In re Burlage Bros.

• Decision Date: 10 May 1909
• Docket Number: 620.
• Citation: 169 F. 1006
• Parties: In re BURLAGE BROS.
• Court: U.S. District Court — Northern District of Iowa

169 F. 1006

In re BURLAGE BROS.

No. 620.

United States District Court, N.D. Iowa, Eastern Division.

May 10, 1909

John A Cunningham, for petitioner.

C. M Thorne and D. E. Maguire, for trustee.

REED District Judge.

On June 26, 1908, a few days more than four months before the bankruptcy, the bankrupts made to the Hercules Buggy Company a bill of sale of a number of carriages or buggies for the expressed consideration of upwards of $500. Under this instrument the buggy company presented to the referee a claim for the specific carriages described therein, and asked that an order be made requiring the trustee to turn them, or such thereof as were still in his custody, over to it.

The trustee objected to the claim upon the ground that the instrument had never been recorded as required by the law of Iowa. The referee sustained the objection and denied the claim, and the buggy company petitions for a review of this order.

No evidence was introduced before the referee, but the parties made and filed with him a stipulation of facts upon which the matter was submitted to him, which stipulation is as follows:

'Stipulation of Facts.

'It is hereby stipulated by and between D. E. Maguire, trustee, and the Hercules Buggy Company, by and through its attorney of record John A. Cunningham, that:

'(1) The bill of sale was executed as set forth on the 26th day of June, 1908.

'(2) That the bill of sale referred to was never recorded in the records of Dubuque county, Iowa.

'(3) That prior to June 26, 1908, the goods and chattels in question were the property of Burlage Bros., sold to them by the Hercules Buggy Company, and that they were not paid for, and that the bill of sale was made for the purpose of reconveying this property to said Hercules Buggy Company on the date mentioned.

'(4) That the chattels remained in the possession of Burlage Bros. until the filing of the petition in bankruptcy.

'(5) It is admitted by John A. Cunningham, the attorney for the Hercules Buggy Company, that on the 26th day of June, 1908, at the time of the execution of the bill of sale set out in the application, the firm of Burlage Bros. and Nick Burlage and Simon Burlage, Jr., were insolvent. But it is denied by the said Hercules Buggy Company that it had reasonable cause to believe that it was intended thereby to give a preference.'

It was conceded upon the argument that the bankrupts retained possession of the carriages after the execution of the bill of sale, with authority to sell them and account to the petitioner for the proceeds, less a commission for selling to apply upon its debt against them. This made the transaction in effect a mortgage, though the instrument is in form an absolute sale of the property; and in either form it might be a preference, yet, if it had been recorded at the time it was made, it would have been valid as against the trustee. It was valid as between the parties without record, and it is contended on behalf of the petitioner that the trustee stands only in the shoes of the bankrupts, and can assert no greater right to the property as against it than the bankrupts could have asserted. On the other hand, the trustee maintains that, inasmuch as the instrument was never recorded as required by the Iowa statute, it may still be avoided by him as a preference. First Not. Bank v. Connett, 142 F. 33, 73 C.C.A. 219. But the petitioner denied before the referee that it had any grounds to believe that a preference was intended by the bill of sale, and there is no proof that it...