In re Easy Living, Inc.
| Decision Date | 25 February 1969 |
| Docket Number | No. 18546.,18546. |
| Citation | 407 F.2d 142 |
| Parties | In the Matter of EASY LIVING, INC., Bankrupt. ASSOCIATES DISCOUNT CORPORATION, Appellant, v. Clifton E. PLATTENBURG, Trustee, Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Richard L. Cousineau, Dayton, Ohio, for appellant, Shaman, Winer, Shulman & Ziegler, Dayton, Ohio, on the brief.
Clifton E. Plattenburg, Jr., Dayton, Ohio, for appellee, Kuhns & Plattenburg, Dayton, Ohio, on the brief.
Before WEICK, Chief Judge, O'SULLIVAN, Circuit Judge, and McALLISTER, Senior Circuit Judge.
Associates Discount Corporation (Associates) has appealed from an order of the District Court affirming a decision of the Referee in Bankruptcy denying its liens on two mobile homes.
Prior to its bankruptcy, the dealer, Easy Living, Inc., had sold and delivered the two mobile homes to two purchasers in consideration of cash down payments and the execution of negotiable promissory installment notes and security agreements evidencing and securing the balance of the purchase price. The dealer discounted the paper with Associates and received payment in full of the purchase price of the mobile homes. The notes were endorsed by the dealer to Asssociates and the security agreements were assigned to it. In the assignment of the security agreements the dealer warranted its title and right to sell to the purchasers and agreed that a certificate of title, with the assignee's first lien noted thereon, has been or will be issued for the vehicles.
The dealer did not have certificates of title for the mobile homes at the time of sale, as required by Ohio law, but procured the certificates about one and one-half years later and prior to bankruptcy. The certificates of title were issued by the Clerk of Courts in the name of the dealer, but no lien was shown thereon. Instead, the dealer executed the assignment form on the back of the certificates of title without filling in the name of the assignee or the other blank spaces provided on the form, and delivered the certificates of title to Associates to hold as security for the payment of the notes and security agreements.
Upon the bankruptcy of the dealer, the Trustee in Bankrupty seized possession of the two mobile homes which were in the hands of the purchasers, claiming them as assets of the bankrupt's estate. He applied to the court for an order determining that he was the sole owner of the mobile homes and entitled to the proceeds of sale thereof.
Associates made application to the court for an order requiring the Trustee in Bankruptcy to cause certificates of title for the two mobile homes to be issued in the names of the two purchasers thereof with notations of its liens thereon.
The Referee in Bankruptcy held that the two purchasers of the mobile homes were innocent purchasers for value, and ordered the Trustee to cause certificates of title to be issued to them upon payment to the Trustee of the balance of the purchase price. The Referee denied Associates' application to have its lien noted on the certificates of title. He ordered Associates to account to the Trustee for the sums which it had collected from the purchasers subsequent to its bankruptcy, and held that the Trustee in Bankruptcy was entitled to receive the balance due on the purchase price. In proceedings to review the Referee's order, the District Court affirmed.
We modify the order of the District Court by affirming that part of it which ordered the Trustee in Bankruptcy to cause certificates of title to be issued for the mobile homes to the two purchasers. We reverse the residue of the order and order the Trustee in Bankruptcy to cause the liens of Associates to be noted on the certificates of title.
Ohio's Certificate of Title law provides in part as follows:
"Any security agreement covering a security interest in a motor vehicle * * * in the case of a certificate of title, if a notation of such instrument has been made by the clerk of the court of common pleas on the face of such certificate, shall be valid as against the creditors of the debtor, whether armed with process or not, and against subsequent purchasers, secured parties, and other lienholders or claimants." (Ohio Rev.Code Sec. 4505.13)
Section 70(a) of the Bankruptcy Act1 vests in the Trustee in Bankruptcy by operation of law the title to the bankrupt's property as of the date of bankruptcy.
It was the theory of the Trustee in Bankruptcy that since the bankrupt dealer was named as the owner in the certificates of title, the Trustee became the sole owner of the mobile homes because of the clear language of Ohio Revised Code Sec. 4505.04.
However, neither the Referee nor the District Judge upheld this contention. They held that the rights of innocent purchasers for value were superior to those of the Trustee in Bankruptcy. The Trustee in Bankruptcy is not an innocent purchaser for value but takes title to the bankrupt's property subject to all liens, claims and equities existing thereon. In re Alikasovich, 275 F.2d 454 (6th Cir. 1960), aff'd sub nom. Lewis v. Manufacturers Nat'l Bank, 364 U.S. 603, 81 S.Ct. 347, 5 L.Ed.2d 323 (1961). The validity of all such liens, claims and equities is to be determined by local state law. Hertzberg v. Associates Discount Corp., 272 F.2d 6 (6th Cir. 1959).
The Ohio Certificate of Title law was enacted "to prevent the importation of stolen motor vehicles and thefts and frauds in the transfer of title to motor vehicles * * *." 117 Ohio Laws, 373.
The Supreme Court of Ohio held in In re Case, 161 Ohio St. 288, 118 N.E.2d 836 (1954):
"Section 6290-4, General Code (Section 4505.04, Revised Code), makes evidence inadmissible to dispute the title of one to whom a motor vehicle certificate of title is issued pursuant to the provisions of the Ohio Certificate of Title Act except evidence to establish fraud which would cause such certificate of title to be voidable." (Syl. 2) (Italics ours)
A resulting trust was declared in Douglas v. Hubbard,...
To continue reading
Request your trial
-
Madeline Marie Nursing Homes, In re
... ... See generally Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). It is also true that, both conceptually ... See In re Clemens, 472 F.2d 939 (6th Cir.1972); In re Easy Living, 407 F.2d 142 (6th Cir.1969); Hertzberg v. Assocs. Discount Corp., 272 F.2d 6 (6th ... ...
-
Canter v. Canter
... ... Inc., was insolvent and apparently headed for bankruptcy. The Canters were also personally liable for ... See, inter alia, In re Richards, 455 F.2d 281 (6th Cir. 1972); In re Easy Living, Inc., 407 F.2d 142 (6th Cir. 1969). But see In re Dail, 257 F.Supp. 326 (E.D.N.C.1966), ... ...
-
Canter v. Canter
... ... June of 1970, the business of Morton and Sylvia Canter, ... Canterbury Fabrics, Inc., was insolvent and apparently headed ... for bankruptcy. The Canters were also personally liable ... See, inter alia, ... In re Richards, 455 F.2d 281 (6th Cir. 1972); In re Easy ... Living, Inc., 407 F.2d 142 (6th Cir. 1969). But see In re ... Dail, 257 F.Supp. 326 ... ...
-
Federal's Inc., Matter of
... ... In re Clemens, 472 F.2d 939 (6th Cir. 1972); In re Alikasovich, 275 F.2d 454 (6th Cir. 1960); In re Troy, 490 F.2d 1061 (6th Cir. 1974); In re Easy Living, Inc., 407 F.2d 142 (6th Cir. 1969) ... In Constance v. Harvey, supra, a trustee in New York was permitted under § 70c to ... ...