conditional sale. Claimant sold to bankrupt the stock of goods in a drug store, excepting the fixtures; a deferred payment of $2,000, under the contract, to be made in 20 monthly payments. At the same time he made a bailment lease to bankrupt of the fixtures for $2,000; rental to be paid in 20 monthly installments, and on their full payment bankrupt to receive a bill of sale. The monthly payment under the two contracts was the same, $100. Held, that the two contracts must be construed together, and constituted a contract of conditional sale, and under the law of Pennsylvania the fixtures could not be reclaimed from the receiver in bankruptcy. In Bankruptcy. In the matter of Julius H. Belle, trading as the Arcade Drug Company, bankrupt. On petition of Herman H. Goldberg for reclamation of property. Petition dismissed. Benj. Diamond, of Pittsburgh, Pa., for petitioner. Harry Shapera, of Pittsburgh, Pa., for receiver. SCHOONMAKER, District Judge. This case came on to be heard on the reclamation petition filed by one Herman H. Goldberg, who claimed the right to repossess and recover from the receiver in bankruptcy in this case certain fixtures in a drug store operated by the bankrupt, which Goldberg claims had been leased by himself to the bankrupt by a bailment lease dated April 3, 1923. After filing this petition, the receiver came into court with a petition for the sale of the bankrupt's personal property, including the bankrupt's interest in the fixtures claimed by Goldberg. After due hearing the court made an order that the personal property be sold, and of that sale price the amount claimed by Goldberg be substituted for the property and held subject to the determination of the reclamation proceeding. The receiver in bankruptcy made answer to the reclamation petition, denying the right of Goldberg to reclaim this property, contending, first, that the contract under which Goldberg claimed the property was a conditional sale contract, and not a bailment contract; and, second, that in any event, by confessing judgment on the notes secured by the contract in question, he had elected his remedy in an action for the recovery of the notes secured by the contract, and could not therefore claim the property itself. This case was heard entirely on the petition and answer. By these it appears that the petitioner in this matter, Herman H. Goldberg, was on April 3, 1923, the owner of a certain stock of drugs, merchandise, and store fixtures, and that on the 4th of April, 1923, he made a contract with Julius H. Belle, the bankrupt, wherein he agreed to sell, and Belle agreed to buy, "all and singular the stock of merchandise located in the drug store at 1921 Carson street, S. S. Pittsburgh, Pa., said stock of merchandise consisting, among other things, of tobacco, confectionery, drugs, toilet articles, and any and all sundries in connection with the said business hitherto operated by the said Herman H. Goldberg, and excepting therefrom, however, all the fixtures located on the said premises, for which fixtures a bailment lease will be given by the said Herman H. Goldberg to the said Julius H. Belle." The consideration for this sale was $4,500, payable $2,000 down, $500 in 30 days, and $2,000 in 20 monthly installments, of $100 each, payable monthly, beginning the 3d of June, So far as the fixtures involved are 1923. concerned, it was specifically agreed that, upon the payment of the last installment of $100, Goldberg should then give to Belle a bill of sale for all the fixtures in accordance with the terms of the bailment lease made this agréement. cotemporaneously with Title and possession of all the merchandise were given cotemporaneously with the execution and delivery of this agreement. Now, at the same time with the execution and delivery of this sale agreement, the parties executed and delivered another contract, in the form of a bailment lease, dated April 3, 1923, wherein it was provided that Belle, now bankrupt, should pay $2,000 for the rent of said fixtures, payable $100 on June 3, 1923, and a like amount on the 3d of each month thereafter, until the whole This was the same amount was paid. monthly payment of $100 agreed to be paid by the sale contract bearing date the 4th day of April, 1923. While undoubtedly the contract under which the claimant, Goldberg, is now claiming this property is in due and correct form a bailment contract, the courts will look behind the mere words of the instruments to the surrounding facts, to determine what the transaction really was. Here there can be no doubt that this was an agreement of sale, whereby, so far as the merchandise was concerned, the title was given on the date of 8 F.(2d) 101 sale, but, so far as the fixtures were concerned, the title was retained in Goldberg until the payment of the balance of the purchase price. So we have here, laying aside the mere form of the papers, what is actually a conditional sale contract. There was no separate amount paid for the merchandise apart from the fixtures. The whole sum to be paid is lumped together in the sale contract, and is specified as $4,500 for both the merchandise and the fixtures. The values of the merchandise and the rental of the fixtures are not separated. The fact that the parties have used as a part of the instrumentality in retaining the title to the fixtures, pending the payment of the balance of the purchase price, a contract which is a bailment in form, does not change the actual situation as to what the parties really intended. We see no escape from the conclusion that both the sale contract and the bailment contract must be considered together, and were part of the same transaction, and, so considered, the deal between the parties was one of conditional sale, and not of bailment. Therefore these fixtures, being held by the bankrupt under a conditional sale contract and having passed into the hands of his receiver, cannot now be reclaimed by the seller, Goldberg. In re Mina (D. C.) 270 F. 969 (opinion by the late Judge Orr, of this district). This view of the case makes it unnecessary to discuss or to determine the question raised by the receiver as to the election of remedies by Goldberg. Now, March 10, 1925, this case came on to be heard on the petition of Herman H. Goldberg for the reclamation of certain property and the answer of the receiver in bankruptcy; and on due consideration thereof it is hereby ordered that the said petition be and the same is hereby dis missed. In re GOLL et al. In re M. LEVY'S SONS. In Bankruptcy. In the matter of Leonard N. Goll and others, individually and as copartners composing the firm of M. Levy's Sons, bankrupts. On motion to confirm report of special master. Report confirmed. The amended report of Special Master E. Henry Lacombe, is as follows: "On January 28, 1921, the undersigned was, by order of Judge Mayer, appointed special master 'to take testimony upon all matters that may arise and be presented to him pursuant to the various agreements between the receiver and certain parties and to report to the court in respect thereof with his recommendations.' Various other matters have from time to time been presented to the special master and by him reported upon. This apparently is the last of such matters. "The Standard Bank of South Africa (hereinafter called the 'Bank'), on August 23, 1920, delivered to the bankrupts, the documents representing title to 3,000 bags of coffee, in exchange for a 'trust receipt,' a document the character and effect of which has been much discussed in the courts. The bankrupts sold 500 bags to the Smith Company, receiving therefor a check for $5,000, which sum, together with other items, the whole amounting to $20,548.36, the bankrupts deposited to the credit of its account with the Guaranty Trust Company (hereinafter called the 'Trust Company') on September 9, 1920. The history of that deposit account shows that on September 27, 1920, the date on which a receiver in bankruptcy was appointed, under a petition that day filed, the balance remaining was $9,978.36. "The Trust Company was at that time a very large creditor of the bankrupt firm for moneys advanced to pay letters of credit for imports of coffee. On September 15, 1920, the Trust Company declined to honor a check of the oankrupt for $5,065.50. It offset against its liability to the bankrupts under the general deposit account so much of its claim against bankrupt as wiped out the (District Court, S. D. New York. August 6, balance. 1925.) Banks and banking 134 (5)-Bank, without knowledge of third person's interest in deposit, may apply it to individual debt of depositor. Bank, in which funds in which third persons have interest are deposited in individual name of depositor, having neither actual notice nor notice of facts sufficient to put it on inquiry as to true character of deposit, may ap ply it to payment of individual debt of depositor to bank, whether it made advances or otherwise changed its position on faith thereof. "The question presented here is: Was the Trust Company legally entitled to offset its claim against the proceeds of the Smith check for $5,000, or was the Bank entitled to collect that money from the Trust Company? "Most of the facts are stipulated; there is no dispute about them. The Trust Company concedes that the $5,000 has been retains its rights in the proceeds of trust traced into this balance, and that the bank receipt property, where they are found in the hands of a third party undisposed of. Analysis of the account shows that subsequent drafts upon it depleted the trust fund, and the Standard Bank conceded that the maximum amount remaining undisposed of is $2,338.53. This amount is based on the view that subsequent deposits restore a mingled and depleted trust fund; whereas the Trust Company contends that in the federal courts there can be no such restoration, I find that the total balance of said trust fund remaining, and therefore the maximum recovery of the Standard Bank, cannot exceed the sum of $2,111.19. It further concedes that the banker's right over a general deposit is not in strict essence a common-law lien, since a deposit is a mere debt, and there cannot be a 'lien' against the property of the lienor. These concessions eliminate much of the elaborate discussions found in the briefs. Practically the sole question in the case is whether the Bank can offset the amount of this check against its claim against the bankrupts, without affirmative proof that it has given some present consideration or credit for the deposit thereof, other than the mere credit upon the general account of the debtor. "There are very many decisions, by no means harmonious, bearing upon this question; the briefs apparently contain nearly all of them. The present condition of federal authority on the point is such that the special master has concluded that it would be a waste of time for him to undertake to write a monograph on the subject. "In Central National Bank v. Conn. Mutual Life Ins. Co., 104 U. S. 54, 26 L. Ed. 693, the court says: "Ordinarily it [the lien or right to offset] attaches in favor of the bank upon the securities and moneys of the customer deposited in the usual course of business, for advances which are supposed to be made upon their credit. It attaches to such securities and funds, not only against the depositor, but against the unknown equities of all others in interest.' "In Fulton Bank of Atlanta v. Hosier, Receiver of Imbrie & Company, 295 F. 611 (C. C. A. Fifth, Dec. 13, 1923), it was held that the decision in Central National Bank v. Mutual Life Ins. Co. could not be construed as overruling the earlier decisions of the Supreme Court in Bank of the Metropolis v. New England Bank, 1 How. 234, 11 L. Ed. 115, and 6 How. 313, 12 L. Ed. 409, and Wilson v. Smith, 3 How. 763, 11 L. Ed. 820. "The facts in the Fulton Bank Case are so nearly identical with the one here presented that, if this were all, the special master would find it controlling, and hold that there was no right of offset here. But in the Fulton Bank Case application was made for a certiorari and the application was granted. Presumably it will be heard and determined next fall. It must be presumed that the Supreme Court entertained some doubt as to whether the conclusion reached in the Fulton Bank Case, is correct; otherwise, it would not have issued the certiorari. There can be little doubt that, when that case is heard and decided by the Supreme Court, the decision will control the disposition of the controversy here presented. "There seems to be no good reason why, in the interim, the disposition of this controversy should remain in its preliminary stages before the special master. Therefore he respectfully 'recommends,' as he was instructed to do, that the District Court deny the application of the Bank, or hold it under advisement until the decision of the Supreme Court in the Fulton Bank Case, which, in view of the substantial identity of its facts with those here conceded, will settle the law of this controversy." Appleton, Butler & Rice, of New York City (Edwin T. Rice, of New York City, of counsel), for Standard Bank of South Af rica. Matthew T. Murray, Jr., of New York City (William G. McLoughlin, of New York City, of counsel), for Guaranty Trust Co. BONDY, District Judge. Judge Lacombe, as special master, in his amended report recommended that the District Court deny the application of the Bank, or hold it under advisement until the decision of the Supreme Court in the Fulton Bank Case (see Beaver Boards Co. v. Imbrie & Co. [D. C.] 287 F. 158), which, in view of the substantial identity of its facts with those here conceded, will settle the law of this controversy. The Supreme Court, on March 2, 1925, reversed the decision in that case, but only on the. ground that the court did not have jurisdiction. 267 U. S. 276, 45 S. Ct. 261, 69 L. Ed. 609. Although there is a conflict, the weight of authority is to the effect that, if funds in which third persons have an interest are deposited in the individual name of the depositor in a bank which has neither actual notice nor notice of facts sufficient to put it on inquiry as to the true character of the deposit, it may apply the deposit to the payment of the individual debt of the depositor to the bank, and may do so whether or not it made any advances or otherwise changed its position on the faith of such de SF.(2d) 103 posit. Central National Bank v. Conn. Mutual Insurance Co., 104 U. S. 54, 71, 26 L. Ed. 693; Bank of Metropolis v. New England Bank, 47 U. S. (6 How.) 212, 12 L. Ed. 409; Union Stockyards Nat. Bank v. Gillespie, 137 U. S. 411, 11 S. Ct. 118, 34 L. Ed. 724; In re Ennis, 187 F. 720, 109 C. C. A. 468; Hateh v. Fourth Nat. Bank, 147 N. Y. 184, 41 N. E. 403; Meyers v. New York County National Bank, 36 App. Div. 482, 55 N. Y. S. 504. The amended report of Judge Lacombe, therefore, is confirmed, and the petition dismissed. THE ESTRADA PALMA. (District Court, E. D. Louisiana, New Orleans Division. August 27, 1923.) I. Maritime liens 6-General agents for steamship held not entitled to lien in libel proceedings. General agents of steamship, who collected all freight and signed bills of lading for her, held not entitled to lien for amount of claim in libel proceedings. 2. Maritime liens 37-Shipping 69 Captain of vessel held entitled to lien but not superior to other contract liens under general maritime law. Captain of vessel held entitled to lien, though not to lien superior to other contract liens under general maritime law. 3. Shipping 133-Claimant of damages for nondelivery of perishable goods held not lien on vessel delayed by seizure under legal process, and there could be no complaint of allowance of a lien ranking last. Claimant of damages for nondelivery of consignment of very perishable onions, due to seizure of vessel under legal process, held not entitled to lien on vessel, in view of Harter Act, § 3 (Comp. St. § 8031), and exempting clause in bill of lading, and claimant could not complain because a lien was allowed him and ranked last. 4. Maritime liens 37-Claims for wharfage and watchman employed while ship was at wharf held not entitled to preference. W. J. & H. W. Waguespack, of New Orleans, La., for Jose Ybarrmia. Scott E. Beer, of New Orleans, La., for Kohlmann Bros. & Sugarman. FOSTER, District Judge. The steamship Estrada Palma was seized at the instance of libelant, John Alsina Company, Limited, on a claim for materials furnished, and was subsequently sold by the marshal, bringing $8,100, which was deposited in the registry of the court less the marshal's costs. There are various interventions, for seamen's wages, supplies, pilotage, wharfage, and other claims. The case went to a Commissioner, who proceeded to hear the evidence and pass on the claims. The Commissioner has also endeavored to rank the various claims, as the fund is insufficient to pay all of them. It is only necessary to consider the exceptions to the commissioner's report. W. G. Coyle & Co., Kohlman Bros. & Sugarman, Inc., and Richard Meyer & Co. have filed exceptions. Coyle & Co. except to the ranking of the claims and except particularly to the allowance of the claim of Jose Ybarrmia. Kohlman Bros. & Sugarman are claiming damages for nondelivery of a consignment of onions, and object to being ranked last in the claims allowed. Richard W. Meyer & Co. object to the finding of the master denying them a lien at all, and do not object to the ranking of the claims as made. Richard W. Meyer & Co. [1] The claim of Richard W. Meyer & Co. was rejected by the commissioner on the ground that they were general agents of the steamship and not entitled to a lien. The Commissioner was right in so holding. There is no doubt that Richard Meyer & Co. were general agents of the ship, collected all the freight and signed bills of lading for her; the express provision of the bill of lading being that the freight should be paid in this case that freight was paid even aftto them. It would appear from the record er the seizure of the ship, but there is nothing to show whether it was paid to Richard W. Meyer & Co. or some other representative or the owner himself direct, but at any rate it was a fund to which the agents might look. There is no distinction between this claim and the claims considered in the case of The Owego (D. C.) 292 F. 403, 1923 A. M. C. 1060, decided to-day. On the authority of that case and those therein cited, Terriberry, Rice & Young, of New Or- the finding of the master as to this claim leans, La., for Richard Meyer Co. Claims for wharfage and watchman employed while ship was at wharf held not entitled to preference. In Admiralty. Libel by John Alsina & Co., Limited, against the steamship Estrada Palma. On exceptions to Commissioner's report. Exceptions sustained in part; in other respects report approved. will be approved. Claim of Jose Ybarrmia. [2] This intervener was captain of the vessel and contends he has a lien under the law of Cuba. The evidence in the record seems to show that he was entitled to a lien, and the finding of the master will be approved; however, I do not think his lien should be superior to other contract liens under the general maritime law. Kohlman Bros. & Sugarman. [3] Kohlman Bros. & Sugarman claim damages to several shipments of onions. On the day the onions were received on board the ship, just as she was about to sail, she was attached under admiralty process, issuing at the instance of the libelant in this case. The freight was very perishable. There is testimony showing that it would not survive shipment for more than six days, and that under the best conditions a certain portion of it was bound to be spoiled when delivered. Bills of lading were issued for this shipment, and contain a clause exempting the vessel from liability for damages occasioned by legal process. This is in keeping with section 3 of the Harter Act (Comp. St. § 8031), which exempts the vessel from liability for damages occasioned by seizure under legal process. There is nothing to show that the vessel was unseaworthy or that the seizure was occasioned by any fault or negligence of the master or owners of the ship. Kohlman Bros. & Sugarman ought not to complain because their claim is ranked last, as under the evidence of the case they are not entitled to a lien at all. The Commissioner, in ranking the claims, has placed that of Anselmo Oteri first. I am unable to determine from the report what might be the nature of this claim, but, as no one has objected to its being given the first rank, and as all of the claims of the seamen have been recognized by all interveners and have been paid out of the fund, there is no occasion to disturb it. He ranks next the claim of the Associated Branch Pilots and claims of William Lumberd, Ivan Cox, Walter Thompson, Albert Zibilich, and Henry J. Post, river pilots, as being entitled to being paid by preference. [4] He ranks third the claims for wharfage and watchmen employed while the ship was at the wharf. There is no reason to give these claims any preference. Pilotage, wharfage, and watchmen are mere contract claims, and there is nothing in the case that would require preferential treatment over the claims of materialmen. The exceptions to the Commissioner's report, in giving preferential ranking to the above claims and that of Jose Ybarrmia will be sustained, and they will be placed all on the same footing, and entitled to be paid pro rata out of the amount remaining in the registry of the court, together with all the other claims allowed by the commissioner. In all other respects the report of the Commissioner will be approved. THE GASCONIER. NIELSEN v. ROBYN. (District Court, E. D. New York. 1. Admirality 39-Action in rem against vessel held not maintainable after dismissal of prior action on same cause, wherein bond had been given by claimant. Where libelant, in action in rem against vessel for personal injuries wherein claimant had given bond, deliberately abandoned action when reached for trial, held, on execution of bond, vessel returned to her owner free from any lien of libelant's claim, and that second action in rem against it for same cause of action was not maintainable, and this regardless of the protection due seamen. 2. Admiralty 57-On execution of bond to release it from lien, in action in rem ship returns to owner from lien. In action in rem, when bond or other security is given to release ship from lien, it takes place of ship which returns to her owner free from lien except there be fraud in appraisement or bond. In Admiralty. Libel by Alec Nielsen against the steamship Gasconier; Maurice Robyn, claimant. On motion to dismiss and to vacate attachment. Motion granted. Silas B. Axtell, of New York City (Lucien V. Axtell, Jr., of Flushing, N. Y., of counsel), for libelant. Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (E. B. Long, Jr., of White Plains, N. Y., of counsel), for claimant. CAMPBELL, District Judge. This is a motion to dismiss the libel filed herein on the 9th day of June, 1924, in an action in rem, and to vacate the attachment made by the marshal under process of this court. Libelant commenced an action for damages for personal injuries in the New York Supreme Court in Richmond county, on December 14, 1922, which is still pending. On April 16, 1923, the libelant commenced |
