The opinion of the court was delivered by: FOLLMER
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 as follows:
' * * * 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 failure of G.M.A.C.
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 purchased 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 follows:
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 ...