J.M. Radford Grocery Co. v. Powell

• Decision Date: 30 November 1915
• Docket Number: 2766.,2765
• Parties: J. M. RADFORD GROCERY CO. v. POWELL (two cases). In re SEWELL.
• Court: U.S. Court of Appeals — Fifth Circuit

228 F. 1

J. M. RADFORD GROCERY CO. v. POWELL (two cases).

In re SEWELL.

Nos. 2765, 2766.

United States Court of Appeals, Fifth Circuit.

November 30, 1915

A. H Kirby and R. W. Haynie, both of Abilene, Tex., for appellant and petitioner.

W. A Wright and C. O. Harris, both of San Angelo, Tex., for appellee and respondent.

Before PARDEE and WALKER, Circuit Judges, and SPEER, District Judge.

SPEER District Judge.

This cause is presented to the court both by appeal and petition to superintend and revise. This being a proceeding in bankruptcy to establish a lien, the controversy is reviewable by petition to superintend and revise, and it is therefore thought proper to dismiss the appeal. Hutting Sash & Door Co. v. Stitt, 218 F. 1, 133 C.C.A. 641.

Upon consideration of the petition, it appears that the Radford Grocery Company, a private corporation of Abilene, in the Northern district of Texas, was a creditor of C. A. Sewell in a considerable amount. The latter was adjudicated bankrupt on February 21, 1914, and J. W. Powell was appointed trustee. Part of the assets were the proceeds of four fire insurance policies. These were issued at various dates from March 1913, to January, 1914, all before the voluntary petition in bankruptcy was filed. That was on the 21st day of February, 1914. Before that day the fire loss under the policies mentioned above had been sustained by Sewell, and had been adjusted by the insurance companies; the amount assessed being $6,655.84. A part of this sum, to wit, $681.50 was paid by the insurance companies upon certain fixtures against which the petitioner held a chattel mortgage. By agreement between the trustee in bankruptcy and the Radford Grocery Company the sum ascertained by the adjustment of the loss was collected by the trustee, and since then has been held by him under order of the referee in bankruptcy, pending the determination of the claim now before the court. In May, 1914, petitioner presented to the referee its claim to a valid lien upon this insurance fund. The trustee objected, a hearing was had before the referee, and order was granted by that official establishing the lien of the Radford Company upon the $6,655.84, and directing the trustee to pay the same to petitioner. A certificate for the review of this order was granted by the referee. The issue was presented to the judge of the District Court for the Northern District of Texas, who, after hearing, reversed the referee, and directed that the sum in controversy be distributed by the trustee upon the claims of the general creditors. From this order of the District Court the petition to superintend and revise, now under consideration here, was filed.

The assignment of the policies was more than six months before the time of the fire. From the instrument itself, it appears that it was, as stated, more than six months before the institution of bankruptcy proceedings. It was in writing, and is as follows:

'Miles, Texas, August 4, 1913.

'For value received, I hereby transfer, assign, and set over unto J. M. Radford Grocery Company, Abilene, Texas, their successors and assigns, all my title and interest in the following described fire insurance policies, and all advantages to be derived therefrom:

'Springfield F. & M. Insurance Company policy No. 229, $1,500, expiring 1/2/14.

'The Royal Exchange Insurance policy No. 3898196, $3,000, expiring 3/3/14.

'Commonwealth Fire Insurance Company, No. 580, $1,500, expiring 12/1/13.

'Austin Fire Insurance Company, No. 18190, $2,000, expiring 11/2/13.

'Orient Insurance Company policy No. 626888, $2,000, expiring 4/28/14.

'It is further agreed and understood that, as the above policies expire and are renewed, the renewals take the place of above policies, and this transfer will hold good and be valid as to the above transfer. This transfer is for the purpose of securing said J. M. Radford Grocery Company, covering the indebtedness owing by me to said J. M. Radford Grocery Company, aggregating about seven thousand ($7,000.00) dollars, and for all advances made me by said J. M. Radford Grocery Company in the future.

'Witness my hand this the 4th day of August, 1913. C. A. Sewell.

'Witness: C. W. Gill.'

Now, it is complained by the trustee that after the policies of insurance were transferred they were actually handed by the Radford Grocery Company to Sewell and remained in his possession, and were returned to that company not until after the loss had accrued. This is explained by the clause in the assignment which provided for the renewal of the policies as they expired, the renewals to take the place of the policies originally assigned. There is nothing unusual or unlawful in this. In Winslow v. Harriman Iron Co. (Tenn. Ch. App.) 42 S.W. 698, the court says:

'In the case of Johnson v. Smith, 11 Humph. 396, 400, it is stated: 'There is no doubt that by an agreement of the parties the pledge may be deposited in the hands of a third person, instead of being delivered to the pawnee, and such person will be considered as the agent or servant of the pawnee, for keeping possession of the pledge; and it would seem that the pawnor himself may be constituted such agent.' Story, Bailm. par. 226; Cross, Liens, 65; Macomber v. Parker, 14 Pick. (Mass.) 497.'

See, also, Clark v. Iselin, 21 Wall. 360, 22 L.Ed. 568; Harding v. Eldridge, 186 Mass. 39, 71 N.E. 115; Ward v. Sumner, 5 Pick. (Mass.) 59; Walker v. Staples, 5 Allen (Mass.) 34; Shaw v. Silloway, 145 Mass. 503, 14 N.E. 783; Moors v. Reading, 167 Mass. 322, 45 N.E. 760, 57 Am.St.Rep. 460; Beeman v. Lawton, 37 Me. 543; Wilkie v. Day, 141 Mass. 68, 6 N.E. 542; Kellogg v. Thompson, 142 Mass. 76, 6 N.E. 860; Casey v. Cavaroc, 96 U.S. 467, 24 L.Ed. 779; Easton v. German American Bank, 127 U.S. 532, 8 Sup.Ct. 1297, 32 L.Ed. 210; Martin v. Reid, 103 E.C.L. 730.

The rule would seem peculiarly applicable to policies of insurance which are issued in the name of the pledgor, and on which the premiums must be paid by him.

Sewell had originally bought his stock from the Radford Grocery Company. He had been indebted to it on the original purchase and for other goods for about three years. While it is urged that he was insolvent at the time the policies were transferred, this is immaterial here, for the transfer was not made within four months antecedent to bankruptcy. The record does not disclose any evidence of fraud in connection with the...