219 F. 507 | 8th Cir. | 1915
This action was commenced by bill in equity to recover of appellee the value of certain personal property alleged to have been transferred to it from the estate of the bankrupt, within four months prior to the filing of the petition in bankruptcy, under such circumstances as to constitute a voidable preference. Appellee moved to dismiss the bill for the reason that it did not state facts sufficient to constitute a cause of action. Equity Rule 29 (198 Fed. xxvi, 115 C. C. A. xxvi). No objection was made that the action was brought in equity and not at law. The bill was dismissed, and appellant appeals.
The facts pleaded in the bill are substantially as follows: An involuntary petition in bankruptcy was filed against the Forward Laundry Company, May 20, 1913. June .13, 1913, the company was adjudged a bankrupt, and in due course thereafter appellant' was appointed trustee of the estate of the bankrupt. September 18, 1911, the laundry
“And provided further, that if such mortgage be given to secure a sum greater than twenty-five hundred (2,500) dollars, there shall be recorded annually on the records of the county wherein such mortgage shall have been recorded, a sworn statement of the mortgagee, or one of the mortgagees, if there be more than one, showing:
“First That said mortgage was given in good faith to secure the payment of the sum of money mentioned therein.
“Second. That said sum of money is still unpaid; or if a portion thereof shall have been paid, then how much thereof, if any, remains unpaid.”
It is conceded that appellee did not comply with this proviso. In the case of Burchinell v. Gorsline, 11 Colo. App. 22, 52 Pac. 413, the Court of Appeals of Colorado used the following language in reference to this proviso:
“But if the debt secured exceeds the sum of $2,500, its validity by virtue of its record continues only until the time when the record of the first sworn statement required by the statute is due. The record of that statement is by the terms of the statute a necessary condition of its further validity; and upon a failure to make such record, its virtue is exhausted. If the statement is duly recorded, the mortgage remains' in force until the next statement is due; and so the effect of the record of each annual statement is to preserve the vitality of the mortgage until the time when, 'by the terms of the statute, the succeeding one should be recorded. * * * Its language is peremptory, and the recording of the sworn statement within the proper time is essential to the continued validity of the mortgage. Knowledge, on the part of a person acquiring an interest in the property, of the existence of a prior mortgage, the affidavit necessary to the preservation of which had not been record*511 ed, could not prejudice his right in the property. It would amount only to knowledge of an instrument which had become void as to him.”
It is true in the case cited, which was a contest between the sheriff and a mortgagee, the court thought a delay of 17 days after the expiration of one year from the filing of the mortgage did not invalidate the mortgage; the court seeming to be of the opinion that, as the statute did not fix any positive date upon which the sworn statement should be filed, a reasonable time might he allowed in which to comply with the law. Conceding that this is the true construction of the statute, it appears in the record before us that there was a delay of seven months after the expiration of one year from the time the mortgage was recorded. It was recorded September 22, 1911, and possession was not taken until April 25, 1913. There must be a limit to the time within which a mortgagee may comply with the statute, or else the statute itself becomes of no force or effect. If the mortgagee may neglect to file the sworn statement for seven months, why not for one year and why not for five years; where is the line to be drawn ? On the other hand, if the mortgagee may record his mortgage and neglect to comply with the statute for five years, and then at the end of that time seize the mortgaged property at the time when the mortgagor has become insolvent, then the bankrupt law is defeated, if he can simply point to the date when the mortgage was recorded and show the trustee in bankruptcy that the four-month period has elapsed. We do not think any such reasoning ought to be adopted as would bring about either one of these results or both. We think the delay in the case at bar to file the sworn statement, as required by law, was so unreasonable that the court must declare, as matter of law, that the record of the mortgage ceased to have any force or validity. The taking possession of the mortgaged property by appellee was, under the Colorado statute, equivalent to the recording of the mortgage, but the prior record of the mortgage having been rendered invalid by the failure of the appellee to comply with the law, the period of four'months within which the trustee could attack the transfer as a preference must be figured from the date of taking possession, April 25, 1913.
It was said by the Supreme Court of Colorado in Ferris v. Chambers, 51 Colo. 368, 117 Pac. 994, as follows:
“Provisions of a statute, rendering a chattel mortgage effective, even though the mortgagor retains possession of the property, are statutory, and if the statute prescribes that, in order to preserve the lien of a mortgage with the property in possession of the mortgagor, something shall be done, that thing must be done as prescribed by the statute.”
An examination of the decisions in states having similar provisions in their statutes as to the filing for record of affidavits or statements, whether the purpose of the affidavit or statement is to preserve, renew, or extend the chattel mortgage, convinces that it is generally held that a failure to comply with such provisions renders the chattel mortgage void. Pleasonton v. Johnson, 91 Md. 673, 47 Atl. 1025; Milburn Mfg. Co. v. Johnson, 9 Mont. 537, 24 Pac. 17; Hanes v. Tiffany, 25 Ohio St. 549; Blandy v. Benedict, 42 Ohio St. 295; Benedict v. Peters, 58 Ohio St. 527, 51 N. E. 37; Lockwood & Co. v. Crawford, 29 Kan.
We do not cite these cases for the purpose of showing that the chattel mortgage in this case was void outside of the question of preference, but simply to show that the record of the mortgage in question had ceased to be of validity for the purpose of fixing the date from which the four months provided by law must be computed. The bill otherwise stating a cause of action, it results that the judgment dismissing the same must be reversed and the'case remanded, with directions to allow the appellee to answer the same, if it is so advised; and it is so ordered.