Wood v. United States Fidelity & Guar. Co.

• Decision Date: 29 July 1905
• Docket Number: 1,651.
• Citation: 143 F. 424
• Parties: WOOD v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: U.S. District Court — District of Massachusetts

143 F. 424

WOOD v. UNITED STATES FIDELITY & GUARANTY CO.

No. 1,651.

United States District Court, D. Massachusetts.

July 29, 1905

Leslie K. Storrs, for plaintiff.

Elder &amp Whitman, for defendant.

DODGE District Judge.

The plaintiff is trustee in bankruptcy of Charles King adjudicated a bankrupt January 25, 1904 on an involuntary petition against him in this Court, filed September 19, 1903. He brings this suit to recover for certain building materials, horses, vehicles and harnesses taken by the defendant on or about August 26, 1903, at Diamond Island in Portland Harbor, Me. It is alleged that the property taken was King's property at the time, and that it was taken under circumstances which made the taking a preference voidable by the trustee in bankruptcy under section 60a and 60b of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat 562 (U.S. Comp. St. 1901, p. 3445)). On December 13, 1904 the case was referred by consent to an auditor, upon whose report filed April 13, 1904, trial has now been had before the court without a jury. The findings of the auditor are in great part undisputed, and his undisputed findings are sufficient for the decision of the case. They will be referred to as occasion may require without restating them at length.

The following provisions of the indemnity agreement set forth in the auditor's report are relied on by the defendant as establishing its right to take the property under the circumstances found; and as preventing such taking from being considered a preference:

'We do further agree, in the event of our being unable to complete or carry on the aforesaid contract, to assign, and we do hereby assign such plant as we may own or have upon said work to the said United States Fidelity & Guaranty Company.'

1. The plaintiff contends that the property taken has been erroneously held by the auditor to be properly included in the term 'plant.' The auditor's findings describe the property as consisting of--

'Lumber, the greater part of it cut and ready to go into the building, bricks, lime, cement, structural iron for this contract, stone, window frames, a small amount of paint and painters' stock, flue lining, nails, some in full kegs and some in kegs which had been opened and from which a part had been used, and certain horses, carts and harnesses.'

King's contract for the performance of which the defendant became surety, was to construct certain buildings at Ft. McKinley, on Diamond Island above referred to. The property above described was what he had brought to the island to be used in the contract work. I see no reason to doubt that it was such property as the parties to the indemnity agreement intended to include by the words 'such plant as we may use or have upon said work,' or that it would naturally and properly fall within the meaning of those words, and I agree with the auditor that the property taken was part of the plant upon said work.

2. When King gave up the performance of the work he had contracted to do, he committed a breach of the condition of the bonds whereon the defendant was his surety and thereby incurred a liability to the defendant founded upon the indemnity agreement. The amount of that liability may not then have been fixed nor capable of being then fixed and it may have been depended to some extent upon contingencies, but the defendant seems to me to have then acquired a claim provable though not liquidated, and such as makes it a creditor within the meaning of section 60. In the bankruptcy proceedings begun against King on September 19, 1903, the defendant appeared to oppose the bankrupt's discharge as a creditor, and if a creditor on September 19th it was a creditor on August 26, 1903. Upon this point my conclusion is opposed to the finding made by the auditor.

3. If however the...