United States Hoffman MacHinery Corp. v. Harris

The opinion o'f the Court was delivered by Mr. Justice Stabler. The facts in this case are few and in the main undisputed. On January 6, 1928, one D. W. Eawton, a citizen of Spartanburg, ordered from the plaintiff, whose place of business was in New York City, two Hoffman pressing machines, and on the same date executed, as evidencing the unpaid part of the purchase price, a series of purchase-money notes, and a title retaining contract covering the machines. The contract provided that it should not be binding upon the company until accepted by it at its office in New York City; and, although the machines were shipped some time during the month of January, written acceptance by the company was not entered on the contract, until March 8th, and the contract itself was not recorded in the office of the register of mesne conveyances for Spartanburg County until March 13. 1928. Some timfe prior to February 9, 1928, the ma *447 chines were received by Lawton and installed in a building rented by him from the defendant, Harris. Thereafter— just when, it does not appear—a partnership was formed between Lawton and A. M. Faucett. The terms of the partnership are not stated in the record, and they may have included only the operation of the plant, as there is nothing to indicate that Lawton conveyed to Faucett any interest in the two pressing machines. The business was operated under the name of the Hub City Cleaning & Pressing Club. On August 9, 1928, the pressing club vacated the building occupied by it, three months’ rent, amounting to $225.00, being unpaid. Thereupon, the defendant took possession of the machines under his claim for rent. On January 12, 1929, the plaintiff brought this action in claim and delivery on his title retaining contract (chattel mortgage), for the possession of the machines or their value, $625.00; and under the requisition issued, the sheriff took possession of them and delivered them to the plaintiff, the defendant having refused to give them up. On trial of the case, the plaintiff made a motion for a directed verdict upon the ground that the machines were sold to Lawton and not to the partnership, the chattel mortgage having been given by him, while the defendant was holding the property for a rent claim against the partnership and not against Lawton, and upon the further ground that the mortgage was placed on the property before the rent contract was entered into and before the property was put in the rented building. The defendant asked for a directed verdict on the ground that the machines were moved into the rented building prior to February 9, 1928, before the contract of sale was completed by its acceptance by the company on March 8, 1928, and upon the further ground that the title retaining contract was not recorded until March 13, 1928, more than a month after the machines had been moved into the building, and that the defendant had no no *448 tice of any kind of the existence of such paper or its contents until after its recordation. The Court granted the defendant’s motion and directed a verdict for him for $225.00, with interest from August 9, 1928, and ordered that upon payment of that amount to him, with the costs of the action, the property in dispute be released and all interest of the defendant satisfied. We think the trial Judge was unquestionably correct. Under the testimony, the question was narrowed down to one of notice of the title retaining contract held by the plaintiff. As already pointed out, the evidence was undisputed that the property was moved into the building of the defendant, the landlord, prior to February 9, 1928, the contract for rent having been made with Lawton before that time; that the chattel mortgage held by the plaintiff, referred to as the title retaining contract, was not recorded until more than a month after the property had been moved into the building, and that, therefore, the defendant had no constructive notice of the existence of such paper or of its contents until the date of its recordation; and there is nothing to show that he had any actual notice. It is also conceded that the machines were taken possession of by the defendant, after the building was vacated by the pressing club, and held by him for the unpaid rent; and he was deprived of such possession only by a process issuing out of the Court. The fact that Lawton formed a partnership with Faucett, after he had rented the building and purchased the machines and installed them therein, could not, as held by the Circuit Judge, affect the defendant’s claim against the machines for rent. Under this state of facts, the Circuit Judge could have reached no other conclusion than that announced by him. See Sections 5283, 5284, 5286 and 5519 of Vol. 3 of the Code of 1922; Fidelity Trust & Mortgage Company v. Davis, 158 S. C., 400, 155 S. E., 622, 626, and cases cited therein. *449 In the Fidelity Trust & Mortgage Company case, the Court, speaking through Mr. Justice Blease, now Chief Justice, said: “We think the landlord is a subsequent creditor within the meaning of this Section [5519], and, as between him and a third party claiming under an unrecorded agreement with the tenant, such unrecorded agreement is void.” To hold otherwise would open the door to fraud and collusion. And there can be no difference in this respect between an “unrecorded” agreement and one not recorded till after the landlord’s rights and status have been fixed. For the reasons stated by the Court, in his order, which will be reported, the plaintiff’s motion for a new trial was also properly overruled. The judgment of the Circuit Court is affirmed. Mr. Justice Carter and Mr. Acting Associate Justice W. C. Cothran concur. Mr. Chief Justice Brease and Mr. Justice Bonham dissent.