The opinion of the court was delivered by: DICKINSON
This began as a reclamation proceeding. The petitioner asked to have awarded to it a sedan automobile which it claimed to be its property and hence no part of the bankruptcy assets. The referee dismissed its petition. What we have before us is a review of this order of dismissal. The cause has been presented to us as raising the question of whether a writing is on its face a bailment or whether it is a contract of sale. The question really before us is the one of whether a claimant to property has proven title thereto. There are two possible fact situations. The owner of property may grant to another the use of it for a limited time without in fact or form parting with the ownership title. This is a "bailment," He may, on the other hand, sell the property to another parting with the possession but retaining the title as security for the purchase price. This is called a "conditional sale." It is a parting with possession under an agreement to sell when the purchase price is paid or what is really a sale on credit. Whether the transaction in question is one or the other is a question of fact. If it is a real bailment, he may, when he has the right to its return, reclaim his property wherever found as the doctrine of market overt is no part of the law of Pennsylvania. If it is not a bailment but a sale upon payment of the purchase price, he may enforce his agreement against his vendee, but under the Statute of Elizabeth the agreement is a legal fraud upon the creditors of the vendee against whom it cannot be enforced. We are disregarding the effect of the conditional sale and other like acts. The question of whether the transaction is one or the other turns upon what it really is, not upon what the vendor or vendee or both of them may say it is. There is no added efficacy given to their say-so by expressing it in a writing. Assume a sale to have been made on credit and the vendor and vendee for the purpose of giving the vendor security for the payment of the purchase price to agree to call it a bailment and to put their agreement in the written form of an undoubted bailment; this surely would not change the fact. This is what these so-called bailment leases are. We repeat what has been already said, these agreements are enforceable by one party against the other but against creditors they are nullities.
There is much confusion of thought in the profession on the subject of these "bailment leases." As already said, if the transaction was a sale, its character is not changed by calling it a bailment. This must be clear to any one. Notwithstanding this, the question is always presented, as it is to us, as if it were: "Is this writing an agreement of sale or a bailment"? What is the nature of the writing is only of secondary importance when it is of any. Putting these abstractions in the concrete will show this. The trustee has possession of the property in question as part of the bankruptcy assets. Possession, of personal property, is evidence of title.The trustee has thus at least prima facie title. The petitioner claims the property to belong to it and seeks to reclaim it. Surely the referee would not be justified in ordering rhe trustee to deliver up the property to the claimant without proof of its title. The burden of showing title is in consequence on the claimant. It offered no evidence whatever. All it did was to offer a paper signed by the claimant and the bankrupt which sets forth (we will assume) that the property belongs to the claimant. This declaration, although in writing and signed, is no evidence of title. All it proves it that the claimant and the bankrupt have said that ownership is in the claimant. Change the agreement to a letter or other statement of fact and this becomes clear. As against the bankrupt his acknowledgment would be evidentiary, but as against any one else it is mere hearsay. Even if evidentiary it would by no means be conclusive or even convincing. We have said the writing is in any event of only secondary importance. We have said that the possession of the trustee is prima facie evidence of title. It is necessary for the claimant to overcome this. This he may be able to do by showing that the possession of the trustee was derived from the bankrupt, and that the claimant gave him possession under a bailment of which the writing is evidence. Here is where the character of the writing becomes of value. If when properly construed it is found not to be a bailment but a conditional sale, the proof of title fails although up to that time the title was clearly in the claimant. This is the reason that stress is laid upon the writing. If it is not a bailment, but a conveyance of sale title, the claim fails. It does not follow by any means, however, that if the paper is in form an undoubted bailment that the claimant has made good his title. He has offered evidence which, if credited, may produce the conviction of truth, but evidence is in itself not proof. The question is the truth. It usually becomes did the claimant in truth sell the property to the bankrupt retaining the title as security for the payment of the price? If he did, a formal agreement of bailment will not save him. As evidence, the writing itself, although its legal meaning may be a bailment, may be persuasive otherwise because of fact expressions in it. Most bailment leases are so. This is no exception to the rule.
Without taking the time and space to analyze it fully, there is provision in it for the retaking possession of the property. Then follows this very suggestive and significant provision that the bailor may "resell" the property. Why "resell" if he had not before sold? This is more than a "Chops and Tomato Sauce" question. What is of importance is that the claimant has no right to a reclamation order without a finding of his ownership of the property.
The learned referee, who is also a fact finder of long and wide experience, has found the fact against the claimant. This ends all question, but if more is required we add our judgment of agreement with the referee. There is no evidence in the cause which convinces us of the title of the claimant to this property. Far from it.
There is nothing in the ruling made by the referee inconsistent with the numerous cases to which we have been referred in the very able brief submitted by counsel for the claimant. General Motors v. Hartman, 114 Pa. Super. 544, 174 A. 795, may be taken as typical. The Pennsylvania Superior Court ruled that the agreement before the court was an agreement of bailment, not a sale. This might well be true of any agreement. The court further found as a fact that the transaction then under review was in truth a bailment. This might likewise be true of any transaction. It may, however, be likewise true of another transaction that it was in fact a sale not a bailment.
We do not see that the Act of May 25, 1933, P.L. 1059 (75 PS Pa. § 38), has any application.
As the learned referee has well observed, it is high time that the question raised should be deemed settled. It, however, seems to be one of those questions which will not "down."
The petition for review is denied, and the order of the referee approved, affirmed, and confirmed.
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