In re Michigan Furniture Co.

LEARNED HAND, District Judge. The New York chattel mortT gage statute (Dien Daw, § 230) does not apply to choses in action, nor does the statute regulating charges other than mortgages (Personal Property Daw, § 36). Each is confined to “goods and chattels.” In general, the doctrine of reputed ownership, which in England extends to traders’ debts (21 Jac. 1, c. 19; Ryall v. Rowles, 1 Ves. Sr. 348), does not in the United States include any kind of choses in action (Greey v. Dockendorff, 231 U. S. 513, 34 Sup. Ct. 166, 58 L. Ed. 339; Clark v. Iselin, 21 Wall. 360, 369, 22 L. Ed. 568; Sexton v. Kessler, 225 U. S. 90, 32 Sup. Ct. 657, 56 L. Ed. 995; Stackhouse v. Holden, 66 App. Div. 423, 73 N. Y. Supp._ 203). The appellant (petitioner to review) does not question this general doctrine, but relies upon the fact that the bankrupts had the right to-use the proceeds in their own business. This, indeed, avoids a mortgage or charge on chattels in New York. Griswold v. Sheldon, 4 N. Y. 581, Edgell v. Hart, 9 N. Y. 213, 59 Am. Dec. 532. There are many subsequent cases, among the last of which are Skilton v. Codington, 185 N. Y. 80, 90, 77 N. E. 790, 113 Am. St. Rep. 885, and Zartman v. First National Bank, 189 N. Y. 267, 82 N. E. 127, 12 L. R. A. (N. S.) 1083. Indeed, the filing of the chattel mortgage will not prevail to save the lien, in the face of the mortgagor’s right of disposal. Potts v. Hart, 99 N. Y. 168, 1 N. E. 605; Southard v. Benner, 72 N. Y. 424. 980 I have found no New York case in which the question here at issue arises, except Stackhouse v. Holden, supra, which was by a. divided court; but upon principle there can be no doubt that there should be-no distinction between the reputed ownership arising only from possession and that arising from the right to dispose of the property charged. The origin of the doctrine rested upon the putative credit which the possessor was enabled to enjoy by the display of the goods. Lord Hardwicke, in Ryall v. Rowles, supra, extended this to traders’ debts; but it has gone no further in England, even under the Bankruptcy Act (46-47 Vict. c. 52, ,§ 44), and it is at least questionable whether, in the absence of some specific deception, traders’ debts are a source of putative credit. However that may be, the rule based upon the possessor’s power of disposal in New York arose as an application of the doctrine of reputed ownership of a stock of goods, and should be as much so confined as that doctrine in its other applications. How far it accords with present commercial habits I have, of course, nothing to say. ‘ ' Petition denied; order affirmed.