279 Pa. 55 | Pa. | 1924
Opinion by
The complicated dealings between many of those trafficking in and loaning money on automobiles has reached a point where the courts must strip transactions of their pretences and look at them as they really are, with the camouflage of papers giving a similitude of the passing of title removed, or they will be dealing with fictions instead of facts. Those who buy and sell, bail and loan money on motor vehicles must be given to understand that the realities of their transactions will be sought for by the courts; they will look through the screen of paper titles to ascertain what was the real situation.
W. R. Averill Sales Company was a dealer in automobiles and motor trucks and Republic Acceptance Corporation was engaged in the business of loaning money on such vehicles. The Averill Company had purchased the cars and truck in question from manufacturers and they were in its possession. It borrowed money from defendant on December 30, 1920, and delivered to the latter- bills of sale and storage receipts for a truck and automobile and simultaneously received a bailment lease thereof from defendant. On February 24, 1921, a similar transaction took place as to two other automobiles. No change in possession of the vehicles took place, all that was done was to execute the papers. Defendant contends this gave it title to the cars as bailor, good as against creditors of the Averill Company and against
On March 1, 1921, defendant entered judgment against the Averill Company on two judgment notes not connected with the cars or truck in dispute, issued execution and caused a levy to be made on the property of the Averill Company, including, as established by the verdict, the cars and truck in question. Defendant released the levy on the day it was made and took possession of the cars and truck under clauses in the bailment lease conferring the right on it so to do. On March 4, 1921, an involuntary petition in bankruptcy was filed against the Averill Company, the execution and levy of the sheriff was restrained by order of the bankruptcy court, and, following the adjudication and appointment of a trustee, the latter brought this action of trespass in trover and conversion to recover the value of the three cars and truck and obtained a verdict and judgment, from which defendant appeals.
The court in its opinion, refusing a motion for new trial, held that the sales and bailment leases, while valid as between the parties, were void as against creditors, as there was no physical change in the possession of the property, that as the bankrupt had possession when the sheriff levied, the lien thereof was rendered void by the adjudication in bankruptcy, and, under the bankruptcy law, the trustee succeeded to the title and right of possession which the bankrupt had at the time the sheriff made the levy.
However much appellant desired and endeavored to disguise the transaction between it and the Averill Company by the dressing of the papers which were executed, — the bill of sale, the storage receipt and the bailment lease, — the real transaction, so far as third persons were concerned, was that of a loan by defendant to the Aver-ill Company and the actual relation between them was not that of bailor and bailee but debtor and creditor.
Appellant stands upon the proposition that the relation between it and the Averill Company was that of bailor and bailee; failing to sustain this position, it is worsted, as, except for this relation, it has no standing at all as against the trustee. There can be no bailment if there was no sale; and the sale was void as to creditors. Parenthetically it might be interesting to inquire why the judgments were entered and execution issued if defendant thought its title secure under the so-called bailment leases. As the contention is limited to the validity of the sale and bailment, the question discussed by appellee, as to when the rights of the trustee accrued, need not be considered, because, if there was no sale, so far as creditors were concerned, then the taking possession of the vehicles by the defendant, whose rights in that event rose no higher than the other creditors, gave it a preference unlawful under the bankrutpcy act.
The pending case is ruled against appellant by Bank of North America v. Penn Motor Car Co., 235 Pa. 194. There, as here, considering the real transaction, we said, at page 198: “It was the intention of the parties to pledge the motor cars as a security for moneys ad
As was said by Judge Henderson in Bowersox v. Weigle & Myers, 77 Pa. Superior Ct. 367, 370: “It has been the unvarying rule in this Commonwealth for more than a century that a delivery of personal property must follow as well as accompany the transfer of title, and that a sale attended with a retained possession by the vendor is fraudulent in law however good the intent of the parties may have been.....Delivery of possession is necessary to transfer a title by the act of the owner in order that it be valid against creditors of the vendor. ......Where the......vendor appears to occupy the same relation to the property as he did before, the transfer is void as against creditors.” We said in White v. Gunn, 205 Pa. 229, 232, “It is as true now as it was when the rule was announced in that case [Clow v. Woods, 5 S. & R. 275], nearly a century ago, that, if a purchaser pays the price for goods purchased by him, without taking possession of them, he takes the risk of the integrity and solvency of his vendor when the rights of a subsequent bona fide purchaser or an execution creditor arise.” Furthermore, statutory as well as decisional law, makes voidable as against creditors such transactions as we are looking into. Section 26 of the Sales Act of 1915, P. L. 543, 551, provides as follows : “Where a person having sold goods continues in possession of the goods......and such retention of possession is fraudulent in fact or is deemed fraudulent under any rule of law, a creditor or creditors of the seller may treat the sale as void.”
There was some dispute as to whether one of the automobiles and the truck were levied on. The jury by their verdict found that they had been and there was suf
There was a preference here under the express words of the Bankruptcy Act. Section 60b, as amended in 1910, Act of June 25, 1910, 36 Stat. at Large 842, reads: “If a bankrupt shall have procured or suffered a judgment to be entered against him in favor of any person or have made a transfer of any of his property, and if, at the time of the transfer, or of the entry of the judgment, or of the recording or registering of the transfer if by law recording or registering thereof is required, and being within four months before the filing of the petition in bankruptcy or after the filing thereof and before the adjudication, the bankrupt be insolvent and the judgment or transfer then operate as a preference, and the person receiving it or to be benefited thereby, or his agent acting therein, shall then have reasonable cause to believe that the enforcement of such judgment or transfer would effect a preference, it shall be voidable by the trustee and he may recover the property or its value from such person”; and section 60a, as amended in 1903, Act of February 5, 1903, 32 Stat. at Large 799, “A person shall be deemed to have given a preference if, being insolvent, he has within four months before the filing of the petition, or after the filing of the petition and before the adjudication, procured or suf
The learned court below rightly determined the controversy; the assignments of error are overruled and the judgment is affirmed.