Martin v. Michigan Trust Co.

• Decision Date: 09 January 1928
• Docket Number: No. 4868.,4868.
• Citation: 23 F.2d 609
• Parties: MARTIN v. MICHIGAN TRUST CO. et al. In re THOMAS-DAGGETT CO.
• Court: U.S. Court of Appeals — Sixth Circuit

23 F.2d 609 (1928)

MARTIN v. MICHIGAN TRUST CO. et al.

In re THOMAS-DAGGETT CO.

No. 4868.

Circuit Court of Appeals, Sixth Circuit.

January 9, 1928.

Laurence W. Smith, of Grand Rapids, Mich. (Fred N. Searl, of Grand Rapids, Mich., on the brief), for appellant.

B. M. Corwin, of Grand Rapids, Mich. (Clapperton & Owen and Corwin, Norcross & Cook, all of Grand Rapids, Mich., on the brief), for appellee Michigan Trust Co.

Edward C. McCobb, of Grand Rapids, Mich. (Travis, Merrick, Warner & Johnson, of Grand Rapids, Mich., on the brief), for appellee Grand Rapids Trust Co.

Before DENISON, MACK, and MOORMAN, Circuit Judges.

MACK, Circuit Judge.

Appeal from an order of the District Court, affirming an order of the referee in bankruptcy which denied appellant's reclamation petition for an automatic sprinkler equipment installed in bankrupt's buildings. The petition was based upon an alleged reservation of title under a contract of sale by one Clayton, subsequently assigned to appellant. Appellees are the trustee in bankruptcy and the trustee under a mortgage of the realty. They are not litigating their controversies inter sese, but unite to resist the reclamation.

The sole question is whether the contract of sale reserved a mortgage lien, void as against the trustees, because not recorded, or title as on conditional sale, valid, under Michigan law, without recording. The significant terms of the contract are as follows:

The vendor agreed to supply and install sprinkler equipment; payment of the purchase price of $22,700 was to be in five annual installments; bankrupt was to keep the property insured, "loss, if any, payable to Hugh W. Clayton vendor, or assigns, as his or their interest may appear." The important paragraphs 8 and 10, so far as relevant, and 12 and 13, are appended.

In the light of Burroughs Adding Machine Co. v. Wieselberg, 230 Mich. 15, 203 N. W. 160 (1925), Nelson v. Viergiver, 230 Mich. 38, 203 N. W. 164 (1925), and our own decision of Vander Lei v. Blakely (C. C. A.) 284 F. 516 (1922), an extended discussion of the Michigan law and of its application to the present facts is unnecessary. The Supreme Court of Michigan in the Wieselberg Case adopted our statement of the local law, in the Vander Lei Case, that, "if there is no agreement or necessary inference that the debt is to remain payable, even though the property may be reclaimed, then the reservation of title contained in the instrument may take full effect, in spite of the giving of a negotiable promissory note for the debt, and even though the instrument may speak of the title reservation as a `security' for the debt; while, if the contract is that the full debt must be paid even after reclamation, or if the parties have provided for a treatment of the instrument which the law contemplates only with reference to mortgage securities, the inference of intent to pass an absolute title and reserve a lien is unavoidable."

We cannot agree with appellant's contention that paragraph 13 was intended merely to make the rights and remedies cumulative upon each other, but not upon the lien or securities. Indeed, appellant's brief admits that "the right" to declare the full amount due and payable and "the right" to re-enter and remove the property cumulate on each other. Furthermore, doubts, if any, as to the interpretation, should be resolved against the vendor, not merely because he prepared the printed form of contract, but also because the instrument evidences what the Michigan courts have properly characterized as a purposeful ambiguity, adopted in the hope of construing it later as a chattel mortgage or a conditional sale, as may best serve the vendor's purpose.

The cases of Heyman Co. v. Buck, 221 Mich. 225, 190 N. W. 631 (1922), Spacing Mach. Co. v. Security Trust Co., 223 Mich. 164, 193 N. W. 790 (1923), Plummer v. Dilley, 223 Mich. 372, 193 N. W. 792, In re Goorman (D. C.) 283 F. 119 (1922), and In...