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IN RE MILLER
October 20, 1952
IN RE MILLER ET AL.
The opinion of the court was delivered by: Follmer, District Judge.
This matter is before the Court on a certificate for the review
of an order of the Referee in Bankruptcy refusing claimant's
petition for reclamation of a certain motor vehicle and directing
claimant to surrender possession to the Trustee in Bankruptcy of
the certificate of title to the same.
The facts are clearly set forth in the opinion of the Referee
"* * * On October 23, 1950 Sam Shoemaker, of
Ashland, Schuylkill County, Pennsylvania, sold a
model 1950 Chevrolet one and one-half ton truck with
refrigerator body to J.W. Miller, Jack W. Miller and
James A. Miller, trading as J.W. Miller and Sons, the
present bankrupt, under a Conditional Sales Agreement
for the price of $3,144.70. The purchaser made a down
payment of $1,050.70 at the time of the sale leaving
$2,094.00, which sum together with other charges
raised the full balance due under the agreement of
$2,539.92. This latter sum was made payable in 24
monthly installments of $105.83 each commencing
December 4, 1950. The Conditional Sales Agreement was
thereafter assigned by the seller to General Motors
Acceptance Corporation, hereinafter referred to as
G.M.A.C. The vehicle was titled in the partnership
name and a notation of an encumbrance in favor of
G.M.A.C. in the amount of $2,539.92 was endorsed on
the Certificate of Title. Thereafter, on September 4,
1951, the partnership and its individual partners
were adjudged bankrupt. At the time of bankruptcy the
subject vehicle was then in possession of the
bankrupt. G.M.A.C. did not file its contract or a
copy thereof in the Office of the Prothonotary in
Schuylkill County until September 25, 1951.
"On October 3, 1951, G.M.A.C. filed its petition to
reclaim possession of the vehicle upon the ground
that it holds a lien thereon, and setting forth the
Conditional Sales Contract and default in the payment
due September 8, 1951. The balance alleged to be due
under the contract at the time of bankruptcy was
$1,587.45 The Trustee is resisting on the ground that
the failure of G.M.A.C. to file its Conditional Sales
Contract prior to bankruptcy has rendered invalid its
claim to an encumbrance. * * *"
In rejecting claimant's petition, the Referee found that the
contract in question was in fact a conditional sale and not a
bailment lease, and then held:
"Our conclusion is that the mere notation of a lien
or encumbrance on the face of the certificate of
title to a motor vehicle is not of itself sufficient
to establish the existence or legal validity of such
alleged lien as against a third party, such as a
trustee in bankruptcy. Accordingly, we hold that the
G.M.A.C.*fn1 to file its Conditional Sales Contract
prior to bankruptcy is fatal to its position."
The parties have stipulated that the subject matter of this
action was puchased under the terms of a conditional sale; the
Referee has found that the transaction was in fact a conditional
sale, and I so find.
The question before us may, therefore be tersely stated as
Does the notation of a lien or encumbrance upon a certificate
of title to a motor vehicle constitute such notice as to
eliminate the necessity for recording a conditional sales
contract under which a motor vehicle is purchased?
The Pennsylvania Conditional Sales Act of May 12, 1925, P.L.
603, 69 P.S. § 401, provides as follows:
"Every provision in a conditional sale, reserving
property in the seller after possession of the goods
is delivered to the buyer, shall be valid as to all
persons, except as hereinafter otherwise provided."
This proviso refers to the succeeding paragraph of the Act, 69
P.S. § 402, which provides as follows:
"Every provision in a conditional sale reserving
property in the seller shall be void as to any
purchaser from or creditor of the buyer who, without
notice of such provision, purchases the goods or
acquires by attachment or levy a lien upon them
before the contract or a copy thereof shall be filed,
as hereinafter provided, unless such ...
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