IN RE FARMERS' CO-OP. ASS'N OF MARION COUNTY, FLA.
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A vendor's lien clause in a bulk sale agreement for merchandise and fixtures is void under Florida law because it constitutes an unrecorded mortgage on personal property that was delivered to the buyer, depriving the seller of priority in bankruptcy.
A vendor's lien purporting to secure deferred payments on a bulk sale of merchandise and fixtures is void as an unrecorded mortgage under Florida law when possession is delivered to the buyer and the instrument is not timely recorded.
[1] Under Florida law, a clause purporting to reserve a vendor's lien on personal property sold in bulk constitutes a mortgage that is void against creditors unless the instr…
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Join FLexlaw to unlock all legal intelligence“A vendor's lien is reserved and retained by the Carn-Thomas Company upon the entire lot of fixtures sold hereunder until the purchase price is fully paid.”
The provision in the sales instrument upon which the creditor based its priority claim.
On November 8, 1920, Carn-Thomas Company sold merchandise, store fixtures, and a store lease to the bankrupt for $7,489.86, with $2,000 cash and quart…
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This cause comes on for a hearing upon the petition of Carn-Thomas Company, to review the order of referee, entered September 23, 1924, denying the petition of the creditor to allow the sum of $670 of their claim as a priority.
[1] The facts disclosed in the record sent up for review, may be stated as follows: On November 8, 1920, the creditor sold to the bankrupt the stock of merchandise, store fixtures, and lease on the store building for a consideration of $7,489.86; $2,000 cash, and the balance deferred payments. The deferred payments to be made at the rate of $300 quarterly, with 8 per cent, interest. In the instrument executed by the parties, this provision was contained, as follows: “A vendor’s lien is reserved and retained by the Carn-Thomas Company upon the entire lot of fixtures sold hereunder until the purchase price is fully paid.”
It is under this clause that the creditor bases its claims for priority. Under the statutes of the state of Florida ■ (section 3836 of the Revised General Statutes) any instrument givén to secure the payment of a debt is a mortgage and every such on. personal property is void as against subsequent creditors unless duly recorded, or the mortgagee is given possession of the personal property covered thereby. In the instant ease it is apparent that possession of all the property was delivered to the bankrupt upon the execution of the instrument on November 8, 1920, and continued so in its possession and control until an attempted assignment was made. No attempt was made to record the instrument by which a lien was attempted to be placed upon the store fixtures in order to secure the deferred .payments, until June of 1924, and then without any acknowledgment entitling the instrument to record. All the debts of the bankrupt, except the debt to this creditor, were incurred subsequent to this sale on November 8, 1920.
[2] The instrument says “vendor’s lien,” but this cannot be a vendor’s lien because a vendor’s lien can only arise as security for the payment of the purchase price of the particular article on which it is claimed. In the instant ease the price was for the stock of merchandise, store fixtures, and the lease of the store building; in fact, a bulk sale of the entire properties for a stated sum. There could be no vendor’s lien on any particular article therein included, and the attempt is made to retain a lien on the store fixtures until the entire debt is paid. It is clearly an instrument intended to secure the payment of a debt, and under the Florida statutes it will be held a mortgage, and same not having been duly recorded prior to the four-months period, is void.
The petition to review the ruling of the referee will therefore be denied.