Court Opinion

ID: 8788589
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:43:41.34193+00
Date Added: 2024-06-11T17:03:12.926674
License: Public Domain

SMITH, Circuit Judge (dissenting).
I concur in the foregoing opinion so far as it affirms the judgment of the District Court, but respectfully dissent from the modification made of its order.
The District Court held that the proceeds of the soda fountain should be distributed to the creditors who became such between the time of the conditional sale and the filing of the chattel mortgage but allowed the claim of L,. A. Becker Company as a general creditor against the estate of the bankrupt. In its decree the District Court contented itself with deciding that the funds be distributed in accordance with the principles announced in In re Wade, 185 Fed. 664. That was a case decided by the same judge and fully considers the question, and I shall not in general review the authorities there cited, but fully concur in all that is there said concerning them.
This court has decided that the chattel mortgage created a voidable preference, and the question now under consideration is with reference to the conditional sale contract. The case is one of construction of the Missouri statute on the subject. That law is as follows:
“Condition;!I Sales Void as to Creditors Unless Recorded.- — In all cases where any personal property shall be sold to any person, to be paid for in whole or in part in installments, or shall be leased, rented, hired or delivered to another on condition that the same shall belong to the person purchasing, leasing, renting, hiring or receiving the same whenever the amount paid shall be a certain sum, or the value of such property, the title to the same to remain to the vendor, lessor, renter, hirer or deliverer of the same, until such sum, or the value of such property, or any part thereof, shall have been paid, such condition, in regard to the title so remaining until such payment, shall be void as to all subsequent purchasers in good faith, and creditors, unless such condition shall be evidenced by writing executed, acknowledged and recorded as provided in eases of mortgages of personal property.” Section 2889, Revised Statutes of Missouri, 1909.
The language of this statute is slightly different from that in reference to chattel mortgages, but the majority opinion announces that this court has construed them as identical in meaning and refuses to reconsider the question of differences in verbiage. It has been held by the courts of Missouri that a chattel mortgage is, while unrecorded, void as against both prior and subsequent creditors, yet if before a *40prior creditor obtains a lien the mortgage is recorded, or if the mortgagee takes possession that will defeat the prior creditor in his efforts to assert his claim as superior to the mortgage. But this is not true of a creditor who became such subsequent to the giving of the mortgage and before the mortgage was recorded or the mortgagee took possession. Landis v. McDonald, 88 Mo. App. 335. And the same ruling was announced by this court in the First National Bank of Buchanan County v. Connett, 142 Fed. 33, 73 C. C. A. 219, 5 L. R. A. (N. S.) 148. Whether the law is the same in reference to conditional sales depends upon whether the word “subsequent” towards the close of section 2889 modifies creditors as well as purchasers, but that is not material here.
In First National Bank of Buchanan County v. Connett, this court said:
“Such a mortgage is also utterly void as to' simple contract creditors who extended credit after it was given and who have secured no title or lien by purchase, execution, attachment, or otherwise. As to them the subsequent recording of the instrument is of no effect; it camvot Toe asserted against the enforcement of their demands.”
The opinion quotes the maxim “equality is equity,” but, of course, this does not mean that one party to litigation may not have superior equities which control the determination of the case.
This court in In re Bothe, 97 C. C. A. 547, 173 Fed. 597, said:
“As between the mortgagee and those dealing with and extending credit to the mortgagor subsequent to the date of the mortgage and prior to the recording of it, there is an obvious equity in favor of the latter.”
Assuming that section 2889 of the Revised Statutes of Missouri refers only to subsequent creditors, it positively declares that as to them the contract of conditional sale is void, and yet the majority hold that the owner is entitled to set it up and take under it a pro rata share of the proceeds of the property.
The question under consideration is not one of general law, but of Missouri law. Did the property pass to the trustee subject to an equitable lien in favor of creditors subsequent to the conditional sale contract ? I think it did. Assuming there are no prior creditors and the holder of the conditional sale contract has a claim nine times as great as the aggregate of the claims of the subsequent creditors and that the property sells for just enough to pay the subsequent creditors under this decision do they get their claims paid in full? No. They get 10 per cent, of their claims or of the amount the property sells for and the vendor gets 90 per cent, of the gross proceeds under his contract which is expressly declared to be void as to them.
The only case cited by the majority which seems to me to in any manner sustain the holding is'the very brief opinion in Re Abell, 117 C. C. A. 243, 198 Fed. 484. In that case a bank had a claim for $19,-208.58 of which $9,800 had been secured by an unrecorded chattel .mortgage which had been abandoned. “A dividend having been declared, Lacy, the trustee, filed a petition, alleging that all of the creditors who had proved claims .became such creditors between the date .of the mortgage and the date of its filing, and asked that the bank be .barred from claiming any of the proceeds of the mortgaged goods un*41til these creditors had been paid in full. This petition was denied by the referee.”
To have sustained the application in that case in its fullness would have required the court to hold not only that the subsequent creditors were entitled to be paid in full before the bank could draw anything upon its debt secured by a chattel mortgage, but before it could draw anything upon the $9,400 of its claim which had never been secured by chattel mortgage. Manifestly such an order could not be made. The court in that case said :
“It is difficult to see liorv any support, for the trustee’s position can be found in the cases cited by his counsel. In re Bothe, 173 Fed. 597, 97 C. C. A. 547; In re Wade (D. C.) 185 Fed. 664.”
The court did not announce that either of these cases was overruled, but that they failed to furnish any support for the trustee’s position, and of course that was true.
A holding that one is not entitled to participate under a chattel mortgage or a conditional sale contract is not a holding that he is not entitled to participate under claims never secured by chattel mortgage or conditional sale contract. It is manifest the court did not mean to overrule those cases, and it is equally manifest that In re Wade is on all fours with the case at bar.
I regard the case of Simmons v. Greer, 98 C. C. A. 408, 174 Fed. 654, in the Circuit Court of Appeals of the Fourth Circuit, as substantially on all fours with this case, and as fully sustaining the trial court.
I entertain no doubt that the case should be affirmed without modification.