In re Coates, Bennett & Reidenbach

• Decision Date: 28 October 1925
• Docket Number: No. 8838.,8838.
• Citation: 8 F.2d 757
• Parties: In re COATES, BENNETT & REIDENBACH, Inc.
• Court: U.S. District Court — Western District of New York

8 F.2d 757 (1925)

In re COATES, BENNETT & REIDENBACH, Inc.

No. 8838.

District Court, W. D. New York.

October 28, 1925.

Peck & Whitbeck, of Rochester, N. Y. (Ernest C. Whitbeck, of Rochester, N. Y., of counsel), for claimant.

Hubbell, Taylor, Goodwin & Moser, of Rochester, N. Y., for trustee.

HAZEL, District Judge.

The question submitted for review is whether the claimant, Genesee Valley Trust Company, used such care and diligence in endeavoring to obtain possession of property, pledged as collateral security for its debt on promissory notes made by the bankrupt, as a reasonably careful and prudent person would use under the same circumstances. The referee concluded that claimant was guilty of laches, and failed to exercise diligence and a proper effort to secure possession of the pledged property, consisting of a quantity of scrap iron and particularly specified in warehouse receipts. He did not disallow the entire claim, but charged claimant with the value of the scrap iron on the day the Consumers' Metal Company, Limited, a Canadian company, failed in business, fixing the value at $5 per ton on 1,200 tons, and then deducted from claimant's secured claim the sum of $6,000, allowing it to prove the balance as an unsecured debt.

The referee, in my judgment, has given equitable consideration to the involved questions. His conclusions on the facts should not be disturbed, unless it is shown that he was clearly wrong in applying laches to the secured creditor, and that there was palpable failure on his part to apply the equities. The filed stipulation of facts is perhaps susceptible of different inferences, but I think the inferences drawn by the referee are not unwarranted, namely, that claimant did not follow its security with sufficient prudence and care, as it should have done immediately following the filing of the petition in bankruptcy herein, and especially after the Consumers' Metal Company, Limited, which was allied with the bankrupt herein, filed its petition for liquidation in Canada.

Claimant's contention that everything was done that reasonably could be done to protect the security, and that it would have been expensive to move the scrap iron, especially as its value, and consequently the value of the security, became greatly depreciated, has not been overlooked by me; but it, I think, fails to outweigh the asserted negligence in timely guarding the property and taking steps to acquire it. It must be held accountable for the lack of...