Statement of the Case. 239 U. S. state commerce, without complying with the statute quoted, the contentions based upon the commerce clause and the due process of law clause alike must fall. For the authority of the State to restrict the right of a foreign corporation to engage in business within its limits or to sue in its courts, so long as interstate commerce be not thereby burdened, is perfectly well settled. Paul v. Virginia, 8 Wall. 168, 181; Hooper v. California, 155 U. S. 648, 655; Bank of Augusta v. Earle, 13 Pet. 519, 589, 591; Anglo-American Prov. Co. v. Davis Prov. Co., 191 U. S. 373; Sioux Remedy Co. v. Cope, 235 U. S. 197, 203. The insistence based upon the "equal protection" clause is unsubstantial, and calls for no discussion. Judgment affirmed. HOME BOND COMPANY v. McCHESNEY, TRUSTEE IN BANKRUPTCY OF AMERICAN FIBRE REED COMPANY AND NEW ENGLAND CHAIR COMPANY. APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT. No. 90. Argued December 3, 1915. Decided January 10, 1916. This court follows the conclusions, reached by the Special Master and affirmed by both courts below, that transactions purporting to be purchases of accounts receivable from the bankrupt were really loans with the accounts transferred as collateral security. 210 Fed. Rep. 893, affirmed. THE facts, which involve construction of contracts between the bankrupt and one dealing with him and determination of whether such contracts were purchases of accounts or loans with the accounts as collateral, are stated in the opinion. Mr. Robert Kinkead, with whom Mr. S. M. Sapinsky, Mr. James R. Duffin, Mr. Owen D. Duffin and Mr. S. M. Stockslager were on the brief, for appellant. Mr. Lewis A. Nuckols, with whom Mr. John Bryce Baskin and Mr. Eli H. Brown, Jr., were on the brief, for appellees. MR. JUSTICE PITNEY delivered the opinion of the court. The New England Chair Company, and its successor, the American Fibre Reed Company, are Kentucky corporations which were engaged in business at Frankfort, in that State. On February 1, 1912, involuntary petitions in bankruptcy were filed against both companies, and they were duly adjudicated bankrupts. The two cases in bankruptcy were consolidated and directed to proceed as one cause, and the estates are under administration as one estate. The present appellant, The Home Bond Company, an Indiana corporation, filed intervening petitions, claiming certain funds in the hands of the trustee, obtained by him through the collection of accounts receivable of the bankrupt corporations, to which the petitioner claimed title under two contracts in writing made between it and the respective corporations; one with the New England Chair Company under date March 6, 1911, the other with the American Fibre Reed Company under date November 9, 1911, after the latter had taken over the assets and assumed the liabilities of the Chair Company. These agreements are identical in form, and a copy of one is set forth in the margin.1 1 This agreement, made this 6th day of March, 1911, at Indianapolis, Indiana, by and between New England Chair Co., hereinafter called first party, and the Home Bond Company, hereinafter called second party. Witnesseth, that, for One Dollar ($1.00) and other good and valuable Petitioner also set up a claim against the trustee for the sum of $800, being $100 per month from March 16 to October 12, 1912, inclusive, paid by it to one Manning, considerations, each to the other paid, receipt whereof is hereby acknowledged, the parties hereto have agreed and do hereby agree as follows: First. That said second party shall buy from said first party all acceptable accounts tendered to it by said first party and pay therefor the face value thereof less the following discounts: 1 per cent. on accounts that are paid within 15 days; subject however, to the terms of this and any subsequent written agreements executed by the parties hereto. Second. That the second party shall pay: 78 per cent. on 30 day accounts; upon delivery to and acceptance by second party of such accounts duly assigned to the party of the second part; and the remainder, less discount and deductions taken by the debtor, shall be paid immediately after the collection of the account by the second party, provided, however, no payment of the remainder shall be made while any of said accounts are in default. Third. The first party shall properly assign and deliver to said second party all accounts purchased, including the right of stoppage in transitu, either in the name of the party of the first part or in the name of the party of the second part (provided, however, the party of the second part shall not be charged with negligence in not making stoppage in transitu in any event unless thereunto requested by the party of the first part). If the merchandise named in the accounts should be refused or returned, for any cause, the title to such merchandise shall be and remain in said second party until such accounts are paid. Fourth. Said first party hereby guarantees the payment to the second who in the sixth clause of the contract of November 9, 1911, was by the Reed Company appointed attorney in fact to receive remittances in payment of the accounts party or its assigns of all accounts purchased hereunder according to the terms thereof. In the event of non-payment at maturity to said second party, of any accounts purchased as aforesaid, or should the debtor become insolvent, said first party hereby covenants and agrees to repurchase said accounts within five days after receipt of written notice thereof, and to pay therefor the same amount paid to the first party by said second party, plus the discount provided for in the first paragraph of this contract; said second party is hereby given the right without notice to said first party to credit any moneys coming into its possession, belonging to said first party, on its accounts. Fifth. Immediately after the purchase of every account hereunder, said first party shall make upon its book an entry showing the absolute sale of said accounts to said second party, and said second party is hereby given the right and privilege of auditing the books, accounts and records of said first party, relating to said accounts, at any time that it may see fit so to do. Sixth. Whereas it is for the mutual benefit of the parties hereto that the collection of said accounts shall in the first instance be remitted to the party of the first part and in its name; the party of the first part shall at all times appoint some person or persons mutually acceptable to both of the parties hereto, their attorney-in-fact to receive all such remittances in whatever form they may be made, and to transfer, assign and transmit all such proceeds to said party of the second part. And said party of the first part shall immediately upon receipt of such remittances in whatever form the same shall be made, deliver the same to such attorney for transmittal to the party of the second part; and said attorney shall at all times have access to all mail received by said party of the first part and all books and records of the party of the first part, to discover what payments and remittances are made upon such accounts. And in consideration of the execution of this agreement by the party of the second part, said party of the first part undertakes and agrees to guarantee the faithful conduct of said attorney-in-fact in the receipt, assignment and transmittal of all such payments or remittances. And upon the like consideration said party of the first part shall pay unto said attorney-in-fact compensation for all such services so rendered in that behalf; and that we will furnish and provide for said attorney-infact all necessary clerical or stenographic assistance for making reports receivable and transmit them to petitioner. It was averred that $100 per month was a reasonable charge and that under the provisions of the sixth clause the Reed Company was to pay Manning, but failed to do so, and petitioner was compelled to make such payment. The trustee filed answers contesting the principal claim on the ground that the transactions between petitioner and the bankrupt corporations did not amount to a purchase of the accounts receivable but constituted mere loans of money (with the accounts assigned as collateral to party of the first part, and all postage or express charges for transmitting reports and remittances; said attorney-in-fact shall also have the right and power, and it shall be his duty to endorse the name of the party of the first part on any freight or express bill or bill of lading relating to said accounts; and ratifying and confirming all its said attorney may do in the premises. And said attorney-in-fact as to all such matters shall receive such moneys or other remittance solely for the party of the second part and shall at all times be subject to its exclusive orders with relation thereto; and it is now mutually agreed between the parties hereto that E. Manning shall be and continue such attorney-infact to perform such duties, until by mutual agreement of the parties hereto, another person shall be appointed in his stead. Seventh. That said second party in making purchase of accounts hereunder relies upon the guaranties and covenants of said first party herein contained and upon the written representations made to it by said first party as to the financial responsibility of said first party; that said written representation heretofore made and that may hereafter be made are for the purpose of establishing the credit of said first party with said second party so that sale of accounts may be made hereunder. Eighth. That said first party shall execute and deliver to said second party or its assigns, any document necessary or proper to carry into effect this contract and should second party employ counsel or cause legal action to be instituted to enforce the payment of any of said accounts, or any part thereof, either in its own name or of the name of the party of the first part, then and in either case said first party shall immediately pay to said second party or its assigns, all court costs, expenses, attorney's and stenographer's fees which may be by it expended in such proceedings. In Witness Whereof, etc. |