The opinion of the court was delivered by: KALODNER
This matter originally started as a suit in the Court of Common Pleas of Philadelphia County by the claimant, Jerpe Commission Co., Inc., of Omaha, Nebraska (hereinafter called Jerpe) as plaintiff, against Quaker City Cold Storage Company (hereinafter called Quaker City) as defendant.
Subsequently, Quaker City filed a petition for reorganization under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., and trustees were appointed for it.
The parties thereafter agreed to have the issue transferred to, and determined by, this Court in the reorganization proceedings.
The claimant, Jerpe, thereupon filed its proof of claim, to which the trustees of Quaker City filed objections, and the matter was referred to a special master who took testimony and rendered a report dismissing Jerpe's claim.
The matter is now before me on the exceptions to the special master's report.
The testimony taken by the master was virtually altogether documentary and was not contradicted.
Rule 53(e)(2) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, provides: "* * * The court after hearing may adopt the report or may modify it or may reject it in whole or in part * * *."
Additionally: "The District Judge has the ultimate responsibility of determining the facts, and the say-so of a master cannot dispense with it." In re Michel, 2 Cir., 56 F.2d 15.
Accordingly, upon consideration of the entire record in the case and after hearing argument of counsel I make the following
1. On February 19, 1940, Quaker City entered into an arrangement with Bennett & Layton, Inc., San Francisco, California, poultry dealers, whereby it was agreed that Quaker City would make advances upon cars of turkeys shipped by Bennett & Layton to Quaker City to be stored for later sale, such advances not to be made until after the arrival of the shipment and its inspection by Quaker City.
2. During the month of May, 1940, Bennett & Layton requested Quaker City to transfer to Jerpe two cars of turkeys stored with Quaker City, upon which Quaker City had made advances amounting to $12,635, Jerpe to repay all advances, in accordance with which Quaker City wired and wrote to Jerpe of its advances and requested to be informed how Jerpe wished the transaction handled, whereupon Jerpe forwarded a check to Quaker City for $12,635, and requested copies of all transactions with Bennett & Layton relative to these turkeys, and non-negotiable warehouse receipts, which receipts were thereupon forwarded by Quaker City.
3. Through the May, 1940 transaction, Jerpe acquired actual knowledge that the said turkeys held by Quaker City and stored by Bennett & Layton were subject to a lien for advances made by Quaker City to Bennett & Layton.
4. On June 7, 1940, Bennett & Layton notified Quaker City by telegram that Car MP-3405, containing 396 boxes of turkeys, would reach Quaker City the next day, and to store the same for the account of Jerpe. A copy of this telegram was sent by Bennett & Layton to Jerpe. Said car arrived at Quaker City on June 8, 1940, consigned to "Bennett & Layton, c/o Quaker City Cold Storage Co."
5. On June 7, 1940, Jerpe -- having received a copy of the telegram sent by Bennett & Layton to Quaker City -- wrote to Quaker City advising of the receipt of Bennett & Layton's telegram, and promising and agreeing further, that as soon as it would be advised by Quaker City of the amount necessary to clear advances against this car, a check therefor would be forwarded by Jerpe, subject to the condition, however, that such advances would only be repaid after Quaker City's acknowledgment of the transfer of the said turkeys to Jerpe's account.
6. Jerpe's letter of June 7, 1940, was received by Quaker City on June 8, 1940.
7. In reliance upon Jerpe's promise and agreement to repay any advance made by Quaker City upon Car MP-3405, after Quaker City's acknowledgment of the transfer of said turkeys to Jerpe's account, and in compliance therewith, Quaker City, on June 8, 1940, issued non-negotiable receipts for said turkeys and forwarded same to Jerpe.
"This is a memorandum for the depositor's convenience only, and is not to be used as a negotiable receipt.
The obligation to receive, store and/or deliver goods is conditioned upon and subject to service delays caused by direct or sympathetic strikes or other labor disputes, and accidents and unavoidable casualties in the operation of the Warehouse.
Quaker City Cold Storage Company, Delaware Ave., Spruce & Water Sts., Philadelphia, Pa. 6/8/1940 has ...