Court Opinion

ID: 8770922
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:43:33.563685+00
Date Added: 2024-06-11T17:02:12.487247
License: Public Domain

MORRIS, District Judge
(concurring). I concur that the judgment appealed from should be reversed. The contract between the vendor (the Corbitt Buggy Company) and the vendee (John L- James, the bankrupt) was a contract by which the property was sold and delivered to the bankrupt, with the agreement that the title thereto should not pass to the bankrupt, but should remain in the vendor until the purchase price was fully paid. There was added to the contract a stipulation that, in case of sale by .the vendee, the proceeds should be held in trust for the vendor; but this stipulation, as it appears to me, never became effective, for there were no sales, the specific property having remained undisposed of and having come into the possession of the trustee in bankruptcy.
A sale with the condition that the title to the goods shall not pass to the vendee until the goods are paid for is a valid condition, except as controlled by local statutes. York Mfg. Co. v. Cassell, 201 U. S. 344, 26 Sup. Ct. 481, 50 L. Ed. 782; Harkness v. Russell, 118 U. S. 663, 7 Sup. Ct. 51, 30 L. Ed. 285; Dunlap v. Mercer, 156 Fed. 545-548, 86 C. C. A. 435. It was also held in the York Manufacturing Company Case that the adjudication in bankruptcy was not equivalent to a judgment, attachment, or other specific lien upon the property of the bankrupt, and that the trustee of the bankrupt was vested with no better right or title to the bankrupt’s property than belonged to the bankrupt at the time when the trustee’s title accrued, in cases unaffected with fraud.
Under the law of North Carolina, conditional sales are required to be reduced to writing and registered with the same legal effect as chattel mortgages. As to chattel mortgages, it is provided by the North Carolina statutes that, to pass any property as against creditors or purchasers for a valuable consideration, chattel mortgages should be registered. And it has likewise been held in North Carolina that a conditional sale is good inter partes without registration. In the case of Williams v. Jones, 95 N. C. 506, the court said, “There is no principle better settled than that, as between the parties, a mortgage is valid without registration.” Leggett v. Bullock, 44 N. C. 283. And it is so laid down in Jones on Mortgages. “Of course,” says that author, “the recording of a mortgage is not necessary as against the mortgagor, and, even in those states where it is provided by statute that a mortgage should be recorded within a specified time, it is still valid between the parties until registered.” Section 107. And it is maintained by the same author, in section 545
“That a mortgage may be recorded after the death of the mortgagor, If he has in his lifetime made a delivery of it. His general creditors cannot, for that reason, claim that thé mortgage was inoperative as against them. Such a mortgage is good and binding upon the heir in like manner as upon the mortgagor, and the- same principle applies to chattel mortgages. Neither the heir in one case, nor the administrator in the other, is a third, person, but represents the intestate, and has no better title than he had.”
*938' Jones on Chattel Mortgages, § 239:
“The same principle applies to the assignees in bankruptcy." Though they are held to be trustees for the creditors, yet they stand in the place of the bankrupt, and they can take in no better manner than he could. They take subject to whatever equity the bankrupt was entitled to.”
In Thomas v. Cooksey, 130 N. C. 148-151, 41 S. E. 2, 3, the court said:
“But we think, it is a conditional sale under the doctrine of Wilcox v. Cherry, 123 N. C. 79, 31 S. E. 369, which in express terms overrules Foreman v. Drake, 98 N. C. 311, 3 S. E. 842. Being a conditional sale,'the title never passed out of the plaintiff to the defendant. This has without exception been held to be the law in this state, at least since the case of Gaither v. Teague, 26 N. C. 65, including Brem v. Lockhard, 93 N. C. 191, and many other cases. The act of 1883 (sections 1274, 1275, of the Code) providing for the registration of conditional sales, did not change the law as between the original parties. This statute put them on the same footing as chattel mortgages, which only protects creditors and purchasers. Brem v. Lockhard, 93 N. C. 191.”
We take it to be the settled law of North Carolina, with regard to conditional sales as with chattel mortgages, that álthough unrecorded they are good as between the parties and as against creditors who have no specific lien, and are therefore good as against the bankrupt’s trustee.
This' is in accordance with the general rule' of construction, which is thus stated in Am. & Eng. Ene. Eaw, vol. 24. p. 125 :
“By the express provisions of many of the recording acts, their protection is extended to creditors of the grantor, mortgagor, or other apparent owner. Usually such provisions, whether limited in their terms to lien creditors or simply specifying creditors generally, are held to apply to such creditors only as have effected a lien on the conveying debtor’s property by attachment, judgment, or otherwise before the recordation of the prior conveyance.”
Also, 5 Am. & Eng. Enc. Law, 1016.. See, also, In re New York Economical Printing Co., 6 Am. Bankr. Rep. 615-618, 619, 110 Fed. 514.
It appears from the record that the 22 buggies in question were delivered to the bankrupt only a few days before he made a general assignment for the benefit of his creditors, so that it cannot be said that any creditor of the bankrupt trusted him upon the faith of his possession of the property in question. The general assignment for the benefit of creditors was avoided and set aside by the adjudication in bankruptcy, and therefore can have no effect upon the question in issue in this case.