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February 21, 1938


The opinion of the court was delivered by: BYERS

BYERS, District Judge.

By this motion, the claimant in reclamation proceedings seeks to review the order of the referee in bankruptcy dated January 7, 1938, by which the petition of the B. F. Goodrich Company to reclaim 348 tires and tubes attached to 58 Yellow buses, formerly operated by the bankrupt, wad dismissed and the said articles were awarded to the trustee as being the property of the bankrupt.

The matter for decision is the interpretation and construction of an agreement bearing date July 28, 1933, between the bankrupt and the B. F. Goodrich Rubber Company as supplemented September 7, 1933, and December 12, 1933.

 Those contracts are in evidence and therefore need not be recited at length.

 The first describes the petitioner as Supplier and the bankrupt as Operator, and provides that the buses of the latter shall be equipped with tires manufactured by the Supplier, who shall maintain and repair all tires and their various parts and will dismount tires from rims or discs. That provision has to do with so-called "fullservicing."

 Paragraph 3 provides that all tires and equipment "shall at all times remain the property of Supplier, and Operator will take all necessary steps to protect and maintain Supplier's title * * * free and clear from all encumbrances of all persons whomsoever. Any tax, excise or levy, of whatsoever kind or form, imposed or assessed directly or indirectly by Governmental authority upon the sale and/or manufacture of the tires furnished by Supplier, under this agreement or by reason of the possession and use by Operator of goods or service covered by this agreement and any increase in the manufacturing or selling cost directly or indirectly resulting from or imposed by any law or laws now in effect or hereafter imposed shall be assumed by Operator and paid to Supplier or as Supplier may direct."

 Then follows a provision whereby the Operator agrees to pay for lost, stolen, or destroyed casings or such as may be damaged by fire, "at Goodrich List Prices then in effect, less the amount previously paid for the use of said tires. In the event tubes in service on running wheels are lost, * * * they shall be paid for by the Operator at Goodrich List Prices then in effect less 50%. * * * In the event new and unused tubes are lost or stolen * * * Operator will pay for the same at Goodrich List Prices."

 If a bus is sold which is equipped with Goodrich tires, the Operator will purchase the latter at List Prices then in effect "less any amount previously paid for use of said tires."

 The Operator agrees to save the Goodrich Company harmless against all claims arising out of the use and possession of the tires and, in the event of default in payment according to the contract terms, or impairment of the Operator's credit, or if the buses should become subject to a lien without the consent of the Supplier, or title to the tires be threatened by attachment, etc., "or should a receiver be appointed for Operator, then * * * Supplier shall have the right to take possession of and remove from service all tires furnished hereunder * * * and/or terminate this agreement without advance notice except as to any sum or sums which may be due from one party to the other."

 Payment for the use of the tires is on a mileage basis according to schedule, and the duration of the contract is until July 31, 1936, when it shall expire unless previously renewed. In the paragraph having to do with that, the following occurs: "If this contract is not renewed, Operator will purchase all tires furnished by Supplier hereunder, including those on the wheels of buses, those known as spare tires, tires in the course of repair, and tires in storage in Operator's garages, and will pay for said tires within thirty days after the expiration of this agreement at Goodrich List Prices then in effect less any amount previously paid for the use of said tires. Should this agreement be renewed, all mileage accumulated after such renewal shall be paid for at the rate fixed by such renewal agreement."

 Provision is made that the Operator may purchase from the Supplier other rubber products manufactured by it or its subsidiaries "as listed on the attached Supplementary Agreement, Operator shall sign said Supplementary Agreement in the space provided therein."

 The agreement of September 7, 1933, embodied a new paragraph 10 having to do with the basis of compensation, the mileage records, and the rates, and the change of base rates in proportion to the change in the Goodrich List Prices. There are attached such prices in effect August 1, 1933.

 That of December 12, 1935, explained the assignment of the original contract by the G.F. Goodrich Rubber Company to this petitioner, and paragraph 10 was further recast in respects not now material, the rates being tabulated, and it is stated that they should be subject to adjustment on January 1, 1937, in accordance with market changes in the cost of rubber and spot cotton.

 There was also included a provision covering termination by the Operator prior to the extended expiration date, whereby the Operator agreed to reimburse the Supplier at the rate of $13.77 per day during the unexpired term of the ...

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