In re Bothe
| Decision Date | 11 October 1909 |
| Docket Number | 95. |
| Citation | 173 F. 597 |
| Parties | In re BOTHE. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Charles H. Franck (A. M. Frumberg, on the brief), for petitioner.
L. L Leonard, for respondent.
Before HOOK and ADAMS, Circuit Judges, and CARLAND, District Judge.
ADAMS Circuit Judge (after stating the facts as above).
The court below was clearly right in holding the mortgage inoperative and void as to the five wagons. It appears without contradiction that Martin had six wagons of various kinds at the time he executed the mortgage. The only description of those conveyed was 'five wagons.' There was no segregation of any particular five wagons from the larger number owned by Martin, and no means were disclosed, in the mortgage or otherwise, for determining which of them were intended to be conveyed. For want, therefore, of a sufficient description to identify the property intended to be conveyed, the mortgage was void as to the wagons.
The mortgage was recorded more than four months prior to the adjudication in bankruptcy, and therefore, so far as the bankruptcy act was concerned, it created a valid preferential right over all other creditors of the bankrupt. But by the law of Missouri (section 3404, Rev. St. 1899 (Ann. St. 1906 p. 1936)), where the mortgage was made, it became and was invalid against any other person than the parties thereto until it was recorded. No question of lawful or unlawful preference within the contemplation of the bankruptcy act is now presented. The sole inquiry is whether the property in question, prior to the bankruptcy proceedings, belonged to the mortgagee or to the creditors of the bankrupt who extended credit to him, after the execution of the mortgage and before it was recorded. No other creditors assert any claim to it.
The trustee in bankruptcy stands for and represents all persons interested in the estate of the bankrupt. In this case doubtless moved so to do by the interested creditors, he seeks to assert an equitable right in favor of certain special creditors to a part of the bankrupt's estate as against the holder of a chattel mortgage purporting to convey it to one creditor. The rights of these special creditors rest on the principle of estoppel, and are no less enforceable in the bankruptcy court than they would be if they had their origin in written contract. Equitable rights, no less than legal, are there enforced. Atchison, Topeka & S.F. Ry. Co. v. Hurley, 153 F. 503, 82 C.C.A. 453, s.c. 213 U.S. 126, 29 Sup.Ct. 466, 53 L.Ed. 729. The mortgagee, Bothe, by leaving the property in the possession of the bankrupt and withholding the mortgage from the record, invited others to deal with the bankrupt on the assumption of his ownership of an unincumbered title to the property conveyed. Whether those so dealing with him were actually deceived or not is immaterial. The inevitable tendency was to mislead and deceive, and the presumption must be indulged that they were misled to their injury. Landis v. McDonald, 88 Mo.App. 335; Harrison & Calhoun v. South Carthage Min. Co., 95 Mo.App. 80, 68 S.W. 963, and cases cited.
As between the mortgagee and those dealing with and extending credit to the mortgagor subsequent to the date of the mortgage and prior to the recording of it, there is an obvious equity in favor of the latter. It was doubtless in recognition of this equity that the provisions of section 3404 were enacted into positive law. That section has been the subject of much consideration by the appellate courts of Missouri; and this court, in the recent cases of First Nat. Bank of Buchanan County v. Connett, 142 F. 33, 37, 73 C.C.A. 219, 5 L.R.A. (N.S.) 148, and McElvain v. Hardesty (C.C.A.) 169 F. 31, considered the Missouri cases and undertook to follow the interpretation placed upon the statute by them. In the former, speaking by Judge Hook, we said:
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