In re Heckathorn

ARCHBALD, District judge.1 As in so many cases which come up where dealings are had with a person of limited means and meager credit, the transaction here has the appearance on its face of seeking to have the advantage of a sale and at the same time retaining the security of a bailment. This is a difficult thing to do, and we need not be surprised if the petitioners have not been more successful than have others. Claim is made in these proceedings to certain fertilizers shipped to the bankrupt, which he had on hand at the time of his bankruptcy, amounting to $4-8.18; and also to certain accounts with customers to whom he had made sales, amounting to $88.80 more. As the basis of this claim, it is contended that the bankrupt was a factor or agent merely, selling these fertilizers for and account of the petitioners, from whom they were received, and to whom, as it is said, they belonged, justifying their present assertion of title. There is no evidence of the relation of the parties other than the written contract between them, and the case turns, therefore, on the proper construction to be given to it. [502] This is a Pennsylvania transaction and is governed by the local law. Hewit v. Berlin Machine Works, 194 U. S. 296, 24 Sup. Ct. 690, 48 L. Ed. 986. The goods, being in the possession of the bankrupt, and the accounts on his books, standing in his name, are both presumptively his, and the burden is on the petitioners to show otherwise; any doubts upon this subject being resolved against them. In re Murphy Barbee Shoe Co., 11 Am. Bankr. R. 428; In re Tice (D. C.) 139 Fed. 52; In re Wood (D. C.) 140 Fed. 964. The trustee in any such controversy is invested with the rights .of creditors. In re Butterwick (D. C.) 131 Fed. 371; Tams v. Bullit, 35 Pa. 308; Duplex Printing Press Co. v. Clipper Publishing Co., 213 Pa. 207, 62 Atl. 841; English v. Ross (D. C.) 140 Fed. 630. He is not limited like an assignee under the state law, who is merely a representative of the debtor. Wright v. Wigton, 84 Pa. 163. Keeping this in mind, and looking to the writing, in accordance with which the goods were delivered, we find that they were billed to the bankrupt at definite prices, and upon fixed terms of credit and discount; the bankrupt on his part undertaking to settle or pay for them and to be responsible for the freight. These are the ordinary marks of a sale, and not of an agency, which there is nothing in the other provisions of the contract to directly suggest. It is only indirectly and by implication that it is sought to be made out. It is pointed out for.instance that the bankrupt was to give to the petitioners his exclusive trade; that accounts of goods sold were to be rendered every six months on July 1st and December 1st; that he was required to hold separate and in trust all “goods unsold, and all currency, open accounts, notes, liens, mortgages, or other values, received for goods sold”; and that, where they were sold on credit, notes were to be taken on blanks furnished by the petitioners, and made payable to their order, the bankrupt indorsing and guarantying them. But, while this may steer close to the line, it does not necessarily make out a case of principal and agent such as is contended for. It is the rather suggestive of an attempt, as is said above, to have the benefit of a sale without the responsibility for it, disposing of the goods at a price and at the same time retaining a hold upon them and upon the proceeds derived from their sale. But why this beating about the bush when a direct course was open to them? If the intention was that the bankrupt should receive and sell the goods, for and on account of the petitioners, upon a commission, it would have 'been easy, in so many words, to' say so; and the failure to do it can but be regarded as significant. There was no difficulty, if that was what was sought to be provided for, in having the bankrupt responsible for the solvency of purchasers and the collection of the accounts against them, without affecting the relation; this being accomplished by means of a del credere engagement, familiar to all. 19 Cyc. 152. It was also possible to arrange that the bankrupt should look for his commissions as factor to all over and above a certain sum, accounting onty for that amount. McCullough v. Porter, 4 Watts & S. 177, 39 Am. Dec. 68; Keystone Watch Co. v. National Bank, 194 Pa. 535, 45 Atl. 328. But, without providing for anything of that kind, the contract was drawn with all its pecularities in its present form. [503] Taking into consideration what might have been provided in the directions suggested, and having regard to the general effect of the writing, it is difficult to escape the conclusion that a sale was not only intended, but was as a matter of law brought about, which the particular provisions which are relied upon are not sufficient to qualify. These go merely to the matter and manner of payment, after all, for which the bankrupt under all circumstances is made liable, subject to wffiich the goods from the outstart are his. In re Tice (D. C.) 139 Fed. 52; In re Poore, Id. 862. The report of the referee is confirmed, and the petition is dismissed, with costs. Footnotes [1] Specially assigned.