Opinion ID: 1824496
Heading Depth: 1
Heading Rank: 2

Heading: Receiver's Right to the Consigned Property.

Text: Sub. (2) of sec. 241.26, Stats., provides that, in the event of failure to comply with the filing requirements of sub. (1), title to the consigned goods shall be deemed to be in the consignee as to creditors of the consignee as well as purchasers of the goods. Worthington contends that the statutory word creditors is confined to creditors who have secured a lien on the goods by attachment or levy of execution, and that, while the receiver represents creditors generally, he does not stand in the shoes of a creditor armed with process, there having been no such type of creditor at the time Adams made its assignment for benefit of creditors. If Worthington is correct in these contentions then it would follow that the order appealed from should be affirmed. This court has held in considering the provisions of sec. 241.11, Stats., [2] dealing with the renewal of the filing of chattel mortgages, that the word creditors in such statute is limited to creditors who after the filing has ceased to be good have acquired liens upon the property. Graham v. Perry (1929), 200 Wis. 211, 215, 228 N. W. 135, 68 A. L. R. 267; Ullman v. Duncan (1890), 78 Wis. 213, 217, 47 N. W. 266; and Lowe v. Wing (1882), 56 Wis. 31, 33, 13 N. W. 892. This holding is in accord with decisions from other jurisdictions. Anno. 51 A. L. R. 591, 598. The same interpretation has also been placed upon the word creditors by most courts in construing conditional sales filing statutes. 2 Williston, Sales (rev. ed.), p. 277, sec. 327a. However, New York has held that a simple contract creditor is as much within the chattel mortgage and conditional sales contract filing statutes of that state as an attaching or levying creditor. Karst v. Gane (1893), 136 N. Y. 316, 32 N. E. 1073, and Baker v. Hull (1929), 250 N. Y. 484, 166 N. E. 175. For the purpose of the instant appeal we will assume, without deciding, that the word creditors appearing in sub. (2) of sec. 241.26, bears the restrictive meaning contended for by Worthington. We next turn to the title of the receiver. Sec. 128.19 (1) (b), Stats., provides: (1) The receiver or assignee upon his qualification shall be vested by operation of law with the title of the debtor as of the date of the filing of the petition or assignment hereunder, except so far as it is property which is exempt, including (a) . . . (b) Property which prior to the filing of the petition or assignment he could by any means have transferred or which might have been levied upon and sold under judicial process against him. At first blush it would appear that the instant compressors, because of the failure to comply with the required filing requirements of sec. 241.26, Stats., are property which prior to the ... assignment ... might have been levied upon and sold under judicial process against Adams. So construed it would be the equivalent of stating that the receiver would have title to the compressors as against Adams. However, Worthington points out that the above-quoted language of sec. 128.19 (1) (b) is identical to that of sec. 70a (5) of the Bankruptcy Act of 1898. When ch. 128, Stats., was re-created by ch. 431, Laws of 1937, not only was sub. (1) (b) of sec. 128.19 copied from the 1898 Bankruptcy Act, but several of the other provisions of the new ch. 128 contained identical, or substantially the same, wording as provisions in the federal act. [3] It is a settled rule in the construction of statutes that, where a statute has received a judicial construction in another state and is then adopted by Wisconsin, it is taken with the construction which has been so given it. Estate of Sweet (1955), 270 Wis. 256, 258, 70 N. W. (2d) 645; Estate of Bullen (1910), 143 Wis. 512, 520, 128 N. W. 109; and Draper v. Emerson (1867), 22 Wis. 142 (), 144 (). The same rule is applicable where Wisconsin adopts the language of a federal statute which has been construed by the United States supreme court. Under the federal decisions of Hewit v. Berlin Machine Works (1904), 194 U. S. 296, 24 Sup. Ct. 690, 48 L. Ed. 986, Thompson v. Fairbanks (1905), 196 U. S. 516, 25 Sup. Ct. 306, 49 L. Ed. 577, and York Mfg. Co. v. Cassell (1906), 201 U. S. 344, 26 Sup. Ct. 481, 50 L. Ed. 782, the statutory language of sec. 70a (5) of the Bankruptcy Act of 1898 would have been insufficient to vest title to the compressors in the receiver as against Worthington. These cases make it clear that where, by failure to comply with a filing statute, the title acquired by the bankrupt was not void against everybody, but only against a limited class, such as creditors who had obtained a lien, the trustee acquired no greater title than the bankrupt. However, if the failure to file rendered an incumbrance given by the bankrupt void as against all persons, then the statutory language of sec. 70a (5) of the Bankruptcy Act of 1898 was applicable and the trustee, not the incumbrancer, would be entitled to the property or its proceeds. The statutory language of sec. 70a (5) of the Bankruptcy Act of 1898, which corresponds to that of sec. 128.19 (1) (b), Stats., was held to be only intended to refer to conveyances of property tainted with fraud. On this point see also In re Garcewich (2d Cir. 1902), 115 Fed. 87. A transfer which is only void as to a limited class is not deemed to be a fraudulent transfer to which this statutory language is applicable. In 1910, the Congress, by ch. 412, sec. 8, 36 U. S. Stat. at L., p. 840, amended the Bankruptcy Act of 1898 so as to provide: ... and such trustees, as to all property in the custody or coming into the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings thereon; and also, as to all property not in the custody of the bankruptcy court, shall be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied. [4] This changed the rule of the afore-cited federal cases so that after 1910 the title of the trustee in bankruptcy was superior to that of any mortgagee or conditional sales vendor of the bankrupt in a situation where a state filing statute had not been complied with, and under state law the failure to file could only be taken advantage of by creditors armed with process, or who had attached or levied upon the property. While we do not find a similarly worded provision to this 1910 amendment in ch. 128, Wis. Stats., we do have sub. (1) of sec. 128.18, Stats., which reads: Claims which for want of record or for other reasons would not have been valid liens as against creditors of the debtor armed with process, pursuant to which such property has been attached or levied upon, shall not be liens against the estate. We are satisfied that the above provision when read in connection with that of sub. (1) (b) of sec. 128.19, Stats., which provides that the receiver is vested with title to any property which at the time of the filing of the assignment might have been levied upon by judicial process, has the effect of putting the receiver in the position of a creditor who has obtained a lien by judicial process. We reach this conclusion in spite of the fact that sub. (1) of sec. 128.18 uses the phrase shall not be liens against the estate. Technically a conditional sales vendor, or a consignor under a consignment for sale or merchandising, has title to the property and not merely a lien. However, we cannot conceive that the legislature intended to draw a line of demarcation between chattel mortgages on the one hand and conditional sales or consignments for sale or merchandising on the other, by the provisions of sub. (1) of sec. 128.18 and sub. (1) (b) of sec. 128.19. Therefore, even if sec. 241.26, Stats., is to be construed as making the instant consignment only void as against creditors who have obtained a lien upon the property by judicial process because of the failure to file, these provisions of ch. 128, Stats., had the effect of placing the receiver in that position. It necessarily follows that the receiver is entitled to recover possession of the four compressors or their value.