be read in connection with the provision of subdivision e that "all conveyances, transfers, or incumbrances of his property made by a debtor at any time within four months prior to the filing of the petition against him, and while insolvent, which are held null and void as against the creditors of such debtor by the laws of the State, Territory, or District in which such property is situate, shall be deemed null and void under this act against the creditors of such debtor if he be adjudged a bankrupt, and such property shall pass to the assignee and be by him reclaimed and recovered for the benefit of the creditors of the bankrupt." The reference in subdivision a is clearly to the State law. Claims which are not yet liens, properly so called, under the State law, as, for want of record or "for other reasons," cannot be recognized in bankruptcy. It is the statute or judicially established rule of the State which must control in every case.15 The State law of

the State where the property is located governs.16 Subdivision a is the corollary of the proposition that the property of the bankrupt comes to the trustee charged with all valid liens. It is merely declaratory of the law.17

4. Unfiled chattel mortgages and contracts of conditional sale. Whether a contract is one of conditional sale or is a chattel mortgage, and, as between the parties thereto, whether it is valid, and what the effect of the failure to file or record it may be, are questions to be determined exclusively by the local law.18

15. Humphrey v. Tatman, 198 U. S. 91, 14 Am. B. R. 74; In re First Nat. Bank of Canton (C. C. A.), 14 Am. B. R. 180, 135 Fed. 62; Thompson v. Fairbanks, 196 U. S. 516, 13 Am. B. R. 437; Dodge v. Norlin, 13 Am. B. R. 177.

16. In re Green, 13 Am, B. R. 504, 134 Fed. 137, a mortgage made and executed in New York, where both parties resided, upon property, then and at the time of the mortgagor's adjudication as a bankrupt, contained in a hotel in Connecticut, if

recorded in compliance with the statutes of the latter State is valid as against the bankrupt's trustee, though not recorded or filed in New York. See also 64 L. R. A. 353, 361, note.

17. Collier, Bankr., 6th ed., p. 553. 18. In re Newton & Co. (C. C. A.), 18 Am. B. R. 567, 153 Fed. 841; York Mfg. Co. v. Cassell, 201 U. S. 344, 15 Am. B. R. 633; Humphrey v. Tatman, supra; Thompson v. Fairbanks, supra.

A chattel mortgage is void, as

The trustee is not a "party" to a mortgage given by the bankrupt within the meaning of the recording acts.19 Where chattel mortgages are withheld from record contrary to the provisions of a statute for the purpose of enabling the mortgagor to preserve his credit, such mortgages are not entitled to priority of payment in bankruptcy over claims arising subsequent to the execution of the mortgages and before they were recorded.20 In some jurisdictions and under some statutes it must affirmatively appear in order to invalidate the mortgage that it was withheld from record. by agreement, or that some prejudice resulted to creditors on account of its not having been filed for record.21 The object of the recording acts is to prevent the obtaining of credit by reason. of the ostensible ownership of property which in reality is covered by a secret lien by giving notice to those intending to purchase such property and to creditors who give credit on the faith thereof.22 The law of New York is that an unfiled chattel mortgage is absolutely void as to all creditors of the mortgagor then existing, or who may exist while such mortgage remains unfiled, but those creditors only who obtain a lien on the property by re

against the mortgagor's trustee in bankruptcy, where it was not recorded and the property was not retained by the mortgagee in conforming to the express provisions of Rev. Laws, c. 198, sec. 1. Goodrich v. Dore (Mass.), 80 N. E. 480.

An unfiled chattel mortgage is void as to creditors, even if the mortgagee is in possession of the property, when proceedings in bankruptcy have been commenced prior to a sale of the property to satisfy such mortgage. Cornelius v. Bolling, 18 Okla. 469, 90 Pac. 874.

19. In re Shaw, 17 Am. B. R. 196,

146 Fed. 273, unrecorded chattel mortgage held void as against the trustee.

20. Clayton v. Exchange Bank of Macon, 10 Am. B. R. 173, 121 Fed.

630; Guras v. Porter, 9 Am. B. R. 271, 118 Fed. 668; In re Andrae Co., 9 Am. B. R. 135, 117 Fed. 561.

21. Deland v. Miller & Cheney Bank, 11 Am. B. R. 744, 119 Iowa, 368; In re Williams, 9 Am. B. R. 731, 120 Fed. 542.

66

22. In re Cannon, 10 Am. B. R. 64. 121 Fed. 582: Bayley v. Greenleaf, 7 Wheat. (U. S.) 46, 5 L. Ed. 393. there is not perhaps a State in the Union, the laws of which do not make all conveyances not recorded and all secret trusts void as to creditors, as well as subsequent purchasers without notice. To support the secret lien of a vendor against a creditor who is a mortgagee would be to counteract the spirit of these laws."

ducing their debts to judgment and issuing execution are in a position to assert and enforce such invalidity, but a general creditor upon obtaining judgment and issuing execution may impeach the validity of the mortgage for non-filing, although in the meantime it may have been filed.23 The Court of Appeals of New York has recently held that an unfiled chattel mortgage is void as against creditors whose claims accrued prior to such filing and, although creditors cannot, under the general rule, attack it until after the recovery of a judgment and issue of an execution, this rule is simply one of procedure and does not affect the right; and, therefore, where the recovery of a judgment is impracticable it is not an indispensable requisite to enforcing the rights of the creditor; hence, a trustee in bankruptcy may, for the benefit of creditors, attack such mortgage, though if a creditor seek that relief in his own name it would be necessary that his claim be first put in judgment.24 And, since the Supreme Court of the United States has held that, in determining the validity of a chattel mortgage, it will accept as decisive the settled law of the State in which the mortgage was given, as established by the decisions of its highest courts,25 this ruling of the Court of Appeals of New York would seem conclusive upon this question, notwithstanding the decisions of the lower federal courts at variance therewith.26

23. In re Beede, 14 Am. B. R. 697, 138 Fed. 441; In re Beede, 11 Am. B. R. 387, 120 Fed. 853, in which cases Judge RAY considered at length and in full all the New York authorities applicable to the validity of unfiled chattel mortgages.

24. Skilton v. Coddington, 185 N. Y. 80, 15 Am. B. R. 810, disapprov ing In re Economical Printing Co., 6 Am. B. R. 615, 110 Fed. 514. See also Matter of Metropolitan Stove, etc., Co., 15 Am. B. R. 119; Gove v. Morton Trust Co., 12 Am. B. R. 297, 96 App. Div. (N. Y.) 177; In re Ducker (C. C. A.), 13 Am. B. R. 760, 133 Fed. 771; Matter of Thompson, 10 Am. B. R. 242, 122 Fed. 174.

25. Humphrey v. Tatman, 198 U. S. 91, 14 Am. B. R. 74; Thompson v. Fairbanks, 196 U. S. 516, 13 Am. B. R. 437. See also In re Antigo Screen Door Co., 10 Am. B. R. 359.

26. In re Economical Printing Co. (C. C. A.), 6 Am. B. R. 615, 110 Fed. 514, 49 C. C. A. 133; In re Burnham, 15 Am. B. R. 548, 140 Fed. 926, in New York a trustee in bankruptcy cannot take advantage of the omission to strictly conform to provisions of the statute in regard to filing renewals of a chattel mortrage within thirty days preceding the expiration of each year after the original filing.

In Massachusetts a chattel mortgage made prior to the four months period and recorded within that period is good as against the mortgagor's trustee in bankruptcy,27 and the rule seems to be the same in Ohio.28 Where under a State law, a conditional sale of chattels with reservation of title, until paid for, is good between the parties, although not filed, such contract is not void as to creditors who have not acquired a specific lien, and under such a statute the trustee of the bankrupt vendee has not acquired such a lien by the adjudication of the vendee, and he may not avoid the contract.29 A failure to record a real property mortgage until after the adjudication of the bankrupt mortgagor and the appointment of his trustee has been held, under the Pennsylvania rule, to deprive the mortgagor of his lien as against the trustee.30 In Tennessee, an unrecorded mortgage given in good faith to secure a valid debt is good between the parties, and where it is given by the bankrupt anterior to the four months period, payment thereof does not constitute a preference.31 The cases are numerous which involve the question of the validity of unfiled or unrecorded chattel mortgages or conditional sales as against general or judgment creditors of the bankrupt. The determination of the question must necessarily depend upon the statutes and decisions of the several States.32 A number of these cases are cited in the note below.33

27. Humphrey v. Tatman, supra. 28. In re First Nat. Bank of Canton (C. C. A.), 14 Am. B. R. 180, 135 Fed. 62.

29. York Mfg. Co. v. Cassell, 15 Am. B. R. 632, 201 U. S. 342. Compare In re Press Post Printing Co., 13 Am. B. R. 797; In re Dunn Hardware & Furniture Co., 13 Am. B. R. 147, 132 Fed. 719, in which cases the statute under consideration was similar to that under consideration in the above case and a different rule was applied.

30. In re Lukens, 14 Am. B. R. 683 133 Fed. 188.

31. Rogers v. Page, 15 Am. B. R. 502, 140 Fed. 596, 72 C. C. A. 164.

32. In re Beede, 11 Am. B. R. 387, 126 Fed. 853; In re Antigo Screen Door Co., 10 Am. B. R. 359, 123 Fed. 249; In re Andrae Co., 9 Am. B. R. 135, 117 Fed. 561.

33. Epstein & Co. V. Wilson (Tex.), 17 Am. B. R. 583; In ro Armstrong (Iowa), 16 Am. B. R. 583; In re Hill (Cal.), 15 Am. B. R. 499; Farmers Bank v. Carr (S. C.), 11 Am. B. R. 733; In re Gosch (Ga.), 12 Am. B. R. 149, 126 Fed. 627, rev'g 9 Am. B. R. 610; In re Rabenau (Mo.), 9 Am. B. R. 180;

§ 5. Subrogation of trustee to rights of creditors; subs. b.— Subdivision b of section 60 of the bankruptcy law is doubtless declaratory of the law.34 The doctrine that the trustce only can sue has been considered elsewhere.35 Cases involving the subrogation of the trustee to the rights of creditors are cited in the notes below.36 The majority of cases under the law of 1867 held that, since the bankruptcy arrests proceedings in the State courts, the assignee (trustee), as the representative of the whole body of creditors, could bring any of that class of equitable actions where the existence of a judgment and execution returned unsatisfied are necessary elements; i. e., that he was in effect, if not in name, a judgment creditor.37 This has been thought still the rule,38 especially in view of the words, "may enforce such rights of such creditor for the benefit of the estate." The phrasing of section 70e, limiting actions to avoid transfers to such suits as a creditor could have brought, has, however, again opened the question. Thus, it has been held that only a judgment cred

In re Josephson (Ga.), 8 Am. B. R. 423, 116 Fed. 404; Duplan Silk Co. v. Spencer (Pa.), 8 Am. B. R. 367; In re Hill (Vt.), 8 Am. B. R. 302, 115 Fed. 858; In re Pekin Plow Co. (Neb.), 7 Am. B. R. 369, 112 Fed. 308; In re Wilkes (Ark.), 7 Am. B. R. 574, 112 Fed. 975; In re Sewell (Ky.), 7 Am. B. R. 133, 111 Fed. 791; In re N. Y. Economical Printing Co., 6 Am. B. R. 615, 110 Fed. 514; In re Tatem (N. C.), 6 Am. B. R. 426, 110 Fed. 519; In re Booth (Or.). 3 Am. B. R. 574, 98 Fed. 975; In re Harrison (N. Y.). 2 N. B. N. Rep. 541: In re Wright (Ga.), 2 Am. B. R. 364. 96 Fed. 187: In re Yukon Woolen Co. (Conn.), 2 Am. B. R. 805, 96 Fed. 326.

34. Compare In re Yukon Woolen Co., 2 Am. B. R. 805, 96 Fed. 326. 35. See Suits by trustees, chap. XXIV, sec. 32. infra.

36. In re Beede, 14 Am. B. R. 697.

138 Fed. 441; Receivers of Virginia Iron, etc., Co. v. Staake (C. C. A.), 13 Am. B. R. 281, 133 Fed. 717; Patten v. Carley, 8 Am. B. R. 482; Barnes Mfg. Co. v. Norden, 7 Am. B. R. 553; In re Howland, 6 Am. B. R. 495, 109 Fed. 869; In re Boston, 3 Am. B. R. 388; In re Kenney, 3 Am. B. R. 353, 97 Fed. 554. As to the subrogation of the trustee to rights of attaching creditors, see In re Morrow, 12 Am. B. R. 615; In re Sentenne & Green Co., 9 Am. B. R. 648.

37. In re Metzger, Fed. Cas. No. 9.510; In re Duncan, Fed. Cas. No. 4.131; Beecher v. Clark, Fed. Cas. No. 1.223; Barker v. Barker's Assigns, Fed. Cas. No. 986. Compare Platt v. Stewart. Fed. Cas. No. 11,220, as rev'd as Stewart v. Platt, 101 U. S. 731.

38. Compare In re McNamara, 2 N. B. N. Rep. 341; In re Harrison, 2 N. B. N. Rep. 541.