In re Cook
| Decision Date | 28 January 1935 |
| Docket Number | No. 6926.,6926. |
| Citation | 9 F. Supp. 764 |
| Parties | In re COOK. |
| Court | U.S. District Court — District of Maryland |
O. Bowie Duckett, Jr., of Baltimore, Md., for Armour Fertilizer Works.
Sherman P. Bowers, of Frederick, Md., for trustee.
This case is before the court on the petition of the Armour Fertilizer Works to review the findings and order of the referee in bankruptcy dismissing the petitioner's claim, which arose in the following manner: On September 18, 1931, the Armour Fertilizer Works sold and delivered to Raymond F. Cook, the bankrupt, fertilizer to be used on the farm tenanted by the bankrupt. As security for payment of the purchase price, the bankrupt gave to the petitioner a bill of sale of "one-half of his wheat crop then being, standing and growing or to be planted during the year 1931," upon the farm. This bill of sale was recorded on October 2, 1931, in full compliance with the recording statute of Maryland (Code Pub. Gen. Laws 1924, art. 21, § 48). Prior thereto, but subsequent to giving the bill of sale, the bankrupt had placed the fertilizer purchased by the bill of sale, and had planted the wheat, on the specified premises. On June 24, 1932, he was adjudicated a bankrupt, and a receiver was appointed for his estate. Shortly before the adjudication, the sheriff of Frederick county levied execution upon all of the personal property belonging to Cook, and the same was later advertised for public sale and sold, not including, however, the wheat crop which was not ready for harvest until about July 1, 1932; that is, subsequent to the adjudication of Cook in bankruptcy. The trustee in bankruptcy harvested the crop, sold it, and obtained $137.02 for Cook's one-half interest covered by the bill of sale, which amount is in excess of the sum due the petitioner, the Armour Fertilizer Works, on account of the fertilizer. Petitioner claimed that it was entitled to be paid in full out of the proceeds of the sale by the trustee in bankruptcy, as a preferred creditor, the purchase price of the fertilizer, with interest. The trustee resisted this payment; the matter was referred to the referee in bankruptcy, who conducted a hearing and decided in favor of the trustee, with the result that the petitioner has now brought the matter before this court for a review of the referee's action.
Briefly stated, the referee's conclusion, rendered in a carefully prepared opinion, is that, according to the law of Maryland, by which the rights, if any, acquired by petitioner under the bill of sale are to be determined, future crops cannot be made the subject of a bill of sale so as to vest any rights in the vendee thereunder.
In reaching his conclusion, the referee relies upon various decisions of the Court of Appeals of Maryland, but none of these cases appears to have actually involved the question of future crops. In one of them which the referee particularly stresses, Wilson v. Wilson, 37 Md. 1, 11 Am. St. Rep. 518, decided in 1872, the court merely held in an action of trespass and trover that a verbal agreement to sell and convey all the personal property that the vendor then had, and all that might thereafter be acquired, was inoperative to pass legal title to the subsequently acquired property. An examination of that case discloses that future crops were not the subject at least of direct inquiry, but the court was concerned with the question of whether legal title can be conveyed in goods subsequently to be acquired, and therefore whether a right of action to recover them from a party seizing them can be acquired by one to whom they have been sold or mortgaged. The court answered these questions in the negative, relying upon the case of Hamilton v. Rogers, 8 Md. 301, decided in 1855. But the court in Wilson v. Wilson clearly indicated that it was not dealing with the question of a possible equitable lien, saying (page 11 of 37 Md.): "How a Court of Equity would deal with a clause of this character in a mortgage or bill of sale, is not a matter now to be determined. * * *" Similarly, a few years later (1877) in Butler v. Rahm, 46 Md. 541, at page 548, in a case involving a railroad mortgage, the court said: "While it is well settled that a party cannot convey subsequently to be acquired goods, so as to give the mortgagee a legal title thereto, or a legal right of action against a party seizing them, as was decided in Hamilton & Robinson v. Rogers, 8 Md. 301, yet it has frequently been decided that such a conveyance creates in equity a valid lien upon property subsequently acquired." See, also, First National Bank v. Lindenstruth, 79 Md. 136, 28 A. 807, 47 Am. St. Rep. 366; Baltimore Humane Impartial Society and Aged Women's and Aged Men's Homes v. Pierce, 99 Md. 352, at page 355, 58 A. 26.
The referee in his opinion in the present case purports to quote the following passage from Wilson v. Wilson: This quotation is not only an inaccurate transcription from the opinion in Wilson v. Wilson, but an examination of that opinion will readily disclose that Justice Miller, in using language similar to the aforegoing, was quoting from the decision in the English case of Congreve v. Evetts, 10 Excheq. Rep. 298.
The referee also relies largely upon the decision of the Circuit Court of Appeals for this circuit in Grimes v. Clark, 234 F. 604, rendered in 1916, affirming a decision of Judge Rose in the Maryland district (232 F. 190), to the effect that a chattel mortgage duly recorded covering a stock of goods, which expressly extended the mortgage lien to after-acquired property, did not authorize the mortgagee shortly before the mortgagor was adjudicated a bankrupt to seize the after-acquired property. After a review of the Maryland authorities, the Circuit Court of Appeals said (page 607 of 234 F.): ...
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