Jewelers Investment Co., Inc. v. Elliott Addressing Machine Co., 95 Ga. App. 152, 97 S.E.2d 548 (1957)

Status: DECIDED

Docket Number: 36511

Parts: Action on contract. Before Judge Etheridge. Ful...

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Brown & Shoob, contra.Arnold S. Kaye, for plaintiff in error.

When property is conveyed by retention-of-title contract, such contract must be recorded within thirty days in order to prevail against one who acquires the property in good faith and for a valid consideration, such as by a loan against such property supported by a bill of sale to secure debt, duly recorded.

Elliott Addressing Machine Company sold an addressograph machine to Ross Jewelers, Inc., on a title-retention or conditional sale contract. The contract was not recorded. Later Elliott Addressing Machine Company filed a foreclosure to obtain the addressograph machine from Ross Jewelers, Inc. Jewelers Investment Company, Inc., intervened by filing a claim affidavit and a claim bond. After a hearing by a judge of the Civil Court of Fulton County, without a jury, a verdict and judgment was duly entered in favor of Elliott Addressing Machine Company. Jewelers Investment Company, Inc., filed a motion for new trial, which was denied. To this judgment the claimant excepted and assigns error hare on the general grounds only.

The evidence shows substantially that Elliott Addressing Machine Company sold an addressograph machine to the defendant on or about March 18, 1955, under a title-retention or conditional- sale contract; that the contract was not recorded; that the machine was not delivered until April 4, 1955; that, before the machine was delivered, Ross Jewelers, Inc., executed a bill of sale to secure debt to A. V. S., Inc., covering all assets of Ross Jewelers, Inc.; that the bill of sale to secure debt did not contain any reference to the addressograph but did provide that the bill of sale would cover after-acquired property; that the bill of sale to secure debt was recorded; that Ross Jewelers, Inc., defaulted and A. V. S., Inc., foreclosed on all assets, including the addressograph machine; that thereafter A. V. S., Inc., transferred all of its assets to Jewelers Investment Company, Inc. George C. McCaughan, an attorney of the Florida bar, who represented A. V. S., Inc., a witness on behalf of Jewelers Investment Company, Inc., testified regarding the original loan as well as subsequent loans. He was asked the question: "Did you take the trouble to check any of the records, court's records, at the time you took your collateral as security for your loan?" The answer was: "I certainly did. I reviewed every record possible available to me in Fulton County to see whether or not there were any retained title contracts, whether there were any pledges, whether there were anything that would detract from the value of the bill of sale to secure debt; and I did not find any recorded liens. I did not find any recorded retained title contracts. I did not find any judgments of record against Ross Jewelers, Inc."

J. The bill of sale to secure debt listed such items as "electric and mechanical appliances, . . . radios, clocks, luggage and other personal property, . . . together with all of the furniture, fixtures and equipment, show cases, air conditioning, signs, cash registers, chairs and other leasehold improvements and other fixed assets and leasehold improvements of every kind and character now located in and about said premises herein described and which may, at any time hereafter, be located in or about said premises." It is evident that cash registers would come under the same category as an addressograph machine and further, the bill of sale to secure debt particularly stated: "And other fixed assets and leasehold improvements of every kind and character now located in and about said premises herein described and which may, at any time hereafter, be located in or about said premises." Such specific declarations take the instant case out of the scope of Southern Cotton-Oil Co. v. Adams, 94 Ga. App. 368 (94 S. E. 2d 609). In a sale of per-

sonal property, if title is to remain in the vendor, the reservation of title must be in writing and must be recorded within thirty days from the date of its execution, in order to be valid against a third person. See Code 67-1401, 67-1402. See also Tremere v. Barfield, 12 Ga. App. 774 (78 S. E. 729). In the absence of such recording the vendor is not entitled to prevail against one who acquired the property in good faith and for a valuable consideration. See Mize v. Paschal, 206 Ga. 189 (2) (56 S. E. 2d 266) wherein the Supreme Court said: "Where personal property is sold and delivered with the condition affixed to the sale that the title is to remain in the vendor until payment of the purchase price, such reservation of title is invalid as to third parties, unless the contract embracing the same is reduced to writing, duly attested, and recorded as prescribed by law. Code 67-1401, 67-1402; Penland v. Cathey, 110 Ga. 431 (35 S. E. 659); Farmers Bank of Doerun v. Avery, 145 Ga. 449 (89 S. E. 409). The institution of a trover suit, within the statutory period of thirty days for the record of such instruments, by the original vendor against a third party who has acquired the property so conveyed from his vendee for a valuable consideration and without actual knowledge of the title reservation, does not dispense with the necessity of duly recording the contract; and it is a settled idle of law that, in the absence of such record, the plaintiff vendor is not entitled to prevail against one who acquired the property in good faith and for a valuable consideration." It follows that the holder of a bill of sale to secure debt, based on valuable consideration, should prevail over a holder of an unrecorded conditional-sale contract.

The court erred in its ruling in favor of Elliott Addressing Machine Company.

Judgment reversed. Townsend and Carlisle, JJ., concur.