Potter Mfg. Co. v. Arthur

• Decision Date: 02 March 1915
• Docket Number: 2670.
• Citation: 220 F. 843
• Parties: POTTER MFG. CO. v. ARTHUR. In re FIDLER & BROCK.
• Court: U.S. Court of Appeals — Sixth Circuit

220 F. 843

POTTER MFG. CO. v. ARTHUR.

In re FIDLER & BROCK.

No. 2670.

United States Court of Appeals, Sixth Circuit.

March 2, 1915

P. V Connolly, of Cincinnati, Ohio, for appellant.

W. W Keifer, of Springfield, Ohio, for appellee.

Before KNAPPEN and DENISON, Circuit Judges, and SATER, District Judge.

DENISON Circuit Judge.

Fidler & Brock, bankrupts, resided in Springfield, Ohio, and as contractors were engaged in construction work at Troy, Ohio. In August, 1913, they went to Indianapolis, Ind., and arranged to purchase from the Potter Company a trench excavating machine. The written contract, signed by both parties, showed that the delivery was to be f.o.b Indianapolis, and that part of the price was to be paid in five installments each alternate month, as evidenced by five promissory notes, and provided 'that full title to said property shall remain in the said Potter Manufacturing Company until payment in full has been made,' and that upon default in payment, the vendor might retake the property. The machine was taken to Troy and there remained. Upon the adjudication in bankruptcy, part of the purchase price remained unpaid, and the Potter Company filed a petition asking that the trustee in bankruptcy be ordered to surrender the machine. From the order of the District Court, holding that the trustee's title was good as against the attempted reclamation, the Potter Company brings this appeal.

The Ohio statute (section 8565, Gen. Code) provides that the reservation of title in such a contract 'shall be void as to all subsequent purchasers and mortgagees in good faith and creditors, unless' the contract is recorded in the county of the vendee's residence. There is no statute in Indiana requiring such recording.

1. We think the law of Ohio, not of Indiana, controls as to the necessity for recording. Ordinarily, by reason of the completed delivery in Indiana, title would have passed in that state, and it might be argued that the effect of recording laws, as to contracts passing title in Indiana, would be determined by the rule of that state; but here title did not pass upon delivery, and part, at least, of the basis of this argument disappears. Aside from that consideration, we regard it as the established rule that where the parties to such a contract at the time contemplate that the property is to go at once, and before any use by the vendee, into another state, and there remain quasi permanently, the law of the situs thus given to the property will control the application of a recording statute. This machine was capable of being moved from place to place, and in the natural course of events might sometime or other be taken by the vendees into different states; but it is a stipulated fact that simultaneously with the completed delivery at Indianapolis, the vendor, by direction of the vendees, and acting for them, shipped the machine to the place in Ohio where it remained continuously until the bankruptcy. As against the necessary inference that a present and continuing location in Ohio was contemplated by both parties, there is nothing; and this inference must therefore be treated as a fact. This fact clearly makes a material difference between this case and one where the personal property to be sold was not intended to have more than a casual or temporary abiding place in any particular state.

That under such circumstances, the law of the state where the property is located in this quasi permanent manner furnishes the controlling rule upon the subject of recording, was held by this court, without extended discussion, in Title Guaranty Co. v. Witmire, 195 F. 41, 43, 115 C.C.A. 43; and if the question were open in this court, it would be ruled, and with the same result, by Hervey v. Locomotive Works, 93 U.S. 664, 671, 23 L.Ed. 1003. The contract there involved pertained to a locomotive, and it was made in Rhode Island, where the locomotive was then situated. It contemplated that the property should be taken to Illinois. This was done, and the Supreme Court held that the title reservation in the contract was invalid as against an Illinois levying creditor, and was so invalid for the reason that the Illinois law required recording. It is true that the location of the excavating machine in Ohio was somewhat less likely to be entirely permanent than was the location of the locomotive in Illinois; but this is a difference which we cannot think material. Indeed, appellant's counsel perhaps do not seriously question the applicability of the Ohio law to this case, except as they insist that the Hervey Case has been overruled by Bank v. Bank, 203 U.S. 296, 27 Sup.Ct. 79, 51 L.Ed. 192. We cannot so interpret the latter decision. The property there involved had been removed from one state to another before the suit was commenced, but the contest was between two mortgagees, and both mortgages had been given, and all the rights involved in the controversy had become fixed, while the property was in the former state.

It was clear that these rights must be determined by that law, as was held; and the applicability of the law of the second state was in no way considered.

It is said that in such a situation...