Court Opinion

ID: 9444139
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:43:23.029935+00
Date Added: 2024-06-11T17:29:44.244504
License: Public Domain

CLARK, Circuit Judge
(dissenting).
Judge Harlan’s able opinion, however attractive its argument, cannot, I fear, be accepted as the existing Connecticut law of conditional sales. I emphasize the local nature of the problem, because that is its proper setting. Even before the recent violent recrudescence of state law in the federal courts it was accepted doctrine that the extent of protection for creditors of a possessor, though not owner, of personal property was a matter of local policy. Maguire v. Gorbaty Bros., 2 Cir., 133 F.2d 675; Air Equipment Corp. v. Rubbercraft Corp., 2 Cir., 79 F.2d 521. But there does not seem anything particularly unusual or arrestingly harsh as to the state law applied as the basis of decision below. All of the state courts of our circuit have announced, in express terms, a strict and forceful interpretation of their statutes for the recording of contracts of conditional sales; and we have regularly followed such an approach in supporting over and over the claim of a trustee in bankruptcy over that of a conditional vendor of a doubtfully recorded sale. See, for example, under New York law, Empire State Chair Co. v. Beldock, 2 Cir., 140 F.2d 587, citing earlier cases at page 589, certiorari denied 322 U.S. 760, 64 S.Ct. 1278, 88 L.Ed. 1587; Hoffman v. Cream-O-Products, 2 Cir., 180 F.2d 649, certiorari denied 340 U.S. 815, 71 S.Ct. 44, 95 L.Ed. 599; Newfield v. National Cash Register Co., 2 Cir., 186 F.2d 883, 885; under Vermont law, Fifth Third Union Trust Co. v. Kennedy, 2 Cir., 185 F.2d 833, 835; and under Connecticut law, the two cases first cited herein. These cases show that we have had to repudiate some suggested limitation based on possible notice or knowledge of the creditors and have had to apply the law as written without respect to “harshness” — harshness certainly at least equal to anything here disclosed. And a check of our decisions of recent years shows literally not a single case otherwise. Since, as I hope to show, the Connecticut cases are solidly contra, this is a new and unprecedented decision, whose unsettling effects may reach beyond the particular locale.
At any rate the local concern for upholding the recording acts is traditional, and of course well known to such experienced Connecticut lawyers as the referee in bankruptcy and the trial judge herein. Thus a security transaction in realty, undisclosed of record — as an absolute deed intended as a mortgage— has long led to the postponement of the mortgagee to take only after claims of attaching creditors. See Ives v. Stone, 51 Conn. 446, recounting earlier cases; *347Second Nat. Bank of New Haven v. Dyer, 121 Conn. 263, 184 A. 386, 389, 104 A.L.R. 1295; Andrews v. Connecticut Properties, 137 Conn. 170, 75 A.2d 402. The same policy has governed the interpretation of the statutes for the recording of conditional sales. “The statutes were not aimed at invalidating, nor do they invalidate, as between the parties, .a conditional sale contract, however defective its execution may be. Refrigeration Discount Corporation v. Chronis, 117 Conn. 457, 460, 168 A. 783. They were passed solely for the benefit of the creditors of, and the bona fide purchasers from, the conditional vendee. In re Wilcox & Howe Co., 70 Conn. 220, 230, 39 A. 163. This legislative purpose has been consistently recognized by our previous decisions. We have interpreted the statutes strictly as against the parties to the conditional sale contract and with liberality towards those for whose protection they were enacted [citing cases].” Rhode Island Hospital Nat. Bank of Providence v. Larson, 137 Conn. 541, 79 A.2d 182, 183, 184.
So the policy has been rationalized also as requiring full knowledge to an attaching creditor — one of those who under Conn.Gen.Stat. § 6694 (1949) has the benefit of failure to comply with § 6692 — so that he may go forward with the completion of the contract. See, e. g., Premium Commercial Corp. v. Kas-przycki, 129 Conn. 446, 29 A.2d 610, 612. But the smallest doubt that even the acknowledgment may be on behalf of the individual, and not his corporation, has resulted in insufficiency of the instrument as against attaching creditors. Commercial Credit Corp. v. Carlson, 114 Conn. 514, 159 A. 352; C. I. T. Corp. v. Hungerford, 123 Conn. 438, 196 A. 151. And the words of § 6692, “all conditions of such sale,” have been explicitly interpreted as meaning the same as the spelling out of, say, the Virginia statute, thus making the leading case of Tok-heim Oil Tank & Pump Co. v. Fentress, 4 Cir., 33 F.2d 730, 732, 65 A.L.R. 710, a controlling authority. Standard Acceptance Corp. v. Connor, 127 Conn. 199, 15 A.2d 314, 130 A.L.R. 720.
Against this background the late Connecticut cases fit into place and, together and singly, present a pattern which shows our present case to be, in my judgment, a fortiori. The Connor case — that of a mistake in stating the date when payments are to begin — expressly holds that the date of completion of payments must be stated as well. C. I. T. Corp. v. Meyers, 129 Conn. 514, 29 A.2d 758, is in accord and in point, since there the contract “provides simply that the balance is due in eighteen monthly payments without specifying when those payments shall commence or end or whether they shall be made in successive months or not.” And the last case, Rhode Island Hospital Nat. Bank of Providence v. Larson, supra, 137 Conn. 541, 79 A.2d 182, 184, is substantially harsher than Judge Hincks’ decision herein; for there the contract was much more definite. It expressly said “the first installment to be paid on July 29th, 1949 and the remaining installments to be paid on or before the —-- day of each and every month thereafter until this contract is paid in full.” This states an ultimate limit for each payment, on any reasonable assumption but a day or two beyond what the vendor may have wanted, so that the construction urged by the minority (and by the trial judge, 17 Conn.Supp. 28) of payment by the end of the month would seem to have been a reasonable reading to be made by any creditor. But the court rejected this outcome to hold the instrument not valid against creditors. So the comment on this decision in 25 Conn.B.J. 346, 348, warns that dealers must take care to “meticulously record all terns and conditions. For even the minority were not willing to settle for less than ‘all.’ ” The contracts before us provide no such way out, for the express statements in the Larson contracts as to the monthly payments are lacking here.
It is to be noted that as to each of the contracts before us two defects were *348found below. As to the first it provided for maturity of the first installment note “30 days after delivery” of the purchased machinery; but there was nothing in the contract to fix either (1) the delivery date or (2) the maturity dates of the other nine notes. As to the second it provided (1) for “Cash with order $300.00,” though no cash was in fact paid, and (2) for the first installment note to be payable August 1, 1953, but with nothing in the contract to fix the maturity date of the other six notes. Thus the second defect in each of the contracts is the very defect found objectionable in the late Connecticut cases just cited. I see no escape from the force of these precedents. This makes it unnecessary to rule on the other defects, although the lack of a delivery date of the first contract would seem to bring the case within the direct ruling of Tok-heim Oil Tank & Pump Co. v. Fentress, supra, 4 Cir., 33 F.2d 730, 65 A.L.R. 710, accepted as authoritative in Standard Acceptance Corp. v. Connor, supra, 127 Conn. 199, 15 A.2d 314, 130 A.L.R. 720. As to the failure to make the stated down payment on the second contract, the authorities are less direct. But this appears to be a default (whether “waived” or not) going not to later breaches of the contract which creditors must be prepared for from the nature of the business transaction involved, but to circumstances affecting the original transfer on condition, thus making the actual terms of transfer different from those recited.
The opinion herein attempts to avoid the force of these cases by advancing the distinction that in them, unlike the present case, the contracts did not recite all the agreed-upon conditions of sale. Unfortunately, however, this is an artificial distinction not justified in either fact or law. As to fact it seems to be based upon the presence of unfilled blanks in the Larson contract and a misstated date in the Connor case, coupled with the assumed absence of a like situation here. But actually here each contract contains three unfilled blanks, in crucial clauses; and it seems quite likely that, had they been properly filled, there would have been no ambiguity and no case. And there is no basis in the record for the suggestion of “no dispute” here on the-completeness of the contracts; while the-tribunals below did not discuss the point (an omission itself significant as to their competent view of fact and law), both the referee’s certificate and the judge’s-memorandum imply an inadequacy of the contracts themselves. Quite obviously the fact is that we have here just the same carelessness in completely filling out blank forms as in the Connecticut decisions. In either or any case, whether the parties actually talked the matter over can be only a matter of guess, and fundamental rights should not depend on such speculation; at the very least the identic situations should receive the-same judicial treatment. And when we turn to the cases we find there is no basis for such a vast hole in the statutory coverage as would be found if the-parties could protect themselves from the force of the recording requirement, by agreeing in advance on a convenient vagueness in terms. No case actually suggests such a hole; an occasional judicial reference (as in the Larson case) that the parties have not set forth their full agreement is but a natural recital where that is the fact and does not at all suggest a validation of a contract lacking essential terms, such as the payment, of installments. And the contrary is-expressly held in one of the two major points of the Meyers case, supra, in demonstrating the inadequacy of the contract reference to “monthly” payments.
The only cases relied on in the opinion-are the Kasprzycki case, which does not. raise the point on its facts (the opinion, does not even attempt a recital verbatim of the contract), and a decision by Judge Smith in 1942 of a case he did not think should be permanently embalmed in the Federal Supplement, to wit, the unreported case of Matter of Peter Karjanes. This covered only a small part of the issues here involved, namely, the first defect of the first contract, as to which *349his conclusion would seem doubtful in the light of the explicit statements of the Connor case, supra. Moreover, the late Connecticut cases after his decision have been more direct and precise; there is no reason to believe that he would have been disposed to reject their teachings, had he then had them.
The unsettling effect of the present decision and the resulting problems for Connecticut lawyers in giving advice to prospective vendors of chattels would seem clear. One might deduce from this decision that a vendor might be safely told to keep his contract vague and ambiguous, notably as to the time of installment payments, and yet be protected if everything talked about was included in the contract and thus recorded. But the state cases indicate that such a conclusion would be only a trap for the unwary, so long at least as the parties remained in a state court. Such confusion of precedents is surely unfortunate. I think affirmance here required by the authorities which are binding on us.