Opinion
No. 21757.
June 9, 1931.
Joseph G. Ehrlich, of Cleveland, Ohio, for Hobart Mfg. Co.
Bernard H. Schulist, of Cleveland, Ohio, for Francis J. Voltz.
Alfred I. Soltz, of Cleveland, Ohio, for the bankrupt.
In the matter of the bankruptcy of the Chinese Temple Restaurant Company, wherein the Hobart Manufacturing Company, claimant, filed a petition in reclamation seeking the recognition of a specific lien, and, an order of the referee having been entered denying the petition, the claimant filed a petition for review, which was granted.
Order of referee confirmed, and petition for review dismissed.
The certificate of review of the referee in bankruptcy follows:
To the Hon. Paul J. Jones, Samuel H. West, George P. Hahn, and John M. Killits, United States District Court Judges for the Northern District of Ohio:
I, Wm. B. Woods, the referee in bankruptcy in charge of this proceeding, do hereby certify:
That, in the course of such proceeding, an order, a copy of which is annexed to the petition hereinafter referred to, was made and entered on the 27th day of April, 1931.
That, on the 5th day of May, 1931, the Hobart Manufacturing Company, claimant in such proceeding, feeling aggrieved thereto, filed a petition for review, which was granted.
That the errors complained of by the petitioner are set forth in full in his petition.
A petition in reclamation was filed by the Hobart Manufacturing Company endeavoring to have a specific lien declared upon certain equipment covered by a conditional sales contract executed in favor of the Hobart Manufacturing Company by the Chinese Temple Restaurant Company.
The said conditional sales contract has an affidavit attached to it on a separate sheet of paper by means of two wire staples which could be bent back and the affidavit easily released from the contract. Both the contract and the affidavit bear the recorder's stamp of being filed on the 24th day of February, 1930.
The recorder's No. 2038387 is placed on the sheet bearing the affidavit, and is not on the sheet containing the conditional sales contract filed herein with the record of the evidence.
The question presented is whether the petitioner, by reason of such filing, has a valid and subsisting lien on the property described in the said conditional sales contract, and whether the petitioner has sufficiently complied with section 8568 of the General Code of Ohio. The referee denied the petition in reclamation on the ground that the petitioner failed to comply with the said section 8568 of the General Code of Ohio.
Said section of the General Code provides that such contracts "shall be void as to all subsequent purchasers * * * and creditors unless the conditions are evidenced by writing * * * and also a statement thereon, under oath, made by the person so selling * * * be deposited with the county recorder. * * *"
In Columbus Merchandise Co. v. Kline (D.C.) 248 F. 296, Judge Sater held that the requirement of the chattel mortgage statute requiring filing is not complied with by filing an affidavit which is attached to a contract with brass (McGill) fasteners; the court goes on to say that the Ohio statutes require strict compliance to prevent fraud and removal of papers from cover, and it was so held. The court also remarked that, if the paper containing the affidavit could be removed without mutilation of the original mortgage, there was a failure to comply with the statute.
In the case at bar, it would appear that the affidavit could be removed without such mutilation, and, as Judge Sater's ruling on this statute appears to be a binding precedent, the holding is that in the present case the petitioner has not complied with the statute, and the conditional sales contract is invalid as against the trustee in bankruptcy.
The blank on which is indorsed the sworn statement of the unpaid sum appears to be a different type of contract from that containing the conditions and executed by the parties. The sworn statement here is not on the instrument, and could be readily removed without mutilation. No reason appears why the statement or affidavit was not placed on the instrument, as required by section 8568, General Code of Ohio. There is nothing in the affidavit that identifies it with the contract executed, except that it is fastened thereto by wire staples and bears the same filing date of the recorder, although neither number nor hour of filing appears on the contract.
That other considerations in the facts were decisive in Columbus Merchandise Co. v. Kline (D.C.) 248 F. 296, does not alter the rule nor leave in doubt the exacting requirements of the Code. Every departure from clear and express provisions enacted for safeguarding against fraud weakens the force of the law and creates exceptions where none are provided or intended. Where the language of the statute is plain and unambiguous, there should be no need for straining interpretations.
Order of referee confirmed; petition to review dismissed.