Air Equipment Corporation v. Rubbercraft Corporation
| Citation | 79 F.2d 521 |
| Decision Date | 04 November 1935 |
| Docket Number | No. 6.,6. |
| Parties | AIR EQUIPMENT CORPORATION v. RUBBERCRAFT CORPORATION. UNION SPECIAL MACHINE CO. v. COOPER. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Goldstein & Bracken, of New Haven, Conn., for appellant.
James W. Cooper, of New Haven, Conn., pro se.
Before MANTON, L. HAND, and SWAN, Circuit Judges.
This is an appeal from a decree dismissing the petition of a conditional seller, filed in a sequestration suit to reclaim the goods sold from the receiver. The seller's right is based upon an agreement between itself and the buyer, the insolvent company, for the "lease" of a sewing machine upon payment of $757.50; the record does not describe the machine further, and we do not know what was its prospective life. The seller professed to "let" the machine for $750 (with interest of $7.50); the buyer agreed to pay "as rent and compensation" for its use $257.50 on delivery and $100 a month for the five following months. If the "lessee" defaulted in any of its payments or pledged or removed the property, or became bankrupt or insolvent, and in various other contingencies, it was to return the property to the "lessor," which was authorized to enter the premises and retake it. The "lessee" was to keep it insured and might at any time "during the rental term * * * purchase the said property by paying to the company the above valuation therefor, in which event the rents theretofore paid, shall be deducted from the purchase price." The agreement was not to "constitute a sale of the property hereinabove described and no agreement of sale shall be implied herefrom."
The machine was delivered on July 5th. The "lease" was signed on the 14th; the seller's salesman in New Haven forwarded it to the seller's office. On the 19th it was mailed to the town clerk of New Haven to be filed. On the 22d the clerk returned it to the seller because it was not acknowledged, and after acknowledging it the seller sent it back to the salesman in New Haven on the 25th. He got the buyer's acknowledgment on August 4th, and filed it on the 8th. The seller asserted, first, that the agreement was in fact a lease and need not have been filed; and, second, that it was filed in season. The judge found that the transaction was a conditional sale and that the agreement was not filed in season. Following his former ruling in Re Guild, Bloomfield & Jensen (D. C.) 51 F.(2d) 818, he thought it relevant whether all creditors had become such after filing, but as he placed the burden of proof on this issue upon the seller, he dismissed the petition.
If the transaction was a sale, the decisions of the courts of Connecticut as to the meaning of the local conditional sales statute control; whether they should also be authoritative as to its character as sale or lease we need not say, for they do not differ from the "general law" in this regard. The attempted disguise of the transaction as a lease is so transparent as to deceive nobody and deserves little discussion. While, as we have said, the length of life of the sewing machine does not appear, we are entitled to assume merely because it was a sewing machine that it would last longer than six months; the circumstance then becomes important that the sum of the supposed "rents" was the same as the purchase price. "Rents" of such an article, which will be accepted as full payment for title, cannot really be intended as a return for its temporary use. This conclusion is confirmed by the initial payment of one-third of the whole price, with one per cent. interest on the whole sum — an unheard of provision in a real lease. The Connecticut decisions give short shrift to the contention that such transactions are not sales. In re Wilcox & Howe Co., 70 Conn. 220, 39 A. 163; Craig & Co. v. Uncas Paperboard Co., 104 Conn. 559, 133 A. 673. Lambert Hoisting Engine Co. v. Carmody, 79 Conn. 419, 65 A. 141, was entirely different; the sum of the rentals did not make up the purchase price; if the lessee chose to buy during the term, it had to pay several times their amount. Finally that stipulation was a nullity which declared that the agreement shall not be treated as a sale. The purpose of the statute being to protect the buyer's creditors, no court will pay the slightest attention to such efforts to circumvent it.
The next question is whether the bill of sale was filed too late. The statute, section 4697 of the Revision of 1930, says that it shall be...
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