Campbell Paint & Varnish Co. v. Hall

• Decision Date: 26 March 1923
• Docket Number: 22963
• Citation: 131 Miss. 671,95 So. 641
• Parties: CAMPBELL PAINT & VARNISH CO. v. HALL
• Court: Mississippi Supreme Court

95 So. 641

131 Miss. 671

CAMPBELL PAINT & VARNISH CO. v. HALL

No. 22963

Supreme Court of Mississippi

March 26, 1923

1 SALES. Vendor has Hen on goods sold merchant for resale for unpaid purchase money while in hands of first purchaser or one deriving title thereto with notice.

By virtue of section 3079, Code of 1906 (Hemingway's Code section 2436), providing that a vendor of personal property shall have a Hen thereon for the purchase money while it remains in the hands of the first purchaser or one deriving title through him with notice, a seller of goods to a merchant for the purpose of resale by the latter in the ordinary course of his mercantile business has a lien thereon for the unpaid purchase money while in the hands of the first purchaser, or of one deriving title thereto with notice.

2 SALES. Business sign statute does not derange priority of liens between creditors of common debtor.

And such purchase-money lien is not affected by the fact that the first purchaser fails to comply with the business sign statute (section 4784, Code of 1906; Hemingway's Code section 3128), for said statute does not have the effect to derange the priority of liens between creditors of a common debtor.

3 SALES. Purchase-money lien not waived because of seller's knowledge that goods intended for resale in regular course of business.

The seller of goods does not waive his purchase-money lien given by section 3079, Code of 1906 (Hemingway's Code, section 2436), because alone of his knowledge that the purchaser intends them for resale in the regular course of his mercantile business.

4. BANKRUPTCY. Purchase-money lien held to prevail as against title of trustee in bankruptcy of first purchaser.

Such purchase-money lien will prevail as against the claim of title to the goods by a trustee in bankruptcy of the first purchaser, in a case where the goods were sold to the bankrupt more than four months prior to his petition in bankruptcy, and at the time of the filing of said petition the seller had instituted the proceeding provided by said statute for the enforcement of his lien, and the goods had been seized thereunder and segregated from the balance of the stock of the bankrupt.

HON. W. H. POTTER, Judge.

Appeal from circuit court of Hinds county, HON. W. H. POTTER, Judge.

Action by the Campbell Paint & Varnish Company against J. P. Hall, trustee in bankruptcy of S. P. Cagle. From a judgment for defendant, plaintiff appeals. Reversed, and judgment for plaintiff.

Judgment reversed.

Chambers & Trenholm, for appellant.

This case, tried upon an agreed state of facts, whereby it was shown that appellant has sold to one Cagle, a merchant in Jackson, Mississippi, certain goods, wares and merchandise on credit, which had become part of his stock in trade, and which had not been paid for, and which were for sale in the usual course of business by the merchant, within the knowledge of appellant, and which were taken possession of by the sheriff of Hinds county under a writ of seizure issued in the suit of appellant against Cagle, for the purchase money thereof, prior to the time of the filing of the petition in bankruptcy by said Cagle, presents but two issues, both of which are clearly defined:

First: Whether such goods come within the terms of section 3079 of the Code of 1906, section 2436 of Hemingway's Code), giving the vendor of personal property a lien thereon for the purchase money while the property remains in the hands of the first purchaser. Second: What effect, if any, section 4784 of the Code of 1906 (section 3129 of Hemingway's Code), known as the "Sign Statute," has upon the case shown by the record.

Upon the first of the two propositions stated above, we refer the court to a printed brief in the case of Brown Shoe Company v. Wynne, Trustee, U. S. Circuit Court of Appeals, June 1922, pages 13 to 21, inclusive, a copy of which brief has been filed in this case as part of the original brief for appellant, by Messrs. Thompson & Thompson. The facts in that case were identical with the facts in this case, except that in the Wynne case there was no showing that the sale was made in Mississippi, adding a complication, whereas in this case the sale was made in Mississippi.

We would like to add just one other suggestion with reference to said first proposition, and that is: "The courts have no authority to ingraft exceptions upon the statute." Williams v. Lee, (Miss.), 94 So. 454, January 1923. In that case the court was discussing the Mississippi statute governing descent and distribution--property rights! In this case we have the statute granting the vendor of personal property a lien thereon--a property right, appellee is asking the court to ingraft upon the vendor's lien statute an exception as to goods clearly within the terms of the statute, because of some waiver or matter of public policy.

The judgment of the lower court states three propositions, viz.: That the lien is avoided by the sign statute; that there was a waiver of the lien by selling goods intended for re-sale; and that the lien is contrary to public policy as indicated by the act of 1920. The court held that there was a waiver, and that it was therefore unnecessary to consider the other two propositions. As to the sign statute, we will refer to that later, but would like to call the court's attention to the fact that appellee's brief, after setting forth the facts and the two statutes involved, is devoted entirely, to a discussion of the sign statute, and, except for a portion of an opinion by Judge HOLMES in the Wynne case, supra, in which case he was later reversed by the circuit court of appeals, there is no attempt made to sustain the finding of the lower court that there was a waiver of the lien by appellant. And Judge HOLMES did not hold that there had been a waiver, but that the legislature did not intend to give a lien on goods knowingly sold for re-sale. Ingrafting an exception on the statute! Judge HOLMES did hold that by selling goods for re-sale the vendor would waive its lien against the trustee, but we assert that that could not extend beyond a case where the goods came into the hands of the trustee, which is not the case here. It will be time enough to pass upon that proposition when it is reached. That will be a question of bankruptcy law rather than of state law, however, and the United States circuit court of appeals has already held in the case of Norris v. Trenholm, cited in brief of appellee, page 15, that the lien granted by this statute is not affected by bankruptcy. We might add that the contention of appellee as to disrupting the bankruptcy law, brief, pages 22 and 23, was urged upon the federal courts in the Norris-Trenholm case, but did not receive notice by them. And the decision of the same court in Brown Shoe Co. v. Wynne, silences all these contentions, where the goods were seized by the state courts prior to bankruptcy, and refers the trustee to the state courts for such relief as he may be able to obtain as a matter of state law governing such liens. (281 Fed. Rep., page 807).

As to whether there was a waiver, strictly speaking, we refer again to the above-mentioned pages of the printed brief, and suggest that this case must finally rest, if affirmed, upon an exception to be ingrafted upon the statute, unless relief can be found under the sign statute. Upon the application of the sign statute we could again refer to the above-mentioned printed brief, pages 25 to 33, inclusive, which gives our ideas upon the subject. Gumble v. Koon, 59 Miss. 264, cited by appellee, brief, page 7, was another case of secret ownership being denied in favor of a creditor; not a contest between creditors, and no lien involved. Note please, also, that that case is an authority for the proposition that no exceptions should be ingrafted upon a statute. Paine v. Hall Sale & Lock Co, 64 Miss. 175, cited by appellee's brief, page 8, was another case of secret ownership--title retention--and not a contest between creditors, as was Hall v. Berg, 64 Miss. 187, likewise cited by appellee, brief, page 8, and Shannon v. Blum, 60 Miss. 828. Citizens Bank v. Studebaker, 71 Miss. 544. appellee's brief, page 10, and Columbus Buggy Co. v. Turley, 73, Miss. 529, appellee's brief, page 11, were similar cases where others set up secret ownership and were denied in favor of creditors, except that in the latter case the secret claim was denied in favor of a purchaser.

In the case of Bank v. Schaff, 108 Miss. 121, cited by appellee, brief, page 12, Schaff placed the pianos in question with the trader on consignment, with title reserved, and not with a vendor's lien retained, by contract or statute, as stated by appellee. In other words, another case of secret ownership denied in favor of a creditor. Gallaspy v. International Harvester Co. 109 Miss. 136, cited by appellee, brief, page 13, is yet another case of title-retained contract falling before the statute in favor of creditors, but through a trustee in bankruptcy, to vary the monotony, the Harvester company undertaking to assert its secret claim of ownership after bankruptcy. The Norris-Trenholm case was mentioned by the court as having been cited against its view of the law, and the court remarked that the sign statute had not been invoked in that case, judging from the fact that it was not mentioned in the opinion. Of course, the Norris-Trenholm case involved the vendor's lien proposition, not a secret claim of ownership, and the sign statute had no place in it.

Allow us to call the attention of the court to the outstanding fact that in every one of the foregoing cases either some creditor had levied upon the property in question, or it had passed to the creditors in a bankruptcy proceeding, or...