Houck v. General Motors Acceptance Corporation

• Decision Date: 09 October 1930
• Docket Number: No. 6301.,6301.
• Parties: HOUCK v. GENERAL MOTORS ACCEPTANCE CORPORATION.
• Court: U.S. District Court — Western District of Pennsylvania

44 F.2d 410 (1930)

HOUCK v. GENERAL MOTORS ACCEPTANCE CORPORATION.

No. 6301.

District Court, W. D. Pennsylvania.

October 9, 1930.

Kountz & Fry, of Pittsburgh, Pa., for plaintiff.

Arthur B. Van Buskirk and Reed, Smith, Shaw & McClay, all of Pittsburgh, Pa., and John Thomas Smith, of New York City, for defendant.

GIBSON, District Judge.

The bankrupt was engaged as a dealer in automobiles in Allegheny county, this district. In 1929, it ordered seven automobiles from the Buick Motor Company of Flint, Mich. Pursuant to the order the Buick Motor Company shipped the automobiles by a common carrier to Pittsburgh, Pa., and forwarded a bill of lading therefor, with sight draft attached for 10 per cent. of the invoice price, to a bank in this county. At or about the same time the manufacturer, the Buick Motor Company, executed and delivered to the General Motors Acceptance Corporation, the defendant, a bill of sale for the automobiles. The sales company, the bankrupt, then went to the bank and paid the sight draft for the 10 per cent. of the invoice price, signed a promissory note to the order of the General Motors Acceptance Corporation for the remaining 90 per cent. of the invoice price, and executed a certain trust receipt which it delivered to the bank as agent for the General Motors Acceptance Corporation. The trust receipt was in the following form:

"Trust Receipt.

"Received of General Motors Acceptance Corporation the Motor Vehicles described above.

"I (we) hereby acknowledge that said Motor Vehicles are the property of said General Motors Acceptance Corporation and agree to take and hold the same, at my (our) sole risk as to all loss or injury, for the purpose of storing said property; and I (we) hereby agree to keep said Motor Vehicles brand new and not to operate them for demonstrating or otherwise, except as may be necessary to drive said Motor Vehicles from freight depot or from above city to my (our) place of business with all due care at my (our) risk en route against all loss and damage to said Motor Vehicles, Persons or Property, and except as I (we) may be allowed by you in a special case to use the same for demonstrating upon our compliance with the conditions expressed in your instructions to us, and to return said Motor Vehicles to said General Motors Acceptance Corporation or its order upon demand; and pay and discharge all taxes, encumbrances and claims relative thereto. I (we) hereby agree not to sell, loan, deliver, pledge, mortgage, or otherwise dispose of said motor vehicles to any other person until after payment of amounts shown on Dealer's Record of Purchase and Release of like identification number herewith. I further agree that the deposit made by me (us), in connection with this transaction, may be applied for reimbursement for any expense incurred by General Motors Acceptance Corporation, in the event of breach of this Trust or repossession of said Motor Vehicles.

"It is further agreed that no one has authority to vary the terms of this Trust Receipt.

"Executed this ______ day of ______, 19__ at ______

"Witness ________ ________

(Dealer) "By ___________ "(Official Title of Company)."

After payment of the sight draft, execution of the note, and delivery of the trust receipt, the bank delivered to the bankrupt the bill of lading covering the automobiles, which later were obtained by the bankrupt and taken to its salesroom. The promissory note and trust receipt were delivered by the bank to the General Motors Acceptance Corporation, which continued to hold the bill of sale for the cars. The cash representing 10 per cent. of the invoice price was paid upon the order of the defendant. On November 28, 1929, the defendant, General Motors Acceptance Corporation, took possession of four of the automobiles in question, and on January 28, 1930, took the other three cars. On February 8, 1930, the sales company filed its voluntary petition in bankruptcy as No. 15403 in bankruptcy of this court and has been adjudicated a bankrupt.

The instant suit has been brought by the trustee of the bankrupt to recover from the General Motors Acceptance Corporation the value of the seven automobiles. The plaintiff's statement asserts that the withdrawal of the automobiles from the bankrupt's possession constituted a voidable preference under the Bankruptcy Act, and that the trust receipt given by the bankrupt was invalid and did not secure title in the defendant as against the trustee. The defendant has filed a statutory demurrer to the statement of claim.

Irrespective of the interpretation and effect of the trust receipt in the instant case, it seems quite plain to us that the repossession of the automobiles by the defendant did not constitute a preference under section 60 of the Bankruptcy Act (11 USCA § 96). Plaintiff bases his claim to recover the value of the automobiles upon the ground of preference upon section 47a(2) of the Bankruptcy Act, 11 USCA § 75(a)(2), which in part provides: "Trustees shall respectively * * * as to all property not in the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied."

The trustee, plaintiff, contends that said section 47 empowers him, as standing in the shoes of an execution creditor, to maintain an action for the removal of goods within the four-month period. He cites Bank of North America v. Penn Motor Co., 235 Pa. 194, 83 A. 622, in support of his position. In that case the Supreme Court of Pennsylvania was dealing with a conditional sale agreement which had been recorded within the four-month period, and under which the vendor had undertaken to exercise its right of repossession shortly prior to the petition in bankruptcy. The court held that the trustee was given the power by section 47 to assert every right which a judgment creditor could have asserted during the four months immediately preceding the filing of the petition in bankruptcy. We are of opinion that we are precluded from accepting that interpretation of the section by the decision of the United States Supreme Court in Bailey v. Baker Ice Machine Co., 239 U. S. 268, 36 S. Ct. 50, 60 L. Ed. 275. The contract of the instant case being made in Pennsylvania, we are required to accept the statutes and decisions of authoritative courts of this state in determining the status of the agreement either as a bailment or conditional sale; but our duty does not require us to...