Detroit Trust Company v. Pontiac Savings Bank
| Decision Date | 05 April 1915 |
| Docket Number | No. 173,173 |
| Citation | 237 U.S. 186,59 L.Ed. 907,35 S.Ct. 509 |
| Parties | DETROIT TRUST COMPANY, Trustee in Bankruptcy of the Estate of Charles Coates, Bankrupt, Appt., v. PONTIAC SAVINGS BANK and Charles Coates |
| Court | U.S. Supreme Court |
Mr. Bernard B. Selling for appellant.
Messrs. Harrison Geer and Elmer R. Webster for appellees.
To secure his outstanding note for $2,300, Coates, a resident of Michigan, and the present bankrupt, gave the Pontiac Savings Bank a mortgage upon his stock of goods, fixtures, etc., in May, 1902, which was not filed for record until the following September. Between these dates he incurred indebtedness exceeding $1,400 to sundry dealers for goods sold and delivered; and it is admitted that under the laws of Michigan the mortgage was void as to them, although good as between the parties thereto. In January, 1903, Coates sold the chattels for cash, paid his note out of the proceeds, and procured a release of the lien upon the records by the mortgagee, who acted with knowledge of the facts. Proceedings were instituted against him shortly thereafter and he was duly adjudged a bankrupt. Appellant here was appointed trustee, and, relying upon supposed rights of creditors, commenced this proceeding in the district court—September, 1903—to recover from the Pontiac Savings Bank the amount of allowed claims for debts contracted by the bankrupt while the mortgage was off the records, although none of them had been reduced to judgment, and no steps had been taken to fix a lien upon the property or its proceeds. The bank set up the absence of any lien and the validity of the mortgage as between the parties thereto, and maintained that the trustee stood in the shoes of the bankrupt, and could not enforce the alleged rights of creditors. This defense was sustained by the circuit court of appeals (115 C. C. A. 663, 196 Fed. 29).
The cause has been pending a very long time and must be decided under the provisions of the bankrupt act as it existed in February, 1903 [30 Stat. at L. 544, chap. 541, as amended by 32 Stat. at L. 797, chap. 487, Comp. Stat. 1913, § 9585],—before the material changes created by amendments,—and according to the laws of Michigan then in effect, whose exact import is not entirely clear. Being of opinion that the action of the court below was correct, we will consider only the ground which it assigned therefor.
Payment to the bank by the bankrupt is attacked as invalid under § 9523, Michigan Compiled Laws of 1897, which provides that every chattel mortgage 'which shall not be accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor' unless filed for record as directed.
The circuit court of appeals declared (p. 33): ...
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Detroit Trust Co. v. Detroit City Serv. Co.
...faith and without notice of the mortgagee. Detroit Trust Co. v. Pontiac Savings Bank, supra, was reviewed and affirmed in 237 U. S. 186, 35 S. Ct. 509, 59 L. Ed. 907, where the language limiting the operation of the statute to subsequent creditors without notice was quoted once more. Notwit......
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...N.W. 661; Riverside Machinery Depot v. American Steel Supply Syndicate, 232 Mich. 22, 204 N.W. 766; Detroit Trust Co. v. Pontiac Savings Bank, 237 U.S. 186, 35 S.Ct. 509, 59 L.Ed. 907, construing the Michigan law. The later Michigan case of Ranson & Randolph Co. v. Moore, 272 Mich. 31, 261 ......
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...adverse claimant to the property consents. Detroit Trust Co. v. Pontiac Savings, 196 F. 29, 32 (6th Cir. 1912) affirmed, 237 U.S. 186, 35 S.Ct. 509, 59 L.Ed. 907 (1915); In re Prima Co., 98 F.2d 952, 959 (7th Cir. 1938); Fairbanks Steam Shovel Co. v. Wills, 212 F. 688 (7th Cir. 1914), affir......
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