Hartford Production Credit Ass'n v. Clark

• Citation: 172 A. 266,118 Conn. 341
• Parties: HARTFORD PRODUCTION CREDIT ASS'N v. CLARK.
• Decision Date: 16 April 1934
• Court: Supreme Court of Connecticut

172 A. 266

118 Conn. 341

HARTFORD PRODUCTION CREDIT ASS'N v. CLARK.

Supreme Court of Errors of Connecticut.

April 16, 1934

Case reserved from Superior Court, Hartford County; Edwin C Dickenson, Judge.

Action by the Hartford Production Credit Association against Arthur A. Clark for a declaratory judgment as to the status of the plaintiff association as a federal agency within the meaning of the Connecticut General Statutes, Cum.Supp. 1933, § 110b, brought to the superior court and reserved by the court for the advice of this court.

Question answered.

Vine R. Paarmelee, of Hartford, for plaintiff.

D.J Loughlin, of Hartford, for defendant.

Argued before MALTBIE, C.J., and HAINES, HINMAN, BANKS, and AVERY JJ.

HINMAN, Judge.

In 1933 the General Assembly passed an act (General Statutes, Cum. Supp. 1933, § 110b) providing that: " (a) Any person, association, partnership or corporation engaged in this state in the business of farming, or the raising, breeding, fattening or marketing of live stock may enter into an agreement with and borrow funds from the reconstruction finance corporation, reginal agricultural credit corporations, the secretary of agriculture of the United States, or any federal agency, including the United States of America, now or hereafter authorized to loan money to agricultural producers, and may give as security for such loan a note secured by a chattel mortgage upon live stock, farm machinery or farm equipment, or upon any crop or crops either planted or to be planted within one year from the date of the execution of such mortgage, or any extension thereof on lands within this state. Each such mortgage shall be a lien against the chattels and crops thereby conveyed, and shall be good and available in law against all subsequent purchasers or execution creditors, upon the recording thereof as hereinafter directed.‘ It also provided: " (e) Unless otherwise expressly provided by such mortgage, the mortgagor shall be entitled to retain possession of the mortgaged chattels and crops until default under the terms of his agreement. * * *‘ The obvious purpose of the provision last quoted was to create, as to the mortgages provided for in the act, an exception, additional to those already provided in sections 5092 and 5094 of the General Statutes, to the general rule that retention of possession of mortgaged chattels invalidates the mortgage as to creditors and bona fide purchasers. Safford v. McNeil, 102 Conn. 684, 688, 129 A. 721; Hartford-Connecticut Trust Co. v. Puritan Laundry, Inc., 95 Conn. 172, 180, 111 A. 149; Gaylor v. Harding, 37 Conn. 508; Swift v. Thompson, 9 Conn. 63, 21 Am.Dec. 718; 11 C.J. p. 564. The effect of the act is to preserve the validity, as to such third parties, of such mortgages, when given and recorded in compliance with it, notwithstanding that possession of the mortgaged property is retained by the mortgagor. The exception applies not only to mortgages so given to the secretary of agriculture and the corporations designated by name but also to those in which the mortgagee is " any federal agency * * * now or hereafter authorized to loan money to agricultural producers.‘ The determinative question presented by this action and reserved for our advice is whether the plaintiff, the Hartford Production Credit Association, is such a " federal agency‘ within the meaning of section 110b. This is a problem of statutory construction involving consideration of the terms of the act as a whole and the circumstances and conditions existing at the time and which may be deemed to have affected its intent and motivated its adoption. Pelton & King v. Bethlehem, 109 Conn. 547, 147 A. 144; State v. Faro, 118 Conn. 267, 171 A. 660.

The stipulation of facts discloses that at the time of the passage of the act, which took effect June 9, 1933, the only agencies providing funds for short-term credits from federal sources to agricultural producers on the security of personal property were the Reconstruction Finance Credit Corporation, the Regional Agricultural Credit Corporation, and the Secretary of Agriculture, all of which were specifically mentioned in the act. The Regional Agricultural Credit Corporation of Albany, N. Y., which served this district, obtained its funds in the first instance from the Reconstruction Finance Corporation. Soon after the passage of the Connecticut act Congress passed the " Farm Credit Act of 1933,‘ approved June 16, 1933, under which administration of the lending of funds to agricultural producers has been superseded by the organizations set up in that act under the head of the Farm Credit Administration. The primary purpose of this Farm Credit Act, as indicated by its title, was to provide for organizations, within the Farm Credit Administration, to make loans for the production and marketing of agricultural products. To that end the governor of the Farm Credit Administration, hereinafter referred to as the " governor‘ is authorized and directed to organize and charter twelve corporations to be known as " Production Credit Corporations‘ and twelve banks to be known as " Banks for Cooperative,‘ one such corporation and one such bank to be established in each city in which there is locaged a Federal Land Bank, and is also authorized and directed to organize and charter corporations to be known as " Production Credit Associations.‘ It is provided that the capital stock of each production credit corporation shall be in such amount as the governor determines is required for the purpose of meeting the credit needs of the district to be served by it. The initial capital stock shall be subscribed for by the governor and held by him on behalf of the United States, payment therefor to be made out of a revolving fund created by the act and consisting of unexpended balances and collections of various government appropriations for crop loans, seed loans, etc., formerly undee the Department of Agriculture, together with direct appropriations by Congress. Each production credit corporation is authorized to invest its funds in stock of production credit associations and to subscribe and pay for class A stock in each such association located in its district in amounts...