Opinion
No. 47.
December 2, 1929.
Appeal from the District Court of the United States for the Northern District of New York.
In the matter of Frank Bowman, individually and doing business as Bowman's Garage and Bowman's Livery, bankrupt. From an order [ 28 F.2d 620] directing D. Elton Gardinier, as trustee in bankruptcy of Frank Bowman, to surrender to the Mack International Motor Truck Corporation all the interest of the trustee in seven certain trucks, the trustee appeals. Affirmed.
The Mack International Motor Truck Corporation sold seven motor trucks to Frank Bowman under a contract of conditional sale dated November 19, 1927. A series of 15 promissory notes was given to the Mack Corporation by Bowman for the balance of the purchase money, each dated November 19, 1927, falling due at monthly intervals between December 20, 1927, and March 20, 1929. The contract contained the usual provisions that title to the trucks should remain in the vendor until the purchase price represented by the notes should be fully paid. It also contained the provision that, if at any time the vendee should make default in any of the payments, the vendor might forthwith take possession of the property wherever found.
Bowman was adjudicated a bankrupt on January 10, 1928. Default was made in payment of the note falling due January 20, 1928, and the Mack Corporation thereupon took possession of the trucks and proceeded to advertise them for sale on February 14, 1928. The conditional sale contract was filed on December 1, 1927, in the office of the city clerk of the city of Little Falls, N.Y., where Bowman, the purchaser, resided.
The trucks had been used by Bowman on state road work prior to November 19, 1927. They had been originally sold by the Mack Corporation under conditional sales contracts, which were superseded by the contract above referred to. We cannot see that these prior contracts have any bearing upon the situation here presented. Six of the trucks, on November 24, 1927, were taken by the purchaser to Pike, Wyoming county, N.Y., where they were put at work on the roads, while the remaining truck was in a garage at Little Falls. The 7 trucks remained in these places from the time when the contract of conditional sale was executed on November 28, 1927, until they were recaptured by the Mack Corporation after default in payment of the note on January 20, 1928. No written notice was given by Bowman to the Mack Corporation that the 6 trucks were at Pike, but, on November 26, 1927, Bowman told Borthwick, the branch manager of the Mack Corporation at Syracuse, that the trucks were at Pike. He did not tell Borthwick that the trucks were going to remain at Pike all winter, or make any statement indicating the length of their stay.
The trustee in bankruptcy applied to the bankruptcy court for an order enjoining the Mack Corporation from disposing of the trucks, and the Mack Corporation answered, claiming rightful possession.
At the hearing, the trustee in bankruptcy took the position that, because of the removal of the 6 trucks by the buyer from the filing district, the seller should have filed the contract of conditional sale in the filing district to which the goods were removed within 10 days after receiving notice of removal, and that the failure to do this rendered the reservation of the property in the seller void.
The referee overruled this contention, and held that the requirements of the Uniform Conditional Sales Law had been complied with, because the notice of removal to the Mack Corporation was insufficient to invalidate the contract of conditional sale. Upon a petition to review, the referee was affirmed by the District Judge.
William J. Gardinier, of Herkimer, N.Y., for appellant.
Olmsted, VanBergen Preston, of Syracuse, N.Y. (A. Lee Olmsted, of Syracuse, N.Y., of counsel), for appellee.
Before MANTON, AUGUSTUS. N. HAND, and CHASE, Circuit Judges.
Under the New York law, conditional sales contracts must be filed in the office of the city clerk of the city in which the purchaser resides. If the property which is the subject of the sale shall be removed from the filing district, the seller is required under certain conditions to file the contract, or a copy thereof, in the filing district to which the goods are removed. If the seller fails to comply with this requirement, the reservation of the property in the seller becomes void as to purchasers from, or creditors of the buyer who, without notice of the reservation of title, purchase the goods or acquire by attachment or levy a lien upon them. The trustee in bankruptcy is given by the Bankruptcy Act (11 USCA) the status of an attaching creditor. Bailey v. Baker Ice Machine Co., 239 U.S. 268, 36 S. Ct. 50, 60 L. Ed. 275; In re Master Knitting Corporation (C.C.A.) 7 F.2d 11.
The question here is whether there has been such a removal as made it necessary for the seller to file the contract, or a copy thereof, in the filing district to which the goods subject to conditional sale were removed.
Section 73 of the New York Uniform Conditional Sales Law (Consol. Laws, c. 41, art. 4) provides that:
"Prior to the performance of the condition, no * * * buyer shall remove the goods from a filing district in which the contract or a copy thereof is filed, except for temporary uses for a period of not more than thirty days, unless the buyer not less than ten days before such removal shall give the seller personally or by registered mail written notice of the place to which the goods are to be removed and the approximate time of such intended removal * * *. If any buyer does so remove the goods, * * * without such notice or in violation of the contract, the seller may retake possession of the goods and deal with them as in case of default in payment of part or all of the purchase price. * * *"
The foregoing provisions indicate that the buyer is intended to have the right of removal of the goods "for temporary uses for a period of not more than thirty days," that a transfer for temporary uses for a shorter period is not a removal within the meaning of the statute, and that the buyer is not required to give notice to the seller of removal for temporary uses in order to prevent a default, unless it is for a longer period.
Section 74 of the New York Conditional Sales Law, which particularly governs the rights of creditors of buyers under conditional sales contracts, contains the following provisions:
"When, prior to the performance of the condition, the goods are removed by the buyer from a filing district in this state to another filing district in this state in which such contract or a copy thereof is not filed, or are removed from another state into a filing district in this state where such contract or copy is not filed, the reservation of the property in the seller shall be void as to the purchasers and creditors described in section sixty-five, unless the conditional sale contract or a copy thereof shall be filed in the filing district to which the goods are removed, within ten days after the seller has received notice of the filing district to which the goods have been removed. * * *"
It is contended on behalf of the Mack Corporation that the notice prescribed in section 74 must be such a written notice as the buyer is required to give the seller under certain circumstances by the terms of section 73. But we are not persuaded that this is so. The precise language of section 73 requiring such written notice and the omission in section 74 of any provision for written notice would seem to leave the word "notice" in section 74 with its usual and natural meaning of an actual notice, however conveyed. If the seller has actual notice of the kind of removal contemplated by the statute, he is in a position to protect creditors by filing in the district to which the goods have been removed and in our opinion he is bound to take this step. Such an interpretation effectuates the general purposes of the act. The decisions under the New York Uniform Conditional Sales Act, as well as the New Jersey statute, seem to indicate that knowledge of removal on the part of the seller is the equivalent of notice, whether given orally or in writing. Goetschius v. Brightman, 245 N.Y. 186, 156 N.E. 660; Thayer Mercantile Co. v. First National Bank of Milltown, 98 N.J. Law, 29, 119 A. 94, affirmed 98 N.J. Law, 907, 121 A. 927.
As we have shown, the buyer has a right to remove for temporary uses for a period of not more than 30 days. If this be so, the notice provided by section 74 as a basis for requiring refiling by the seller must be a notice that the buyer has exceeded his rights of removal for temporary uses. We cannot regard such a notice as having been given by Bowman to the Mack Corporation.
It must be remembered that rolling stock, like motor trucks, for considerable periods has no actual local situs. The very purpose of its being is mobility, often at long range. This was pointed out by the Supreme Court of New Jersey in Hare Chase, Inc., v. Tomkinson, 129 A. 396. There a truck which constantly plied from Philadelphia (where it was usually housed between trips) to Atlantic City was held not "removed" from Philadelphia to New Jersey, within the meaning of the Conditional Sales Act of that state (P.L.N.J. 1919, p. 461).
It is difficult to apply the provisions of the Conditional Sales Act for filing to various situations that may arise in the disposition of mobile property like motor vehicles, but it would seem in any event exceedingly important that the seller should have definite information that such ambulatory chattels have been removed from the filing district in contravention of the rights given to the buyer by that act.
Here the Mack Corporation had no information about the duration of the removal, but it was justified in believing that it was for temporary uses and it had a right to suppose, if the period of removal was to exceed 30 days, that the written notice provided for in section 73 would have been given. Valuable rights ought not to be destroyed by vague information capable of various inferences, and a seller under a contract of conditional sale should not be required to treat every movement of a motor truck as notice that the buyer is to remove it from the filing district for more than thirty days. He is not, in our opinion, required to speculate about the duration of the removal.
The notice to be effective under section 74 must indicate in words or substance that the removal for a temporary purpose is to exceed or has exceeded a period of 30 days. We hold that no such notice was given here and that the information received was insufficient to require refiling under section 74, supra.
The order of the court below is accordingly affirmed.