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In re Brownsville Brewing Co.

January 29, 1941


Appeal from the District Court of the United States for the Western District of Pennsylvania; Frederic P. Schoonmaker, Judge.

Author: Clark

Before BIGGS, MARIS and CLARK, Circuit Judges.

CLARK, Circuit Judge.

Appellant here is contending for a liberal construction of one of the Pennsylvania Recording Acts. The argument is, we think, inappropriate. That type of statute is for protection, not for punishment. Its interpretation should be strong to help its beneficiaries and not, as in the criminal law, tempered with mercy toward those it strikes down. This is particularly so in a State whose "abhorrence of the secret lien" did not even admit of the palliative of recording.*fn1

The particular Recording Act is that applicable to the conditional sale of chattels attached to the realty.*fn2 In its original form it was an enactment of the Uniform Conditional Sales Act which is in turn "patterned after statutes existing in Massachusetts, New York, Oregon, and Pennsylvania". Conditional Sales - Legislation in the State of Washington - Recent Legislation, Particularly Where Personalty Is Attached To Buildings On Realty, 13 Washington Law Review and State Bar Journal 46, 53 (comment). The learned author, Ayer, of the last cited comment poses the problem thus:

"The law is replete, however, with cases where a party in possession using the property creates a more or less deceptive appearance as to the ownership of the property so far as third parties are concerned. As between the vendor and a third party who has been misled, the law has taken into consideration not merely the objective incidents such as use and possession, but in addition the balance of social, particularly business, convenience to vendors and third parties generally. Sometimes the third party is protected; sometimes the vendor. In the case of the conditional sale, the vendor was with few exceptions protected at common law, the rationalizations of estoppel, apparent ownership, and constructive fraud being urged in vain. With the intention of protecting both the vendor and the third party so far as possible, resort was made to recording and filing acts for the purpose of giving knowledge to third parties. These acts qualified the rights of the vendor unless so recorded or filed. While such acts have been adopted in most of the states, there is still some question as to the policy of requiring filing or recording due to the fact that they place a restraint upon merchandising because of the consequent reflection on the credit of the vendee and the additional costs involved, and possibly the further fact that the reliance by third parties is largely fictional rather than real. Accordingly a number of the states still protect the vendor without the necessity of recording or filing." 13 Washington Law Review and State Bar Journal 46-47 (Comment) (italics ours), and his question is answered by the Uniform Law Commissioners who say in their note to Section 5:*fn3

"To prevent injury to innocent persons who may rely on the buyer's apparent ownership, it seems desirable to insert this filing requirement in the Uniform Act. The burden on the seller is slight, and the benefit to the public is great." 2 Uniform Laws Annotated (1922), Conditional Sales Act, p. 7.

In describing the application of this general policy to our particular field, i.e. the conditional sale of fixtures, Professor Bogert, the draftsman of the Act, lays down the principle which we think should control the decisions of the courts. In his Commentaries, he says:*fn4 "The theory of the Act is that a conditional seller of a fixture should be given protection and allowed to retain title as security for the payment of the price of the fixture, but that in order to retain such title he should be required to give notice adapted as nearly as possible to reaching dealers in real property. The conditional seller of the fixture should not get protection by filing the contract with ordinary conditional sale contracts and making a record similar to that made in the case of chattel mortgages. It is unreasonable to ask purchasers and mortgagees of realty to search in the personal property records regarding every article connected with a building which might have been sold separately." 2A Uniform Laws Annotated, Bogert's Commentaries on Conditional Sales ยง 65, p. 98,

Does the brief description of the case at bar satisfy the principle? We think not at all. The property sold on condition is bottling equipment and the real estate to which it is attached is functionally a brewery. There are three references to the real estate, each one a little more detailed than the last. The first is the statement accompanying the filed contract and describes the property as " * * * Street, City of Brownsville, State of Pennsylvania." In the body of the contract this is expanded to "At Street Water Street, City Brownsville, Pa." and finally in the refiling of July 24, 1936, "Water and Bolivar Streets, South Brownsville, City of Brownsville, State of Pennsylvania". The trouble with these latter two amplifications lies in the fact that the bottling equipment is in the ice plant and the ice plant is located neither on Water Street nor on Water and Bolivar Streets but on a parcel of land bounded on the east by Fayette Street, on the south by Edel Alley, on the west by Bolivar Street, and on the north by an unnamed alley. This property was not owned by the Brewing Company and therefore the inaccurate description could not have been augmented and corrected by a glance at the land records. Nowhere is there any reference to the standard and now ancient method for the identification of urban real estate.*fn5

As we are concerned with a general standard, on the one hand, and particular circumstances, on the other, we cannot turn our present facts into a permanent rule. We cannot say, then, that a street or street numbers are a sine qua non. We do say, however, that to omit both places a burden on "dealers in real estate" inconsistent with the purpose of the statute. Professor Bogert in his phrase "as nearly as possible" acknowledges the practical limitations in the policy. For the same reason, the cases construing the description of personal property recognize the difficulties there. They accordingly lay down a rule that calls for inquiry if the description suggests it and upholds the description if it would naturally lead to identification of the property, Tokheim Oil Tank & Pump Co. v. Fentress, 4 Cir., 33 F.2d 730, 65 A.L.R. 714. These very cases, however, also recognize the obvious differences in the two classes of property. As one court puts it: "Land can be so described as to enable a surveyor to locate it merely by following the metes and bounds set out in the mortgage*fn6 * * * . There are some forms of personal property which it is possible to describe by marks, numbers, or other terms. But this is not always practicable." A. S. Thomas Furniture Co. v. T. & C. Furniture Co., 120 Ga. 879, 48 S.E. 333.

In summation, it is not only possible, but nearly always extremely easy to identify urban real estate by street and number. Here, for instance, the seller just carelessly left a blank with instructions (not complied with) to have it filled in. We see no cause, therefore, why the "dealer in real estate" (here the appellee) should be forced to make any inquiry no matter how simple of success. We agree with the learned Court for the Sixth Circuit when it said: "The property here involved is described in the contract as an automatic sprinkler system, called 'Equipment,' situated in the knitting mill of the bankrupt at 827-828-829 South Spring Street, Shelbyville, Tenn. This definitely locates it and we think that no other sprinkler system could be mistaken for it. See Stoll v. Schneider, 158 Tenn. 341, 344, 13 S.W.2d 325." In re Robinson-McGill Mfg. Co., 70 F.2d 100, 101

The Pennsylvania Courts and our own District Court decisions exhibit a similar tendency.*fn7 We may say that insistence on a strict, definite, and detailed requirement has this desirable effect. Conditional vendors and their advisers know what they must do, can easily do it, and when they have done it are not subject to the conceptions of any particular court.

As the description in the statement of the refiling is the more detailed, appellant stresses it also. There would seem to be three answers to this contention. First, although fuller, the description is still wrong. One correct street is added to other incorrect ones. Second, the three years elapsed since the original sale cannot be considered a reasonable time. Pennsylvania seems to incline toward the authorities*fn8 adhering to such a requirement - one, incidentally, more in keeping with the purpose of the recording provisions. Speaking for the Supreme Court, Mr. Justice Simpson said:

"The Act of May 14, 1925, P.L. 722, says that the contract or a verified statement thereof, 'shall be filed.' A fair conclusion from this is that, unless otherwise provided, and so far as concerns the present controversy it is not, such filing must be within a reasonable time from the sale and delivery of the chattel, and a failure so to do by the conditional vendor, whose duty it is to file it and who seeks the ...

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