Court Opinion

ID: 8813254
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:10:08.263718+00
Date Added: 2024-06-11T17:04:22.245317
License: Public Domain

BATTS, Circuit Judge
(dissenting). Among the creditors of E. B. Moore was the Beaumont Rice Mills, to whom he owed more than $6,-000, secured by a mortgage on livestock, etc., worth about $3,000. He entered into an arrangement in January, 1906, with Broussard, manager of Beaumont Rice Mills, by which the McCrimmin farm was to be rented and planted to rice. Broussard was to make the necessary advances, and the net proceeds were to be applied to the Rice Mills’ debt. Broussard paid the rent, and was recognized as the tenant. On April 5, 1906, Moore executed an instrument in the form of a transfer of the crop to Broussard, which was registered as a chattel mortgage. The parties testified, and the court found, that .in June, 1906, a further agreement was made that the Rice Mills take the crop in discharge of its debt. The court also found that at the time of the sale “there was not a scintilla of evidence to show that anybody contemplated any bankruptcy proceedings.” In July, 1906, Moore became bankrupt, Re Blanc, a member of the firm of Beaumont Rice Mills, becoming trustee. The crop was subsequently harvested and marketed, and $11,651.25 realized; the crop and price being much better than was expected at the time of the sale. The harvesting expenses, added to the rent, $813, and advances, $1,139.40, aggregated $5,209.45, leaving as the net proceeds an amount almost as large as the debt to the Rice Mills. The proceeds of the crop came into the hands of Re Blanc, and were by him turned over to the firm. When Re Blanc resigned as trustee, a controversy as to the proper custody of the fund resulted in litigation, determined, after a number of years, in favor of the trustee, Crawford, the crop at the time of the bankruptcy being in possession of Moore under the terms of the sale. Complainants thereupon sued for the fund, or, in the alternative, to establish a lien against it for the amount of the rent, advances, expenses of harvesting, and the prior debt. From a final judgment in their favor for the fund is this1 appeal.
*129Considering the uncertainty as to yield and price, the surrender of about $3,000 of other security, and the large expenditures required for harvesting, the sale could not be regarded as in fraud of creditors. The transaction was, in fact, greatly to the benefit of other creditors. But even if, for any reason, the sale should be held void, there is no doubt that complainants had a lien on the crop for the rent, and advances, and the debt; and the amount subsequently expended for harvesting also became proper charges against the property.
The trustee has, notwithstanding the opposition of complainants, taken over the crop or the fund which stands in its place. Under such circumstances, a trustee takes property subject to valid liens. The property in controversy, having now become money, the amount of such liens would properly be paid from it. The lienholder, making no claim against the estate generally, is not compelled to file his claim within the period prescribed by section 57n, Bankruptcy Act (Comp. St. § 9641). The trustee, not having discharged the lien upon taking possession of the property, may be sued, as contemplated by section lid (section 9595) and within the period therein provided.
The judgment of this court will bring about results entirely inequitable. The crop would not have been raised and the fund created, except for the act of complainants in risking the money paid as rents and advances, and could not have been harvested, except for the expenditures made for that purpose. A judgment sustaining the sale, or a proper application of the fund to the liens, releases for the benefit of other creditors the property upon which complainants had a mortgage, and also gives to the other creditors the benefit of dividends which would otherwise have been payable to complainants. The judgment deprives complainants, not only of their original debt, but of all moneys expended by them in making and saving the crop. Complainants are deprived of legal rights, and the equitable principles recognized and applied in Hurley v. A., T. & S. F. Ry. Co., 213 U. S. 132, 29 Sup. Ct. 466, 53 L. Ed. 729, and the cases therein cited, are ignored.
I cannot concur in a judgment bringing about such palpably unjust results.