Scherl v. Flam — 129 A.D. 561

Majority

p. 561

Harry Scherl, Respondent, v. Herman L. Flam, Individually, and as a City Marshal of the City of New York, Appellant.

Second Department,

December 30, 1908.

Headnote

Conditional sale—Lien Law construed — sale of goods not in esse — contract fraudulent upon its face.

The Lien Law (§ 112 et seq.), providing that contracts for the conditional sale of goods “shall be void as against subsequent purchasers, pledgees or mortgagees, in good faith,” unless filed, contemplates the making and filing of an agreement for each sale, not an omnibus agreement in advance for all future sales. This, because the statute reduces the interest of a conditional vendor to a lien similar to that created by a chattel mortgage.

The rule that chattels not in esse cannot be subject to a lien as against purchasers and judgment creditors applies in the case of conditional sales.

Quasi'e, as to whether said statute applies to the judgment creditors of a conditional vendee.

A contract of conditional sale which states that whereas the first party is a baker without money to purchase flour and is anxious to have the second party assist him so that he may bake and make a living, the second party agrees to deliver flour from time to time as needed by the first party, the title to remain in the • vendor until the price be paid, and that should the baker “ desire” to use any of the flour in his business, he shall notify the vendor and shall immediately at his earliest convenience pay for the flour intended to be used, and thereupon the title thereto shall pass to the first party, is fraudulent upon its face.

Appeal by the defendant, Herman L. Flam, individually, etc., from a judgment of the Municipal Court of the city of New York in favor of the plaintiff.

The action was replevin of 15 barrels of flour.

The plaintiff, a wholesale flour merchant, entered into and filed a written agreement with a baker, Zweifach, by which the latter agreed to purchase flour for his bakery of no one but the plaintiff, and the former agreed to deliver him flour from time to time as it was needed to be made into bread ; but it was agreed that the title of the flour so delivered should remain in the plaintiff until the price therefor should be paid, and that as the said baker should “ desire ” from time to time to use any of it in his business he should notify the plaintiff thereof, “ and shall then immediately, at his earliest convenience, pay to the” plaintiff “for such flour by him

p. 562

intended to be used, and upon such .payment the title ” thereto shall pass to the said baker. This is preceded by a whereas as follows : “ Whereas the party of the first part, who is a baker and engaged in the bakery business * * * has no money with which to purchase any flour to be used in said bakery, and. is anxious to have the party of the second part to assist him so as to enable the party of the first part to bake and make a living ”.

The defendant is a city marshal who levied on the property in the said bakery under an execution on a judgment against the said baker.

Samuel W. Phillips, for the appellant.

David Hirschfield, for the respondent.

The Lien Law provides that contracts for the conditional sale of goods “ shall be void as against subsequent purchasers, pledgees or mortgagees in good faith ”, unless the same has been tiled (§ 112 et seq.). The statute contemplates the making and filing of an agreement for each sale, and not an omnibus agreement in advance for all future sales. This becomes the necessary construction of the statute in view of the fact that it in effect treats and reduces the interest of the vendor to a lien like that under a chattel mortgage, which needs to be foreclosed as under a chattel mortgage by a sale on retaking the property, and the rule of law is that chattels not in esse cannot be subjected to a lien as against purchasers and judgment creditors (Jones on Chat. Mor. [5th ed.] § 138).

But the statute does not apply in terms to judgment creditors, but only to “ subsequent purchasers, pledgees or mortgagees ”, although it is assumed by both sides that it does apply to judgment creditors. Even if it did, the plaintiff would have no case, for the agreement, preamble and all, shows the intention to be that the purchaser may use the flour to bake as he needs it from time to time on giving notice to the seller of his “ desire ” to use it, and paying for it “ immediately, at his earliest convenience ”. The preamble is in effect that the purchaser has no riioney to purchase flour to bake and therefore the seller is to help him to flour to bake. If he, too, was not to let him have any to bake until it was paid for in advance,

p. 563

he would certainly not be helping him to get it without money. A chattel mortgage like that would be fraudulent on its face, and the rule is the same in respect of a contract of conditional sale on the same principle (Jones on Chat. Mor. [5th ed.] § 401, et seq.). The cases are collected up to the present time by'tlie learned author. The judgment should be reversed.

Woodward, Jenks, Hooker and Bich, JJ., concurred.

Judgment and order of the Municipal Court reversed and new trial ordered, costs to abide the event. '