Guarantee Title & Trust Co. v. First Nat Bank of Huntingdon, Pa

• Decision Date: 24 February 1911
• Docket Number: 67,68 (1,439).
• Citation: 185 F. 373
• Parties: GUARANTEE TITLE & TRUST CO. v. FIRST NAT. BANK OF HUNTINGDON, PA., et al. FIRST NAT. BANK OF HUNTINGDON, PA., v. GUARANTEE TITLE & TRUST CO.
• Court: U.S. Court of Appeals — Third Circuit

185 F. 373

GUARANTEE TITLE & TRUST CO. v. FIRST NAT. BANK OF HUNTINGDON, PA., et al.

FIRST NAT. BANK OF HUNTINGDON, PA., v. GUARANTEE TITLE & TRUST CO.

Nos. 67, 68 (1,439).

United States Court of Appeals, Third Circuit.

February 24, 1911

H. V Blaxter, for First Nat. Bank of Huntingdon.

R. T M. McCready, for Guarantee Title & Trust Co.

S. S Mehard, for American Car & Foundry Co.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

GRAY Circuit Judge.

These are appeals from a final order and decree of the District Court of the United States for the Western District of Pennsylvania, in bankruptcy, in a controversy between a trustee in bankruptcy and two adverse claimants. In re Pittsburgh Industrial Iron Works, 179 F. 151.

By virtue of proceedings begun in involuntary bankruptcy November 9, 1907, the above named Pittsburgh Industrial Iron Works was adjudicated a bankrupt. A receiver was duly appointed November 14, 1907, and thereafter the Guarantee Title & Trust Company, party to these appeals, was duly elected trustee of the bankrupt's estate. On December 19, 1907, a petition was filed in the said court by the First National Bank, of Huntingdon, Pa., one of the parties to these appeals, setting forth a certain contract between the petitioner and the bankrupt, dated March 6, 1907, more than four months before the commencement of the proceedings in bankruptcy, by which the said bankrupt assigned, transferred and set over to the petitioner a certain invoice or account for goods theretofore sold by the bankrupt to the Detroit River Tunnel Company, and the goods covered by the said account, in consideration of and as collateral security for the discount of a note given by the bankrupt to said petitioner, the proceeds of which, $5,125, were received by the said bankrupt. It also set forth that, in consideration of and collateral to the discount of another promissory note by it, the said bankrupt assigned to the petitioner the proceeds of a certain contract between the bankrupt and the United States Navy Department.

The petitioner thereupon prayed that the receiver should surrender to it any rights he may claim to the goods or proceeds of the said contract with the Detroit River Tunnel Company, and also the proceeds of the said contract with the said United States Navy Department, when and as collected by said receiver. Upon this petition, a rule was granted upon said receiver to show cause why he should not comply with the prayer of said petition. Thereafter, at some date not known and as to which no docket entry is disclosed by the record, it is admitted that the American Car & Foundry Company had duly intervened in these proceedings, by claiming a vendor's lien upon a certain car sold and delivered to the bankrupt, being part of the property claimed by the First National Bank, of Huntingdon, to have been assigned to it for collateral security, as aforesaid. The controversy between these intervenors and between each of them and the trustee, was heard by the court below and a decree entered in favor of the American Car & Foundry Company, for the value of the car sold and delivered by it to the bankrupt and in favor of the First National Bank, of Huntingdon, Pa., for the machinery and equipment placed upon said car by the bankrupt. The court also ordered and decreed against the said bank as to its claim for the proceeds of the contract between the bankrupt and the Navy Department, and sustained the claim of the trustee to retain the said proceeds in his hands for the benefit of the creditors of the bankrupt estate.

The agreed statement of facts, upon which the case was heard and determined below, is contained in the record, and, so far as material for our present purpose, is as follows:

'1. Prior to January 1, 1907, the Pittsburgh Industrial Iron Works (the bankrupt) contracted with the Detroit River Tunnel Company to furnish it a certain steel derrick car and equipment.

'2. That thereafter, to wit, on or about March 26, 1907, while said Pittsburgh Industrial Iron Works were engaged in the manufacture and erection of said equipment, it procured the discount by the First National Bank of Huntingdon of its promissory note for $5,125, and received the sum of $5,125 as the proceeds thereof.

'3. That at the time of the discounting of the said note and in consideration thereof, said Pittsburgh Industrial Iron Works executed and delivered to the said First National Bank of Huntingdon an assignment in terms shown by 'Exhibit B' of the petition in this case.

'4. That on March 6, 1907, the said Pittsburgh Industrial Iron Works, having arranged for the discount of said note gave to said Detroit River Tunnel Company notice in writing in the following terms:

"March 6, 1907.

"Detroit River Tunnel Co., Detroit, Mich.-- Gentlemen: For financial convenience we have arranged with the First National Bank, Huntingdon, Pa., to cash the invoice mailed to you, amounting to $5,125.00, kindly make remittance to them. You understand your compliance incurs no liability whatever, you simply settle with the bank instead of us. We enclose you form of reply, which please mail to them in stamped envelope herewith. Thanking you in advance for the courtesy, we are,

"Yours truly,

President.'

'5. That on March 20, 1907, said Tunnel Company wrote the said bank in the following terms:

"Detroit, Mich., March 20, 1907.

"First National Bank, Huntingdon, Pa.-- Gentlemen: We have received a letter from the Pittsburgh Industrial Iron Works, dated March 6th, and asking us to pay you what may be due them for a derrick car which they have been building for us. After the car has been received, tested and accepted, we will pay you whatever may be due them for it.

"Yours truly,

(Signed) Benjamin Douglass.'

'6. That on April 3, 1907, the said derrick and equipment were tendered to the Detroit River Tunnel Company at Detroit and were in their possession, although unaccepted and uncompleted, until May 10, 1907, when said car and equipment were refused, because not in accordance with specifications, and were on May 17, 1907, reshipped to the Pittsburgh Industrial Iron Works.

'7. That from May 17, 1907, to August 15, 1907, said derrick was in the possession of the Pittsburgh Industrial Works, was altered and tested divers times, said tests being made from time to time by employes of the Detroit River Tunnel Company.

'8. That on August 15, 1907, the derrick car was again shipped by said Pittsburgh Industrial Iron Works via the Pennsylvania Railroad to Detroit and then and there set up by the said Pittsburgh Industrial Iron Works and again tendered to said Tunnel Company and by it refused as not according to contract. The Pittsburgh Industrial Iron Works then proposed and undertook various changes to meet the requirements of the contract with the Tunnel Company, but (as it admitted for the purposes of this case only) did not meet the requirements of the contract under which said derrick car was built; and, therefore, said car was finally and lawfully refused on October 28, 1907, by notice from said Tunnel Company to said Pittsburgh Industrial Iron Works.

'9. That the First National Bank of Huntingdon was aware of the insolvency of the said Pittsburgh Industrial Iron Works on November 1, 1907, and on November 7, 1907, at a meeting of its directors, adopted the following resolution: 'On motion John D. Davis was instructed as attorney for the bank to take the necessary steps to protect our ownership of the Detroit River Tunnel Company rig.'

'10. That on November 25, 1907, Messrs. Gray & Gray, attorneys at law, of Detroit, were retained by said bank in the matter of said claim, under letter of . . . , a copy of which is hereto attached and made part hereof, marked 'Exhibit A.'

'11. That on January 17, 1908, said derrick car and equipment which had remained in Detroit at all times since August, 1907, held by the Michigan Central Railroad Company, was seized by writ of replevin issued on behalf of said bank against said railroad company.

'12. That American Car & Foundry Company of St. Louis, Mo., has intervened as respondents and claims to be the owner, or at least to have a lien on the said car, which claim is based upon the following facts:

''That after preliminary negotiations, the Pittsburgh Industrial Iron Works offered to said American Car & Foundry Company the following order, to wit:

"Pittsburgh, Pa., Sept. 4, 1906.

"American Car & Foundry Co., St. Louis, Mo. Attention Mr. W. J. McBride.--D3741. Gentlemen: In further reply to your favor under date of August 25th, you will kindly enter our order for one 100,000# capacity P.R.R. type F.M. steel flat car to be built under the following specifications,' &c., &c. * * * Price, eleven hundred sixty ($1,160.00) dollars, f.o.b. cars Detroit, Mich. We trust you will be able to make delivery in October, and in making shipment kindly consign to us at Reynoldsville, Jefferson Co., Pa., via P.R.R.'

'That said offer was accepted by American Car & Foundry Company and pursuant to the contract thus made said company proceeded to construct the said car according to the specifications contained in the said order, and when the said car was completed, to wit, on or about March 13, 1907, said American Car & Foundry Company made shipment thereof from their Peninsular Plant in accordance with said order of September 4, 1906, and notified Pittsburgh Industrial Iron Works of such shipment by writing in the following terms, to wit:

"March 22, 1907.

"Mr. J. S. Beckwith, Sec. Pittsburgh Industrial Iron Works, Pittsburgh, Pa.--Dear Sir: Enclosed we beg to hand you our invoice in triplicate, dated March 13th, covering one flat car lettered 'Detroit River Tunnel Co., Detroit, Mich.' $1,160.

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