Appeal from the District Court of the United States for the Northern District of Illinois, Eastern Division; Philip L. Sullivan, Judge.
Before EVANS and SPARKS, Circuit Judges, and BRIGGLE, District Judge.
Appellant filed his petition in the bankruptcy court in the nature of a reclamation petition, asserting a lien on certain chattels that were in the possession of The Goodwin Corporation at the time of bankruptcy and which subsequently came into the hands of appellee as trustee in bankruptcy. He prayed that the trustee be required to pay him the sum of $7,000 and interest (which was concededly due him from the debtor), or, in the alternative, deliver up all of said chattels on which he claimed a lien. The referee held that he had no lien which could be asserted against the trustee and upon review the District Court affirmed. Appellant assigns error upon this holding.
The pertinent facts which are without substantial dispute are disclosed by the referee's report from which we quote, as follows:
"* * * That on July 20, 1935, an involuntary petition in bankruptcy was filed against The Goodwin Corporation; that on July 20, 1935, an involuntary petition for reorganization under section 77B of chapter 8 of the Acts of Congress relating to bankruptcy [11 U.S.C.A. § 207] was filed against said The Goodwin Corporation; that said latter petition was found to be properly filed and filed in good faith, by the District Court of the United States, on October 17, 1935, and Robert W. McKinlay, was appointed permanent trustee of the estate of said debtor; that on January 21, 1936, the bankruptcy cause pending against said debtor was consolidated with the within cause for reorganization under said section 77B, and an order of liquidation was entered in said consolidated causes, and the same were referred to the undersigned in accordance with subdivision (k) of said section 77B [11 U.S.C.A. § 207(k)].
"That on August 20, 1934, said debtor was indebted to numerous unsecured creditors for the total sum of One Hundred Fourteen Thousand, Two Hundred Dollars ($114,200.00); that most of these creditors continued as creditors up to July 20, 1935, and are still creditors at this date.
"That on August 20, 1934, said debtor's tangible assets consisted of the office furniture, fixtures and equipment, which is the subject of a reclamation petition of Frank W. Pearson, and is more fully described therein.
"That on said date said debtor's other assets were intangible, consisting of choses in action, contracts with manufacturers, field managers and with oral broadcasters.
"That the business of said debtor was that of promoting and stimulating sales of nationally advertised goods, wares, and merchandise by the use of individuals termed 'oral broadcasters.'
"That on August 20, 1934, and for some time prior thereto, said debtor was in need of money to finance its operations. * * *
"That on August 20, 1934, said debtor executed and delivered to said Frank W. Pearson a Bill of Sale in consideration of the sum of Seven Thousand Dollars ($7,000) paid by said Frank W. Pearson to said debtor; that in and by said Bill of Sale the said debtor conveyed all of its tangible personal property to said Frank W. Pearson, petitioner herein, who is a stockholder of said debtor.
"That contemporaneously therewith, said Frank W. Pearson executed and delivered to said debtor a Conditional Sales Contract reconveying said tangible personal property to said debtor in consideration of the sum of Seven Thousand Dollars ($7,000), together with interest at the rate of six per cent (6%) per annum to be paid in fixed installments; that in and by said Conditional Sales Contract, title to said personal property was to remain in said Frank W. Pearson until the said sum was paid to him in full. * * *
"That the intent of said Frank W. Pearson and said The Goodwin Corporation, debtor, was to effect a loan of Seven Thousand Dollars ($7,000.00) from said Frank W. Pearson to said The Goodwin Corporation, a corporation, and as security for the repayment thereof, said Bill of Sale and said ...