In re Thomas

• Decision Date: 05 August 1912
• Citation: 199 F. 214
• Parties: In re THOMAS.
• Court: U.S. District Court — Northern District of New York

199 F. 214

In re THOMAS.

United States District Court, N.D. New York.

August 5, 1912

Dunmore & Ferris, of Utica, N.Y., for Taber and others.

Martin & Jones, of Utica, N.Y., for the trustee.

RAY District Judge.

This review involves four distinct matters which for brevity may be spoken of as the Ames-Dean claim, Marshall mortgage claim Addy mortgage claim, and Citizens' Trust Company mortgage. The Marshall and Addy claims involve chattel mortgages, and the other is a real estate mortgage.

General Facts.

Prior to the month of March, 1910, the bankrupt, John B. Thomas, a married man, had conducted the business of running a livery and sales stable in the city of Utica, N.Y. During his temporary absences his wife had acted for him, presumably with his authority, but there is no proof that she had a general power of attorney or authority to act for him. If agent at all, her agency was special. It does not appear that Thomas ever objected to or repudiated any of her acts done in his absence.

At some time in February, or early in March, 1910, said Thomas left the city of Utica, and for some considerable time his whereabouts were unknown to his creditors and the general public. It does not appear that he has returned, and his evidence in the bankruptcy proceedings was taken at some place in Ohio. He left his wife and a considerable part of his property behind. Shortly before leaving Utica, Thomas purchased a car load of horses in Canada, and gave his check for the purchase price drawn on a bank in Utica, but same was not paid when presented; there being no funds to his credit. He took these horses with him to New York City, where he disposed of them, and then spent the money in ways which he has refused to disclose.

After the departure of Thomas from Utica and on his failure to return or disclose his whereabouts, it being known that he was heavily in debt, and some time in the latter part of March, 1910, quite a large number of his creditors representing probably about 80 or 90 per cent. of same in amount, held a meeting and discussed the situation, and in writing appointed a committee, the purpose of which is shown thereby, in part at least. It reads as follows:

'The subscribers, creditors of John B. Thomas, of Utica, New York, hereby designate and appoint William I. Taber, Charles D. Thomas, Arthur W. McLaughlin, Patrick T. Fitzgerald, and Joseph T. White as a committee to represent and act for us, and for us with the assistance of Katharine R. Thomas, wife of said John B. Thomas, to take such course with reference to converting the assets of said John B. Thomas into cash, as in their judgment shall be for the best interests of all the creditors and to divide and distribute the proceeds among all the creditors of said Thomas ratably after payment of liens, upon the amount of their respective claims.

'Dated, Utica, N.Y., March 21st, 1910.

'Creditors

Amount of Claim.'

A large number of these appointments were signed, and I assume some were sent to and signed by various creditors who were not present at the meeting, and some are signed by one, some by two, and others by several of the creditors. However, they were duly signed. Something like 10 or 15 per cent. of the creditors never signed or assented thereto. This committee consented to act, and did act. William I. Taber, one of the number, acted as treasurer of such committee. Some one had prepared an inventory of the property belonging to Mr. Thomas. After the appointment of the committee, and I am taking these facts from the testimony of Mr. Taber, the members thereof, except Mr. White, went to the stables, conferred with creditors as to how the matter should be handled, and considered the question of feeding and caring for the horses, and, in fact, purchased feed for them until sold. The committee had talks and conferences with Mrs. Thomas, the wife of the bankrupt, and she exhibited the books. This committee later made an auction sale of the property, and sold most of same. During the sale Mrs. Thomas billed out and receipted for the larger articles such as horses. Taber says:

'The committee acted in the course of disposing of property selling at private sale or auction sale as they could get best prices.'

Thomas acted as auctioneer. This auction sale commenced March 24th, and continued about a week and until enjoined by the court. At the beginning of the sale, Mr. McLaughlin resigned from the committee. Mrs. Thomas was present, and assisted at the sale. The money received for the sale of certain of the property, something like $7,374.59, was deposited in bank by this committee subject to its order. There was other property sold by the committee to which special attention will be called, and the committee made certain disbursements as expenses, which expenses are not in question here. Something like $6,000 seems to have been turned over to the trustee in bankruptcy after his appointment. April 25, 1910, said John B. Thomas was duly adjudicated a bankrupt, and May 10, 1910, Abram G. Senior was duly appointed trustee of his estate, and he duly qualified May 12, 1910.

Ames-Dean Claim.

May 3, 1909, said John B. Thomas by written order directed the shipment to himself of certain property, including four carriages. The property was shipped and delivered, and the four carriages were in the possession of Thomas at the time of the appointment of such committee, and came into their possession. They were then worth the sum of $255. The Ames-Dean Carriage Company claimed to own same under and by virtue of the terms of such order, and the committee delivered same to said 'The Ames-Dean Carriage Company.' The said order for such property, including said carriages, omitting the description of such property, reads as follows:

'The Ames-Dean Carriage Co., Jackson, Michigan:

'Please ship the following goods on or about soon as ready of the value as herein specified, and for which we agree to give our notes, on your usual forms, on receipt of invoice. Notes payable as per terms stated below. This order is not subject to countermand.

'Terms 5% 30 days or 4 months note. Will reship balance of car.

'Said vehicles to be made and furnished according to description in your illustrated catalogue, when not otherwise specified herein, warranted to be well made and of good material; any breakage from defect of material or workmanship to be replaced free of charge for one year when not otherwise specified.

'It is agreed that all goods at any time on hand manufactured by you, and the proceeds of sales of goods received under this contract, or prior and similar contracts, also future orders, whether in cash, notes, book accounts or other proceeds, are to be held in trust by me for you and subject to your

order until I have paid in full all my obligations due or to become due to you, whether for goods sold under this contract or under prior and similar contracts or future orders.

'The title to and ownership of all goods shipped under this contract, or prior and similar contracts, also future orders, shall remain vested in you until the prices thereof shall be paid and until I have paid in full for all goods shipped me, in cash or until all notes given under this contract, or under prior and similar contracts or future orders are paid and nothing in this contract shall be deemed as releasing me from my obligations to pay for said goods as per the notes hereby contemplated.

'No agreements, verbal or otherwise, are binding on you unless embodied in this order which is given subject to your acceptance.

'(Signed) J. B. Thomas.'

This was never filed as a chattel mortgage or conditional sale contract. It may be fairly inferred from the evidence that Thomas purchased buggies, etc., not only for use in his livery stable, but for sale. He says some were on hand not sold. The vehicles here in question had not been sold, and there is no evidence they had been used. Thomas testified he did not purchase them on consignment, had paid part of the debt in cash, and settled and paid the balance by giving his note; also that he purchased the carriages outright, on credit. The referee finds the committee liable to the trustee for the value of said carriages $255. The justice and correctness of this ruling is challenged.

Marshall Mortgage Claim.

April 3, 1908, said John B. Thomas signed, acknowledged, and delivered to James Marshall a certain chattel mortgage covering certain horses and other personal property therein described. It recites that:

'I, John Thomas, of Utica, N.Y., being indebted to James Marshall of Utica, N.Y., for certain sums of money, which indebtedness is secured by a certain note or notes bearing date of April 1, 1908, payable to the said James Marshall and signed by me, now,' etc.

This mortgage does not disclose the amount of the indebtedness. The note is not in evidence, nor is there any evidence or proof that there was a debt or note owing by Thomas to Marshall, when the money, the proceeds of certain of the property covered by the mortgage, was paid over to Marshall by the committee. In regard to this Taber testified as follows:

'Q. On page 6 of your record (Exhibit B) I note a statement of giving of check to Marshall April 6, 1910, for $927. Please state what occurred for the payment of $927 to J. Marshall. A. The Marshall mortgage covered several horses, sleigh, wagons, carriages, and harnesses about the place. As horses were sold, the money was turned over to Marshall, and, instead of covering separate list of these items, they were credited on regular sales slips and check drawn to him for $217 which made up the amount, the horses having sold for $390, $155, $165 which made $710, check for $217 given for the balance; the other articles

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