Phillips v. J. F. Johnson Lumber Co.

Bruñe, C. J., delivered the opinion of the Court. The J. F. Johnson Lumber Company (Johnson), the appellee, sued the appellants, trading as Phillips Machinery and Tractor Company (Phillips) for the conversion of a Terratrac Bulldozer loader, Model 30, upon which Johnson claimed to hold a chattel mortgage, duly recorded. The case was tried before the Circuit Court for Anne Arundel County, without a jury, and resulted in a verdict and judgment for Johnson for $1,200, the agreed value of the bulldozer at the time of the alleged conversion, plus interest and costs. Phillips appealed.

The question presented is a narrow one—the sufficiency of the description of the bulldozer in the chattel mortgage—and it is not free of difficulty. There is no dispute as to the facts, many of which were stipulated. In brief they are as follows: On August 3, 1955, Joseph E. Glover and wife executed a chattel mortgage to Johnson to secure an indebtedness in excess of $31,000, of which more than $21,000 remained unpaid at the time of the alleged conversion. The mortgage purported to cover sev ⁵³³ eral motor trucks and passenger motor vehicles as well as sundry equipment of various kinds, including drills, a sanding machine, various saws, an electric generator, an electric motor, a water pump, four wheelbarrows, two concrete mixers, several other items and the bone of contention in this suit, described in the mortgage as “1—Terratrac Bulldozer loader —Mod. 30”.

The motor vehicles (both the trucks and passenger cars) were described by make, type, year and serial number (and one truck apparently by motor number as well). The remaining items, with perhaps one exception, were not described by serial numbers, though some of them probably had such numbers. We are not, however, concerned with them. On May 21, 1956, Phillips sold to Joseph E. Glover an International Crawler Tractor under a conditional contract of sale and accepted as part payment thereon a Terratrac Bulldozer loader, Model 30.

This was the only piece of equipment of its kind owned by Mr. Glover at that time and, according to the testimony of one of his employees, the only one which he had owned since August, 1955. The appellants asked him if it was free of encumbrances, and upon receiving an affirmative answer made no further investigation before accepting it in trade. The loader has since been resold by Phillips. It is conceded that Phillips made no examination of the chattel records for the purpose of determining whether there was a lien upon the Terratrac Loader, and there is no question that the loader covered, or purportedly covered, by the mortgage is the same loader which was taken in trade by Phillips.

By stipulation of the parties the sole question to be decided in this case is the sufficiency of the description of the bulldozer loader contained in the recorded chattel mortgage to establish a lien in favor of the mortgagee, valid as against the claim of a subsequent bona fide purchaser. Under Code (1957), Article 21, Section 46 (Section 54 in the 1951 Code) a mortgage of personal property shall be executed, acknowledged and recorded in the same manner as a bill of sale; and under Section 42 of Article 21 of the 1957 Code (Section 50 in the 1951 Code), “[a]ny bill of sale of ⁵³⁴ personal property shall be sufficient in form if it contains the names of the parties, the consideration, a description of the property conveyed, and be signed and sealed by the vendor, and dated.” The vital words, so far as this case is concerned, are “a description of the property conveyed”. . Sections 42 and 46 of Article 21 of the 1957 Code and Section 5 thereof (as well as Sections 68, 77, 78 and 80) have as their source Chapter 154 of the Acts of 1856. They are unchanged in substance (insofar as they are pertinent to this case) from the corresponding provisions of the Code of 1860, which were derived from the statute just cited; and these Sections of the present Article 21 are identical in terms with the corresponding Sections of the 1951 Code, which were in force when the transactions here involved took place.

Chapter 154 of the Acts of 1856 revised the laws with regard to conveyancing and dealt, inter alia, with deeds conveying real property, bills of sale of personal property and chattel mortgages. That statute set out various forms of conveyances, including general forms of a deed of real estate (§ 26), of a bill of sale (§ 124), and of a chattel mortgage (§ 137) and by companion sections (§§ 27, 125, 139, respectively) declared instruments executed in accordance with these statutory forms to be sufficient. That Act also contained a specific Section (§ 24) setting forth the requirements of a valid deed conveying real estate, one of which was that it should contain “a description with reasonable certainty of the property therein conveyed.” This was changed in form rather than substance in the Code of 1860, Article 24, Section 9, to “a description of the real estate sufficient to identify the same with reasonable certainty.” This language continues in Section 5 of Article 21 of the 1957 Code. Chapter 154 of the Acts of 1856 contained no counterpart of § 24, supra, as to deeds setting forth the requirements of a valid bill of sale or of a valid chattel mortgage.

However, the draftsmen of the Code of 1860, (which was enacted by Chapter 1 of the Acts of 1860 “in lieu of and as a substitute for all the Public General Laws and the Public Local Laws, heretofore passed by the Legislature of Maryland”), supplied such a counterpart through Section 41 of Article 24 ⁵³⁵ as to bills of sale and through Section 47 as to chattel mortgages. Section 41 put together the several elements contained in the form of a bill of sale given in § 124 of Chapter 154 of the Acts of 1856 and the validating provision contained in § 125 of that statute. These provisions of §§ 124 and 125 corresponded closely to those of § 137 and § 139, supra. Section 47, instead of making a similar combination of §§ 137 and 139, simply provided that chattel mortgages should be executed, acknowledged and recorded as bills of sale.

The provisions of these Sections have been carried forward without change in text in subsequent Codes. 1 Notwithstanding the historical difference in origin and the difference in text between Sections 5 and 42 of Article 21 of the Code (1957), the description required by the latter Section has been construed as substantially the equivalent of that required by the former. Thus, in State, Use of Horsey v. Maryland Casualty Co., 164 Md. 69 , 163 A. 856 , this Court said ( 164 Md., at 76 ) : “[U]nless there is a description sufficient to identify the subject-matter intended to be granted with reasonable certainty, according to the nature of the subject, the bill of sale is defective, and title does not pass.” That case involved a bill of sale which was held to be an equitable mortgage, and the description therein contained was held to be insufficient. In support of the rule quoted, Judge Parke, writing for the Court, cited Code [1924], Article 21, Sections 45, 44 (Sections 42, 41 of the 1957 Edition) and Fersner v. Bradley, 87 Md. 488, 492, 493 , 40 A. 58 , involving a bill of sale. He also referred to Berry v. Derwart, 55 Md. 66, 72 , and Schaidt v. Blaul, 66 Md. 141, 144 , 6 A. 669 , both of which involved title to real estate.

The fatal defect in the deed in the Berry case was in the description of the property, which did not specify which side of a street certain lots lay on, and which did not purport to convey either ⁵³⁶ all of the grantor’s realty or all of his lots located on the particular street. In the Schaidt case, a defect which was pointed out was the omission of the name of the grantee, but the case did not turn on it. It was, however, the occasion for a dictum ( 66 Md. at 144 ) to the effect that the policy of the Registration Acts required that “every circumstance should appear on the face of the registry, which is necessary to the devolution of the title to real estate.” In the Fersner case this Court held that a description of some property in a bill of sale simply as a half interest in eight horses located in a particular county, without any statement as to who owned the other half interest or any description of the horses by color, name or distinctive marks, was insufficient. It was also held that the description of an interest in sundry vehicles set forth in the same instrument as “one-half interest in five single buggies, one-half interest in six double rigs * * *” was insufficient to pass title as against a judgment creditor of the vendor.

As to the vehicles it was said that “[I]f they could not be designated by the name of the manufacturer or particular style of vehicle, it could at least have been stated where they then were, who owned the other half, or some description given that would enable persons who might be interested to form some idea as to what particular vehicles were intended to be included.” 87 Md. at 493 . In the Horsey case it was held that the description of certain chattels in the bill of sale was so defective as to prevent title to the subject matter from passing even as between the immediate parties thereto. Included with many smaller items described as “25 fenders; 7 wheels, 2 Truck Wheels;” etc., were listed “3 Tractors; * * * 1 Oakland Touring car; 1 Ford Touring car; 1 Ford Coupe.” Phillips’ contention is in essence that, in order to be valid as against third parties having only constructive notice, the description of mass-produced machinery or equipment in a chattel mortgage must contain the serial number (or its equivalent), if there is one. Phillips relies upon the Fersner case, particularly the statements therein relating to the buggies, but naturally relies more strongly upon the following ⁵³⁷ passage from the Horsey case, which immediately follows the description of the property there involved which is set forth above and which precedes the statement of the rule which we have already quoted from that case. “While some of the smaller articles are not susceptible of any more accurate description than the place where they were located and in whose possession they were and would remain, the more important goods and chattels can be described with certainty.

Although there are numerous cash registers of the same make, and many automobiles and tractors of the same manufacture and design as those named in the bill of sale, yet every one may be positively identified by its motor or serial number, yet none is given. No attempt is made to describe anything distinctly; * * Other language in the opinion, however, indicates that several factors contributed to the court’s conclusion. It was pointed out that the instrument contained no covenant or warranty of title nor was any mention made as to the premises, town, county or state where the articles were located. It is also worthy of note that the vendor operated a garage and dealt in automobiles, automotive parts, and their accessories, and at least a portion of the items purported to be included under the bill of sale were subsequently disposed of in the ordinary course of business.

It is also apparent that not even the make of the tractors was stated, nor was there any description of them by model or type. In In re Oliver C. Putney Granite Corp., 14 F. Supp. 31 (D. C., Md.), a bankruptcy case, Judge Chesnut had occasion to consider the validity under Maryland law as a chattel mortgage of