268 F. 1012 | E.D. Mich. | 1920
This is a petition to review an order of one of the referees in bankruptcy of this district, denying a petition of Isaac Rosenthal and Abraham Rosenthal, doing business as Detroit Store Fixture Company, praying for an order instructing the trustee in bankruptcy to surrender possession of a certain soda fountain and other drug store fixtures to petitioner, or to pay the balance due thereon.
The property involved was originally sold by petitioners to one Tilley under two written contracts containing substantially the same language. Each of such contracts provided for the payment of a certain amount in cash and for the payment of the balance of the purchase price in monthly installments, for which notes were to be given. Each contract contained -the following clause:
“It is agreed, as security lor the payment of the above, that the Detroit Store Fixture Company retain title to said property until fully paid for, after which a receipted bill will be given for same. (Notes, drafts or cheeks not to be consdered as ‘payment’ until they are redeemed.)”
There are other provisions which it is unnecessary to set forth here. Pursuant to these contracts, Tilley, the original vendee, executed and delivered to petitioners a series of notes, nearly all of which have been paid. Subsequently, and more than four months prior to the time of the filing of the petition in bankruptcy herein, Tilley sold and assigned bis interest in these contracts and notes and the property covered thereby to the bankrupt. Petitioners consented to this transfer, but there is no evidence that they agreed to release Tilley from any liability under the contracts or to accept the bankrupt in his place. Neither of the contracts executed by Tilley and assigned to the bankrupt was filed lor public record. The bankrupt himself executed no contract with petitioners. No creditors of Tilley have raised any objections to the validity of these contracts, and it does not appear that said Tilley has, or at any time had, any creditors.
Under these circumstances, the trustee contends, and his contentions were sustained by the referee, that the contracts under which the property was originally sold to Tilley were, in legal effect, absolute sales to Tilley, with retention of title making them chattel mortgages by him to secure the balance of the purchase price, and that they were void as.to the creditors of said Tilley, because not filed for record as required by the Michigan statute applicable; that when these contracts were assigned to the bankrupt, with the consent of petitioners, a no-vation occurred, and the bankrupt was substituted in the place of Tilley, and became in legal effect the mortgagor under these chattel mortgages; and that the failure of the bankrupt to file such contracts for record rendered them void as to his creditors, and subject to be set aside at the instance of the trustee in bankruptcy herein.
The referee apparently based his decision, holding these contracts to be chattel mortgages, on his opinion that the provision for the execution and delivery of promissory notes by the vendee to the vendor conclusively indicated an .intention that the absolute title should pass to the vendee, subject to the so-called reservation thereof by way of security only. This court has recently held that the mere fact that promissory notes are given under a contract providing for the retention of title until payment of the purchase price is not necessarily inconsistent with an intention that no title shall pass until the payment of the purchase price, and that a contract may be construed to be one of pure conditional sale, notwithstanding a provision therein for the execution of such promissory notes. In the matter of Robinson Machine Company (D. C.) 268 Fed. 165.
It will be noted, however, that in each of the contracts here involved it is expressly agreed between the parties that title is to be retained “as security for the payment” of the purchase price. The parties having thus clearly and positively expressed their meaning as to the purpose of the retention of title, and there being no language in the contract inconsistent with the clause just quoted, it is unnecessary to consider the effect of the provision referring to the execution of the promissory notes, or of the acts or conduct of the parties in relation thereto, and the intention of the parties thus unequivocally and unambiguously expressed should be given effect, and the contracts held to be instruments intended to operate as chattel mortgages.
“Every mortgage or conveyance intended to operate as a mortgage of goods and chattels which shall hereafter be made which shall not be accompanied by an immediate delivery- and followed_ by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers or mortgagees in good faith, unless the mortgage or a true copy thereof shall be filed”
—as provided in said statute. Under this statute every chattel mortgage not filed as therein required is void as to creditors “of the mortgagor.” Is such an unfiled mortgage void also as against creditors of the assignee of such mortgagor? O'f course, if this question has been determined by the Michigan Supreme Court, its decision on such ques-