120 F.2d 821 | 5th Cir. | 1941
The proceeding was in bankruptcy on a petition of creditors, to set aside a chattel mortgage on cases of wine, part of bankrupt’s stock, and to recover payments made on account thereof. The claim was that the mortgage was void because the mortgagor was allowed to remain in possession of the wine and to dispose of it in the usual course of business. The defense was a denial that this was so and an affirmative claim; that at the time and as a part of the agreement for the loan, it was distinctly agreed and understood; that the mortgagor was not to be in possession of the mortgaged cases with the right to dispose of them in the usual course of business; that the cases were to be identified and marked as the bank’s, and segregated from the other stock; that the bank was to be in possession thereof; that the proceeds, except a small portion, of the sales thereof, should belong to and be applied upon the mortgage debt of the bank; and that this agreement was faithfully carried out.
The referee, basing his conclusion on the law of Florida, as he understood it to be set out, in First National Bank v. Wittich, 33 Fla. 681, 15 So. 552, found for the creditors; the district judge, basing his opinion upon his understanding of the law as decided in the same case, found for the bank. Appellant and appellee are here each with equal assurance, still relying on that case. Since the referee, the district
We need not concern ourselves here though, with a kind of higher critical analysis of the various statements in the opinion, for it is not a statute and its every word need not be examined as if it were. It must be examined and given effect as a statement of controlling legal principles, not as they are abstractly stated, but as they are given point by their application to the particular facts of that case. That the principles as there set down and applied are the same as those obtaining generally wherever chattel mortgages on stocks of goods exposed for sale are held void, either at common law or under statute, is made plain in an extended note to 73 A.L.R. 269.
Mortgages on stocks of goods exposed for sale under an agreement, as here, for identification and segregation, that the goods are held for the mortgagee, and that the proceeds of their sale will be held for and paid to mortgagee, are valid. For goods, so held and exposed, are not goods delivered to the unrestricted possession of mortgagor and exposed for sale by him in the usual course of trade.
This is the gist and heart of the matter. If, under the facts as found, the mortgagor was in possession of the wine, exposing it for sale in the usual course of trade, the mortgage is void. If on the other hand the mortgagor as agent for the mortgagee was holding the goods under an agreement to apply, and was applying the proceeds to the debt, the arrangement is a consistent one throughout and the chattel mortgage is valid. The referee found; that the transaction was bona fide; that the bank advanced the money in good faith; that the cases covered by the mortgage were
Upon these findings which are not controverted, the referee was wrong, the district judge was right, in concluding that the mortgage was valid. The judgment is affirmed.
There, decisions from 31 states are cited in support of the following proposition “where it is provided in a chattel mortgage or by collateral agreement that the mortgagor shall remain in possession of the mortgaged goods and sell them, either as agent of the mortgagee or otherwise, and apply the proceeds to the payment of the mortgage debt, the mortgage is not invalid.”