In re Farmers' Co-op. Co. of Barlow, N.D.

• Decision Date: 08 February 1913
• Citation: 202 F. 1005
• Court: U.S. District Court — District of North Dakota
• Parties: In re FARMERS' CO-OPERATIVE CO. OF BARLOW, N.D.

202 F. 1005

In re FARMERS' CO-OPERATIVE CO. OF BARLOW, N.D.

United States District Court, D. North Dakota, Southeastern Division.

February 8, 1913

Todd &amp Kerr, of St. Paul, Minn., for trustee.

Lawrence & Murphy, of Fargo, N.D., for International Harvester Co. and another.

AMIDON District Judge.

This cause comes before the court upon a certificate of the referee, certifying to the court for review an order made by him on the 10th day of July, 1912. The controversy arises out of these facts: The Northern Rock Island Plow Company on September 2, 1910, entered into a conditional sale contract with the bankrupt, agreeing to supply it with certain classes of farm implements, the title to which was to remain in the seller until the purchase price was fully paid. Thereafter during the fall of 1910, it supplied the property involved in this controversy. The contract was not filed in the office of the register of deeds until February 24, 1912. The petition in bankruptcy was filed March 9, 1912, and the adjudication was entered on the 29th of the same month. The plow company petitioned the referee for an order directing the trustee to turn over the property to it by reason of its reserved right in the contract. This the referee refused to do, but, on the contrary, entered a decree declaring that the trustee in bankruptcy held the property free and clear of any claim of the petitioner. The plow company now seeks a review of that order.

It should be noticed that the conditional sale contract was filed for record on the 24th day of February, 1912, fourteen days before the filing of the petition in bankruptcy. The referee held it void as against the trustee because the filing was within four months of the filing of the petition. This I think was clearly erroneous. The trustee in bankruptcy derives his right from section 47a, subd. 2, as amended by the act of 1910. The purpose of the amendment is now reasonably clear. Under the original act several of the Circuit Courts of Appeal had held that the filing of the petition in bankruptcy amounted to a seizure of the property of the bankrupt, and conferred upon the trustee the same rights as a creditor would have obtained by the levy of an execution or attachment at the date of the filing of the petition. In re Shirley, 112 F. 301, 50 C.C.A. 252; York Mfg. Co. v. Cassell, 135 F. 52, 67 C.C.A. 526; In re Ducker, 134 F. 43, 67 C.C.A. 117. But in York Mfg. Co. v. Cassell, 201 U.S. 344, 26 Sup.Ct 481, 50 L.Ed. 782, the Supreme Court held these decisions to be unsound, and ruled that the trustee simply stood in the shoes of the bankrupt, and took the property subject to every claim that could have been urged against him. The amendment of 1910 was passed for the purpose of reinstating the rule as declared by the Circuit Courts of Appeal. In re Williamsburg Knitting Co. (D.C.) 190 F. 871, 878; In re Farmers' Supply Co. (D.C.) 196 F. 991.

The trustee, therefore, as the amendment plainly declares 'as to all property in the custody or coming into the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies and powers of a creditor holding a lien by legal or equitable proceedings thereon. ' This language measures the right of the trustee. The history of the statute, as above outlined, shows that those rights are obtained by the filing of the petition in bankruptcy. That act is by the amendment given the same force as the seizure of the property under execution or attachment by a creditor, and cannot be given any retroactive effect. In re Jacobson & Perrill (D.C.) 200 F. 812. If...