In re Biehl
| Decision Date | 11 December 1916 |
| Docket Number | 5594. |
| Citation | 237 F. 720 |
| Parties | In re BIEHL. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
W. K Stevens, of Reading, Pa., for trustee.
Thomas I. Snyder, of Reading, Pa., for claimant.
The legal principle upon which the referee based his ruling is embraced in this proposition: Where a creditor has a claim of debt against a firm, evidenced by an absolute obligation in writing for its payment, and also an optional claim in tort for misappropriation of money or property (the damages in which are measured by the same debt), and also has a claim against an individual upon a separate and independent contract of bailment (damages flowing from the breach of which are measured by the same debt), he may prove his claim of debt against the bankrupt estate of the firm, and (after allowing credit for the dividend received) prove a claim for the balance due him against the bankrupt estate of the individual, notwithstanding the fact that the individual is a member of the firm and liable as a partner for the firm debt.
As the soundness of this legal principle is not denied, the appellate question involved resolves itself into an inquiry into the facts, and we might well rest a dismissal of the petition for a review upon the well-recognized rule of noninterference with findings of facts, leaving their vindication to the able and well-considered opinion of the referee. The ability and earnestness, however, with which the argument in support of the petition has been pressed, merits a consideration of certain features of the case, and a review of the adjudged cases which would otherwise be unwarranted.
The evidentiary facts upon which the referee based his findings are not in dispute, although perhaps open to different characterizations. There are three parties involved. They are the Maxwell Motor Sales Corporation, B. & C. Motor Car Co. (a partnership), and B. Frank Biehl. The latter was a member of the B. & C. firm.
The partnership and Biehl has each been adjudged a bankrupt and each has assets insufficient to pay the debts in full. The Maxwell Company was permitted to prove its claim (representing the same debt) in each proceeding. Its right to do this is the sole question involved in the present inquiry. It proved its claim against the bankrupt estate of the firm and was allowed a dividend. The question suggested is raised by objections to a subsequent proof of the balance of its claim against the bankrupt estate of Biehl.
The claim arises out of the following state of facts and transactions: The Maxwell Company manufactured automobiles. The B. & C. firm sold automobiles as a dealer. Biehl was in the iron business, and was also a member of the above firm and its financial backer. The Maxwell Company shipped to the firm cars of different types, to be delivered, upon payment of sight drafts accompanying bills of lading. The original arrangement was that, upon shipment of cars consigned by the Maxwell Company to themselves, the bills of lading, with the sight drafts, were forwarded to a bank at the place of consignment. The firm was to take up the drafts, receive the bills of lading, and through them get the cars. This arrangement was departed from, presumably because it was not always convenient for the firm to take up the drafts. What was then done was this: The bank was instructed to deliver the bills of lading upon receiving part cash, the note of the firm for the balance, with the automobiles pledged as collateral, and the agreement of Biehl to take and hold possession of the cars for the Maxwell Company as pledgee and not to deliver them to the firm until and except as the notes were paid. A separate note was given and separate pledge was made of each car, which was fully described. The agreement between the company and Biehl contained a recital of the fiction (substantially true in fact) that the company had loaned to the firm the amount involved (being the unpaid part of the price of the car), and that for this loan the firm had given its collateral note, pledging the car as security, and as an inducement to this arrangement Biehl had undertaken to retain possession of the car so pledged, and not deliver it until and unless the note was paid, and set forth the further undertaking of Biehl to so hold the cars and to transmit the moneys to the company if and when the notes were paid.
The claim against Biehl (aside from his partnership liability on the note) arises out of the fact that he parted with the pledge without receiving payment of the note, and loss resulted to the company to a sum measured by the sum due on the note. Some question would appear to have existed of whether Biehl ever received payment of any of the notes, but the allowance of a claim against the firm for the aggregate of all the notes is a finding that none of them were paid. There was also in the transaction the feature or fiction of a retention of title in the Maxwell Company until payment through the usual device of a formal bailment. If the transaction is viewed with Biehl disassociated from the firm, the rights of the company will more clearly appear. Its entire claim was restricted to the amount of the notes. It possessed the clear right to demand from the makers of the notes payment thereof. If this demand was not met, and nothing was recovered from the makers, it was as clearly entitled to sell the pledge and receive payment from the proceeds of such sale. If the pledge was lost through the culpable act of the agent, he would be answerable for the value of the pledge up to the sum due on the note, which latter sum measured the damage of the pledgee.
The referee has found such loss and allowed the claim of the pledgee for the balance due them as the consequent damages against the estate of Biehl. There was no suggestion at the argument of any excessive allowance in amount to the pledgees, and because of this we have not inquired into the correctness of the amount allowed. The learned referee bases his conclusion upon the findings that the firm had a title to the automobiles which they could pledge, that they had pledged them for their debt, that Biehl as an individual received and agreed to hold for the Maxwell Company the cars until the notes were paid, and that he culpably failed so to do to pledgee's hurt in that a part of the debt for which the pledge was given was thereby lost.
The views of the referee may be thus presented: Stated negatively, the claimant was not seeking to recover one judgment...
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