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AUGUST v. ALDAN RUBBER CO.

December 18, 1967

Irving A. AUGUST, Trustee in Bankruptcy of Capac Manufacturing Corporation
v.
ALDAN RUBBER COMPANY



The opinion of the court was delivered by: LORD, JR.

 JOHN W. LORD, Jr., District Judge.

 This is a civil action for damages arising out of an alleged conversion of the bankrupt's property. The defendant claimed to have had a lien against the property of the bankrupt in its possession.

 After a trial before the Court without a jury, upon pleadings and proof, the Court makes the following:

 FINDINGS OF FACT

 1. On March 29, 1962, an involuntary petition in bankruptcy was filed against Capac Manufacturing Corporation (hereafter called bankrupt) in the United States District Court for the Eastern District of Michigan. Capac was duly adjudicated a bankrupt. The plaintiff was appointed Trustee and duly qualified as such.

 2. The bankrupt gave the defendant an order in writing dated November 14, 1960, to rubber-coat cotton sheeting for the bankrupt. Attached to the order was a writing dated November 15, 1960 which stated the bankrupt's assumption that the terms of payment were "1% 30 days."

 3. The defendant accepted the order by a letter dated November 21, 1960, but correcting the terms to "1% 30 net 35 days."

 4. The bankrupt's order and note and the defendant's answering letter constituted an offer and acceptance.

 5. Defendant's president in the initial dealings, prior to the written offer and acceptance, informed bankrupt's president that defendant claimed a general lien on all goods sent to it for processing, to which bankrupt's president assented.

 6. This prior oral agreement was not inconsistent with the written contract, and was such an agreement as might be made separately by parties situated as were the parties to the written contract here.

 7. The parties to this contract would not have normally included the oral agreement setting forth a general lien in the purchase order or acceptance letter.

 8. On several occasions, upon receipt of bankrupt's goods, receiving memos were sent by defendant to bankrupt with conspicious red stampings on the front stating "NOTE REVERSE SIDE" and a red stamping on the back stating:

 
"It is specifically agreed that Aldan Rubber Co. has or shall have a general lien on all customer's merchandise in its possession, as a security interest for all indebtedness and claims, whether or not in a liquidated amount, on open account, arising after the receipt of the merchandise or for work done on other merchandise, and it shall have the right after default to dispose of ...

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