Arthur v. G.W. Parsons Co.

• Citation: 224 F. 47
• Decision Date: 30 June 1915
• Docket Number: 2747.
• Parties: ARTHUR v. G. W. PARSONS CO.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

224 F. 47

ARTHUR v. G. W. PARSONS CO.

No. 2747.

United States Court of Appeals, Sixth Circuit.

June 30, 1915

[Copyrighted Material Omitted]

W. W Keifer, of Springfield, Ohio, for appellant.

P. C Martin, of Springfield, Ohio, for appellee.

Before KNAPPEN and DENISON, Circuit Judges, and SESSIONS, District judge.

KNAPPEN Circuit Judge.

Appellee filed in the bankruptcy court an intervening petition, asking that it be allowed to repossess itself of a certain traction trench-excavating machine, with its boiler, engines, and other appurtenances, then in possession of the court through its trustee in bankruptcy. The property had been sold by appellee to the bankrupts by a conditional contract in writing, whereby the title remained in the seller (appellee) until the purchase price ($6,000) and the promissory notes given therefor should be fully paid. Two thousand dollars had been paid upon the purchase price; the remaining $4,000 was past due and unpaid. The referee ordered the surrender of the property to appellee. Upon review, the district court affirmed the action of the referee, upon condition of the surrender to the trustee of the unpaid purchase-money notes. Reversal is asked upon four grounds.

1. By section 8568 of the General Code of Ohio conditional sales of personal property, whereby the title remains in the seller until the purchase price is paid, are declared void as to all subsequent purchasers and mortgagees in good faith, and creditors, unless--

'the conditions are evidenced by writing, signed by the purchaser, * * * and also a statement thereon, under oath, made by the person so selling, * * * of the amount of the claim, * * * be deposited with' the recorder of the proper county.

The contract was in writing and was duly recorded. It contained all the conditions regarding payment of purchase price, including the fact that promissory notes were to be given therefor, the amounts of the respective notes, the periods they were to run, where payable, and that they drew 'interest from date at the rate of six per cent. per annum. ' The notes themselves were not recorded. They contained the additional provision whereby failure to pay interest when due precipitated the maturity of the entire note, both principal and interest, the entire amount to draw interest thereafter at 8 per cent., payable semiannually, with provision waiving demand of payment, protest, etc., and for payment of attorney's fees and collection expenses.

It is urged that all the conditions of the sale contract were thus not filed, and that the contract is therefore void as against the trustee in bankruptcy. We cannot agree with this contention. The purpose of the statute regarding record was to protect third parties dealing with the property by imparting notice to them of the condition of its title. Burbank v. Conrad, 96 U.S. 291, 292, 24 L.Ed. 731; Register Co. v. Lesko, 77 Conn. 276, 280, 58 A. 967. The contract itself gave complete information of the payments necessary to be made to vest title in the purchaser. It omitted only certain results following a default. As was well said by the referee:

'If the vendee had complied with all the terms of the conditional contract as filed, the title to the machine would have passed, and there is nothing in the notes that would have imposed any additional obligation. * * * The notes * * * merely imposed penalties on a failure to fulfill the conditions. At the time the contract was filed none of these penalties had attached, and the only conditions the vendee had to meet in order to acquire full title were those set out in the contract as filed.'

We agree with the referee's conclusion that recording of the notes was unnecessary. This conclusion is sustained by Cable Co. v. Stewart (C.C.A. 5) 191 F. 699, 702, 112 C.C.A. 289.

2. The machine was delivered March 10, 1913, and notes were given on that date (as required by the contract), and bore interest therefrom. The contract itself was filed April 3, 1913. The affidavit which was indorsed thereon bore the same date, and stated that the partnership purchasers--

'all of which are named in the within contract, are indebted to said the G. W. parsons Company in the sum of $5,000, and that said claim is just and unpaid, and that the foregoing and within contract was entered into in good faith.'

It is urged that this affidavit was insufficient: First, because untrue, in that interest had accumulated upon the notes from their date, and that fact was not stated; and, second, that it does not appear that the $5,000 referred to was due 'upon the contract then filed.' It is not clear that these objections to the affidavit have been saved; but, assuming that they are properly here, we have no hesitation in saying that we see no merit in them. The criticism respecting the nonmention of accrued interest impresses us as too refined. The authorities cited in support of the other objection to the affidavit are not, in our opinion, in point. The affidavit lacks, at most, only the word 'thereon' following 'indebted'; but we think the only natural inference from the reference to the contract, both preceding and following the statement of indebtedness, is that the indebtedness referred to is under that contract.

3. The two notes for $2,000 each, representing the last two payments upon the contract, fell due, respectively on July 24, 1913 and September 24, 1913. The one first maturing 'was renewed...