In re Nader

TUTTLE, District Judge. One of the referees in bankruptcy has certified to this court for its opinion the question whether a certain written contract, under which a cash register was furnished by the claimant to the bankrupt before the filing of the voluntary petition in bankruptcy herein, which cash register came into the possession of the trustee, should be construed as evidencing a pure conditional sale, with absolute reservation of title until payment of the purchase price, or as an absolute sale with reservation of title merely as security for the payment of such .purchase price. As the contract was not filed for record in accordance with the statute governing the filing of chattel mortgages, such contract is void as to the creditors of the bankrupt, if it is to be construed as a contract of absolute sale with retention of title as such security only, or, in other words, as a chattel mortgage, but otherwise is valid. The contract involved was in words and figures as follows: “City, Detroit; County, Wayne; State, Mick. “Tbé National Cash Register Company, Dayton, Ohio: Date, Aug. 25, 1920. Please manufacture and ship, freight prepaid, to 1736 E. Forest St., Detroit, Wayne county, Mich., or to the nearest railroad station, Detroit, Mich., of your No. 730 registers, mahogany finish, denomination of keys — for use on — ■ counter, novelty business, for which undersigned agrees to pay you one hundred fifty dollars ($150.00), as follows: $15 cash, cash on arrival of register; $135 in 9 monthly payments of $15, and undersigned to give you his promissory [125] note for $135, payable in similar payments as collateral security for such payment. Five per cent, discount for cash settlement on arrival of register, but no discount allowed on credit for exchange registers, or on autographic registers. Upon refusal of undersigned to accept the register when tendered, or to make any cash payment, or to execute and deliver the note, or make any payment provided for therein, you, or any person authorized by you, if you so elect, may immediately repossess the register, and retain, as rental for use of said register, all payments theretofore made. Should the register get out of order from ordinary use within one year from shipment, you will, without charge, repair it, provided undersigned pays the transportation charges on it to and from the factory, or nearest agency able to make the repairs, or .traveling expenses of repairman. Undersigned to pay for any repairs made without your authorization, and to pay all taxes on the register, and, in event of default, to reimburse the company to full extent of taxes paid by it. “The register shall remain your property until the price is paid in full. “This contract covers all agreements between the parties and shall not be countermanded. “Sign here: [Signed] Aboud Nader. “Aboud Nader “Print purchaser's name plainly on this line/' On the delivery of said register by the claimant to the bankrupt, the latter executed and delivered to the former the note mentioned in said contract, which was in the following words and figures: “Promissory Note. “City, Detroit; County, Wayne; State, Mich. “Date, 9 — 28—1920. “For value received, I promise to pay to the order of the National Cash Register Co., Dayton, Ohio, XT. S. A'., one hundred thirty-five dollars (§335.00) at N. C. R. office, Detroit, in payments, payable as below: Collection No. Date Paid. .1 month alter date S15.G0 11 — 80.20 ..2 “ “ “ 15.00 12 — 6—20. “ “ 15.00 1 — 3—21.. “ “ 15.00 ^ “ “ 15.00 VI “ “ 15.00 Ci “ " 15.00 -5 “ “ 15.00 00 ‘‘ “ ¡5.00 S5 “It is agreed that default in the payment of any of the above payments shall, at the option of the holder hereof, render the unpaid balance of this note immediately due and payable. “This note represents monthly payments only — not price of register. “Register No. 1845482, style and finish 730 Mali, business novelty. “Notice to Agents: Write name of customer plainly on this line: Sign here: “Aboud Nader. [.Signed] Aboud N. Nader. “No. 1730 E. Forest Street, “City, Detroit, Mich.” Only the first three monthly installments called for in said note were paid by the bankrupt, who owed on said contract and note to the claimant a balance of $90 at the time of the adjudication in bankruptcy. [1] As this contract, whether operating as a purely conditional, or an absolute sale of property, was to be performed in Michigan, if its meaning and effect have been passed upon and determined by a de126 cisión of the highest court of that state, this court is, of course, bound by such decision. Bryant v. Swofford Bros. Dry Goods Co. 214 U. S. 279, 29 Sup. Ct. 614, 53 L. Ed. 997; In re Ducker, 134 Fed. 43, 67 C. C. A. 117 (C. C. A. 6); Union Trust Co. v. Bulkeley, 150 Fed. 510, 80 C. C. A. 328 (C. C. A. 6); Title Guaranty & Surety Co. v. Witmire, 195 Fed. 41, 115 C. C. A. 43 (C. C. A. 6); Potter Mfg. Co. v. Arthur, 220 Fed. 843, 136 C. C. A. 589, Ann. Cas. 1916A, 1268 (C. C. A. 6); In re Stoughton Wagon Co., 231 Fed. 676, 145 C. C. A. 562 (C. C. A. 6). [2] As, therefore, the identical contract involved in the present proceeding was involved in the case of National Cash Register Co. v. Paul, 213 Mich. 609, 182 N. W. 44, and there construed by the Michigan Supreme Court as one of absolute sale with reservation of title as security only, and therefore a chattel mortgage, and as in all substantial respects the facts in that case were the same as those presented herein, I cannot doubt that this court is bound to follow that decision [8] Nor would the binding effect upon this court of such a decision by a state court be affected by the fact, if, as is urged by claimant, it were a fact, that the latter decision might appear to this court to be inconsistent with prior decisions of such state court (Sioux Remedy Co. v. Cope, 235 U. S. 197, 35 Sup. Ct. 57, 59 L. Ed. 193; In re Floyd & Hayes [D. C.] 225 Fed. 262, affirmed in 232 Fed. 119, 146 C. C. A. 311 [C. C. A. 4]; Denver & Rio Grande R. R. Co. v. United States, 241 Fed. 614, 154 C. C. A. 372 [C. C. A. 8]), where, as here, there is an absence of any showing that the cause of action in question accrued in reliance upon prior decisions of the state court establishing a settled rule of property, which was abrogated by the later decision of that court to the extent of impairing a vested right (Douglass v. Pike County, 101 U. S. 677, 25 L. Ed. 968). The question, therefore, certified by the referee, is answered accordingly.