Case ID: ad_140/html/0726-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Kruse, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Crocker-Wheeler Company, Plaintiff, v. Genesee Recreation Company, Defendant.
    Fourth Department,
    November 15, 1910.
    Sale — action to recover chattels transferred under contract of conditional sale — possession by vendee — sale of chattels to be attached to building — effect of failure to file contract — evidence ■— good faith of purchasers from conditional vendee — erroneous direction of verdict.
    . &. vendor of machinery which was delivered to the vendee under a contract of conditional sale who bases his right to recover the property on the contract itself cannot contend that there was no acceptance by the vendee or its successors in title.
    Since the statute relating to filing contracts of conditional sales was amended by chapter 698 of the Laws of 1904, a conditional vendor of chattels which were actually affixed to a building cannot recover them as against a bona fide purchaser of the building unless the contract was filed, even though the chattels were not in existence when the contract was made, but were to be manufactured and delivered in the future.
    Where the vendor of chattels conditionally sold and attached to a building sues the grantee of the vendee to recover possession the defendant is under the burden of showing that he was a bona fide purchaser.
    Evidence in such-action examined, and held, that the question as to whether the purchasers from the conditioual vendee had notice that the sale was conditional was one of fact, and that a verdict should not have been directed in their favor.
    The trustee of a bankrupt who purchased property from a vendee holding the same under a contract of conditional sale acquires no better title than his bankrupt had.
    The failure to file a contract of conditional sale does not make it void as to creditors of one who purchased from the conditional vendee.
    Motion by the plaintiff, the Crocker-Wheeler Company, for a new trial upon a case containing exceptions, ordered to be heard at the Appellate Division in the first instance, a nonsuit having been granted at the close of plaintiff’s case on a trial at the Monroe Trial Term in April, 1910.
    
      Isaac Adler, for the plaintiff.
    
      Percival De W. Oviatt, for the defendant.
   Kruse, J.:

The plaintiff claims to own and seeks to recover of the defendant three electric generators, which were furnished and delivered by the plaintiff to the James McDonell Company under a contract of conditional sale containing the provision that the title should remain in the plaintiff and not pass to the purchaser until fully paid for in cash. The purchase price was $1,990, two-thirds of which remains unpaid.

The contract is in writing, but was not tiled as required by the statute relating to conditional sales to make that provision of the contract effective as against subsequent purchasers in good faith.

The James McDonell Company sold the generators to the Genesee Amusement Company, and they were installed upon the premises of the latter company in the city of Rochester. Subsequently the amusement company became insolvent and the trustee in bankruptcy sold its assets, including the generators, to three individuals, who in turn sold the same to the defendant. The trial court directed a verdict for the defendant, to which the plaintiff excepted, and the exceptions were ordered to be heard here in the first instance.

It is now contended on behalf of the plaintiff that the two larger generators were not accepted by the McDonell Company or any of its successors in title. I think the acts of the plaintiff before the action was commenced, as well as the allegations of its complaint, are to the contrary. While the amusement company and its successors have claimed that the generators did not come up to the contract, and changes have been made by the plaintiff from time to time to make them satisfactory, and the amusement company has withheld $1,500 of the purchase price coming to the McDonell Company from the amusement company to protect the latter against damages for the generators not coming up to contract; the generators have been left installed upon the premises and the plaintiff’s claim to recover possession thereof has been based upon its retention of the title under the conditional contract of sale. That was the claim of the plaintiff when it demanded possession, and upon that theory the action was brought. I think the point which the plaintiff now makes is not well taken.

It further contends that the statute relating to the filing of conditional sales contracts does not apply, for the reason that the gen-orators were not in existence when the contract ivas made, but were to be manufactured and delivered in the future; citing in support of its contention Graves Elevator Company v. Callanan (11 App. Div. 301) and Duntz v. Granger Brewing Company (41 Misc. Rep. 177; affd., 96 App. Div. 631; affd., 184 N. Y. 595). When the contracts under consideration in those cases were made, the Conditional Sales Statute provided that such con tracts, accompanied “ by immediate delivery and continued possession of the thing contracted to be sold” should be void as against subsequent purchasers, pledgees or mortgagees in good faith, unless filed as therein directed. (Laws of 1897, chap. 418, § 112.) But in 1904 the act was amended by striking out the word “ immediate ” and the phrase “ and continued possession,” and the section and subsequent sections were further amended by providing that contracts for the conditional sale of goods and chattels attached or to be attached to a building shall be void as against subsequent bona fide purchasers or incumbrancers of the premises on which such building stands, and that as to them the sale shall be deemed absolute unless, on or before the date of the delivery of such goods or chattels at such building, such contract shall have been duly and properly filed with the register or the county clerk as therein provided of the county in which the premises whereon the building stands are located. • (Laws of 1904, chap. 698, amdg. §§ 112, 113, 114, 115 of the Lien Law, relating to contracts of conditional sales, being Gen. Laws, chap. 49 ; Laws of 1897, chap. 418.) The statute as thus amended, except section 115, which was repealed by chapter 503 of the Laws of 1905, has been incorporated in the present Personal Property Law (Consol. Laws, chap. 4i [Laws of 1909, chap. 45], art. 4, relating to contracts for . the conditional sale of goods and chattels).

The generators were delivered by the plaintiff to the amusement company by the direction of the McDonell Company, about three months after the date of the contract, and ¡lermanently affixed to the foundation or base and each connected with an engine, making them a part of the plant in the building of the' amusement company. I think they were attached to the building within the meaning of the act, and that the failure to file the contract made the sale •absolute as to subsequent bona fide purchasers or incumbrancers of the premises on which the building stands.

Finally, the plaintiff contends that neither the amusement company nor any of its successors in title were bona fide purchasers, at least, that upon the evidence it was a question of fact. I think the burden of proof showing that fact was upon the defendant. (Stevens v. Brennan, 79 N. Y. 254; Duffus v. Howard Furnace Co., 8 App. Div. 567; Berner v. Kaye, 14 Misc. Rep. 1.)

It can be found from the evidence that not only the amusement company had notice of the conditional sale, but that the persons to whom the generators were sold by the trustee in bankruptcy likewise had notice thereof, as well as the defendant corporation which was subsequently formed. The contract was submitted for approval to the architect employed by the amusement company before it was made. He examined it, approved the specifications and agreed to let the McDonell Company purchase the generators and put them in. A written notice of the terms of the contract was served upon the treasurer of the amusement company about the time or soon after the delivery of the generators to the latter, and the treasurer called the attention of the president to the notice. The terms upon, which the generators were purchased were necessarily involved in the discussions, relating to the generators, had between the representatives of the various companies interested. The three individuals to whom the generators were sold by the trustee in bankruptcy were at that time directors of the amusement company, one of them being its president, and afterward, together with others, they formed the defendant corporation and became directors thereof; and they were directors of the defendant corporation at the time the sale was made by them to it. There are other circumstances tending to show that the subsequent purchasers had notice of the conditional sale, to which I need not allude. I think it clear that the question of good faith was a question of fact, and that a verdict should not have been directed for the defendant.

As regards the trustee, he acquired no better title than his bankrupt had ; he was- not a bona fide purchaser within the provisions of the act under consideration. (Hewit v. Berlin Machine Works, 194 U. S. 296.) Counsel for the defendant urges that the trustee not only acquired the rights of the amusement company, but as well those of its creditors. Very likely that is true, but the answer to that suggestion is that, unlike the provision relating to the filing of chattel mortgages (Lien Law [Gen. Laws, chap. 49 ; Laws of 1897, chap. 418], § 90, as amd. by Laws of 1900, chap. 248; Lien Law [Consol. Laws, chap. 33; Laws of 1909, chap. 38], § 230), the failure to file a conditional bill of sale is not void as to creditors. And even if the provision which makes the omission to refile a conditional sale contract void as to creditors applies here it only applies to the creditors of the conditional vendee (Lien Law [Gen. Laws, chap. 49; Laws of 1897, chap. 418], § 114, as amd. by Laws of 1904, chap. 698; Pers. Prop. Law [Consol. Laws, chap. 41; Laws of 1909, chap. 45], § 64), and that in this case is the McDonell Company and not the bankrupt amusement company.

The plaintiff’s exceptions should, therefore, be sustained and the motion for a new trial granted, with costs to the plaintiff to abide the event.

All concurred.

Plaintiff’s exceptions sustained and motion for new trial granted, • with costs to plaintiff to abide event.