Court Opinion

ID: 9642594
Source: CourtListenerOpinion
Date Created: 2023-08-22 18:03:59.877737+00
Date Added: 2024-06-11T11:52:56.407956
License: Public Domain

HICKS, Circuit Judge
(dissenting).
I cannot assent. I do not think that the theories either of “pledge” or of “trust receipt” are available to appellants.
As to the pledge: If the ears both new and used were actually pledged to appellants I have no doubt that appellants might have redelivered them to Stewart as bailee. Clark v. Iselin, 21 Wall. 360, 369, 22 L. Ed. 568. This was substantially what was done in Darragh v. Elliotte, with the exception that in the Darragh Case the ear was redelivered to the bankrupt rather than to a third party but appellants’ obstacle is that possession is of the essence of a pledge and that there is no evidence that appellants ever had possession of the ears (as had Biles & Co. in the Darragh Case) either actually or through any symbol upon which they could predicate constructive possession. See Casey v. Cavaroc, 96 U. S. 467, 477, 24 L. Ed. 779. The rule undoubtedly is that a pledge, not followed by delivery, actual or symbolical, is invalid against a trustee in bankruptcy as the representative of creditors. See Interstate Banking & Trust Co. v. Brown, 235 F. 32, 36, C. C. A. 6; Hook v. Ayers et al., 80 F. 978, 981, C. C. A. 7.
As to the trust receipts: I concur in the court’s conception of these instruments. It is in accord with In re A. E. Fountain, Inc., 282 F. 816, C. C. A. 2, 25 A. L. R. 319 ; In re James, Inc., 30 F.(2d) 555, C. C. A. 2; Century Throwing Co. v. Muller, 197 F. 252, C. C. A. 3; In re Bettman-Johnson Co., 250 F. 657, C. C. A. 6. But I think its opinion misapplies the principle. Running through all the trust receipt eases which I have examined is the idea that the holder of the trust receipt must have had some sort of security title to the goods which he has delivered in exchange for it. See In re Riehheimer, 221 F. 16, 22, C. C. A. 7. It is this attribute of ownership variously called “bankers title” or “security title” that furnishes the analogy between trust receipts and consignment contracts.
I agree with the Referee and District Judge that appellants never acquired any such title to or ownership of the ears in question.
As to the new cars: The contract of purchase was between the Chrysler Company and the bankrupt. The invoice was sent directly from the manufacturer to the bankrupt. The sight drafts were upon the bankrupt. The attached bills of lading ran to the bankrupt. The drafts with the attached bills of lading and order to notify the bankrupt were sent through appellants in the usual course. When the bankrupt received notice of the drafts it went to appellants, borrowed the money upon its own notes, paid the drafts, took the bills of lading, presented them to the earlier, and received the ears. Appellants purchased nothing from the manufacturer; they advanced nothing out of their own funds in payment of the drafts; they did not retain the bills of lading; nor was any bill of sale executed in their favor. *915We have no such ease as In re Bettman-Johnson Co., supra, or Century Throwing Co. v. Muller, supra. We have no such ease as appellant bank itself would have had if it had adhered to its original practice. Its cashier testified: “It had been the bank’s custom for years to pay those drafts itself, get the bills of lading in their possession, which they construed as possession of the ear, and later delivered that bill of lading to the operator. That was discontinued in 1927.”
I am unable to find any basis for the claim that appellants ever acquired title to or ownership of any of the used ears. The proper construction of the “trust receipts” does not depend upon the name given them by the parties. Nomenclature is of little importance. Their legal effect should be determined with reference to the dealings between the parties and the circumstances under which the receipts were executed. When examined in this light they appear to me to be nothing more than security for undisclosed amounts of borrowed money. I think therefore that they are void because they not only undertake to carry a secret lien (Turbeville v. Gibson, 5 Heisk. (Tenn.) 571) but because they are expressly forbidden by the act of the General Assembly of Tennessee, 1807, ch. 85, § 4 (see Shannon’s Code, 1917, § 3664.1 Italics in the note are mine). The primary object of the Tennessee registration laws is to protect creditors against secret and unrecorded liens. Dixon v. Morgan, 154 Tenn. 389, 408, 285 S. W. 558. This act has for a century and a quarter represented public policy, and because I conceive that the effect of the opinion is to devitalize this statute I file this memorandum.

 “3664. Personalty: mortgages of, to be in writing, etc. — All mortgages and trusts of personalty shall l)e in writing, and proved- and- registered as hereinafter provided, to be valid against the creditors of the bargainor, or purchasers under him for value, and without notice."