Townsend v. Ashepoo Fertilizer Co.

• Decision Date: 06 February 1914
• Docket Number: 1209.
• Citation: 212 F. 97
• Parties: TOWNSEND v. ASHEPOO FERTILIZER CO.
• Court: U.S. Court of Appeals — Fourth Circuit

212 F. 97

TOWNSEND v. ASHEPOO FERTILIZER CO.

No. 1209.

United States Court of Appeals, Fourth Circuit.

February 6, 1914

George B. Timmerman, of Lexington, S.C. (Thurmond, Timmerman &amp Callison, of Lexington, S.C., on the brief), for petitioners and cross-respondents.

Geo. F von Kolnitz, of Charleston, S.C., for respondent and cross-petitioner.

Before PRITCHARD and WOODS, Circuit Judges, and ROSE, District Judge.

WOODS Circuit Judge.

The petitions of the trustee of the bankrupt estate of W. P Roof, and of Ashepoo Fertilizer Company, claiming to be a lien creditor or owner of assets in the hands of the trustee involve important questions under the recording statutes of South Carolina.

On February 6, 1912, Ashepoo Fertilizer Company agreed to sell W. P. Roof 265 tons of fertilizers; the form of contract adopted being a written proposition to Roof setting forth prices and terms, duly accepted by him. The second paragraph of the contract contained this stipulation: 'All of the said goods sold to you on credit are to be held by you in trust for the payment of your obligations to Ashepoo Company, for the purchase price thereof, as per above sale, and when the same shall be fully paid then for your own benefit, with full power in you, however, to sell and dispose of the same, or any part thereof, for cash or on credit secured by good note and such other good securities as you require; provided that the proceeds of any such sale and sales, whether cash or credit, shall represent the goods sold and be held by you upon the same terms and for the same purposes as the goods are held and the cash for cash sales to be remitted, when the goods are sold to Ashepoo Fertilizer Company, to be applied to the payment of your obligation to them, whether they have matured or not, until they are paid in full.'

All fertilizers shipped to Roof in excess of the 265 tons were to be received by him on the same conditions. He was authorized to collect from his customers the debts contracted for fertilizers, and remit to the company for credit on the purchase price. On March 22, 1912, about six weeks after the execution of the contract, Roof was adjudged a bankrupt. In the meantime he had ordered out and received a number of shipments of fertilizer, all of which he had resold to his customers except a little over a car load which was in his hands when the petition in bankruptcy was filed. The sales to his customers had been charged to them on his books, but no notes or other singed obligations had been taken. Under these conditions the referee held that failure to record the agreement made the reservation of title or lien for the security of Ashepoo Fertilizer Company void under the recording laws of South Carolina, not only as to the fertilizers in the hands of Roof, but also as to the debts of Roof's customers for sales made by him. The District Judge, on review, approved the finding of the referee as to the unsold fertilizer, but held that the recording statutes of South Carolina had no application to mortgages or sales of choses in action, and adjudged the accounts to be the property of Ashepoo Fertilizer Company. Both the trustee and the fertilizer company by separate petitions ask a review of this finding.

It would be difficult to frame statutes more comprehensive than those of South Carolina as to the instruments required to be recorded. Section 3542 of the Civil Code provides:

'3542. All deeds of conveyance of lands, tenements or hereditaments, either in fee simple or for life; all deeds of trusts or instruments in writing, conveying either real or personal estate, and creating a trust or trusts in regard to such property, or charging or incumbering the same; all mortgages or instruments in writing in the nature of a mortgage of any property, real or personal, * * * shall be valid, so as to affect from the time of such delivery or execution the rights of subsequent creditors (whether lien creditors or simple contract creditors) or purchasers for valuable consideration without notice, only when recorded within ten days from the time of such delivery or execution in the office of the register of mesne conveyance or clerk of court. * * * '

To make the law still more comprehensive, section 3740 was enacted:

'3740. Every agreement between the vendor and vendee, bailor or bailee of personal property, whereby the vendor or bailor or bailor shall reserve to himself any interest in the same, shall be null and void as to subsequent creditors (whether lien creditors or simple contract creditors) or purchasers for valuable consideration without notice, unless the same be reduced to writing and recorded in the manner now provided by law for the recording of mortgages; but nothing herein contained shall apply to livery stable keepers, innkeepers, or any other persons letting or hiring property for temporary use or for agricultural purposes, or depositing such property for the purpose of repairs or work or labor done thereon, or as a pledge or collateral to a loan.'

The unrecorded agreement here was between a vendor and vendee whereby the Ashepoo Fertilizer Company, as vendor, reserved to itself an...