In re Franklin Lumber Co.

• Decision Date: 06 May 1911
• Docket Number: 3,794.
• Citation: 187 F. 281
• Parties: In re FRANKLIN LUMBER CO.
• Court: U.S. District Court — Eastern District of Pennsylvania

187 F. 281

In re FRANKLIN LUMBER CO.

No. 3,794.

United States District Court, E.D. Pennsylvania.

May 6, 1911

D. Hays Solis-Cohen, for trustee.

William F. Berkowitz, for claimant.

J. B McPHERSON, District Judge.

In my opinion the referee's conclusion is right, although I am not wholly in accord with the antecedent reasoning. It is to be noted that section 47a2, as amended by the act of June 25 1910, applies to the present dispute. Under that amendment if property coming into the custody of the court be claimed by another, the trustee is vested with all the rights remedies, and powers of a creditor holding a lien by legal or equitable proceedings thereon. An agreement, therefore, which would previously have been valid between the parties-- such, for example, as was considered in Davis v. Crompton, 158 F. 735, 85 C.C.A. 633; Id., 209 U.S. 548, 28 Sup.Ct. 759, 52 L.Ed. 921--is no longer necessarily valid against the trustee. He is in the position of a creditor holding a legal or equitable lien, and the agreement is to be scrutinized from that point of view. The contract now in question is as follows: '* * * Said second party (the bankrupt) has this day received and leased of the said first party one (1) L. C. Smith & Bros. typewriter, bearing factory number 2-- 39187, for use and hire for the term of seven months, at a rental of one hundred and five dollars, of which sum the said second party hereby agrees to pay to said first party the sum of $30 on the execution of this agreement, and $10 per month thereafter, and one payment of $15, at the office of said first party, without notification or demand. Monthly payments to begin February 14, 1909.

'The said second party further agrees to preserve said property in as good order and condition as received, natural wear and usage only excepted, and to exhibit the same to said first party when desired, and not to remove said property from address above named without the consent of said first party.

'And it is further agreed by said second party to return said property to the party of the first part immediately on the expiration of the aforesaid term. In default of any payment or payments as above stipulated, the said second party agrees to return said property to said first party, and hereby authorizes said first party, its agents or representatives, to search for and remove said property, with or without process of law, hereby releasing and waiving all right of action, civil or criminal, against the person or persons effecting such forcible possession and removal, as aforesaid, and expressly waiving all and every claim for damages therefor.

'It is further agreed between the parties that upon the return of the property at the expiration of the term, upon the payment of $1 by the party of the second part, in addition to the sum paid for rental, the party of the first part will execute a bill of sale of the aforesaid property to the party of the second part.

'It is agreed that there is no other written contract or verbal agreement in connection with this contract.'

Assuming that the bankrupt would be bound by the words of this agreement, and could not deny it to be a lease, his trustee is not so bound, and may contend that the contract is really one of conditional sale. In such a contention he may offer any competent and relevant evidence, and it is obvious, I think, that the conduct of the parties may ordinarily throw much light on the true meaning of their agreement. If they treat it as...