Opinion
35157.
DECIDED OCTOBER 14, 1954.
Complaint. Before Judge Vaughn. DeKalb Superior Court. December 28, 1953.
Haas, Holland Blackshear, Joseph F. Haas, for plaintiff in error.
Troutman, Sams, Schroder Lockerman, D. W. Rolader, Henry B. Smith, M. L. Kahn, W. Harvey Armistead, A. A. Baumstark, John W. Wilcox, Jr., Assistant Attorney-General, contra.
The court erred in relegating a seller of personal property, under a title-retention contract which was not recorded, to the rank and priority of a general creditor without lien with respect to such vendor's participation in funds arising from the sale of the property described in the title-retention contract.
DECIDED OCTOBER 14, 1954.
A receivership proceeding was brought against Phillip Rosenberg in DeKalb Superior Court. Refrigeration-Appliances, Inc., intervened to claim $1,864.60 as the balance due upon a title-retention contract covering certain property sold to Rosenberg. Refrigeration-Appliances' claim of first priority to funds arising from the sale of the property described in its title-retention contract was denied, and Refrigeration-Appliances was ordered to be paid out of the fund as an unsecured creditor. The exception here is to this judgment.
State of Georgia v. Atlanta Provision Co., ante, p. 147 (82 S.E.2d 145) is another case arising from this proceeding. It was there held that the court erred in relegating the State to the position of a general creditor in enforcing its lien for sales and use taxes against the debtor, and also that the lien attached when the taxes became due.
The conditional-sale contract recited that it had been executed in Fulton County on May 6, 1952, and further stated: "To Refrigeration Appliances, Inc. [address] I, or we, residing at Fulton, Atlanta, Georgia, purchased from you the following described chattel: [Reference to an attached sheet was made for a description.] For which I or we agree to pay you or your assigns $2884.82 [on specified terms]. . . Title and ownership to said chattel and any and all replacements thereof and additions thereto shall remain in you and your assigns irrespective of any retaking and redelivery thereof to me or us until said indebtedness shall have been fully paid, in money, at which time ownership shall pass to me or us. Said chattel shall be installed in the following premises: Mr. Phil Rosenberg, d/b/a Phil's Super Market, 484 W. Mitchell St., Atlanta, Georgia. But shall not become a part of the realty."
It does not appear that the title-retention contract was ever recorded. "The registration and record of conditional bills of sale shall be governed in all respects by the laws relating to the registration of mortgages on personal property, except that they must be filed for record within thirty days from their date." Code § 67-1403, as amended (Ga. L. 1952, p. 88). "The effect of failure to record a mortgage shall be the same as is the effect of failure to record a deed of bargain and sale." § 67-109.
In construing these sections, it was held in Evans Motors of Georgia v. Hearn, 53 Ga. App. 703 ( 186 S.E. 751): "The act of August 27, 1931 (Ga. L. 1931, p. 153; Code of 1933, §§ 67-109, 67-1305), providing that the effect of a failure to record a mortgage or bill of sale or deed to secure debt `shall be the same as is the effect of failure to record a deed of bargain and sale,' so changes the prior law with reference to those securities as to render such instruments, even though unrecorded, superior in rank to subsequent liens created by law. However, the act does not expressly or impliedly change the prior law with regard to contracts of conditional sale. The Code of 1933, §§ 67-1401 to 67-1403, inclusive, contains, without any substantial change, the provisions of the Code of 1910, §§ 3318 and 3319, and earlier Codes, relative to such contracts. Therefore the settled rule of priority in favor of a holder of a lien created by law, which prevailed under prior statutes, will still control in a contest between such a lienholder and a vendor in an unrecorded contract of conditional sale." This ruling has been followed in Allen v. Dickey, 54 Ga. App. 451 ( 188 S.E. 273), in Rhodes v. Jones, 55 Ga. App. 803 ( 191 S.E. 503), and in Buchanan v. Georgia Acceptance Co., 61 Ga. App. 476 ( 6 S.E.2d 162). The legislature amended Code § 67-1403 in 1952 (Ga. L. 1952, p. 88), so as to require that conditional bills of sale be "filed for record" instead of "recorded" within thirty days from their date, but the section has not been changed otherwise, and this is at least tacit approval of this court's construction of the act of 1931 and its effect. We refuse to overrule the Evans Motors case. The unrecorded reservation of title in Refrigeration-Appliances does not have priority over the lien of the State for sales and use taxes. See State v. Atlanta Provision Co., supra, Carroll v. Richards, 50 Ga. App. 272 ( 178 S.E. 178).
It does not appear, nor is it contended, that Rosenberg's other creditors had obtained judgments against him, or that they were misled to extend him credit by Refrigeration-Appliances' failure to record its conditional-sale contract. Such a contract, unrecorded, will be postponed to liens obtained or bona fide purchases made after its execution, but not to creditors without a lien. Rhode Island Locomotive Works v. Empire Lumber Co., 91 Ga. 639 ( 17 S.E. 1012); Cottrell v. Merchants Mechanics Bank, 89 Ga. 508 ( 15 S.E. 944). See also Wood v. Evans, 98 Ga. 454 ( 25 S.E. 559).
The court erred in relegating Refrigeration-Appliances to the rank of a general creditor with respect to the funds arising from the sale of the property described in its unrecorded contract of conditional sale. This creditor was entitled to priority except over the lien of the State for sales and use taxes.
Judgment reversed. Felton, C. J., and Quillian, J., concur.