Massachusetts Bonding & Ins. Co. v. Kemper

• Decision Date: 02 March 1915
• Docket Number: 2525.
• Parties: MASSACHUSETTS BONDING & INS. CO. v. KEMPER. In re L. P. HAZEN CO.
• Court: U.S. Court of Appeals — Sixth Circuit

220 F. 847

MASSACHUSETTS BONDING & INS. CO. v. KEMPER.

In re L. P. HAZEN CO.

No. 2525.

United States Court of Appeals, Sixth Circuit.

March 2, 1915

The bankrupt corporation, the Hazen Company, in July, 1910 agreed to erect a building in Cincinnati, and the Bonding Company became surety for the Hazen Company upon the usual contractor's bond, conditioned that the building should be completed free from liens, etc., according to contract. In connection with obtaining the bond, the Hazen Company, called therein the applicant, entered into an agreement with the Bonding Company, including the provisions set out in the margin, ^[1] to the effect that the Hazen Company's building plans and machinery and the building contract itself were assigned to the Bonding Company by way of indemnity against signing the bond, and so that, in case of default, the Bonding Company might have the use of the plant to complete the building, in order to minimize its own liability. This contract was not recorded. While the erection of the building was in progress, and on September 20th the state court appointed a receiver for the Hazen Company. The receiver decided not to go on with this contract, and thereupon, on October 25th, the Bonding Company, acting under the power conferred or by virtue of the assignment made by the application contract, took possession of the building plant and thereafter carried on the contract to completion resulting in a loss to the Bonding Company, and creating a corresponding claim in favor of that company against the Hazen Company.

Intermediate the appointment of the receiver by the state court and the taking of possession of the property by the Bonding Company these bankruptcy proceedings were initiated by the filing of an involuntary petition on September 30th, as the result of which an adjudication occurred November 28th. Later, and in February, 1911, the Bonding Company filed a petition in the bankruptcy court, alleging its lien upon and possession of the building machinery, and praying that its right thereto for the purpose of completing the contract might be adjudged, that the trustee be enjoined from selling this machinery until the contract was completed, and that whatever loss the Bonding Company in the end suffered might be adjudged a secured claim against the proceeds of this property when sold. By an interlocutory order, this property was exempted from the general sale which the trustee was to make, and the determination of the rights of the parties was reserved. Later the property was sold under an agreement that the proceeds were to be held by the trustee as a separate fund and subject to the order of the court to be made in the controversy between the Bonding Company and the trustee. On November 5, 1912, a stipulation of fact was filed, showing that the total loss of the Bonding Company, by carrying out the contract, was $4,579.61, that the net proceeds of the property in controversy were $1,452.17, and concluding: 'The Massachusetts Bonding & Insurance Company claims a lien upon the net proceeds of the articles above referred to, viz., $1,452.17, and to the allowance of its loss as a general creditor for the difference, viz., $4,579.61 less $1,452.17 equals $3,127.44. ' The referee, and on review the District Judge, held that the Bonding Company had no lien upon the tools and building machinery, valid as against the trustee, and so was not entitled to the specific fund in controversy, and also held that the general claim for $4,579.61, not having been filed in due form and in due time, must be disallowed. From the order of the District Court, entered on February 19, 1913, the Bonding Company appealed on April 26th, complaining both of the denial of the lien and the refusal of the general claim.

C. D. Robertson, of Cincinnati, Ohio, for appellant.

Province Pogue and B. B. Tuttle, both of Cincinnati, Ohio, for appellee.

Before KNAPPEN and DENISON, Circuit Judges, and SATER, District Judge.

DENISON Circuit Judge (after stating the facts as above).

1. A motion is made to dismiss the appeal because it was not taken within 10 days, as required by section 25a. So far as the appeal seeks a reversal of the order disallowing the general claim, this motion must be granted, upon the authority of the cases cited by us in Re Martin, 201 F. 31, 34, 119 C.C.A. 363; but this odes not dispose of the whole appeal. The denial of the lien and the disallowance of the general claim are so distinct that there could have been an independent appeal from either part of the order; and the appeal from so much of the order as refused the lien must be treated separately. While this assertion of lien eventually took very much the form of an attempt to secure the allowance of a preferred claim, and so appealable only under the 10-day limitation, yet we think that, considering the form in which it arose, it may fairly be regarded as presenting a controversy over the title to or rights in specific property, and that therefore this appeal is, pro tanto, entitled to be considered as taken under section 24a. To that extent, the motion to dismiss is denied. Southern Co. v. Elliotte (C.C.A. 6, Nov. 13, 1914) 218 F. 567, 134 C.C.A. 295. By granting the motion as to the general claim, we intimate no opinion whether that claim had been so filed that there was anything for the order appealed from to operate upon in that respect as an adjudication.

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