Opinion
No. 238.
March 5, 1930.
Bascom Cox, of Austin, Tex., for bankrupt.
In Bankruptcy. In the matter of A.D. Rose, bankrupt. On review of the order of the referee denying reclamation claim and disallowing alternative proof as a general creditor.
Order disallowing proof as a general creditor reversed in part and affirmed in part.
I am of the opinion that the record supports the referee's conclusion denying reclamation, and that so much of his order as denies the reclamation claim should be affirmed.
It seems plain to me, however, that that part of his order which disallows proof as a general creditor is erroneous and must be set aside.
The doctrine of election has never been a favorite in equity, and is only applied with favor in cases where the elements of estoppel are present, or where there is such inconsistency in the two claims as that the assertion of both of them amounts to stultification. Parkerson v. Borst (C.C.A.) 264 F. 767. In 9 Ruling Case Law, 957, it is said: "The doctrine of election of remedies is therefore generally regarded as being an application of the law of estoppel upon the theory that a party cannot, in the assertion or prosecution of his rights, occupy inconsistent positions."
In Friederichsen v. Renard, 247 U.S. 207, 38 S. Ct. 450, 452, 62 L. Ed. 1075, the court said: "At Best this doctrine of election of remedies is a harsh, and now largely obsolete rule, the scope of which should not be extended."
Here the petitioner occupies no inconsistent position at all. He was either entitled to the goods or to the money due for the goods. Conceiving that the title had never passed, he had a right to assert that to be the case, and there is no inconsistency at all in his saying, "Well, if I do not own the goods, I am certainly entitled to my money." Any other result would be shocking.
In short, either the bankrupt is not indebted because he does not own the goods or he is indebted because he does. The order of the referee denying the creditor both his goods and the money for them smacks too much of the judgment in Shylock's case, where, because of his rapacity, Shylock lost both his bond and his money. The doctrine of election so harshly though poetically invoked by Portia does not apply to a reclamation claim in a bankruptcy proceeding.
Here there was no inconsistency at all between the remedies. There was merely an effort on the part of the creditor to obtain his goods, if he could, with the right to get his money for them, if he could not. Parkerson v. Borst (C.C.A.) 264 F. 767.
It is evident that the referee has confused petitioner's situation here with that which he would have been in if he had first filed his proof of debt as a simple creditor, thus affirming the passage of the title, and then, in the absence of newly discovered facts, had undertaken to assert the wholly inconsistent position that the title had not in fact passed. Even in that case, which does present some of the typical elements of election, upon a proper showing and by proper reservation he could have protected himself against the doctrine. See In re Kaplan Myers (C.C.A.) 241 F. 459.