In re Floyd-Scott Co.
| Decision Date | 08 June 1915 |
| Docket Number | 21221. |
| Parties | In re FLOYD-SCOTT CO. |
| Court | U.S. District Court — District of Massachusetts |
Charles W. Littlefield, of Providence, R.I., for alleged lienholder.
Clarence A. Barnes, of Boston, Mass., for trustee.
This case was recommitted to the referee, after my former opinion on motion of the trustee, upon the question whether the lien claimed by the petitioner is a voidable preference. The learned referee reports that it was, because, in his opinion record of the lease was required in order to give validity to the lien as against creditors, and at the time when such record was made, six days before the bankruptcy, the lessor had reasonable cause to believe that the lessee was insolvent and that the lien claimed would constitute a preference. The petitioner objects both to the findings of fact and to the rulings of law made by the referee.
I see no sufficient reason to doubt the correctness of the learned referee's findings of fact; and they are affirmed.
The lease was undoubtedly valid at the time when it was made. It was not recorded until more than two years later, and was recorded then with the land records, not with those relating to personal property. If the lien claimed does not depend for its validity upon the recording, it is obvious that section 60 of the Bankruptcy Act (Comp. St. 1913, Sec. 9644), on which the learned referee based his decision, does not apply.
As no possession was taken by the lessor, in my former opinion I stated broadly that the lien in the lease was unenforceable against attaching creditors (meaning those without knowledge of the provisions of the lease), or a trustee in bankruptcy while the lease was unrecorded. That statement was correct as to the law of Massachusetts ( , and probably so as to the general law. See Hervey v. R. I. locomotive Works, 93 U.S. 664, 23 L.Ed. 1003; Reynolds v. Ellis, 103 N.Y. 115, 8 N.E. 392, 57 Am.Rep. 701; Stockton Savings & Loan Soc. v. Purvis, 112 Cal. 236, 44 P. 561, 53 Am.St.Rep. 210. But it is contended by the petitioner that it is incorrect as to the law of Rhode Island; and, upon further examination, I think that the petitioner is right in its contention, and that my former statement is not correct as applied to the law of that state.
In Groton Mfg. Co. v. Gardiner, 11 R.I. 626, land and a building were demised by a five-year lease containing a lien clause substantially like the one in question. The lease was recorded with the land records, but not with those relating to personal property. The machinery and other property of the lessee on the leased premises was attached by a creditor, at a time when the rent was in arrears, but no possession had been taken by the lessor under the lien; and the attached property was sold by the sheriff. The lessor filed a bill in equity to assert its lien on the proceeds, and was held entitled to a decree on the ground that the lease gave to the lessor an equitable lien on the property in question which was good against an attaching creditor. The case is distinguishable from this only upon the point that the lease there was recorded with the land records, while here it was not recorded at all. It is difficult to see how such record could in any way affect rights in personal property; and it seems to have been regarded by the court as immaterial. At that time, as now, mortgages of personal property were by statute invalid in Rhode Island, except between the parties, unless recorded (General Statutes of Rhode Island 1872, c. 165, Sec. 9); and the requirements as to record of conveyances of real estate were, as to the question here presented, substantially the same as at present (Id. c. 162, Sec. 4). The court said:
'The instrument in the present case was recorded, but not with mortgages of personal property; and if it had been, it would have given it no additional validity. It is not a mortgage, nor does it purport to be a mortgage, even of the after-acquired property. There is no transfer of title or possession.
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In re Ford-Rennie Leather Co., 509.
...the amendment of 1910, section 47a (2), as under section 70 of the Bankruptcy Act, must be determined by the local law. In re Floyd-Scott Co. (D. C.) 224 F. 987; Hoyt v. Zibell, 259 F. 186, 170 C. C. A. 254; In re Bettman-Johnson Co., 250 F. 657, 163 C. C. A. 3; Bryant v. Swofford Bros., 21......
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