Taube v. Ingraham
Decision Date | 10 May 1961 |
Docket Number | No. 16595.,16595. |
Citation | 290 F.2d 288 |
Parties | L. S. TAUBE et al., Appellants, v. John INGRAHAM, Trustee in Bankruptcy of Mace-Ryer Appliance and Furniture Company, Bankrupt, Appellee. |
Court | U.S. Court of Appeals — Eighth Circuit |
James E. Lockwood, Kansas City, Mo., for appellants; J. John Gillis and Brenner, Wimmell, Ewing & Lockwood, Kansas City, Mo., on the brief.
I. I. Ozar, Kansas City, Mo., for appellee.
Before VOGEL and BLACKMUN, Circuit Judges, and BECK, District Judge.
Mace-Ryer Appliance and Furniture Company, a corporation, was adjudicated a bankrupt on October 15, 1959. John Ingraham became trustee in bankruptcy. The appellant Commerce Finance Company, a partnership engaged in the business of financing dealers in the purchase of appliances, etc., filed a petition for reclamation of certain specific items of property in possession of the bankrupt. Right to reclamation was based upon instruments designated "trust receipts".1
When the bankrupt wished to order merchandise from the distributor, Lee Wholesale Company, it would place an order with Lee. Lee would make out an invoice showing the merchandise "sold to Commerce Finance Company" and "ship to Mace-Ryer". Lee would also prepare a trust receipt covering the items to be shipped to Mace-Ryer. The trust receipt and a promissory note, in the amount of 90% of the purchase price of the merchandise, would be executed by Mace-Ryer, with Lee Wholesale signing as co-maker on the note. Sometimes Lee would execute the instruments for Mace-Ryer under a power of attorney given for that purpose. The original notes called for payment within 90 days. When the trust receipts and promissory notes were delivered to Commerce Finance, the latter in turn would pay 90% of the purchase price to Lee Wholesale. The bankrupt, Mace-Ryer, would, upon receiving the goods, pay the remaining 10% of the purchase price to Lee Wholesale. From time to time the bankrupt would make remittances to Commerce Finance and as such remittances came in Commerce Finance would strike off the items of merchandise for which payment was made. At the end of 90 days a new note and trust receipt would be prepared covering any unpaid balance. These renewal notes, also co-signed by Lee Wholesale, would be for an additional period of 30 to 60 days. Upon receipt of the renewal trust receipt and the renewal note, Commerce Finance would return the original note and trust receipt to Mace-Ryer.
Apparently when Commerce Finance reached a point beyond which they would no longer extend time for payment, they would stamp the last renewal papers as follows: "Last Renewal — Must be Paid In Full When Due." None of the trust receipts was ever filed for record.
During the period when the trust receipts were outstanding, credit was extended to the bankrupt on open account by persons and corporations who have now become general creditors of the bankrupt.
The referee in bankruptcy denied the petition for reclamation, holding the "alleged trust receipts should have been filed or recorded" under the provisions of Section 428.100 R.S.Mo.1949, V.A.M.S., and accordingly were unenforceable liens as against the trustee in bankruptcy. The District Court, upon review, affirmed the action of the referee. This appeal followed. In consideration thereof we are, of course, bound by the law of the State of Missouri.
Section 428.100 R.S.Mo.1949, V.A.M.S., provides as follows:
Admitting that Missouri does not have a final authoritative ruling from the Supreme Court of Missouri covering the precise question presented on this appeal, i. e., whether the assumption of an absolute obligation to pay, such as the giving of a promissory note by the receiptor, destroyed the trust character of the transactions and brought them within the purview of the recording statute, the appellants nevertheless contend that the court was in error. Appellants' position is that the holding of the District Court constitutes a minority rule usually grounded upon biparty transactions or broader recording acts than Section 428.100 R.S.Mo.1949, V.A.M.S., supra. Appellants contend that such view should not be followed in Missouri in a triparty transaction and that what they refer to as the dicta of the Supreme Court of Missouri in Globe Securities Co. v. Gardner Motor Co., Mo.1935, 337 Mo. 177, 85 S.W. 2d 561, 567, motion for rehearing overruled July 30, 1935, post, cited and relied upon by the District Court, should not be so construed.
Here it should be pointed out that Missouri has not adopted the Uniform Trust Receipts Act, now the law in some 35 of the states, which recognizes the trust receipts device as being sui generis and which has provision for the filing of a statement of trust receipt financing with the Secretary of State, thus providing for notice to subsequent creditors and dispensing with the applicability of recording generally.
While, as indicated, the precise question involved in this appeal has never been ruled on directly by the Supreme Court of Missouri or any of the intermediate Courts of Appeals, a review of Missouri cases insofar as they deal with trust receipts or were relied on or cited by the District Court is indicated.
The first such Missouri decision is Forgan v. Bridges, Mo.App.Springfield, 1926, 281 S.W. 134. Therein, the plaintiffs claimed automobiles under unrecorded trust receipts. Defendant's claim was bottomed on subsequent chattel mortgages on the same vehicles. The automobiles in question were originally owned by Spalding Motor Company of St. Louis and delivered by it directly to the dealer, Davison Brothers. The latter would pay 15% of the purchase price to Spalding Company upon delivery of the vehicles and sign a trust receipt and a time draft payable to plaintiffs for the balance. The trust receipt recited "Received of Spalding Motor Company, Inc., St. Louis, Mo., acting for Commercial Acceptance Trust, Chicago, Ill., the owner thereof * * *." The Springfield Court of Appeals, loc. cit. 135, held that the title to the automobiles passed to Davison Brothers when the machines were delivered to them; that there were no words of conveyance in the trust receipts, and that as they were not recorded and the defendant had no knowledge that they were in existence at the time he took the chattel mortgage under which he claimed, plaintiffs could not recover. The court stated, at page 136:
"* * * All we do hold is that as to Bridges, the mortgagee, the title was in Davison Bros. at the time his mortgage was executed; hence, as far as this case rests on the question of whether the actual title to the automobiles was in Davison Bros. or the plaintiffs at the time the mortgage was executed, Bridges must prevail over plaintiffs."
The next case dealing with Missouri law and cited by the trial court is from this court, In re Bell Motor Co., 8 Cir., 1930, 45 F.2d 19, certiorari denied Craig v. Industrial Acceptance Corporation, 283 U.S. 832, 51 S.Ct. 365, 75 L.Ed. 1445, upon which appellants place considerable reliance. Therein the court stated, 45 F. 2d at page 24:
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