Court Opinion

ID: 3379445
Source: CourtListenerOpinion
Date Created: 2016-07-05 18:25:26.830432+00
Date Added: 2024-06-11T12:45:02.958899
License: Public Domain

This is an appeal by Auburn Automobile Company, an Indiana corporation, from the final decree of the Circuit Court disallowing the claim of the appellant as a preferred claim against Habig Motor Company, a Florida corporation.
The bill of complaint was filed by Namor Corporation in the way of a creditor's bill. A receiver was appointed. The appellant here filed its claim with such Receiver. The claim was evidenced by notes and chattel mortgages made and executed by the defendant to the City National Bank of Miami. The chattel mortgages were never recorded. The claimant contended in the court below, and contends here, that the notes and the chattel mortgages were executed to City National Bank of Miami as agent and trustee and in trust for Auburn Automobile Company, the claimant.
Many questions are attempted to be presented for review here, but the record discloses that it is only necessary to determine one question to dispose of this case. The question is, whether or not the notes and mortgages were given to the City National Bank as the Agent and Trustee of and in trust for Auburn Automobile Company and whether or not Auburn Automobile Company was the owner of such securities at the time it filed its claim in the court below.
There was one note for $2,456.50 dated April 17, 1930; one note for $2,459.50 dated April 25, 1930; one note for $2,459.50 dated April 28, 1930; one note for $1,305.00 dated April 28, 1930; one note for $920.00 dated July 31, 1930; one note for $970.00 dated September 9, 1930; one note for $2,317.50 dated October 15, 1930; one note for $2,317.50 dated November 8, 1930; one note for $2,459.50 dated November 8, 1930; one note for $1,166.00 dated November 14, 1930; one note for $960.00 dated November 14, 1930, *Page 91 
and one note for $2,624.50 dated November 14, 1930. Each note was secured by a chattel mortgage on a particular therein-described automobile and each note carries with it a trust agreement, typical of which is the following language:
"Miami, Fla., November 14, 1930.
"RECEIVED from CITY NATIONAL BANK IN MIAMI the following property held by the Bank:
"Cord Phaeton Sedan Serial No. L29/292879 Motor No. FD5712A
and in consideration thereof we hereby agree to hold said property in trust and to keep insured against fire (loss, if any, payable to the City National Bank in Miami for the following purposes, viz.:
and we will return the said property immediately upon demand by the Bank with due diligence to the Bank, the intention of this agreement being to protect and preserve unimpaired the lien of __________ on the property.
                          "Habig Motors Company (SEAL) "B. L. St. Peters, "Secretary-Treasurer. "Chas. W. Habig, "By B. L. St. Peters, Atty. in Fact."
The record shows that each note was given in payment of a demand draft with letter of authority thereto attached, of which the following is typical:
                          "AUBURN AUTOMOBILE COMPANY, "AUBURN, INDIANA, "November 7, 1930.
"No. c-2109.
"ON DEMAND PAY TO THE ORDER OF
2509.00 $ City National Bank, Miami, Florida,
Two Thousand Five Hundred nine and 00/100 DOLLARS *Page 92 
(with exchange and collection charges)
"Please do not present this draft until arrival of shipment.
AND CHARGE TO THE ACCOUNT OF
"To Habig Motors Company, "1917 Biscayne Blvd., "Miami, Fla." "Through "AD*100, 5-29, 5M-Boda."
                                      "Please be sure and make remittance on this item direct to the Auburn Automobile Co., Auburn, Ind.
                                      "AUBURN AUTOMOBILE CO., "By: G. G. Johnson."
                      "AUBURN AUTOMOBILE COMPANY. "No. c-2109. "Auburn, Ind., November 7, 1930.
"We enclose for collection and remittance on Sight Draft
                       On Habig Motors Co., Miami, Fla.
FOR $2,509.00.
"No PROTEST.
"Delivery papers attached (if any) only on payment of Draft.
"Cord Phaeton No. 129-292869 BO 291548.
                                 "Yours truly, "AUBURN AUTOMOBILE COMPANY."
The record fails to show that the Bank acted as Agent or as Trustee for the Auburn Automobile Company, but the record shows by the documents above referred to that *Page 93 
the only authority which the Bank had was to collect from the drawee the amount of the draft and to remit the same to Auburn Automobile Company.
The record further shows no assignment or endorsement of either the notes or the mortgages from the Bank to Auburn Automobile Company prior to the filing of the claim. The books of the defendant corporation for which the Receiver was appointed show the entire indebtedness due to City National Bank and nothing due for automobiles to Auburn Automobile Company. Voluminous evidence was taken before the master and in his findings concerning this claim he said:
"In the matter of the claim of Auburn Automobile Co., this claim has been objected to among other reasons that the said claimant has no basis upon which their claim could be allowed, and if such claim is allowable to anyone it is to the City National Bank in Miami, and it appears to me that such contention is correct, and this claim, if such claim there be, should have been filed by said City National Bank in Miami, as it appears from the exhibits and testimony in this cause said City National Bank is the party to whom such amounts are due and payable, if such amounts are due and payable to anyone. However, if this is not a correct deduction from the exhibits and testimony before me, and if said claimant, Auburn Automobile Co., are correctly the claimants in this cause, then I find as follows:
"That this claim is based on cars shipped by claimant to Habig Motors Company at Miami, Florida, and which cars were shipped, sending Bill of Lading with draft for purchase price, attached, to City National Bank, and upon arrival in Miami of such shipment of automobiles, the Habig Motors Company was notified. Whereupon said *Page 94 
Habig Motors Company gave to said City National Bank and said bank accepted the following:
"1. A promissory note in the amount of the draft and charges.
"2. A purported 'Bill of Sale' of the automobile from Habig Motors Company to said City National Bank.
"3. A third paper called 'Trust Receipt.'
"all in the form as attached to the sworn proof of claim and filed before me in this cause, and the testimony and exhibits disclose that all the transactions upon which the claim is based were similar. At first glance this appears to be a somewhat anomalous transaction, being in form obviously not a conditional sale and not in the usual form of a mortgage. The claimant claims a preference for proceeds of sales of the automobiles, which it claims to trace into the Receiver's hand, to-wit, the proceeds of one car for which the money was in the cash register at the date of the Receiver's appointment, and for proceeds of other cars sold by the Receiver. As contended by counsel for objecting creditors and the Receiver, even disregarding the point as to whether the claimant, Auburn Automobile Company, has any basis for its claim, and whether or not as a matter of fact, the claim, if any such there be, was that of the City National Bank in Miami, the transaction at best on its face constitutes nothing more than an ordinary mortgage, and therefore invalid as to creditors because never recorded, and therefore, the said claimant having placed itself in this position is not entitled to any preference of its claim over other creditors, if it is entitled to any claim at all.
"I, therefore, find that if said claimant, Auburn Automobile Co., is entitled to any claim at all, it is only as a general creditor in the sum of $25,179.50." *Page 95 
The Chancellor sustained this report of the Master and disallowed the claim of Auburn Automobile Company. The appeal is from that decree. The evidence amply supports the findings and justifies the conclusion that if Auburn Automobile Company had a claim for the amount presented it was against City National Bank and could not be maintained against the defendant in the court below to the prejudice of other creditors of that defendant. Therefore, it becomes unnecessary to discuss in detail other questions which might be pertinent if the above state of facts did not exist.
So it is that the decree appealed from should be affirmed and it is so ordered.
Affirmed.
WHITFIELD, ELLIS, TERRELL and BUFORD, J. J., concur.
DAVIS, C. J., and BROWN, J., dissent.