In re Coe

• Decision Date: 07 May 1909
• Docket Number: 9,649.
• Citation: 169 F. 1002
• Parties: In re COE et al.
• Court: U.S. District Court — Southern District of New York

169 F. 1002

In re COE et al.

No. 9,649.

United States District Court, S.D. New York.

May 7, 1909

Rounds Hatch, Dillingham & Debevoise (Ralph S. Rounds, of counsel) for claimant Sovereign Bank of Canada.

White &amp Case (Joseph M. Hartfield, of counsel), for trustee.

HOLT District Judge.

This is a proceeding to review an order of the referee expunging a claim for $56,926, filed by the Sovereign Bank of Canada against the separate estate of the bankrupt Coe. On February 15, 1907, the firm of Cadenas & Coe, composed of Edward P Coe and William H. Knox, were put into bankruptcy. The firm had been for many years previously engaged in business in New York as importers of African goods. Some time prior to the bankruptcy, they made an arrangement for a credit with the Sovereign Bank of Canada, which had an agency in New York. Under this arrangement they purchased a large amount of ostrich feathers in Africa, paying for them by drafts on the Sovereign Bank of Canada. The goods were consigned to the bank. The bills of lading given for the goods described the bank as their owner. When the drafts, accompanied by the bills of lading, reached the bank, they were paid. The bank thereupon drew bills for an equivalent amount upon Cadenas & Coe, which were duly accepted. They also transferred the bills of lading to Cadenas & Coe, taking from them trust receipts, which recited that Cadenas & Coe had received from the Sovereign Bank of Canada the bills of lading and invoices for the ostrich feathers, and that Cadenas & Coe thereby undertook to sell the property for account of the bank, and to collect the proceeds of the sales thereof, and to deposit the same immediately on receipt thereof in the said bank at New York. The receipts acknowledged that Cadenas & Coe were bailees for the said property for the said bank, that the bank might at any time cancel the bailment or trust, and that, in such event, Cadenas & Coe undertook and agreed to return all unsold goods at once on demand, or to pay the value of the said goods. Thereupon Cadenas & Coe sold the goods on a term of credit, usually, of about 60 days. It was understood by both parties that the goods were to be sold on credit. Cadenas & Coe collected from the proceeds of said goods about $70,000, but did not turn it over to the bank. When the bankruptcy occurred, the entire amount substantially had been disposed of by Cadenas & Coe.

Shortly after the bankruptcy, a composition was proposed in behalf of the partner Knox individually, and of the firm of Cadenas &amp Coe, but not in behalf of the partner Coe individually. This composition provided for the payment of 20 per cent. of the firm indebtedness. It was assented to by the requisite number of creditors, and was duly authorized by an order of this court. The Sovereign Bank of Canada did not formally sign the consent to the composition, but its representative announced, at a meeting of creditors, when the composition was under consideration, that it had no objection to it. It had at that time filed no proof of claim either against the firm or against the individual partners, and the amount of its claim was not then exactly liquidated. A statement was subsequently made up, showing an indebtedness of about $71,000. Thereupon a stipulation was entered into between the bankrupt Knox and the attorneys for the bank, deciding the amount of the indebtedness to be at least $71,158, and stating that an order might be entered forthwith, directing the trustee to draw a check in payment of the dividend due upon said sum pursuant to the order of this court, dated October 29, 1907, and 'that neither the bankrupts nor the Sovereign Bank of Canada waives any rights by this stipulation. ' Thereupon an order was entered...