Court Opinion

ID: 7221750
Source: CourtListenerOpinion
Date Created: 2022-07-25 03:49:56.181295+00
Date Added: 2024-06-11T16:16:59.682097
License: Public Domain

DICKINSON, District Judge
(dissenting).
This case presents a question with which referees in bankruptcy are now confronted in almost every bankruptcy case. There should be a uniform rule of. decision and the parties not left to the accident of to whom the cause is referred or the judge who hears the petition for re*590view. This and other cases raising the like question, were because of this set down for a hearing before the court in banc so that referees would have an authoritative guide.
Nowadays in almost every bankruptcy case, as • in this, a reclamation claim is presented asserting the right of a vendor of property who has sold it on credit and delivered possession to the vendee, to reclaim it from the hands of a trustee in bankruptcy if the purchase price has not been paid. In former times such a claim would not have been even presented, but to-day it is aggressively asserted, provided only that the vendor has had the vendee sign a so-called bailment lease, and that this is in approved valid form. There is no doubt that the business of selling on the installment plan of extending credit has tremendously increased and that great and powerful forces are now enlisted in the effort to change the law. No one can blame them for striving to secure the payment of what is owing to them, but whether the policy they advocate would be for weal or woe is a question for the Legislature but not the courts to answer.
Happily, the members of this court have always been in accord and still are upon the question presented, except upon the interpretation to be given to the ruling of the Circuit Court of Appeals in the case of General Motors Acceptance Corp. v. Horton, 85 F.(2d) 452. We are not called upon to vindicate the soundness of that ruling, but it is our function to rightly interpret it and to give to that interpretation loyal adherence.
It is strongly urged upon us that the cited case rules that the old policy of the law has been reversed and that now a sale of goods may be made on credit and possession delivered to the vendee and that the vendor may reclaim the property from the hands of an innocent purchaser for value or an execution creditor or a trustee in bankruptcy if the purchase price is not fully paid, provided only, as before stated, that the vendor has had the vendee sign what is known as a bailment lease, which is found to be in valid form. On the contrary, that case rules only that in construing the bailment as a writing it must be construed as a bailment and cannot be construed as a bill of sale.
This is precisely the question which this court had before it in the Sobern’s Men’s Shop Case (In bankruptcy No. 17,-931) ,1 There the referee had found the transaction to have been a conditional sale, and hence had very properly dismissed a reclamation petition. He had, however, found the fact of sale from no other evidence than that supplied by the writing itself. The referee was reversed by this court per Kirkpatrick, Judge, not on his law, but because he had found a fact without supporting evidence. The bailment was a writing as such to be construed and could not by itself be construed as a conditional sale, whatever the real truth may have been.
That is precisely what the General Motors Case rules. The ruling has no application to the instant case. Here the referee, who has had a wide experience as a fact finder, has found that in truth and fact the transaction was a sale and this court unanimously approves the finding as one made from ample evidence. The question of law presented must be answered with this fact in the case.
We are all in accord on the proposition that an owner of property may part with its possession by letting it out on hire without losing his title and that the law protects him in this right.
We are also agreed that if he sells the property, although on credit, and delivers possession to his vendee, thus clothing the vendee with all the indicia of ownership, he cannot afterwards, because the purchase price has not been fully .paid, reclaim the property from an innocent purchaser for value or an execution creditor.
To shorten the argument we concede that a bailor may safely grant to the bailee the further right or privilege to purchase the property at a stated price during or at the end of the term of bailment.
We likewise concede that the question here being one of title is to be determined by the law of Pennsylvania. What is that law? It is and always has been what has been already formulated, that if a vendor sells his property and delivers possession to the vendee, thus clothing him with all the indicia of ownership, it is a iegal fraud on deceived innocent purchasers for value or execution creditors to attempt to reclaim the property because the purchase price has not in whole or in part been paid.
We have not space to cite the numerous cases in Pennsylvania which support this *591doctrine, nor is it necessary. There is not a single case to the contrary in any jurisdiction in which the Statute of Elizabeth against fraudulent conveyances is in force. Whether the doctrine or policy is a principle of what we call the common law or has its origin in the statute, so saturated with it is the law of Pennsylvania that it has found expression in familiar adages, such as that the law abhors secret liens and the like. The Statute of Elizabeth is in force in Pennsylvania (39 P.S.Pa. following section 363). Roberts Digest of British Statutes.
Throughout the whole history of litigation there have been ingenious attempts made to elude this law. Every device which professional ingenuity could devise has been resorted to in vain. None of them have been permitted to succeed. Every session of the Legislature has witnessed the attempt to change the law. It has been relaxed in favored instances. These, however, have been few and exceptional. The latest is the Conditional Sales Act. Vendors are unwilling to conform to this act. Its very passage, however, proclaims adherence to this law. Why otherwise the need to pass such an act? The latest device to annul the law is the so called bailment lease. There is no magic in these words. Why should this device succeed when all others have failed? If it does it is due to its cleverness. It is a most excellent instrument of deception. As we have said, an owner of property may let it out on hire and part with its possession without losing his title or he may sell it. Whether he in truth and fact does one or the other may at times be- difficult to determine.
The proposition urged upon us, however, is that all the vendor has to do is to call the sale a bailment and have the vendee sign a bailment lease and the trick is turned. It would insult the intelligence of any one to accuse him of being so duped. The only chance of success this new device has is in this. The question is one of fact and the fact of sale may be camouflaged as a bailment. This cannot, however, in this case be done, as the fact that this transaction was a sale is an admitted fact. The question is whether a sale can be turned into a bailment by the mere signing of a bailment lease. We are urged to. say that it can because the Circuit Court of Appeals has so ruled in the General Motors Case, and stress is laid upon certain expressions in the opinion. Judicial utterances are always to be read in the light of the fact situation to which they apply. When so read, the court ruled in the General Motors Case what Judge Kirkpatrick ruled in the Sobern’s Men's Shop Case.
A cynic has given us as a definition of Faith that it is “the ability or capacity to believe in the truth of what we know aint so.”
We cannot lay claim to this capacity and find that a transaction was a bailment in face of the fact that we have found it to be in truth a sale.
The learned referee has vindicated his order in a full discussion of the question. There is no need to fortify his findings' with a citation of authorities. If, however, they are called, for they may easily be found in abundance. Among them we cite: Clow v. Woods, 5 Serg. & R. (Pa.) 275, 277, 9 Am.Dec. 346; Ott v. Sweatman, 166 Pa. 217, 31 A. 102; Jacquard Knitting Mach. Co. v. Vennell (C.C.A.) 59 F.(2d) 496, opinion by Buffington, J.; Root v. Republic Acceptance Corp., 279 Pa. 55, 123 A. 650.
For this and other reasons, which will occur to any one considering the question, I very respectfully, but most earnestly, dissent from the decision of the majority reversing the order of the referee.

 No opinion for publication.