In re Hager

• Decision Date: 05 February 1909
• Citation: 166 F. 972
• Parties: In re HAGER.
• Court: U.S. District Court — Northern District of Iowa

166 F. 972

In re HAGER.

United States District Court, N.D. Iowa, Central Division.

February 5, 1909

J. L Bonar, for Deere & Mansur Company and Deere & Co.

E. K Main, for Racine-Sattley Company.

Sullivan & MacMahon, for E. A. Studer.

W. B Quarton and E. V. Swetting, for the trustee.

REED District Judge.

Numerous motions are filed by the respective parties to strike the abstracts of evidence and briefs of the others. They are each and all overruled.

William J. Hager, a dealer in agricultural implements at Wesley in this district, was adjudged bankrupt by this court January 15, 1908, upon his own petition filed January 13, 1908. A trustee of his estate was duly appointed, who, upon qualifying, took possession of the bankrupt's stock of agricultural implements, including the property involved in these controversies. Deere & Mansur Company, Deere & Company, and the Racine-Sattley Company (hereinafter for convenience called the implement companies) presented to the referee their several petitions claiming separate portions of the property so in custody of the trustee upon the ground that the property so claimed had been sold by them, respectively, to the bankrupt under written contracts of sale whereby each reserved the title to and right of possession of the property sold by it until it should be fully paid for in cash (which it was stipulated upon the hearing before the referee had not been done), and E. A. Studer presented a petition in which he claimed of the trustee all of the property under a chattel mortgage made by the bankrupt to him April 4, 1907, but which was not recorded until December 16th, prior to the filing of the petition in bankruptcy. The referee denied the claim of each of the petitioners, and they severally petition for a review of such orders.

The contracts of the implement companies under which they, respectively, claim portions of the property so in possession of the trustee, are substantially alike. That of Deere & Mansur Company contains the following provisions:

'That the title to and ownership of all goods shipped under this contract shall remain vested in Deere & Mansur Co., until the price thereof shall be paid in cash, and until all notes given therefor and to be given under this contract are paid, and the said Deere & Mansur Co., shall be entitled to possession of the same whenever they may feel insecure, or whenever I or we (the bankrupt) may become insolvent or bankrupt.'

The others contain a like provision.

The question of the priority of right between the vendor under such a conditional contract of sale, not recorded as required by the Iowa statute, and the trustee in bankruptcy of the conditional vendee, was considered by this court in Re Tweed (D.C.) 131 F. 355, and in Re Smith & Shuck (D.C.) 132 F. 301, and it was held, following the decision of the Court of Appeals this circuit in Re Pekin Plow Co., 121 F. 308, 50 C.C.A. 257, and other cases, that such priority was in the trustee in bankruptcy. Since these decisions, however, the Supreme Court of the United States and the Court of Appeals this circuit have held that the trustee in bankruptcy succeeds only to the rights of the bankrupt in property owned or claimed by him at the time of the bankruptcy, and, in cases unaffected by fraud, 'takes such title in the same plight and condition that the bankrupt himself held it, and subject to all of the equities impressed upon it in his hands. ' York Mfg. Co. v. Cassel, 201 U.S. 344, 26 Sup.Ct. 481, 50 L.Ed. 782; In re Newton & Co., 153 F. 641-845, 83 C.C.A. 23; Dunlop v. Mercer, 156 F. 545, 86 C.C.A. 435.

In York Mfg. Co. v. Cassel, above, it is held, that 'a creditor' against whom a conditional contract of sale of property is void, under a statute substantially like that of the state of Iowa, is one who 'between the execution of the contract and the filing thereof for record has taken steps to fasten a specific lien upon the property for the payment of his debt,' and that a general creditor, having no such lien, cannot contest the validity of the title of the conditional vendor; also, that the filing of a petition in bankruptcy or an adjudication of bankruptcy does not operate as a lien in favor of the trustee upon any property of the bankrupt, as stated in Mueller v. Nugent, 184 U.S 1, 22 Sup.Ct. 269, 46 L.Ed. 405, and that the rights of the parties under said contract of conditional sale are to be determined by the laws of the state in which they are made. In Blackman v. Baxter, 125 Iowa, 118-120, 100 N.W. 75, 70 L.R.A. 250, it is held by the Supreme Court of Iowa that the...