In re Cattus

• Decision Date: 12 December 1910
• Docket Number: 42.
• Citation: 183 F. 733
• Parties: In re CATTUS.
• Court: U.S. Court of Appeals — Second Circuit

183 F. 733

In re CATTUS.

No. 42.

United States Court of Appeals, Second Circuit.

December 12, 1910

Hastings & Gleason (Mervyn MacKenzie, of counsel), for petitioner.

G. A Strong, for respondent.

Before LACOMBE, COXE, and WARD, Circuit Judges.

WARD Circuit Judge.

This is a petition of a trustee in bankruptcy to revise an order of the District Court confirming the report of the special master in reclamation proceedings awarding to the London &amp Hanseatic Bank, Limited, certain goods and proceeds of certain goods now in the hands of the trustee, covered by trust receipts given it by the bankrupt, Cattus, and authorizing the bank to sell certain other goods covered by bills of lading in its hands and to apply the proceeds to repayment of advances made by it on account of the bankrupt. The course of dealing between the bank and the bankrupt is according to commercial usage of long standing, under which by a loan of credit a vast amount of business is rapidly and safely done. The particular steps of the method followed are not always the same, but the substantial feature which makes the banker the owner of the goods until the purchase price of them advanced by him is paid is always present. One common method, which seems to have been adopted in this case, is as follows: A merchant who wishes to import goods for which he has not funds to pay obtains credit from a bank to a fixed amount, against which he draws for the price of the goods to the order of the vendor or the vendor draws for the price to his own order. The draft with bill of lading indorsed in blank or to the order of the bank is forwarded by the vendor to the banker for acceptance. The banker accepts the draft payable in one, two, three, or four months, as the case may be, forwards the bill of lading indorsed in blank to his agent in New York, who delivers the same to the importer against a receipt called a trust receipt, whereby he agrees to sell the goods for account of the banker, to pay him the proceeds and so put him in funds to take up the acceptance at maturity.

In this case the bank had accepted drafts to the amount of some 5,000, had delivered the bills of lading for most of the goods to Cattus against his trust receipts before his adjudication as a bankrupt, and still has in its hands bills of lading for other goods not so delivered.

The form of the trust receipt in this case is as follows:

'New York, . . . , 190 . . .

'Received from . . . through their representatives Messrs. G. Amsinck & Co., of New York, the following goods and merchandise, their property, specified in the bill of lading per . . . shipped by . . . under credit No. . . . and in consideration thereof, we hereby agree to hold said goods in trust for the above named bankers, and as their property, with liberty to sell the same for their account, and in case of sale to give Messrs. G. Amsinck & Co. the name of the buyers, and to hand them the avails, as soon as received, as security for due provision for the acceptance of the said bankers, on our account, noted at foot; and we further pledge to them said goods and the proceeds of such as security for the payment of any and

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