In re Reynolds , 203 F. 162 ( 1912 )

COCHRAN, District Judge.

This cause is before me on petition for review filed by the Birdsell Manufacturing Company, complaining of an order of the referee denying its petition, whereby it asserted ownership to certain property in the possession of the trustee. Its right thereto depends on the nature of its contract with the bankrupt under which the unsold property in the possession of the trustee and claimed by it was delivered to'him. Was it a bailment for sale or a conditional sale? If a conditional sale, it was a mortgage, and, not having been recorded, the trustee takes precedence over it by virtue of the amendment of 1910 (Act June 25, 1910, c. 412, § 8, 36 Stat. 840 [U. S. Comp. St. Supp. 1911, p. 1500]) to section 47a (2) to the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 557 [U. S. Comp. St. 1901, p. 3438]), and the petition was properly denied. It is only on the basis that it was a bailment for sale that the petitioner was entitled to any relief. I think that the contract was a bailment for sale under these authorities. In re Galt (C. C. A., 7th Cir.) 13 Am. Bankr. Rep. 575, 120 Fed. 64, 56 C. C. A. 470; John Deere Plow Co. v. McDavid (C. C. A., 8th Cir.) 14 Am. Bankr. Rep. 653, 137 Fed. 802, 70 C. C. A. 422; In re Columbus Buggy Co. (C. C. A., 8th Cir.) 16 Am. Bankr. Rep. 759, 143 Fed. 859, 74 C. C. A. 611; In re Pierce (C. C. A., 8th Cir.) 19 Am. Bankr. Rep. 664, 157 Fed. 757, 85 C. C. A. 14; Sturm v. Boker, 150 U. S. 312,. 14 Sup. Ct. 99, 37 L. Ed. 1093.

The fourth clause of the contract is mostly relied upon in support of the position that it was a conditional sale. By virtue thereof undoubtedly on the 1st day of each mouth all notes and accounts for wagons sold on time became the property of the bankrupt. The bankrupt at that time had to account for all goods sold during the preceding-month, and for such as were sold on time he could settle to the extent of $100 by executing his four months’ note without interest. But this did not have the effect of making a sale of such goods as had not been sold. In case of Parlett v. Blake (C. C. A., 8th Cir.) 26 Am. Bankr. Rep. 25, 188 Fed. 200, 110 C. C. A. 72, 39 L. R. A. (N. S.) 620, it was assumed that an agency contract, containing a provision that at the expiration of its term the agent should buy all goods not theretofore sold at the then current prices, was not a sale contract before the expiration of the term. It became such only upon the expiration of the term as to goods then unsold. So here this contract, otherwise an agency contract as to goods not sold, is not made a sale contract as to them because on the 1st day of each month it became a sale contract as to the proceeds of goods sold during the preceding mouth on time. 1 think, however, that the petitioner’s right is limited to the unsold goods. He has none as to the proceeds of goods sold because of this fourth clause.

The order of the referee is reversed, with directions to allow petitioner the unsold goods claimed by it.