Слике страница

Bank v. Armstrong (C. C.) 39 Fed. 684, 692; and Frelinghuysen v. Nugent (C. C.) 36 Fed. 229.

Peters v. Bain, 133 U. S. 671, 678, 693, 10 Sup. Ct. 354, 33 L. Ed. 696, is a very close authority upon the facts of this case. There the moneys of a national bank had been obtained and used in breach of trust by a firm of private bankers. Both failed; the firm after a general assignment. The receiver of the national bank sought to impress with a trust the entire property of the firm in the hands of its assignee. It was shown that the bank's money had been used exclusively in the purchase of certain property. It was sought, also, to impress a lien upon other property which had been "paid for by the firm out of the general mass of moneys in their possession, and which may or may not have been made up in part of what had been wrongfully taken from the bank.” Waite, C. J., heard the case on circuit, and, as to this class of property, said:

"There the purchases were made with moneys that cannot be identified as belonging to the bank. The payments were all, so far as now appears, from the general fund then in the possession and under the control of the firm. Some of the money of the bank may have gone into this fund, but it was not distinguishable from the rest. The mixture of the money of the bank with the money of the firm did not make the bank the owner of the whole. All the bank could, in any event, claim would be the right to draw out of the general mass of money, so long as it remained money, an amount equal to that which had been wrongfully taken from its own possession and put there. Purchases made and paid for out of the general mass cannot be claimed by the bank, unless it is shown that its own moneys then in the fund were appropriated for that purpose. Nothing of the kind has been attempted here, and it has not even been shown that, when the property in this class was purchased, the firm had in its possession any of the moneys of the bank which could be reclaimed in specie. To give a cestui que trust the benefit of purchases by his trustees, it must be satisfactorily shown that they were actually made with the trust funds."

The opinion of the Supreme Court was by Fuller, Chief Justice, who affirmed the Circuit Court, and overruled the claim of a general charge, saying that “purchases made and paid for out of the general mass cannot be claimed by the bank, unless it is shown that its own moneys then in the fund were appropriated for that purpose.” The contention that the cases of Smith v. Mottley and Smith v. Au Gres, decided by this court, sustain the decree below in giving a general lien upon all the bills and notes acquired by the bank during its custody of the tax deposit, is a misapprehension. Smith v. Mottley was this: Miss Smith owed a sum of money to Miss Wintersmith. When the note fell due she paid into Mottley's bank the amount of the note, the bank claiming authority to collect the same, and that it would obtain the note and deliver it to her. Within 10 days the bank failed. The money so paid into the bank was placed upon the books of the bank to the credit of the payee. When Miss Wintersmith learned of the transaction, she repudiated the authority of the bank to collect her debt from Miss Smith. The latter filed her petition in the bankrupt court, and asked that her claim against Mottley's bank be paid in preference. From the time the bank wrongfully received Miss Smith's money until the time its doors were closed its general cash balance was never below the amount of Miss Smith's claim, and a sum of money in excess of her claim passed to the bankrupt's trustee. The court held that upon these facts the fund in the trustee's hands had been augmented to the full amount of this trust fund. Thus, neither the facts of the case nor the conclusion of the court justify the contention now made. The opinion cites and reaffirms earlier opinions by this court, including City Bank v. Blackmore, 75 Fed. 771, 773, 21 C. C. A. 514, and In re Dial, 140 Fed. 689, 691, 72 C. C. A. 183; in both of which cases we had to deal with the question of the extent of a reclamation when it was sought to follow the property of the owner into the hands of a receiver or bankrupt trustee. În the Blackmore Case, it was sought to fasten a general charge upon the assets in the hands of a national bank receiver, because there had been an unauthorized use of the claimant's property or funds by the bank. Touching the necessity of either identifying the owner's property in the hands of the receiver or showing that the assets which had come into his hands had been definitely augmented by property into which it had gone, this court, speaking by Judge Taft, said:

"It may not be necessary to show earmarks upon the proceeds of the thing parted with to justify such a remedy ; but it must at least appear that the funds in the hands of the receiver were increased or benefited by the proceeds, and the recovery is limited to the extent of this increase or benefit. In every case relied upon by counsel for appellant, recovery, if decreed, was based on the fact that the property in the hands of the assignee or receiver of the person or bank against whom the claim of fraud, right to rescind, and priority of distribution was made, included in its mass either the very thing parted with or its proceeds. Railroad Coinpany y. Johnston, 133 U. S. 573, 10 Sup. t. 39, 33 L. Ed. 683; Armstrong v. Bank, 148 U. S. 50, 13 Sup. Ct. 533, 37 I. Ed. 363 ; Cragie v. Hadley, 99 N. Y. 131, 1 N. E. 337, 52 Am. Rep. 9. The exact question is discussed with satisfactory fullness in Bank v. Latimer, (C. C.) 67 Fed. 27; and the necessity for the presence of the proceeds of the very thing obtained by fraud in the mass of assets to be distributed is clearly pointed out.”

The opinion in Re Dial was announced by the same member of The court who wrote the opinion in Smith v. Mottley, as well as the Cipinion in the Au Gres Case, to which we shall refer later. That was a case where certain rubber, to which the bankrupt had no title, had been wrongfully used and made up into tires. Bankruptcy ensued. The owner of the rubber, by petition, asserted his right to the rubber and to follow it into the tires into which it had gone. It appeared that this rubber had been worked into tires, and that rubber of the bankrupt had been worked into other tires, and the tires made from both had been so intermingled that those made from the petitioner's rubber could not be distinguished from those made from the bankrupt's rubber. In this condition some of these tires came into the possession of the bankrupt's trustee. We held that, under such circumstances, the petitioner was entitled to enforce a charge against the tires which had passed to the trustee, to the extent that the assets had een augmented by the rubber of the petitioner, and ordered an account. Upon the necessity of tracing the trust fund into the trustee's possession, we said:

"We recognize that the rule only permits the following of the converted property into assets which can be traced as proceeds, and that the lien does not attach to assets in which neither the thing nor its value can be found." In the Au Gres Case it was shown that a township treasurer had used the public funds in his hands in buying additional merchandise, and adding the same to his stock as a general merchant. He became bankrupt, and this stock of merchandise thus augmented went into the possession of the trustee. The particular items which had been paid for and added to the general stock were not ascertainable, but this court held that the misappropriated trust fund, having been traced into the general stock, constituted a prior lien and charge upon the stock as a unit. This case proceeds upon the theory that a stock of merchandise constitutes a subject which is capable of being sold or mortgaged as an entirety, and in the latter case the mortgage is not invalid if it provides for a continuance of the business, merchandise added from time to time to take the place of that sold passing under the mortgage. It is quite distinguishable from the case at bar, where it is sought to fasten a trust fund upon hundreds of distinct pieces of commercial paper made by many different persons and acquired at different times, because it is probable that some of such bills or notes were acquired with the general funds of the bank with which had been mingled some part of complainants' tax deposits. See text 6 Cyc. 1041, “Future Interests," and cases cited in notes following.

Complainants have not shown that any single piece of that mass of bills and notes was acquired with the blended moneys of the bank and of the tax fund, still less are they able to show that the assets in the receiver's hands have been actually augmented by a dollar collected from paper so paid for by the mingled fund.

The decree must be modified as to this, and affirmed as to all other matters. Costs of this court will be divided.

(157 Fed. 57.)

In re NEFF.

(Circuit Court of Appeals, Sixth Circuit. November 20, 1907.)

Nos. 1,671, 1,672, 1,673.



A promissory note by which the makers promised to pay a stated sum to the payee on a future date on surrender of certain shares of stock of a corporation, accepted by the payee, is a written contract to take and

pay for such shares, and is not within the statute of frauds. 2. BANKRUPTCY-PROVABLE DEBTS-DEBTS OWING AT TIME OF BANKRUPTCY.

That a claim arises as a consequence of bankruptcy is sufficient to render it provable as a fixed liability absolutely owing at the date of the filing of the petition, within the meaning of Pankr. Act 1898, 8 63a (1), c.


Bankruptcy is such an anticipatory breach of a contract to take and pay for stock of a corporation at a stated price and time, which time was subsequent to the bankruptcy, that a claim for damages for the breach is a provable debt. Appeal from the District Court of the United States for the Southern District of Ohio.

84 C.C.A.--36

The following is the opinion of the District Court by Thompson, District Judge:

These petitions present the same questions, and will be considered together.

The petitioners, as creditors, proved claims against the bankrupt, which were allowed but afterwards were expunged upon the ground that they were not provable. They were expunged upon the petitions of the trustee, which were submitted to the referee upon an agreed statement of facts which reads as follows:

“We agree that the inakers of the promissory note or contract filed as the basis of this claim were promoters of the Avery Caldwell Co.—that in order to induce the claimant to purchase or subscribe for shares of stock in said company they agreed to execute and deliver to claimant the note or contract filed—that claimant paid the full sum of $ and received therefor the shares of stock filed with his claim and the said note or contractthat at and before the filing of the petition in bankruptcy the

Co. was insolvent.”

The following are copies of the promissory notes or contracts : "$2500.00

Bellaire, Ohio, April 14th, 1905. “April 15th, 1908, after date, I, we or either of us promise to pay to the order of Allen Chaney Twenty-five Hundred Dollars at The Office of The Avery Caldwell Mnfg. Co. upon surrender of 2500 shares of Preferred Stock of The Avery Caldwell Mnfg. Co. Interest at 7 per cent. Value received.

"J. Brent Harding, “Theodore Neff,

"Anson C. Lamb." "$2500.00

Bellaire, Ohio, Feb. 7, 1905. "Two years after date I, we, or either of us promise to pay to the order of Miss Emily M. Nichols Twenty-five Hundred and no-100 Dollars at The Office of The Avery Caldwell Ynfg. Co., upon surrender of Certificate No. 38 for 2500 shares of Preferred Stock of said Company. Interest at 7 per cent per anValue received.

J. Brent Harding,

“Theodore Neff.” "$1000

Bellaire, Ohio, January 20, 1905. "Two years after date I, we, or either of us promise to pay to the order of J. D. Lyle One Thousand Dollars at The Dollar Savings Bank, Bellaire, upon surrender of 1000 shares of stock of The Federal Casket Co. Interest 7 per cent per annum.

J. Brent Harding, "Theodore Neff, "Chas. P. Lee,

Anson C. Lamb." "$1500.00

Bellaire, Ohio, April 1, 1905. “On demand April 1, 1907, after date we promise to pay to the order of James D. Lyle Fifteen llundred Dollars at the office of The Avery Caldwell Mntg. Co., Bellaire, Ohio, upon surrender of Certificate No. 61 for 1500 shares of The Preferred Stock of The Avery Caldwell Mnfg. Co. 7 per cent Dividend guaranteed from April 1, 1905, to 1907. Value received.

"J. Brent Harding,

"Theodore Neff.” Before the filing of the petition in bankruptcy herein, the two corporations failed and their stock became and is now utterly worthless. Neff was adjudged a bankrupt January 20, 1906, and the claimants proved their claims within 30 days thereafter. The question presented is, were these claims provable?

The agreed statement of facts is meager and leaves much to conjecture. The circumstances suggest different yet plausible views of the character of these transactions, but the best supported is that the stock was subscribed for upon the agreement of the promoters to redeem it. It may be that the promoters needed the use of the money, and that the names of the claimants


added to the list of stockholders, would aid their enterprise, and that in consideration therefor they agreed to redeem it. Those agreements were evidenced by writings, upon which these claims were founded, which fixed the times and places for the payment of the prices agreed upon and for the delivery or surrender of the stock. In substance, if not in form, these transactions may have been loans of money at 7 per cent., secured by collateral (the stock) which, upon payment of the loans, was to be surrendered or delivered up with the notes. If so, then these claims represent fixed liabilities, evidenced by instruments in writing, absolutely owing at the time of the filing of the petition in bankruptcy, although not then payable, and are provable claims against the estate of the bankrupt, under section 63a (1) of the Bankrupt Act of July 1, 1898, c. 541, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3447).

If, however, these instruments be regarded as contracts to purchase the stock at the prices and times and upon the terms specified (and one or the other of these two views must prevail), the adjudication in bankruptcy disabled Neff from performing these contracts and was equivalent to an anticipatory breach thereof, and, coincident therewith, rights of action arose in favor of the claimants to enforce these contracts, and the claim became provable under section 63a (4) and the proof and filing thereof, accompanied by the stock and notes, was a sufficient delivery or surrender thereof in compliance with the requirement of the contracts. Rochester v. Delatur, 2 E. & B. 678; Frost v. Knight, 7 Exch. 111. Roehm v. Horst, 178 U. S. 1, 20 Sup. Ct. 780, 44 L. Ed. 953; In re Swift, 7 Am. Bankr. Rep. 374, 112 Fed. 315, 50 C. C. A. 264; In re Pettingill & Co. (D. C.) 14 Am. Bankr. Rep. 728, 137 Fed. 143; Watson v. Merrill, 14 Am. Bankr. Rep. 454, 136 Fed. 359, 69 C. C. A. 185, 69 L. R. A. 719 : Dunbar v. Dunbar, 190 U. S. 340, 23 Sup. Ct. 757, 47 L. Ed. 1084.

The contracts were in writing and signed by the parties to be charged, and were delivered to and accepted by the claimants, which was a sufficient compliance with the statute of frauds, and takes the case out of the operation thereof. Thayer v. Luce, 22 Ohio St. 62; Himrod Furnace Co. v. Cleveland, Id. 451; Brown, Stat. Frauds, $ 345C.

The findings and orders of the referee will be reversed, and the claims allowed.

E. E. Clevenger and Cook Danford, for appellants.
A. H. Mitchell, for appellees.
Before LURTON, SEVERENS, and RICHARDS, Circuit Judges

LURTON, Circuit judge. These three appeals have been heard together, as they involve the provability of a number of claims against the bankrupt of like character. In tenor and substance the contracts are alike. That presented by Emily M. Nichols is an example and is as follows: *$2,500.00

Bellaire, Ohio, Feb. 7, 1905. "Two years after date, I, we, or either of us promise to pay to the order of Miss Emily M. Nichols twenty-five hundred and no 100 dollars at the office of the Avery-Caldwell Mfg. Co., upon surrender of certificate No. 38 for 2,300 shares of preferred stock of said company, value received interest 7 per cent per annum.

J. Brent Ilarding, “Theodore Neff."

Some of these contracts related to the stock of a manufacturing corporation, known as the Avery-Caldwell Company, and others to the stock of the Federal Casket Company. It was agreed, as a fact, that the contract set out and others of like character were made by the persons signing the same as promoters, and to induce sales of the stock of the corporations named, and that in consideration of this agreement the claimants became subscribers to the stock of said com

« ПретходнаНастави »