Opinion
No. 67.
November 29, 1944.
Appeal from the District Court of the United States for the District of Connecticut.
Proceeding in the matter of Curb Service Laundry Dry Cleaning, Inc., bankrupt, wherein Samuel G. Braun, Inc., filed a reclamation petition seeking return of goods sold and delivered to the bankrupt, which was opposed by Everett T. McKinney, trustee in bankruptcy of the estate of Curb Service Laundry Dry Cleaning, Inc. From a judgment of the District Court affirming an order of the referee denying its petition, petitioner appeals.
Reversed.
Section 4697 of the General Statutes of Connecticut, Revision of 1930, provides that "All contracts for the sale of personal property, conditioned that the title thereto shall remain in the vendor after delivery, shall be in writing, describing the property and all conditions of such sale, and shall be acknowledged before some competent authority and filed within a reasonable time in the town clerk's office in the town where the vendee resides."
On February 28, 1940, appellant, a New York corporation, delivered to Curb Service Laundry Dry Cleaning, Inc., then a newly-organized laundry company doing business in Manchester, Connecticut, 29 items of laundry machinery and equipment having an agreed sales price of $15,753.33. These items and their prices were correctly described in a conditional bill of sale which was properly executed and which was recorded on February 28, 1940, but which did not set forth the actual agreement between the parties as to terms of payment.
Curb was then a new enterprise, and its real needs as to machinery and equipment did not appear until after it had been operating for several months and its average volume of work became known. During the first seven months of its existence, therefore, negotiations with petitioner continued, as a result of which 5 of the original 29 items were returned to petitioner and 10 new items were delivered. These exchanges and additional deliveries were made during June, August and September, 1940, the final delivery being made on or about September 27, 1940.
On September 27, 1940, a new conditional bill of sale was executed between appellant and Curb which listed and correctly described all of the items delivered to bankrupt and retained by it up to and including that date, and the terms of payment. It was properly executed and acknowledged and was duly recorded on October 2, 1940, within five days of its execution on September 27, 1940. No payments were made by Curb to appellant for any of the items described in this agreement until it was executed, but payments were made by Curb strictly according to its terms for over two years after its execution.
The principal balance remaining unpaid under the agreement was $13,891.40 on June 21, 1943, when Curb filed its petition in bankruptcy and no part thereof has since been paid.
Appellant filed a reclamation petition in the bankruptcy proceeding asking the return of the goods. The District Court entered an order affirming an order by the Referee denying appellant's petition.
Herbert S. MacDonald, of New Haven, Conn., for appellant.
Raymond A. Johnson, of Hartford, Conn., for appellee.
Before SWAN, CLARK, and FRANK, Circuit Judges.
On the facts, Colonial Acceptance Corp. v. Messick, 120 Conn. 585, 182 A. 133, compels reversal, for we must follow the decision of the highest court of Connecticut, construing a statute of that state, as to the validity of conditional sales. In that case, it was held that the reasonable time for recording runs not from the delivery of the goods but from the making of the recorded contract "unless perhaps where the rights of third persons have intervened." Here there were no such intervening rights, for all the claims filed in the bankruptcy proceedings were incurred after the recording of the second bill of sale on September 27, 1940. There is a claim of the State of Connecticut for taxes for 1940, in the amount of $8.42, and one of the United States for taxes for 1940 in the amount of $50.06; but, even assuming arguendo that otherwise those claims would be pertinent, they did not accrue until the close of that year.
It was decided after, and supersedes, our decision in Air Equipment Corp. v. Rubbercraft Corp., 2 Cir., 79 F.2d 521.
We do not read Standard Acceptance Corporation v. Connor, 127 Conn. 199, 15 A.2d 314, 130 A.L.R. 720, as over-ruling or modifying the Messick case. The Connor case merely holds that, where a recording is defective in that the instrument as recorded incorrectly describes the conditions of the sale, the conditional seller cannot recover possession of the goods whether or not it is shown that any creditor relied upon the defectively recorded instrument; nothing was said by the court concerning the question considered in the Messick case and before us here. Nor is there anything in the Messick case indicating that it matters how long a time elapses between the delivery of the goods and the recording, provided the period between the making of the second contract and the recording is reasonable, as it was here.
Reversed.