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11 F.(2d) 59

stant case, no rule more favorable to the buyer could have been formulated. At the time the goods were delivered their market price and the contract price were the same, and thereafter the former fell rapidly. As a further precaution the learned judge told the jury separately to find and return the market or selling value at the buyer's plant in September, 1920, of the chipboard actually delivered. Their verdict was for the seller for $26,823.75, and they found that at the time and place specified the chipboard was worth $86.25 per ton; that is to say, they reached the conclusion that the value of the board to the buyer was the same as the sum which at the time it could have gotten for it, had it chosen to sell. The buyer had used so much of the board that it was properly held to have accepted all of it. It was bound to pay for it, either what it was reasonably worth, or what it had promised to pay, less the damage caused it by the seller's breach. It is possible to differ as to whether that worth is to be that which it had to the buyer, to the seller, or to other persons who might have use for it; but in this case the controversy would be moot, as the jury by their findings have found the practical result would be the same, whichever rule was applied. Upon a falling market, the damage suffered by the buyer could be accurately measured by the difference between the value to it of the chipboard delivered and the price which it had promised to pay for good chipboard. What we here say is applicable to the special facts before us and perhaps to those only. If, at the time of delivery or of inspection, the market price had been higher than the contract price, the buyer, of course, would have been entitled to have the deduction so calculated as to preserve for it the benefit the rising market would have given it, had the seller kept its bargain.

[3] There is only one other matter upon which we find it necessary to comment. The instruction of the court required the jury to return a verdict for the seller for whatever they found the chipboard was actually worth to the buyer at its (the buyer's) mills. The buyer asked an instruction that it was entitled to have the jury deduct from this amount the amount of freight on the chipboard from seller's mills to its own, as well as compensation to it for storage of the board. These instructions the court refused. As the buyer had waived its right to rescind the contract, the chipboard belonged to it, and the seller had nothing to do with its storage. That is not so, however, as to the freight. It is true, by the terms of the original contract the buy

er undertook to pay the freight, and if the jury had been told to measure the damages by the difference between the contract price at seller's mills at the time delivery should have been made of chipboard answering in all respects to the requirements of the contract, and the market price then and there of such chipboard as was actually delivered, the matter of freight could have been ignored, and should have been. The standard of recovery laid down was, however, the value of the chipboard to the buyer at its mills. Upon the theory of the court, that value was all the buyer could be required to pay for the goods delivered at its plant; but, as it had already paid the freight, it was entitled to have that amount deducted from the gross value to it. The amount so paid by it is definitely proved, and is not disputed. It was $2,310.43.

Since all other matters in dispute were settled in favor of the seller by the verdict of the jury under proper instruction, we shall follow the course taken by us in Mullins Lumber Co. v. Williamson & Brown Land & Lumber Co., 255 F. 645, 648, 167 C. C. A. 21, and give the option to the seller to accept the lowest possible verdict, rather than to submit all the issues to a new trial. It follows that the judgment of the District Court will be reversed, and the cause remanded for a new trial, unless the plaintiff shall pay all the costs in this court and shall remit in writing on the judgment in the District Court within 60 days $2,310.43, and that, if the plaintiff shall pay such costs and remit such sum of $2,310.43 within 60 days, the judgment of the District Court stands as affirmed. Reversed nisi.

NATIONAL LIBERTY INS. CO. et al. v. NORMAN.

(Circuit Court of Appeals, Fourth Circuit. January 12, 1926.)

No. 2391.

1. Insurance 175-Policies in force, though inventory was not begun before fire, on next to last day for taking it.

Under provision invalidating policies if inventory be not taken within 30 days of issuance, they were in force at time of fire on 29th day, though inventory was not begun.

2. Insurance 175-Time for inventory held to run from "date" of "issuance" of policies as corrected.

"Issuance" of policy requiring inventory within 30 days of "issuance," if not taken within 12 months before "date," of policy, is not synonymous with "date"; and insured hav

ing sent policy back for correction of agent's mistake in adding "administratrix" after insured's name, 30 days ran from date of issuance of amended policies.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Date.]

In Error to the District Court of the United States for the Western District of North Carolina, at Greensboro; Edwin Y. Webb, Judge.

Separate suits by Daisy Norman against the National Liberty Insurance Company, against the Phoenix Assurance Company, and against the Commercial Union Assurance Company, Limited, respectively, consolidated for trial. Judgments for plaintiff, and defendants bring error.

Affirmed.

Charles W. Tillett and Thomas C. Guth

rie, both of Charlotte, N. C., for plaintiffs in

error.

the policies were issued on the day upon which they bore date, they became null and void before the fire took place. The claim of the insured is that their date of issuance is June 12, 1922, or but 29 days before the loss. The facts upon which this contention is based, are as follows:

On the day the policies were dated-that is, the 20th of May-the insured applied to the underwriters' agent for them. They were

made out and forwarded to her a few days later, the last of them reaching her about May 26. When they arrived, she found out they were made to Daisy Norman, administratrix. The mistake was doubtless due to

the fact that, at the time she solicited policies

on her stock, she had also asked for one on the store building, and the latter she did want in her name as administratrix. On the 26th of May she sent the policies back, saying in one letter, "Inclosed find two policies made administratrix. Please have them changed to Mrs. Daisy Norman, as the stock is mine and not the estate's," and in the other she said: "The stock belongs to Mrs. Daisy Norman and the store belongs to the estate. You have Before WADDILL, ROSE, and PAR- the building policy correct, but I want the KER, Circuit Judges.

Louis M. Swink, of Winston-Salem, N. C., and Robert A. Freeman, of Dobson, N. C. (Swink, Clement & Hutchins, of WinstonSalem, N. C., on the brief), for defendant in

error.

ROSE, Circuit Judge. In the court below the defendant in error, Daisy Norman, was the plaintiff. She instituted separate suits against each of the insurance companies, now plaintiffs in error. As the issues in each of the cases were identical, and were to be supported by the same testimony, the learned judge, with the consent of the parties, consolidated them for the trial. The verdict and the judgment in every case being against the defendants, they sued out their writ of error. For brevity, we will call the defendant in error the insured; the plaintiffs in error, the underwriters.

The iron safe clause is found in every one of the policies. Among other things, it required the insured to take a complete itemized inventory of stock on hand at least once in each calendar year, and "unless this inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within thirty days of the issuance of this policy or this policy shall be null and void from such date." The policies were dated May 20, 1922. It is admitted that the insured had not taken an inventory of the stock within 12 calendar months, next preceding, and did not thereafter take one at any time before the fire, which occurred on the 11th of July, 1922. If, within the meaning of the clause in question,

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policy on the stock made to Mrs. Daisy Norman. I am sending them over for correction. Will send check in about thirty

days."

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[1] For some reason the underwriters' agent allowed 17 days to go by without taking the action requested, but on the 12th of June, there was indorsed on every one of the policies: "Indorsement dated June 12, 1922. Assured, Mrs. Daisy Norman. Location, Dobson, N. C. The correct name of the assured under the above numbered policy is Mrs. Daisy Norman, instead of Mrs. Daisy Norman, Administratrix, as stated in the policy." These policies, so corrected, were redelivered to the assured on the same day, that is June 12, 1922. The fire occurred within less than 48 hours from the expiration of 30 days from that date. The insured had not begun the taking of the inventory, and the underwriters say that she could not have finished it in the little time remaining, and that therefore she had for all practical purposes already breached her warranty, even if the date of issuance was as late as June 12. We may not accede to this contention. The policies provide that if the inventory be not taken within 30 days of their issuance, they shall be null and void from such date. This language clearly implies that, until the 30 days have expired, the policies are in force, and, if the fire occurs while they are, the underwriters are liable. Bray v. Insurance Co.,

11 F.(2d) 59

51 S. E. 922, 139 N. C. 390; Polizzi v. Com-
mercial Insurance Co., 99 A. 907, 255 Pa.
297; Homestead Insurance Co. v. Ison, 65
S. E. 463, 110 Va. 18; Springfield Fire &
Marine Insurance Co. v. Shapoff, 201 S. W.
1116, 179 Ky. 804; Royal Insurance Co. v.
Wright (Tex. Civ. App.) 148 S. W. 824.
[2] On the other hand, we would hesitate to
hold, as the insured says we should, that the
letter of May 26th was a rejection of the poli-
cies, and, if a fire had occurred between that
date and June 12, she would have been with-
out insurance. We do not understand the
letter to the agent of the company to suggest
anything of the kind. She had asked insur-
ance from the 20th of May. She supposed
that it had been given her. By mistake of the
agent, the word "administratrix" was affixed
to her name. She wanted the policies cor-
rected in this respect, and for that purpose
she returned them, but she at the same time
said she would pay for them. Had a fire oc-
curred in the 17 days between May 26 and
June 12, we doubt if any court would have
been willing to go so far as to say the policies
were not in force. It follows, therefore, that
if the meaning of the iron safe clause is that
the 30 days begins to run from the time the
risk is assumed and the policy is dated, the
insured is not entitled to recover.

The clause, as has been already stated, provides that, unless "inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within thirty days of issuance of this policy." The italics are ours. The underwriters argued that the clause means precisely the same as it would if for "issuance" had been substituted the words "the date." Is this contention altogether reasonable? It is true that graceful writing requires that one shall, wherever possible, avoid the repetition of the same word by employing a synonym or near synonym instead; but there is scant reason to suppose that a longing for literary elegance has played much part in the draft ing of insurance policies. Any peculiarities of phraseology which may be found in them should be attributed to considerations at once more prosaic and more practical.

Is there any reason why in the iron safe clause the 12 calendar months are to be counted back from "the date" of the policy and the 30 days forward from its “issuance"? We think there is. There can seldom be any

room for difference of opinion as to the date of the policy. A mere glance at the instrument will show what its date is, in the absence of a clerical mistake or some other unusual circumstance. It will be convenient for everybody to measure back from it the comparatively long period of 12 calendar months in which an inventory may have been taken. When, however, we come to calculating the 30 days in which it must be taken, if it has not previously been, the problem is by no means so simple.

The risk of fire loss is often assumed in advance of the actual execution of the policy, and quite frequently an appreciable time before it is received by the insured. Ordinarily it is then that the latter for the first time inspects it and learns of the obligations it imposes upon him. There is nothing unreasonable in supposing that the drafter of the iron safe clause may have intended that the 30 days in which the insured was to take the inventory were to run from the time at which the policy was issued from the office of the underwriters' agent to him. Such a construction well fits in with the practical conditions under which the fire insurance business is necessarily conducted. It seems to us to be sound, and we find no controlling authority to the contrary.

In the instant case, while the policies were all dated May 20, there appears to have been some difference in the time at which they were sent to the insured. Her testimony is all we have on the subject, and it is that she received one of them a few days before the 26th of May and the other about 2 days after that date. It was on the 26th she returned them for correction, which was not made until 17 days later, and June 12th was the day upon which she received them back. She was in no sense responsible for this delay. Under all the circumstances, we do not think that the underwriters are in a position to say the 30 days for the taking of the inventory began to run before the date upon which, having corrected the error which they themselves had made, they issued the amended policies to her.

We have examined the other assignments of error, but do not find that they bring before us any ruling below which is at once erroneous and harmful.

Affirmed.

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4. Bankruptcy 353-Filing suit to set aside bankrupt's conveyance wherein bankruptcy trustee intervened held to preserve lien of general creditors (Bankr. Act, § 67f [Comp. St. § 9651]).

If preservation of lien under Bankr. Act, $67f (Comp. St. § 9651), was necessary to permit general creditors to share after bankrupt's conveyance was set aside, held, that filing suit to set such conveyance aside wherein trustee intervened preserved such lien.

5. Bankruptcy 440-Contest over distribution of proceeds of sale of bankrupt's proper ty held "controversy arising in bankruptcy proceedings," reviewable by appeal (Bankr. Act, § 24a [Comp. St. § 9608]).

Contest in bankruptcy court, over distribution of proceeds of sale of bankrupt's property sold by bankruptcy trustee after conveyance was set aside held "controversy arising in bankruptcy proceedings," reviewable by appeal under Bankr. Act, § 24a (Comp. St. § 9608).

On Petition to Superintend and Revise in Matter of Law Proceedings of, and Appeal from, the District Court of the United States

for the District of Maryland, at Baltimore, in Bankruptcy; Morris A. Soper, Judge.

In the matter of William H. Moore, bankrupt. From a decree of the District Court in favor of Martha E. Warner, a creditor, James Morfit Mullen, trustee in bankruptcy, appeals and files a petition to superintend and revise. Petition to superintend and revise dismissed. On appeal, decree reversed.

Walter H. Buck and James Morfit Mullen, both of Baltimore, Md., for petitioner and appellant.

Edward Duffy, of Baltimore, Md., for respondent and appellee.

Before WADDILL, ROSE, and PARKER, Circuit Judges.

PARKER, Circuit Judge. On December 6, 1923, one William H. Moore of Baltimore, Md., was duly adjudged a bankrupt, and thereafter in due course appellant, Mullen, was elected trustee in bankruptcy of his estate. On October 6, 1921, more than two years prior to the adjudication, the bankrupt conveyed a lot of ground and improvements thereon in the city of Baltimore to one Knapp, admittedly a "straw man," who immediately reconveyed the property to Moore and his wife so as to vest them with an estate by the entireties, which under the law of Maryland is not subject to sale under execution against the husband. At the time this was done Moore was insolvent, and was indebted to Miss Martha Warner, the appellee, in a sum exceeding $15,000. He owed other debts aggregating approximately $8,500. On September 26, 1923, within four months prior to the adjudication of bankruptcy, Miss Warner recovered judgment against Moore for the full amount of her claim, and straightway filed a bill in equity in circuit court No. 2 of Baltimore city to set aside the two conveyances by means of which the estate by the entireties had been created. While the suit was pending, Moore was adjudged bankrupt, and the trustee in bankruptcy was ordered to intervene in the suit and to "prosecute to the fullest extent the rights of said trustee in bankruptcy in and to the property involved in said equity suit." The trustee thereupon petitioned and was allowed to intervene in the suit in the state court as a party plaintiff, and on March 3, 1924, a consent decree was entered in that cause reciting that Moore admitted his inability to prove his solvency as of October 6, 1921, decreeing that the conveyances be set aside and directing that Moore and wife convey to the trustee in bankruptcy all of their

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11 F.(2d) 62

right, title, and interest in the property, but expressly reserving for future determination the question as to the priority claimed by the creditors whose claims were existent at the time of the making of the conveyances.

The trustee in bankruptcy sold the property for $5,759.88; and Miss Warner filed her petition in the bankruptcy court praying that she and the other antecedent creditors be allowed the whole of the fund realized to the exclusion of the subsequent creditors whose claims amounted to approximate ly $18,000. The District Court entered a decree in accordance with the prayer of this petition excluding subsequent creditors from participation in the fund, and from this decree the trustee in bankruptcy appealed, filing also a petition to superintend and revise. [1] It is admitted that under the Maryland law a voluntary conveyance by an insolvent is fraudulent in law as to antecedent creditors. Christopher v. Christopher, 3 A. 296, 64 Md. 587, 588. But as to subsequent creditors it is not void unless shown to be fraudulent in fact. Matthai v. Heather, 57 Md. 489; Turner v. Hudson, 104 A. 455, 133 Md. 144; Diggs v. McCulloh, 16 A. 453, 69 Md. 609. It is also admitted that under the Maryland law where a conveyance is set aside as being fraudulent only as against antecedent creditors, subsequent creditors do not participate in the fund realized. Williams v. Banks, 11 Md. 98. The question which is presented by this appeal, therefore, is whether a trustee in bankruptcy who has set aside a conveyance which, in the absence of bankruptcy, could have been avoided only by creditors whose claims were in existence at the time of the conveyance, holds the fund realized for the sole benefit of such antecedent creditors or for the benefit of creditors generally to be distributed under the general provisions of the Bankruptcy Act (Comp. St. §§ 9585-9656).

The contention of the petitioner is that since, in the absence of bankruptcy, only antecedent creditors could have avoided the conveyance, and since because of the intervention of bankruptcy the trustee was substituted for such creditors to secure rights which would have inured to their benefit alone, the recovery by the trustee should be held to be for their exclusive benefit and that subsequent creditors, who could not have set aside the conveyance, should not be allowed to participate in the recovery. While there is much that is plausible in this contention, it is not supported by the provisions of the Bankruptcy Act. Undoubtedly the right of the trustee to set aside the conveyance existed

because of the right of antecedent creditors to avoid same; but this right was derived from section 70e of the Bankruptcy Act (Comp. St. § 9654), which provides that the trustee may avoid any transfer by the bankrupt of his property which any creditor of the bankrupt might have avoided and may recover the property so transferred, but makes no provision for the holding of the property recovered by the avoidance of such transfer for any particular creditor or class of creditors. To hold that the recovery by the trustee in such a case should go to the antecedent creditors alone, instead of being held for distribution under the general provisions of the act, would be to read into the statute a provision which Congress has not enacted, and one which we think is at variance with the spirit of the statute as embodied in its other provisions. [2, 3] The Bankruptcy Act contemplates an equal division among the bankrupt's creditors with no preferences except those specially designated in the statute. It is accordingly provided by section 67b (being section 9651, Comp. St.) that whenever a creditor is prevented by the bankruptcy from enforcing his rights as against a lien created by his debtor, the trustee shall be subrogated to and enforce the right of such creditor for the benefit of the estate. Can it be that when the trustee avoids a lien through subrogation to the right of a creditor he does so for the benefit of the estate, but when he avoids a fraudulent conveyance, he does so for the exclusive benefit of such creditor? We think not. Such a distinction would certainly seem to be repugnant to the presumed intention of the act, and we think that it is repugnant also to its express provisions. It is true that the words "for the benefit of the estate" were not added to section 70e as they were to 67b, but the addition of these words was not necessary. The power vested in the trustee by section 70e is the power not only to avoid the fraudulent conveyance but to recover the property conveyed. In the absence of contrary provision, this recovery would be presumed to be for the benefit of the estate. But the matter is not left to presumption, for section 70a expressly vests the trustee with property transferred by the bankrupt in fraud of creditors. The antecedent creditors have no lien upon the property or the fund realized from it, their right in the absence of bankruptcy being merely the right to set aside the fraudulent conveyance and subject the property to levy under execution. The Bankruptcy Act gives them no preference. Consequently the recovery by the trus

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