Grand Rapids Showcase Co. v. Trustee of Loeb's, Inc.

HOLMES, District Judge. On March 12, 1920, the bankrupt purchased from the Grand Rapids Showcase Company six plate glass showcases for $896.40. No payment was ever made, and the original purchase price is still due. At the time of the sale Loeb’s, Incorporated, executed a conditional sales contract, by virtue of which title was retained in the vendor until the full purchase price should be paid. This contract was dated March 12, 1920, and by its terms the said company, of Grand Rapids, Mich., was directed to ship by freight to Loeb’s, Incorporated, at Clarksdale, Miss., as soon as possible, (he six show cases now in controversy. The contract provided that delivery of the [270] showcases was to be f. o. 5. railroad cars, Grand Rapids, Mich., and they were so delivered about 60 days after the date thereof. • The contract retaining title was not recorded in the office of the chancery clerk of Coahoma county, at Clarksdale, Miss., where the said Loeh’s, Incorporated, was doing business as a trader, until the 23d. day of May, 1921, and 46 days thereafter the said Loeb’s, Incorporated,, was duly adjudicated a bankrupt. At the time of the contract of purchase, and continuously thereafter until the date of adjudication, the-bankrupt was doing business in Clarksdale as a trader under the sign,. “Loeb’s, Incorporated,” and there was no sign of any kind to indicate that the said showcase company was interested in these showcases,, which were acquired and used in the mercantile business, aforesaid. The petitioner, the Grand Rapids Showcase Company, filed a petition with the referee, setting forth the facts, alleging that it had title-to these showcases, and praying that an order be entered awarding-them to it. The referee denied the petition, in so far as it claimed title, hut allowed petitioner to prove its claim as a general creditor. The matter is before me on petition to review the decision of the referee. [1] The showcase company claims title by reason of having reserved the same in its contract of sale, but under section 4784 of the-Code of 1906, commonly known as the Mississippi sign statute, these showcases, which were used and acquired in the bankrupt’s business-as a trader, were, as to creditors, liable for the debts of the bankrupt, and must “be in all respects treated in favor of his creditors as his property.” The section in full is as follows: “4784. (4234) Business Sign, and What to Contain. — If a person shall transact business as a trader or otherwise with’the addition of the words ‘agent,” ‘factor’ ‘and company,’ or ‘& Co.,’ or like words, and fail to disclose the name-of his principal or partner by a sign in letters easy to be read, placed conspicuously at the house where such business is transacted, or if any person shall transact business in his own name without any such addition, all the-property, stock, money, and choses in action used or acquired in such business shall, as to the creditors of any such person, be liable for his debts, and" -be in all respects treated in favor of his creditors as his property.” This section has been construed ánd applied by the Supreme Court' of Mississippi in several decisions. While it cuts off all secret liens upon and claims of ownership to such property, it does not forbid the trader to incumber the same by an instrument duly recorded. Dodds v. Pratt, 64 Miss. 123, 8 South. 167. It prevents the seller of personal property, who has retained title to secure the purchase money, from asserting any claim where the contract, was not recorded. Paine v. Hall Safe & Lock Co., 64 Miss. 175, 1 South. 56. But it has no application against the original seller of such property, who, to secure the-purchase money, reserves title by an instrument signed by the purchaser and duly recorded. Tufts v. Stone, 70 Miss. 54, 11 South. 792. In Fitz Gerald v. American Mfg. Co., 114 Miss. 580, 75 South. 440, the plaintiff was claiming a soda fountain, and fixtures appertaining-thereto, under a recorded contract retaining title, and also a ceiling-fan under a different instrument which was not recorded. The court held that the statute applied to'the claim for the ceiling fan but not to* [271] the claim for the soda fountain and fixtures. The report of the above case of Dodds v. Pratt in 64 Miss. 123, 8 South. 167, does not state that the deed of trust was recorded, yet such was the fact, as is infer-able from other cases decided by the court shortly thereafter, in which Dodds v. Pratt is cited, notably Tufts v. Stone, 70 Miss. 54, 11 South. 792. But in order to remove all doubt in my mind I have had the original court record examined and have ascertained that the deed of trust was recorded in the office of the chancery clerk of Madison county. [2] The contract here between the bankrupt and the petitioner was not recorded until within less than four months of the adjudication in bankruptcy, and consequently, up to the time of such recording, the showcases under the sign statute must in all respects be treated as the property of the bankrupt. The recordation, within four months of the adjudication, in bankruptcy, of this instrument which had been given by the bankrupt, while insolvent, under the circumstances and at the time here shown, was a voidable preference under sections 60 (a) and (b) of the Bankruptcy Act (Comp. St. § 9644). The case of Bailey v. Baker Ice Machine Co., 239 U. S. 268, 36 Sup. Ct. 50, 60 L. Ed. 275, is not an authority to the contrary, because here under the sign statute the showcases are treated as the property of the bankrupt until the contract was recorded, whereas in that case the ice machine was held to be not the property of the bankrupt, but of the vendor, even prior to the date when the contract of sale was put on record. The decision of the referee, denying the petitioner’s claim of title to the showcases, but allowing petitioner to prove its debt and participate as a general creditor, is affirmed. Final Decree. This day this matter coming on to be heard before the court on the petition of the Grand Rapids Showcase Company to review an order of W. E. Stone, -referee in bankruptcy, entered on the 31st day of January, 1922, denying the relief prayed for by the Grand Rapids Showcase Company with reference to six showcases, and the court, having fully considered the same, is of the opinion that the decree of the said referee is correct and should be affirmed. Wherefore it is ordered, adjudged, and decreed' that the said order of the said W. E. Stone, referee in bankruptcy, dated January 31, 1922, be, and the same hereby is, sustained and affirmed. It is further ordered that the petition of the said Grand Rapids Showcase Company be denied, and that they participate in the assets of the said bankrupt as a common creditor.