In re Hooven-Owens-Rentschler Co.

DENISON, Circuit Judge (after stating the facts as above). We may well disregard, for the purposes of this opinion, any question arising from the fact that the first order imposing the condition was made a long time ago, and that petitioner seems to have acted under that order and derived some benefit therefrom, and we will treat the case as though both orders took effect only at the date of the final order, and should be construed together as one. The petitioner’s complaint is that, under the laws of Michigan, it -had the absolute legal right to replevin this property, and that the bankruptcy court had no power to impose any condition. The premise of this complaint may be granted. In Michigan, the vendor in such a contract may maintain replevin, and the fact of the payment of anything less than the whole of the purchase price would be no defense to the replevin suit (Tufts v. D’Arcanbal, 85 Mich. 185, 48 N. W. 497. 12 L. R. A. 446, 24 Am. St. Rep. 79; Thrilby v. Rainbow, 93 Mich. 164, 168, 53 N. W. 159); and, on the other hand, the vendor in such a contract (containing no forfeiture or liquidated damages provision tending to cover the subject of payments, use and depreciation), who retakes the property and sells it to another, is considered to have rescinded and is liable to the vendee in an action at law for the purchase money payments which he had received, less suitable allowances for the use of the property, depreciation, etc. This liability is recognized as essentially equitable, and, although it may be enforced in an action at law, it doubtless could also be enforced in a proper case by a bill for an accounting (Preston v. Whitney, 23 Mich. 260, 267). Petitioner, being under this equitable liability to account, came voluntarily into the bankruptcy court, and made the application which it did make, expecting to get some benefit therefrom, and its application, under the facts stated and the prayer for general relief, would have furnished support for a direction that the trustee pay to petitioner [426] the unpaid purchase price and so get the full benefit of the bankrupt’s sale to the Sugar Company; indeed, this may have been petitioner’s object. We find, then, that petitioner, a resident of Ohio, was, if it rescinded the sale, liable to account to the bankruptcy trustee for the $560 received, and was subject to be sued at law or in equity in any court having personal jurisdiction over petitioner. Under, these circumstances, petitioner invoked the action of the bankruptcy court in the same general subject-matter. Full personal jurisdiction over it was thereby acquired, and there was neither lack of jurisdiction nor abuse of discretion in directing, in that very proceeding, that petitioner should respond to the trustee for any such liability which in fact existed. The strictly legal character of the action which petitioner might have taken without coming into the bankruptcy court and which it did take after thus coming into that court, and the quasi equitable character of the condition imposed and the order finally made, are not so inconsistent as to invalidate the latter. We are holding, by opinion this day filed, in Rode & Horn v. Phipps, 195 Fed. 414, 114 C. C. A. -, that these unclassified proceedings by intervening petition in the bankruptcy court, even though they present only legal questions, are so far equitable in form that equitable remedies aré appropriate. Much more is this true when the petition seeks, as this one did, whatever equitable relief the court may think is proper, and when the remedy given by way of an imposed condition is of at least quasi equitable character. The order of the District Court should be affirmed, with costs.