The sole question in the case is whether the vendors claiming under an unregistered conditional sale are entitled to recover the property from the purchaser at sale by the bankrupt’s trustees. At the close of the testimony the defendant moved for a nonsuit, which was allowed, and the plaintiffs excepted.
The mortgage or conditional sale expressed the intention of the parties that title was to be retained by the Hintons until the purchase price was paid in full. Though the agreement .was executed 21 June, 1912, it was not recorded till 30 August, 1913. In the meantime the Camden Timber Company had been adjudged a bankrupt, 8 July, 1913, and on 16 August the trustees in bankruptcy had been directed to sell the property at public sale on Monday, 1 September, 1913. The court adjudged that the purchasers at such sale took the property clear of any lien.
The plaintiffs contended that the mortgage, though unregistered,' was good as between the parties and that the trustees in bankruptcy stood in the shoes of the bankrupt, and did not hold as a purchaser for value. In this State and some others it has been held that the failure to record a conditional sale precludes the seller from any lien on the property when it has passed into the hands of the trustee in bankruptcy, on the ground that the contract is void as to creditors until it is recorded, and that therefore the title passes to the trustee in bankruptcy discharged of any lien.
In re Tatum,
In 1906 the Supreme Court of the United States, in
Mfg. Co. v. Cassell,
In 1910 Congress, in order, no doubt, to avoid cases of fraud wbicb arose under tbat decision, amended tbe Bankrupt Law, sec. 47 (a), clause 2, by adding thereto: “And such trustee, as to all property in tbe custody, or coming into tbe custody, of tbe bankrupt court, shall be deemed vested with all tbe rights, remedies and powers of a creditor bolding a lien by legal or equitable proceedings thereon, and also as to all property not in tbe custody of tbe bankruptcy court shall be deemed vested with all tbe rights, remedies and powers of a judgment creditor bolding an execution duly returned unsatisfied.” Chapter 412, sec. 8, Stat. at L., 840; TJ. S. Comp. Stat. Supp., 1912, p. 1493.
Tbe decisions since tbe adoption of this statute bold tbat where tbe seller of property by conditional sale has failed to record bis contract of sale where tbe State statute renders tbe contract invalid as to lien creditors or
bona, fíele
purchasers without registration, be has no remedy as against tbe trustee in bankruptcy to enforce tbe lien, but is a mere general creditor with a right to share in tbe assets of tbe estate.
In re Lumber Co.,
Prior-to tbe above amendment of 1910, under tbe ruling in
Mfg. Co. v. Cassell, supra,
a trustee in bankruptcy was vested with no better right or title to tbe bankrupt’s property than belonged to tbe bankrupt at tbe time wben tbe trustee’s title accrued. He stood in tbe shoes of tbe bankrupt and bad no greater right; and where under tbe State law, wbicb was binding on tbe bankruptcy court, a chattel mortgage was valid as between tbe bankrupt and tbe mortgagee without registration, but not against tbe purchasers, mortgagees or creditors, it was good against tbe trustee in bankruptcy. Tbe amendment of 1910 changed this rule. This has been held in numerous cases in tbe Federal courts, among them
Bank v. Schade
(C. C. A.),
Hnder tbe North Carolina statute unrecorded conditional sale contracts are not good against creditors and purchasers for value. Eevisal, 983;
Blalock v. Strain,
Tbe amendment of 1910 puts trustees in bankruptcy on tbe same
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basis.
Mfg. Co. v. Arthur
(C. C. A.),
The court below properly held that the plaintiff vendor in an unrecorded conditional contract of sale could not recover the property or its value from the purchaser at such sale, when such conditional sale was not recorded until after the title passed to the trustees in bankruptcy.
The judgment of nonsuit is
Affirmed.