Court Opinion

ID: 8191045
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:14:03.216851+00
Date Added: 2024-06-11T16:40:36.646722
License: Public Domain

Siebeceeb, J.
The contract in question is in form and substance a conditional contract of sale of the plaintiff’s property to the Edgar Farmer Store Company. Such contracts of sale are recognized in the law of this state as proper modes of transfer. Sec. 2317, Stats.; Wadleigh v. Buckingham, 80 Wis. 230, 49 N. W. 745; Mississippi River L. Co. v. Miller, 109 Wis. 77, 85 N. W. 193. It is stated in the opinion in the Wadleigh Case:
“In the absence of fraud, an agreement for a conditional sale of personal property, accompanied by delivery sub modo, *494is valid as well against third parties as against the parties to the transaction. The statute expressly makes such a contract valid when signed by the parties and filed in the proper office, as this contract was. Sec. 2311, R. S. The statute is founded upon the principle that the compliance with the conditions of the sale and delivery is a precedent condition to the transfer of the property from the vendor to the vendee. See Harkness v. Russell & Co. 118 U. S. 663, 1 Sup. Ct. 51, where there is a learned and able discussion of the law of conditional sales by Mr. Justice Bradley. Also, W. W. Kimball Co. v. Mellon, 80 Wis. 133, 48 N. W. 1100, where the validity of such a contract as the one now before us is impliedly affirmed, when signed by the parties and filed in the proper office.”
The holding in some of the states that there is a presumption that the vendee holding goods for sale under such contracts has title and that this is necessary to prevent frauds as to creditors, it is declared in Harkness v. Russell & Co., supra, arose from the provision in the English bankrupt law from an early date providing that if any person becoming-bankrupt has in his possession, order, or disposition, by consent of the owner, any goods or chattels of which he is the reputed owner, or takes upon himself the sale, alteration, or disposition thereof as owner, such goods are to be sold for the benefit of his creditors. Mr. Justice Beadley declares:
“This presumption of property in a bankrupt arising from his possession and reputed ownership became so deeply imbedded in the English law that in process of time many persons in the profession, not adverting to its origin in the statute of bankruptcy, were led to regard it as a doctrine of the common law. . . .”
Conditional contracts of sale of goods accompanied with delivery to the vendee are generally upheld in the law as proper. See cases cited in the opinion in Dunlop v. Mercer, 156 Fed. 545. The claim that this contract is in effect' the same as a chattel mortgage given by the owner of personal property and operates as a secret promise of the mort*495gagee who permits the mortgagor to sell it and apply the proceeds thereof to his own-use is not sustained. In the case of such chattel mortgages it' necessarily follows that the mortgagor of the chattels, .by the mortgage instruments, is permitted to transfer title to his property without delivery; but secretly is permitted to treat it as his property and to retain the proceeds of a sale thereof as if no such transfer had in fact been made. It is this secret agreement which contravenes and avoids the terms of the mortgage transfer that' is condemned in the law as deceptive and fraudulent as to creditors. This is not the result of such contracts as the' one in question. In thé first place the statute required that the terms thereof be made public by filing; furthermore, in terms such contracts differ materially from mortgages by giving the vendor not only the right a mortgagee has of taking the property to pay the debt, but the right, upon default in any of the stipulations to pay for the property as agreed, .or if the vendee becomes insolvent or if the vendor deems himself insecure, to retake the property and thus cancel the obligation to pay the agreed price. It is an important feature of such a sale that the vendee of the property never had any right or title to the property until payment of the purchase price or sale thereof, and he cannot be considered as having disposed of that which was not' his own for some private purpose to gain some private advantage to the detriment of his creditors. ■ All of these considerations distinguish these sales from the chattel-mortgage sale with the secret right to use the property by the mortgagee as his own, and hence condemned for fraud, as held in Place v. Langworthy, 13 Wis. 629; Anderson v. Patterson, 64 Wis. 557, 25 N. W. 541, and cases cited. The contract in question is clearly a conditional sale within the rule of the cases of this and other courts, and being free from'actual fraud must be held valid and effective. In addition to the above cases in this court see Dunlop v. Mercer, 156 Fed. 545; Bradley, C. & Co. v. *496Benson, 93 Minn. 91, 100 N. W. 670; F. J. Dewes B. Co. v. Merritt, 82 Mich. 198, 46 N. W. 379; Flint W. Works v. Malery (Del.) 81 Atl. 502. We cannot accede to the conclusion suggested by the court in In re Bement, 172 Fed. 9, that this contract is condemned as fraudulent by the rule adopted in Place v. Langworthy and Anderson v. Patterson as to such chattel mortgages as were there involved, nor are such contracts as the trial court found invalid in the common law.
The respondents’ contention that the transaction embraced in this contract constituted an unlawful preference under sec. 60 of the Bankruptcy Act (30 U. S. Stats. at Large, 544, ch. 541) must also fail. The bankrupt transferred no estate in any of this property, nor was anything done by way of securing any antecedent debt of the bankrupt so as to invalidate the transfer within this provision of the Bankruptcy Act.
It is found by the court that no creditor was in fact misled by the failure of the plaintiff to file the contracts or copies thereof until April 4th, which was a day before the replevin suit was commenced and two days before any proceedings in bankruptcy were instituted. Upon these facts the trial court properly determined that nothing appeared upon which the plaintiff was estopped from claiming this property as against intervening creditors. No creditor having acquired any specific interest in the property while the contract was not on file as required by sec. 2317, Stats., and the bankrupt having no interest therein at the time bankruptcy proceedings were commenced, it follows that the trustee in bankruptcy has no right to the possession thereof.
By the Court. — The judgment appealed from is reversed, and the cause remanded to award judgment for the plaintiff, granting recovery of the property levied on under the writ of replevin and for costs.