Loren Hewit v. Berlin Machine Works

• Citation: 48 L.Ed. 986,24 S.Ct. 690,194 U.S. 296
• Decision Date: 16 May 1904
• Docket Number: No. 228,228
• Parties: LOREN M. HEWIT, as Trustee in Bankruptcy of Clara E. Kellogg, Appt. , v. BERLIN MACHINE WORKS
• Court: United States Supreme Court

194 U.S. 296

24 S.Ct. 690

48 L.Ed. 986

LOREN M. HEWIT, as Trustee in Bankruptcy of Clara E. Kellogg, Appt.,

v BERLIN MACHINE WORKS.

No. 228.

Argued April 18, 1904.

Decided May 16, 1904.

Loren M. Hewit, as trustee in bankruptcy of Clara E Kellogg, applied to the United States district court for the eastern district of New York for an order of sale of certain real estate, buildings, and machinery. Notice to creditors was given, and thereafter the Berlin Machine Works, a corporation, filed its petition, praying, on grounds set forth, to be declared the owner of certain machines included in the property, and be awarded possession thereof, and that they be exempted from sale, or that it be determined that the corporation is entitled to be first paid out of the proceeds of the sale of the machines, and to share in dividends on any unpaid balance. The matter was heard before the referee, who held that the corporation had lost the legal title to the machines, and must come in as an unsecured creditor. The corporation petitioned the district court for a review of the referee's decision, the referee made his certificate and return, and the matter was submitted to the court, which thereafter reversed the decision of the referee, and adjudged that the Berlin Machine Works had a good and valid title to the machines, and that the same be delivered to it, or, in the event that they had been disposed of, that the trustee pay over to the Berlin Machine Works the sum of $1,200, the value of the machines. 112 Fed. 52.

The trustee then filed a petition in the district court, making application for revision and review in matter of law, and appealed to the circuit court of appeals for the second circuit from the judgment of the district court, and the district court ordered 'that a superintendency and revision and review in matter of law and an appeal be and the same hereby is allowed in the above-entitled proceedings to the circuit court of appeals, second circuit of the United States.' The circuit court of appeals affirmed the judgment of the district court, 56 C. C. A. 383, 118 Fed. 1017, and thereupon an appeal was allowed to this court.

Mr. Frank H. Robinson for appellant.

Mr. Charles M. Harrington and John L. Romer for appellee. Statement by Mr. Chief Justice Fuller:

Mr. Chief Justice Fuller delivered the opinion of the court:

If the trustee had carried the case to the circuit court of appeals on petition for supervision and revision under § 24b of the bankruptcy law [30 Stat. at L. 553, chap. 541, U. S. Comp. Stat. 1901, p. 3432], the case would have fallen within Holden v. Stratton, 191 U. S. 115, ante, p. 45, 24 Sup. Ct. Rep. 45, and the appeal to this court would have failed. But he took it there by appeal, though accompanied by some apparent effort to avail himself also of the other method. And as the Berlin Machine Works asserted title to the property in the possession of the trustee by an intervention raising a distinct and separable issue, the controversy may be treated as one of those 'controversies arising in bankruptcy proceedings' over which the circuit court of appeals could, under §24a, exercise appellate appeals could, under § 24a, exercise appellate 25a relates to appeals from judgments in certain enumerated steps in bankruptcy proceedings, in respect of which special provision therefor was required. (Holden v. Stratton, 191 U. S. 115, ante, p. 45, 24 Sup. Ct. Rep. 45), while § 24a relates to controversies arising in bankruptcy proceedings in the exercise by the bankruptcy courts of the jurisdiction vested in them at law and in equity by § 2, to settle the estates of bankrupts, and to determine controversies in relation thereto. Hutchinson v. Otis, 190 U. S. 552, 47 L. ed. 1179, 23 Sup. Ct. Rep. 778; Burleigh v. Foreman, 125 Fed. 217.

The appeal to this court then followed, under § 6 of the act of March 3, 1891 [26 Stat. at L. 828, chap. 517, U. S. Comp. Stat. 1901, pp. 549, 550].

This brings us to the consideration of the case on the merits. The material facts are these: October 10, 1900, Clara E. Kellogg contracted with the Berlin Machine Works for the purchase of two wood-working machines at the price of $1,850, payment to be made within four months from date of shipment, and title to the property to remain in the machine company until fully paid for. The machines were shipped to Kellogg, October 29 and November 16, respectively, and were received by her, set up in her planing mill, and put in operation. October 29 and November 16 she signed and delivered to the machine company in payment for the machines two promissory notes for $925 each, payable in two and four months from their respective dates, to the order of the machine company, and each containing the following clause 'Title and right of possession of the property for which this note is given remains in the Berlin Machine Works until fully paid for.' Kellogg, on her voluntary petition, was adjudicated a bankrupt, March 1, 1901, and a trustee was selected March 22, and thereafter duly qualified. The notes have not been paid, and were mentioned in the schedules as secured claims, the security being the machines in question. It also appeared that January 21, 1901, Clara E. Kellogg, being insolvent, executed a conveyance of the planing mill to a corporation called the C. E. Kellogg Company, which being attacked as fraudulent, the property was voluntarily released to the trustee, all the capital stock of the company, the entire consideration of the alleged transfer, being...