In re Rose Shoe Mfg. Co.

• Decision Date: 16 February 1909
• Docket Number: 168.
• Parties: In re ROSE SHOE MFG. CO.
• Court: U.S. Court of Appeals — Second Circuit

168 F. 39

In re ROSE SHOE MFG. CO.

No. 168.

United States Court of Appeals, Second Circuit.

February 16, 1909

Adler &amp Adler, for appellant.

Walter S. Hubbell (John A. Barhite, of counsel), for respondent.

Before LACOMBE, COXE, and NOYES, Circuit Judges.

NOYES Circuit Judge.

This is an appeal from an order of the District Court reversing a summary order of a referee in bankruptcy directing the Alliance Bank, of Rochester, N.Y., to turn over to the trustee of a bankrupt estate $1,171.73, being the proceeds of a sale of certain shoes alleged by the trustee to have been a part of such bankrupt estate and to have been unlawfully taken from the receiver of said estate by said bank.

At the outset it is apparent that the case comes to this court in an improper way. An order directing the turning over of property or money by a third person to a trustee is not an order which can be reviewed by appeal under section 25a of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 553 (U.S. Comp. St. 1901, p. 3432)). It is not (1) an adjudication of bankruptcy (2) a grant or denial of a discharge, or (3) a judgment allowing or disallowing a debt or claim; the latter term applying only to debts presented for proof against estates in bankruptcy. First National Bank v. Chicago Title & Trust Co., 198 U.S. 280, 25 Sup.Ct. 693, 49 L.Ed. 1051; Holden v. Stratton, 191 U.S. 115, 24 Sup.Ct. 45, 48 L.Ed. 116; In re Whitener, 105 F. 180, 44 C.C.A 434. A petition for revision is the only remedy.

As, however, the appellee has made no objection to the present method of procedure, and as the assignments of errors in connection with the findings present the questions of law to be considered as adequately as would a petition for revision, we have concluded to treat the case as if brought here by petition. In re Russell & Birkett, 101 F. 248, 41 C.C.A. 323; In re Abraham, 93 F. 767, 35 C.C.A. 592. But we shall not consider our action a precedent in any case where objection is made.

The following is a summary of the essential facts: In April, 1907, a receiver in bankruptcy was appointed for the Rose Shoe Manufacturing Company, who forthwith entered upon the discharge of his duties and took possession of the bankrupt's shoe factory at Rochester and all the merchandise therein. A part of such merchandise consisted of boots and shoes which had been sent out by the bankrupt to fill orders and had been returned. A considerable quantity sent out before the appointment of the receiver was returned afterwards, and was accepted by the receiver and the bankrupt. Some time after the appointment of the receiver the Alliance Bank, without his consent, took the said returned merchandise, sold it for $1,171.73, and retained the proceeds. This action of the bank was in pursuance of a claim of ownership. Accounts for boots and shoes sold had been assigned by the bankrupt to the bank as collateral security for indebtedness, and the bank claimed that the returned merchandise which had been included in such accounts belonged to it. The assignment from the bankrupt to the bank in terms embraced only the accounts, and no other assignment was executed.

Upon these facts the referee found that the proceeds of the sale of the shoes should be returned by the bank to the trustee in bankruptcy. The District Court, however, held that the action of the referee was erroneous, upon the ground that the bank had an adverse claim to the returned shoes, that the bankrupt had possession of them only as agent of the bank, that the bank was the lawful owner of the shoes, and that the referee had no jurisdiction to make the order in question.

It is clear that the returned merchandise came into the actual possession of the receiver as a part of the bankrupt's property. Whether or not it was separated from other merchandise is not material, and it is not found by the referee that it was separated. It was in the factory of the bankrupt, and no legal action was necessary upon the part of the receiver to retain possession.

On the other hand, legal action would have been necessary on the part of the bank to...