Grand Rapids Trust Co. v. American Wood Working Machinery Co.

DONAHUE, Circuit Judge (after stating the facts as above). It is insisted upon the part of the receiver that the contracts attached to claimant’s proof of claim are in legal effect chattel mortgages; that even if these contracts are conditional sale contracts, the claimant has elected to transfer title to the estate of defendant, retaining no title or security for its claim; and that the claim is not entitled to preference under any construction. In the opinion of this court it is wholly unnecessary to consider and determine whether these contracts are conditional sales contracts or chattel mortgages. If they are chattel mortgages, they are void as against creditors because not filed as required by the law of the state of Michigan (Compiled Statutes of Michigan 1915, § 11988). If they are conditional sales contracts, the claimant had the right to retake the property after default or to sue upon the contract for the unpaid purchase .price. In neither case is it entitled to a preferred lien on all the vendee’s property. If it exercised its right to retake the property, the vendee cannot be held personally liable for the balance of the unpaid purchase price. If it sues for the balance of the unpaid purchase price, it waives the reservation of title in the conditional sales contract and makes the sale absolute. Button v. Trader, 75 Mich. 295, 42 N. W. 834; Owen & Co. v. Keller, 206 Mich. 555, 173 N. W. 343; Young v. Phillips, 203 Mich. 566, 169 N. W. 822. This question has been fully, considered and determined by this court in Re Ames, 289 F. 208, in which it was held that á suit for the purchase price is inconsistent with the reservation of the title, and that the bringing of such suit, or at the latest the taking of judgment, will be a waiver of the title reservation and operate as a transfer of the title. In the instant case the claimant did not exercise its right to retake this property, but, on the contrary, asked that the balance of the purchase price be allowed by the receiver as a valid claim against the estate. If, under these contracts, it was the owner of the property, then it had no such claim against the receiver. If it was not the own [814] er, then the conditional sales' contracts were not security for the debt and would not entitle the claimant to a preference. The allowance of a preference would do even more than to give effect to these conditional sales contracts, if they are such, as chattel mortgages, and if chattel mortgages, they are void under the Michigan statute. It is insisted upon the part of claimant that it waived none of its rights under the pure conditional sales contract by filing its claim with the receiver, for the reason that it was invited by the receiver to present its claim on a form furnished by him; that the claim as presented fully advised receiver and the court that the claimant was the owner of .the machinery and that it attached copies of the contracts to the claim. It is further claimed that the action is in equity, and the court being fully advised in the premises should grant the claimant such equitable relief as would fully protect its rights under these contracts. In reply to this, it is sufficient to say that it was for the claimant and not the receiver to elect its remedy, and that a court of'equity cannot grant a preference where, under the admitted facts and the law, the claimant is not entitled thereto. For the reasons stated, the decree of the District Court is reversed, and the cause remanded for further proceedings in accordance with this opinion.