Va., for respondent.

Mr. Justice HOLMES delivered the opinion of the Court.

This is a suit brought by the respondent, trustee in bankruptcy for W. A. Lee, to recover the value of four authomobiles seized by the defendant, the petitioner, in circumstances alleged to have made the taking a preference if maintained. The defendant sold the automobiles to the bankrupt by a duly recorded contract of conditional sale. On January 10, 1921, it repossessed itself of the cars by a suit in detinue. Ten days later, on January 20, the petition in bankruptcy was filed against Lee, and on February 25 he was adjudicated a bankrupt. About a year later the trustee brought this suit relying upon the Traders' Act, section 5224 of the Code of Virginia, by which, it may be assumed, all the property used by Lee in his business, including these cars, 'shall as to the creditors of any such person, be liable for the debts of such person.' The trustee prevailed in the Circuit Court of Appeals. Opinion, 5 F.(2d) 486; formal conclusion, 15 F.(2d) 1011. A writ of certiorari was granted by this Court. 273 U. S. 689, 47 S. Ct. 460, 71 L. Ed. 842.

We are of opinion that the decision was wrong for the reason given by the dissenting judge below. The Su- preme Court of Appeals of Virginia has construed the Traders' Act and has established that 'the creditors' in section 5224 means creditors having a line. Capitol Motor Corporation v. Lasker, 138 Va. 630, 123 S. E. 376. The lien of the trustee in bankruptcy did not arise until after the property in question had come back to the hands of the petitioner, which had reserved title to itself. Bailey v. Baker Ice Machine Co., 239 U. S. 268, 270, 36 S. Ct. 50, 60 L. Ed. 275; Martin v. Commercial National Bank, 245 U. S. 513, 517, 38 S. Ct. 176, 62 L. Ed. 441; Bankruptcy Act, § 47a(2), as amended (Code, tit. 11, § 75). Therefore the retaking of the property was valid as against the trustee. It could not work a preference unless he represented a claim that was paramount when the property was seized. At that time the petitioner did what it had a right to do as against the bankrupt and simply took what was its own. It did no wrong to any creditor, for no creditor not having a judgment or other lien could have complained so far as the law of Virginia went. See Firestone Tire & Rubber Co. v. Cross (C. C. A.) 17 F.(2d) 417, 421, 422. The majority in the Circuit Court of Appeals took the distinction between a trustee...