Castaneda v. National Cash Register Company

• Decision Date: 12 February 1934
• Docket Number: Civil 3343
• Citation: 29 P.2d 730,43 Ariz. 119
• Parties: A. A. CASTANEDA, as Assignee for the Benefit of Creditors of TUCSON SHOE COMPANY, a Corporation, Insolvent, Appellant, v. THE NATIONAL CASH REGISTER COMPANY, a Corporation, Appellee
• Court: Arizona Supreme Court

29 P.2d 730

43 Ariz. 119

A. A. CASTANEDA, as Assignee for the Benefit of Creditors of TUCSON SHOE COMPANY, a Corporation, Insolvent, Appellant, v. THE NATIONAL CASH REGISTER COMPANY, a Corporation, Appellee

Civil No. 3343

Supreme Court of Arizona

February 12, 1934

APPEAL from a judgment of the Superior Court of the County of Pima. Fred W. Fickett, Judge. Judgment affirmed.

Mr Leslie C. Hardy, for Appellant.

Mr. Ben C. Hill, for Appellee.

OPINION

ROSS C. J.

The appellee, the National Cash Register Company, commenced this action to recover of A. A. Castaneda, assignee, a cash register, or an unpaid balance thereon of $315. The register was sold by it on March 17, 1931, to the Tucson Shoe Company under a conditional sales contract by the terms of which it retained ownership and title until the register was fully paid for. On August 4, 1932, the Tucson Shoe Company being insolvent made a general assignment for the benefit of its creditors to the defendant, A. A. Castaneda who thereafter took possession of the cash register and now, as such assignee, claims it free of any claim of the appellee. This claim is based solely on the ground that the conditional sales contract was not filed for record in the office of the county recorder of Pima county, the county in which the cash register was first kept for use, within ten days after the making of the contract, although it was filed in such office on April 10, 1931, or about sixteen months before Castaneda as assignee came into the possession of the register. In other words, while the contract was not filed until twenty-four days after it was made, it was filed long before the assignee defendant acquired any rights in the register.

From a judgment against him, the defendant has appealed, contending that the seller's reserved property in the register was lost for failure to file within ten days after the making of the conditional contract.

In determining the respective claims, it is necessary to construe section 2890 of the Revised Code of 1928, being a part of the Uniform Conditional Sales Act, but changed in phraseology from the original act so that it presents a rather difficult question. Section 2890 reads as follows:

"Every provision in a conditional sale reserving property in the seller after possession of the goods is delivered to the buyer, is valid as to all persons, except as hereinafter otherwise provided; it is void as to any purchaser from or creditor of the buyer, who, without notice of such provision, purchases the goods or acquires by attachment or levy a lien upon them, before the contract or a copy thereof be filed as hereinafter provided; and is void as to all persons except the buyer unless such contract or copy is so filed within ten days after the making of the conditional sale."

This section is a revision and consolidation of sections 4 and 5 of chapter 40 of the Laws of 1919, entitled, "Concerning Conditional Sales and to Make Uniform the Law Relating Thereto." These sections read:

"Section 4. (Conditional Sales Valid Except as Otherwise Provided.) Every provision in a conditional sale reserving property in the seller after possession of the goods is delivered to the buyer, shall be valid as to all persons, except as hereinafter otherwise provided.

"Section 5. (Conditional Sales Void as to Certain Persons.) Every provision in a conditional sale reserving property in the seller, shall be void as to any purchaser from or creditor of the buyer, who, without notice of such provision, purchases the goods or acquires by attachment or levy a lien upon them, before the contract or a copy thereof shall be filed as hereinafter provided, unless such contract or copy is so filed within ten days after the making of the conditional sale."

Under these sections the seller is allowed ten days after the making of the contract in which to file it. The provisions thereof for the ten days are valid as against the whole world, and, if within that time the contract is filed, its provisions reserving the seller's property therein continues valid as to everyone until fully performed. After ten days from the making of the contract, if it is not filed, its provisions are valid as to persons purchasing the goods of the buyer or persons as creditors of the buyer acquiring by attachment or levy a lien thereon with notice of the conditional sales contract. In other words, one who purchases the goods of the buyer knowing that he is a conditional buyer, or his creditors who with such knowledge attempt to subject the property to the payment of their debts, acquires rights inferior to the seller's. A failure to file within the ten days after the making of the contract invalidates the provision reserving property in the seller as to a purchaser from the buyer or attaching or lien creditors without notice. Filing after the ten days, however, is constructive notice and protects the seller's interest as against subsequent buyers and lien or attachment creditors.

The Supreme Court of Kansas in Commercial Credit Co. v. Gaiser, 134 Kan. 552, 7 P.2d 527, in construing our section 2890, decided (see syllabus 1):

"Notwithstanding statute making conditional sale void as to others than buyer if not recorded within ten days, belated recording protects rights of holder as against one acquiring interest after recordation."

While the effect under sections 4 and 5, supra, of a belated filing upon those acquiring interests in property thereafter has not been directly passed upon, this court in at least two cases recognized or intimated that such a filing is constructive notice. Bradshaw v. Kleiber Motor Truck Co., 29 Ariz. 293, 241 P. 305; Cashman v. Lewis, 26 Ariz. 95, 222 P. 411.

The Commissioners on Uniform State Laws drafted the Conditional Sales Act, and in a note, in 2 Uniform Laws Annotated 9, they say:

"A filing after ten days from the date of the making of the contract of course protects the seller against all subsequent purchasers or creditors who buy or levy on the goods."

In 2A Uniform Laws Annotated 90, the authors have to say, with reference to the reason for requiring a filing, the following:

"The object in permitting the seller a short time within which to file his contract is to allow for delays necessarily occurring after the delivery of the goods or the making of the contract. The contract may have to be sent by a local office to a main office for approval, or may have to be mailed from the place where the contract was made to a distant place for record. Because of the practical hardship in some cases occasioned by requiring immediate record, the seller is given protection in his reserved title for a short time without any record. The purpose of this ten day provision is not to penalize the seller if he does not file within a short time, but to protect him a short time without filing. ...