In re Taub

• Decision Date: 06 April 1925
• Docket Number: No. 298.,298.
• Citation: 7 F.2d 447
• Parties: In re TAUB.
• Court: U.S. Court of Appeals — Second Circuit

7 F.2d 447 (1925)

In re TAUB.

No. 298.

Circuit Court of Appeals, Second Circuit.

April 6, 1925.

COPYRIGHT MATERIAL OMITTED

Beekman, Bogue, Clark & Griscom, of New York City (William Campbell Armstrong, of New York City, of counsel), for petitioner appellant.

Dallas Flannagan, of New York City (John W. Davis, of New York City, of counsel), for respondent appellee.

Before ROGERS, HOUGH, and HAND, Circuit Judges.

ROGERS, Circuit Judge (after stating the facts as above).

The parties to this proceeding have seen fit to bring it into this court by a petition to revise and by an appeal. There are certain proceedings in bankruptcy which can be reviewed by writ of error. There are others which are to be reviewed by an appeal. There are others which are to be reviewed by petition to revise. In general it may be said that the character of the proceedings determines the proper method to be pursued in bringing the proceedings into this court. Section 24a of the Bankruptcy Act (Comp. St. § 9608) gives the Circuit Courts of Appeals "appellate jurisdiction of controversies arising in bankruptcy proceedings." Section 24b gives them "jurisdiction in equity * * * to revise in matter of law." The Supreme Court, in Re Loving, 224 U. S. 183, 32 S. Ct. 446, 56 L. Ed. 725, declared that the proceeding under section 24b was not intended as a substitute for the right of appeal under section 25 (Comp. St. § 9609). The two remedies, appeals and petitions to revise, as we have many times said, are mutually exclusive, and where a party can avail himself of one the other is not open to him. In Globe Bank & Trust Co. v. Martin, 236 U. S. 288, 295, 35 S. Ct. 377, 59 L. Ed. 583, it was held that a controversy over the distribution of a fund in the hands of a trustee in bankruptcy is "a controversy arising in the bankruptcy proceedings, and hence appealable as other cases in equity under the Circuit Court of Appeals Act," and that the appeal to the Circuit Court of Appeals was properly taken. And see the cases cited in Remington on Bankruptcy (3d Ed.) vol. 8, p. 76, § 3688. The petition to revise is dismissed, and we shall dispose of the case on the appeal.

The case is here on appeal from an order made in the District Court dated February 29, 1924, which directed the Central Union Trust Company of New York City to pay to the storage company the sum of $3,782.28. Under the decision on the first appeal the trust company would have been entitled to receive the sum of $21,623, the full amount realized at the auction sale of the fruit after payment of the charges of the storage company in the sum of $33,021.13, if it had then been ascertained that the storage company's remaining charge of $3,782.28 did not constitute a lien on the proceeds of the sale of the fruit. Whether this second claim of the storage company amounts to a lien on the particular proceeds now before the court is to be determined herein.

The conclusion reached in the first appeal, and which gave the trust company a lien after discharging the lien of the storage company, was reached upon the theory that, while the legal title to the fruit was in Taub under the straight bill of lading, the fruit equitably was the joint property of Taub and Small, who were partners in the joint adventure, and that Small had power to borrow for the joint enterprise, and when he drew his drafts on Taub and discounted them with the trust company, transferring to it the straight bills of lading, he gave to that company the same equitable right in the fruit that he himself possessed; and when the fruit was sold the trust company's equitable lien in succession to Small attached to what remained after paying the lien of the storage company. The trustee of the bankrupt had no interest in the estate, for his interest extended only to any surplus which remained after the payment of the trust company's lien, and after its payment there would be no surplus.

The question now raised has not been decided. It is whether the storage company's claim to the $3,782.28 has been now established. Unless this has been done, that amount also must be paid to the trust company in addition to the $17,840.72. The fact being that the trust company's just claim for its advances amounted to $31,532.75, and under the decision on the first appeal it would have been entitled to the whole of the balance, $21,623, deposited with the Central Union Trust Company, but for the fact that the storage company had asserted an additional warehouseman's lien under the laws of New Jersey against the fund to the extent of $3,782.28.

The storage company is here claiming that it now has established its right to this additional lien in the above amount. As to this claim the referee has found as follows: "The claim or lien asserted by the storage company is for storage charges due from Taub in respect of prior merchandise stored by him in his name, other than the merchandise represented by the 42 carloads; the storage company pleading that its claim or lien outranks any claim or lien of the Yakima Company the trust company to the extent of $3,782.28 to or upon such $21,623."

He has sustained the validity of the lien as against that of the trust company in the following statement: "As to the claims of the storage company: All claims for storage on the contents of the 42 cars have already been paid out of the proceeds of sale, with the consent of all parties. The claim by the storage company to be reimbursed for other storage due from Taub on other merchandise, viz. $3,782.28 before the lien of the bank is satisfied, seems to me well founded on the doctrine of estoppel. By the bank's act in leaving the contents of the 42 cars in the possession and control of Taub (by accepting the pledge of a `straight' bill of lading), the bank took the risk of any act of Taub subjecting the fruit to his own liens. De facto he stored the fruit in his own name, entirely or to a large extent. Having done so, he subjected the fruit to any lien which the storage company might have against him as fully as if he had been the owner of the fruit free and clear of any claim by the bank."

He thereupon directed the Central Union Trust Company, the depositary, to pay to the storage company $3,782.28. And this decision the court below affirmed. It appears to have been assumed by the referee that Taub had possession of the fruit, and deposited it with the storage company in his own name, and that the storage company had a claim against him for storage charges in respect of prior merchandise stored in his name, and that when the fruit in the 42 carloads was deposited the storage company had no notice of the claim of the trust company. If such were the facts, as established by the record, we could understand the claim which the storage company puts forward and ...