Bumb v. McIntyre

• Decision Date: 14 April 1960
• Docket Number: No. 16515.,16515.
• Citation: 277 F.2d 647
• Parties: A. J. BUMB, Trustee in Bankruptcy of the Estate of Ampsco Products of California, Inc., Bankrupt, Appellant, v. L. E. McINTYRE and M. H. McIntyre, doing business as L. E. McIntyre & Co., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

277 F.2d 647 (1960)

A. J. BUMB, Trustee in Bankruptcy of the Estate of Ampsco Products of California, Inc., Bankrupt, Appellant, v. L. E. McINTYRE and M. H. McIntyre, doing business as L. E. McIntyre & Co., Appellees.

No. 16515.

United States Court of Appeals Ninth Circuit.

April 14, 1960.

Robert H. Shutan, Milton Feinerman, Beverly Hills, Cal., for appellant.

Forster & Gemmill, Donald W. Crocker, John G. Gemmill, Los Angeles, Cal., for appellees.

Before BARNES, HAMLEY and HAMLIN, Circuit Judges.

HAMLIN, Circuit Judge.

A. J. Bumb, Trustee in Bankruptcy of the Estate of Ampsco Products of California, Inc., Bankrupt, appellant herein, appeals from an order of the District Court of the Southern District of California affirming the decision of a referee in bankruptcy holding valid as against the trustee a chattel mortgage executed by the bankrupt in favor of L. E. McIntyre and M. H. McIntyre, doing business as L. E. McIntyre & Company, appellee herein.

The District Court had jurisdiction by virtue of 11 U.S.C.A. § 11, and this Court has jurisdiction under 11 U.S.C.A. § 47.

The essential facts in the case are undisputed. On May 25, 1956, Ampsco Products of California, Inc., for a valuable consideration executed and delivered a chattel mortgage to L. E. McIntyre & Co., a partnership, as security for a promissory note in the sum of $27,500. The transaction was handled through an escrow in the Security-First National Bank of Los Angeles. An inventory list of all the specific items of personal property covered by the mortgage was deposited in said escrow with the mortgage. However, the inventory list was not actually attached to the mortgage. The chattel mortgage was duly published and recorded in all respects. On August 13, 1957, Ampsco made a general assignment for the benefit of creditors to Ralph Meyer. The assignee then sold all of the assets of Ampsco to a third party for $28,775 free and clear of encumbrances. An involuntary petition in bankruptcy was filed on October 29, 1957. An order of adjudication of bankruptcy was thereafter made and the assignee paid over all funds in his possession to the trustee in bankruptcy.

Prior to said sale and prior to the bankruptcy adjudication, appellee had filed in the State Court an action against Ampsco seeking forclosure of the chattel mortgage. After adjudication appellee sought to have appellant substituted in place of Ampsco in said action. Thereafter, by stipulation, the issue as to the validity of the chattel mortgage was tried before the referee in bankruptcy.

The trustee contends that the chattel mortgage is void as to creditors, claiming that the description of the property mortgaged was not sufficient under California law.

The chattel mortgage recited in part as follows:

"Witnesseth: That the Mortgagor mortgages to the Mortgagee all that certain personal property situated and described as follows, to-wit: Certain fixtures, machinery and tooling equipment, and located at 224 East Palmer Avenue, in the City of Compton, State of California."

The referee made findings of fact and conclusions of law which were adopted by the District Court. Pertinent portions of these findings and conclusions are set forth below.¹

The form of a mortgage under California Civil Code § 2956 provides for the description of the property. In Pace v. Threewit, 31 Cal.App.2d 509, 88 P.2d 247, 248, the California District Court of Appeal stated as follows:

"There can be no mortgage unless the property hypothecated is sufficiently described to bring the instrument within the meaning of the statute defining a mortgage.

"With respect to the sufficiency of the description of the mortgaged property the general rules are thus set forth in 10 American Jurisprudence, page 752, section 55:

"`To be sufficient against a third person, the description of the mortgaged property must be definite enough to enable him, aided by inquiries which the instrument itself suggests, to identify the property. A description which may be amply sufficient as between the immediate parties to a mortgage will, in many cases, not be sufficient as against creditors of, or purchasers from, the mortgagor.

"`Third parties are under no obligation to exhaust every possible means of information before they can safely proceed to treat the property of the mortgagor as unencumbered. The record of a mortgage is not constructive notice to them where it does not describe any particular property or furnish any data which will direct the attention of those reading it to some source of information beyond the words of the parties to it. In nearly all cases, however, resort must be had to other evidence than that furnished by the mortgage itself to enable third persons to identify mortgaged property, and generally where there is a description of the property mortgaged and the description is true, and by the aid of such description and the surrounding circumstances the third person would in the ordinary course of things know the property that was mortgaged, the description will be held to be sufficient.\'

"And at section 63, page 756, is to be found the following:

"`A statement as to the location of the chattels mortgaged is one of the most important elements in the description. Other details without this element often amount to little or nothing, whereas its presence with other slight details often makes easy the ascertainment of the property meant to be designated and may make sufficient a description which otherwise would be insufficient. There should be a designation of the property conveyed and of the place where it may be found. A description is of course, insufficient where there is no location indicated and nothing else to identify the property.\'"

Appellant apparently concedes that the law is as set out in Pace v. Threewit, but contends that under this law the description in the instant chattel mortgage is insufficient.

Appellant raises a question as to the meaning of the word "certain," which is found in two places in the chattel mortgage in question. The appellant contends that "certain" means "some" or "a portion of", and cites in support thereof In re Mineral Lac Paint Co., D.C.Pa. 1936, 17 F.Supp. 1, 2.

In that case the opening paragraph of the conditional sales contract read as follows:

"Know All Men by These Presents, That I, Bessie Rose, of 805 Sixty-Ninth Avenue, Philadelphia, Pennsylvania, hereinafter referred to as Buyer, do hereby acknowledge the receipt from Hanna Salkind, of 6634 Pine Street, Philadelphia, Pennsylvania, hereinafter referred to as Seller, certain machinery, apparatus, plant and equipment now upon premises 3306-16 E. Thompson Street, Philadelphia, Pennsylvania, described in a schedule hereto annexed, made part hereof and referred to as Exhibit `A.\'"

Exhibit "A" was not annexed to the contract or filed in the prothonotary's office. Because of this omission, the trustee in bankruptcy contended that the conditional sale contract was not filed in accordance with the provisions of the Uniform Conditional Sales Act and was therefore void as to him. The Court held with the trustee that a material part of the contract had been omitted from the document, and that its omission was not cured by the brief general reference to machinery and equipment above set out, "since that language is not sufficiently precise or definite, particularly in view of the testimony that other similar machinery and equipment was located upon the premises mentioned. We think that the word `certain,' used in referring to the machinery and equipment * *, followed as it is stated to be by a detailed description (which was not in fact attached), was used in the sense of `some among possible others.'" The Court then says further: "Regardless of this, however, the failure to include a schedule containing a description of the machinery and equipment sold, which schedule the contract itself expressly stipulates to be a part of it, in our opinion amounts to the omission of a material part of the contract."

Appellant further relies upon Black's Law Dictionary (4th Edition 1951) where, under the heading "certain," one definition appears as follows: "Some among possible others, In re Mineral Lac Paint Co., D.C.Pa., 17 F.Supp. 1, 2."

It appears, however, that in the same dictionary various other meanings are set...