ARTICLE
SECURED TRANSACTION HISTORY:
PROTECTING HOLMES' NOTES THROUGH
THE CONDITIONAL SALES ACTS
GEORGE LEE FLINT, JR. *
I.
II.
III.
IV.
Prelude..............................................318
Introduction..........................................321
The Gilmorian M odel..................................328
328
A. Theoretical Underpinnings...........................
B. Illegitimate Functions...............................331
335
C. Coming of Age As a Financing Device .................
D. Redundant Conditional Sales Acts.....................
339
The Pre-Act American Decisions .........................
340
A . The Parties.......................................342
346
B. The Collateral.....................................
351
C. TypeofAction ....................................
D. Bailment-Lease Opinions............................358
E. Origin of the Conditional Sale ........................
360
The Conditional Sales Acts..............................361
A. The First Wave New England Statutes .................
362
B. The First Wave: Upper Mississippi Valley Statutes ........ 365
H. Andy Professor of Commercial Law, St. Mary's University School of Law, San Antonio, Texas;
B.A., 1966, B.S., 1966, M.A., 1968, University of Texas at Austin; Nuc. E. 1969, Massachusetts
Institute of Technology; Ph.D. (Physics), 1973,J.D. 1975, University of Texas at Austin.
317
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[Vol. 44:317
C. The Second Wave Statutes........................
D. The Third and Fourth Wave Statutes ..................
E. Legislative H istory .................................
1. M aine ........................................
...............................
2. Vermont ...
3. Iowa
.....................................
4. Minnesota .
................................
5. Wisconsin ...
..............................
6. Nebraska...
...............................
7. Missouri
..................................
V. Judicial and Historical Explanations for the Passage of the
........................
Conditional Sales Acts......
A. Jurists' Refusal to Treat Conditional Sales As Chattel
...................................
Mortgages .
B. Protection of the Good Faith Purchaser ...............
C. Prevention of Vendee Fraud .......................
VI. Passage of the Conditional Sales Acts...................
A. Maine
.......................................
B. Vermont............................
.........
C. Iowa .
.......................................
D. Minnesota.
...................................
...................................
E. Wisconsin .
VII. Conclusion.
......................................
366
367
370
371
374
376
382
384
385
388
390
390
395
400
403
404
408
411
413
415
419
PRELUDE
On May 31, 1860, Thomas E. Billington, a wagon maker from Antwerp,
New York, purchased a horse from Mrs. Catherine Comins, from Le Ray,
taking the horse and giving Mrs. Comins his $100 note, payable to her or
bearer in five months with interest.' At the bottom of the note was a
memorandum signed by Thomas Billington saying, "Given for one bay
horse. The said Mrs. Comins holds the said horse as her property until the
1. These facts come from Wait v. Green (Wait 1), 35 Barb. 585 (N.Y. Gen. Term 1862), afd, 36
N.Y. 556, 556 (1867). See U.S. NAT'L ARCHIVES & RECORDS ADMIN., Census of Antwerp, Jefferson
Cnty., N.Y., at 394 (1860), available at http://www.heritagequestonline.com (providing the name, age,
and occupation of Thomas E. Billington); see also id., Census of Le Ray, Jefferson Cnty., N.Y., at 344
(providing the names, ages, and occupations of Guy Comins and Catherine Comins).
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SECURED TRANSACTIONS HISTORY
319
above note is paid." 2 By adding this memorandum to the note, it became
a Holmes' note.' In 1860 New York, this conditional sales transaction,
which reserved title in the vendor until full payment, was a method of
selling goods on the installment plan and retaining a security interest in the
seller to guarantee payment by the vendee.4
Early in June 1860, Thomas Billington, claiming to be the owner of the
horse, sold the horse to Charles S. Green, a farmer from Antwerp, in
exchange for another horse and $65.s Mr. Billington did not disclose
anything to Mr. Green about how he had acquired the bay horse.6
During that same June of 1860, Mrs. Comins, desiring to convert the
Billington debt to her into present value, delivered the Billington note to
Isaac Wait, a joiner from Pamelia.' Mr. Wait paid less than the face value
of the Billington note, which reflected the time value of his money and the
possibility that Mr. Billington might default.' Mrs. Comins also received
some personal property in this transaction.'
In September 1860, one
month before the note's due date, Mr. Wait learned of the sale of the horse
by Mr. Billington to Mr. Green.10 Mr. Wait approached Mr. Green,
showed Mr. Green the note with the memorandum, and demanded either
the horse or payment for the horse." Mr. Green refused.1 2
Mr. Wait hired Levi H. Brown, a lawyer from Watertown, who
commenced a replevin action to recover his horse along with damages for
its detention.1
Mr. Green's response, filed by his lawyer, James F.
Starbuck of Watertown, argued that, having purchased the bay horse in
good faith and paid valuable consideration to Mr. Billington, he was now
2. Wait 1, 35 Barb. at 586.
3. See infra notes 316-321 and accompanying text (detailing origin of the term "Holmes' note").
4. See Wait 1, 35 Barb. at 588 (explaining the time when title passes between parties to a
transaction).
5. Id. at 586.
See U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF ANTWERP,
JEFFERSON CNTY., N.Y., at 378 (1860), available at http://www.heritagequestonline.com/ (providing
the name, age, and occupation of Charles S. Green).
6. Waitl,35 Barb. at 586.
7. Id., see U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF PAMELIA, JEFFERSON
CNTY. N.Y., at 799 (1860), available at http://www.heritagequestonline.com/ (providing age and
record of Isaac Wait).
8. Wait I, 35 Barb. at 586.
9. Id.
10. Id.
11. Id
12. Id.
13. See id. at 585-86 (listing the attorneys representing the plaintiff and defendant); see also U.S.
NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF WATERTOWN, JEFFERSON CNTY., N.Y., at 567
(1860), available at http://www.heritagequestonline.com/
residence of Levi Brown).
(providing age, occupation, and city of
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the owner of the horse." The well-settled law of New York was that a
vendor under a conditional sales agreement held title to the item sold, even
against a good faith purchaser.1 s Accordingly, as the successor to that
vendor, Mr. Wait should be entitled to recover.1" So, under the direction
of the circuit justice, the jury gave a verdict for Mr. Wait and determined
$75 in damages for the detention of the horse.1 7 Upon these findings, Mr.
Wait moved for judgment.1
However, in 1862, the Supreme Court for the Fifth Judicial District of
New York, which is the appellate court encompassing Jefferson County,
composed of Justices William F. Allen, Le Roy Morgan, Joseph Mullin,
and William Johnson Bacon, decided otherwise." The citizenry of New
York at that time included numerous retailers and middlepersons engaged
in the distribution of goods.2 0 Consequently, the politicians of New York
generally despised security interests that might upset that distribution.2 1 A
security interest in a retailer's inventory items would hinder purchaser sales
if the secured party attempted to enforce its security interest against the
purchaser.2
Between 1812 and 1833, these politicians declared several
14. Wait I, 35 Barb. at 586-88; see also U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF
www.
JEFFERSON CNTY.,
N.Y., at 573 (1860), available at http://
heritagequestonline.com/ (providing age, occupation, and city of residence of James F. Starbuck).
15. See, e.g., Brewster v. Baker, 20 Barb. 364, 369-70 (N.Y. Gen. Term 1855) (finding in an
action for value case, for the vendee's good faith buyer against vendor's buyer because the vendee
had no title to transfer).
16. Wait , 35 Barb. at 586.
17. Id.
18. Id.
19. See id. (listing the justices of the court and rendering a decision); U.S. NAT'L ARCHIVES &
RECORDS ADMIN., CENSUS OF THE 4TH WARD OF UTICA, ONEIDA CNTY., N.Y., at 563 (1860),
available at http://www.heritagequestonline.com (providing the city of residence, occupation, and age
of Justice Bacon); id. at Census of the 5th Ward of Syracuse, Onadaga Cnty., N.Y., at 460 (1860)
(providing the city of residence, occupation, and age ofJustice Morgan); id. at Census of Watertown,
Jefferson Cnty., N.Y., at 733 (1860) (providing the city of residence, occupation, and age of justice
Mullin); id at Census of the 1st Ward of Oswego, Oswego Cnty., N.Y., at 925 (1860) (providing the
city of residence, occupation, and age of Justice Allen).
20. See generally George Lee Flint, Jr., Secured TransactionsHistog: The Impact of Textile Macbiney on
the Chattel Mortgage Acts of the Northeast, 52 OKLA. L. REV. 303, 311 (1999) (detailing the various
interest groups involved with the chattel mortgage acts in the northeastern states).
21. See id. at 355-62 (1999) (examining the legislative and judicial battles over holding the
chattel mortgage security devices per se fraudulent); see also Zartman v. First Nat'l Bank of Waterloo,
82 N.E. 127, 129 (N.Y. 1907) (holding against the use of chattel mortgages in inventory).
22. See George Lee Flint, Jr., Secured Transactions Histoy: The Impact of Textile Machinet on the
Chattel Mortgage Acts of the Northeast, 52 OKLA. L. REV. 303, 363-65 (1999) (examining the legislative
and judicial battles over holding the chattel mortgage security devices per se fraudulent); see also
Zartman, 82 N.E. at 129 (ruling against the presence of chattel mortgages in inventory).
WATERTOWN,
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SECURED TRANSACIONS HISTORY
321
times that the chattel mortgage security device was per se fraudulent.
They sought to enable retailers to grant good title to their purchasers for
goods sold, regardless of security interests protecting retailers' lenders. 2 4
Thus, New York courts protected the good faith purchaser who purchased
from a vendee who fraudulently acquired the personalty from a vendor;
i.e., the vendor had the intent to transfer the property, but not feloniously.
In other words, the vendor lacked the intent to transfer and the property
was acquired by theft.2 5 The New York supreme court saw no reason to
distinguish between a sale and a conditional sale, so it created an exception
from the title rule favoring the vendor for the good faith purchaser."
However, this exception did not apply to judgment creditors and voluntary
assignments.2
In 1867, the New York Court of Appeals affirmed the Wait v. Green"
decision based on sales cases, none of which involved a conditional sale,
except possibly a subsequent decision made by the same lower court
involved in the Wait case concerning conditional delivery.2 9
I.
INTRODUCTION
Law professors should become familiar with the history of their legal
subject in order to understand the underlying reasons behind the rules they
teach.3 o The sheer quantity of ways to take a security interest in
personalt'" complicates the task for those teaching secured
23. See George Lee Flint, Jr., Secured Transactions Histoy: The Impact of Textile MachineU on the
ChattelMortgage Acts of the Northeast, 52 OKLA. L. REV. 303, 355-65 (1999) (describing the battle in
New York from 1812 to 1833, led by James Kent, to declare the chattel mortgage as per se
fraudulent to benefit the back country retailers). Even as late as 1907, New York's highest court still
found chattel mortgages in inventory as per se fraudulent. See Zartman,82 N.E. at 129.
24. See George Lee Flint, Jr., Secured Transactions Histoy: The Impact of Texdle MachineU on the
ChattelMortgage Acts of the Northeast, 52 OKLA. L. REV. 303, 356-65 (1999) (examining the legislative
and judicial battles over the holding that the chattel mortgage security devices were per se
fraudulent).
25. See Mowrey v. Walsh, 8 Cow. 238, 245 (N.Y. Sup. Ct. 1828) (holding in favor of protecting
a good faith purchaser).
26. See id. ("On the whole, therefore, I am of [the] opinion that the innocent purchaser for
valuable consideration must be protected . . .
27. Id.
28. Wait v. Green (Wait 1l), 36 N.Y. 556 (1867).
29. Id. at 556-58; see W. Transp. Co. v. Marshall, 37 Barb. 509, 514-16 (N.Y. Gen. Term 1862),
affd, 4 Abb. Dec. 575 (N.Y. 1867) (deciding a case which involved the conditional sale of a large
quantity of grain).
30. See Douglas J. Whaley, Teaching Law: Adtice for the New Professor, 43 OHIO ST. L.J. 125, 128
(1980) (explaining that concentrating on history builds a thorough understanding of a particular area
of the law).
31. Before the 1994 amendment to Article 9 of the Uniform Commercial Code, it listed the
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[Vol. 44:317
transactions.3 2 The most prominent characteristic of Anglo-American
secured transaction law is that there must be some filing in the public
records to obtain court enforcement against third parties of the nonpossessory secured transaction.3 ' The possible methods for creating a
security interest in the nineteenth century resulted in the adoption of more
than one type of filing statute.
Legislatures designed the earliest set of recording statutes for the chattel
mortgage.3 4 In return for a lender's loan of money, the borrower
delivered a promissory note for the loan and sold personalty items to the
lender as security for the loan, which was subject to a condition defeasance
if the borrower timely paid the note. 3s For a chattel mortgage, the lender
owns the items of personalty.?6 However, the working borrower needed
the personalty for the operation of the borrower's business. 3 ' As a result,
the lenders often left the items of personalty in the borrower's possession,
thus resulting in a non-possessory secured transaction."
Consequently,
people dealing with the borrower-such as a purchaser of a personalty
item or a sheriff levying on the items to satisfy the borrower's creditor's
judgments-would remove the personalty from the borrower's possession,
thereby interfering with the lender's ability to recover the value of its loan
various methods in the scope provision. Compare U.C.C. § 9-102(2) (1992) ("[P]ledge, assignment,
chattel mortgage, chattel trust, trust deed, factor's lien, equipment trust, conditional sale, trust receipt,
other lien or title retention contract and lease or consignment intended as security .. ."), nith id. 9109(a) (1) (2011) (disregarding the form of security interest).
32. A secured transaction ensures lenders' repayment. In return for the loan, the lender gets an
interest in the borrower's personalty. See id. § 1-201(35) (defining a security interest). Secured
transactions do not include security interests in realty, the subject of mortgages. See id. §9-109(d)(1 1)
(identifying the scope of the Article). Secured transactions differ depending on whether the creditor
takes possession of the collateral, a pledge, or the debtor retains possession of the collateral, a
nonpossessory secured transaction. See id. §9-313, cmt. 3.
33. George Lee Flint, Jr. & Marie Juliet Alfaro, Secured TransactionsHistoy: The Impact of Southern
Staple Agriculture on the First ChattelMortgage Acts in the Anglo-American World, 30 OHIO N.U. L. REV.
537, 540 (2004). "Not all legal jurisdictions follow this example. Roman law recognized the
transaction without any filing. The Napoleonic Code banned the transaction." Id. (citing 14 S. P.
Scorr, THE CIVIL LAW INCLUDING THE TWELVE TABLES, THE INSTITUTES OF ULPAN, THE
OPINIONS OF PAULUS, THE ENACTMENTS OF JUSTINIAN, AND THE CONSTITUTION OF LEO 267
(Central Trust Co. 1973) (1932); FRANCE, CODE NAPOLEON arts. 2118, 2119 (Claiton's Book Store
1960) (1804)).
34. See George Lee Flint, Jr., Secured Transactions Histoy: The Northern Struggle to Defeat the Judgment
Lien in the Pre-ChattelMortgageActEra,20 N. ILL. U. L. REV. 1, 5 (2000) (providing the times when the
colonies, the states, and Great Britain adopted the chattel mortgage acts).
35. See id. at 3-6 (describing the development of the first chattel mortgage acts).
36. Id.
37. Id.
38. Id.
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SECURED TRANSACIONS HISTORY
323
in the event of the borrower's non-payment of the loan.3 9 Jurists
described the situation as the "ostensible ownership problem"; where it
appeared the borrower owned the personalty, but in fact did not.4 0 Some
historians have clouded the origin of the chattel mortgage acts by claiming
the ostensible ownership problem meant courts found the chattel
mortgage fraudulent and the chattel mortgage acts legalized the chattel
mortgage if filed.41 The southern colonies adopted these acts as early as
1643 to facilitate the local trade of tobacco produced by plantermerchants. 4 2 New England states began adopting these acts in 1832 to
accommodate the sale of textile machinery on credit by the Boston
Associates.4 3 State legislatures passed both sets of these chattel mortgage
acts attempting to provide a method to prevent the interference of levying
judgment liens upon a chattel mortgagee's rights to the underlying
collateral.
The same ostensible ownership problem exists for the conditional sale,
The
such as the Comins-Billington transaction outlined above. 4 5
conditional sale involves a sale of a personalty item in which the vendor
retains ownership, namely title, until the vendee pays the purchase price
evidenced by a promissory note; in the meantime the vendee retains
39. Id.
40. See NBD-Sandusky Bank v. Ritter, 471 N.W.2d 340, 345 (Mich. 1991) ("Moreover, when
John Deere filed its financing statement, it cured any ostensible ownership problem created by Mr.
Ritter's possession of the collateral."); George Lee Flint, Jr., Secured TransactionsHistory: The Northern
Stnggle to Defeat the Judgment Lien in the Pre-ChattelMortgage Act Era, 20 N. ILL. U. L. REV. 1, 1 n.3
(2000) (citing Benedict v. Ratner, 268 U.S. 353, 364-65 (1925)) (exemplifying this characterization).
41. 1 GRANT GILMORE, SECURITY INTEREST INPERSONAL PROPERTY 24-26 (1965).
[Legislatures left entirely to the courts the task of deciding what the law of chattel mortgages
should be. Most courts, informed with a sense of history, concluded that a transaction which
had for hundreds of years been recognized as a fraudulent conveyance was a fraudulent
conveyance still. No court ever held a chattel mortgage act unconstitutional and, short of such
a holding, it had to be recognized that the statutes, provided the filing provisions were
complied with, validated to some extent, under some circumstances, some types of
nonpossessory security interests in personal property.
Id. at 26.
42. See generally George Lee Flint, Jr., Secured Transactions History: The Impact of Southern Staple
Agriculture on the First ChattelMortgageActs in the Anglo-American World, 30 OHIO N.U. L. REV. 537, 542
(2004) (providing history of chattel mortgage acts).
43. See George Lee Flint, Jr., Secured Transactions History: The Impact of Textile Machinery on the
Chattel Mortgage Acts of the Northeast, 52 OKLA. L. REv. 303, 308 (1999) ("[]he legislative response
came the following year in the form of a chattel mortgage act requiring a public filing of the chattel
mortgage for validity against third parties.").
44. See id. at 311 (describing issues debtors faced because they lacked preference).
45. See Wait v. Green (Wait 1),35 Barb. 585, 586 (N.Y. Gen. Term 1862) (naming parties to the
transaction).
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ST. MARY'S LAWJOURNAL
[Vol. 44:317
possession of the item. 4 ' This security device is tailor-made for the sale of
personalty on the installment method.4 7 The vendor can convert the
credit into cash by assignment of the promissory note secured by the
conditional sale to a lender.4" In the nineteenth century, the term
"conditional sale," in addition to the retained title condition, also included
sales subject to delivery conditions, 4 9 conditions defeasance,so and the
Courts treated the latter two conditions as
right of repurchase.-'
involving a security interest subject to the filing requirements of the chattel
mortgage actS. 5 2 This Article will exclude these extraneous conditional
sales transactions and limit the term conditional sale to those with the
retained title condition.
The first appellate court decisions that considered the conditional sale
provide a date before which parties used the conditional sale. The
conditional sale appeared in the southeastern seaboard states shortly after
the turn of the nineteenth century; Virginia courts considered a case in
1812 that stemmed from a conditional sale made in 1806.5 By the 1820s,
parties in the northeastern seaboard states were also using conditional
sales, with Massachusetts courts considering a case that dealt with a
conditional sale made in 1819.54 Western states adopted the conditional
sale much later, appearing in the southwestern states in the 1830s 5 5 and in
46. See George Lee Flint, Jr, Secured Transactions Histoy: The Impact of Textile Machinery on the
Chattel Mortgage Acts of the Northeast, 52 OKLA. L. REv. 303, 305 (1999) (noting the differences
between a chattel mortgage and a conditional bill of sale).
47. See id. (describing a conditional bill of sale).
48. See id. (noting the differences between a chattel mortgage and a conditional bill of sale).
49. See, e.g., Hussey v..Thornton, 4 Mass. 405, 406 (1808) (clarifying the conditions relevant to
the contract at issue); W. Transp. Co. v. Marshall, 37 Barb. 509, 514 (N.Y. Gen. Term 1862), afd,4
Abb. Dec. 575 (N.Y. 1867) (discussing a contract stipulating payment upon delivery).
50. See, e.g.,Dabney v. Green, 14 Va. 101, 102 (1809) ("[The paper, called by the complainant a
defeasance, did not convert the said bill of sale into a mortgage . . . .").
51. See, e.g., Robertson v. Campbell, 6 Va. 421, 427 (1800) ("For the deed was absolute; and he
had only a right to re-purchase.").
52. See, e.g., Potter v. Boston Locomotive Works, 78 Mass. 154, 154 (1858) ("[The agreement
[A] subsequent agreement gave the manufactures no additional right in the
was not recorded ....
engines."); Bullock v. Williams, 33 Mass. 33, 34-35 (1834) (condition defeasance must be recorded
under chattel mortgage act).
53. See Randolph v. Randolph, 17 Va. 99, 101 (1812) (explaining that property sold and
delivered to a purchaser without a bill of sale vests title in the purchaser).
54. See Marston v. Baldwin, 17 Mass. 606, 606-07 (1822) (describing a conditional sale of rum
and other goods).
55. See, e.g., Gambling v. Read, 19 Tenn. 281, 281 (1838) (examining the conditional sale of a
female slave, secured by the bill of sale of another female slave); see also Parmlee v. Catherwood, 36
Mo. 479, 480 (1865) ("From the testimony it is abundantly shown that the sale was conditional, and
was not to be complete or absolute till the condition was complied with; that is, until the property
was paid for."). Residents of Alabama were aware of the conditional sale transaction in the 1840s.
2013]
SECURED TRANSACTIONS HISTORY
325
the northwestern states in the 1850s.5 6
To solve this ostensible ownership problem caused by the conditional
sale, a second set of recording statutes, known as the conditional sales acts,
Under the common law, this security device
evolved in the 1870s."
differed significantly from the chattel mortgage, which warranted its own
Because the underlying transaction involved
set of recording statutes.5
the sale of goods rather than a general lending secured by collateral that
the borrower already owned, there was no right of redemption or an
accounting for the vendee/borrower, 9 nor any right to a deficiency
Not all states recognized the
judgment for the vendor/lender. 6 0
conditional sale as a viable security device. 6 ' For example, Pennsylvania
See Babcock v. Huntington, 9 Ala. 869, 869-70 (1846) (mentioning a conditional sale, made in Texas,
where title did not vest until payment was completed); Caraway v. Wallace, 2 Ala. 542, 547-48 (1841)
(attempting to change an absolute sale to one where title would not pass until the purchase price was
secured).
56. See, e.g.,Thomas v. Winters, 12 Ind. 322, 323 (1859) ("It was a conditional sale to become
absolute upon payment of consideration.'); Bailey v. Harris, 8 Iowa 331, 332 (1859) (ruling on the
conditional sale of blacksmith's tools); Hunter v. Warner, 1 Wisc. 126, 141-46 (1853) (recognizing
that the seller retained the right to the property until the entire contract price was paid, while the
buyer gained the right to possession subject to forfeiture if he defaulted in payment).
57. See infra notes 244-66 (describing the first wave of conditional sales acts).
58. The documents differed in that the chattel mortgage was a sale subject to a condition
subsequent, meaning a sale had occurred but would become void in the event of non-payment,
whereas the conditional sale was subject to a condition precedent, which meant that no sale occurred
until the debt was paid. See, e.g.,Duke v. Shackleford, 56 Miss. 552, 554-55 (1879) (explaining the
difference between conditions subsequent and conditions precedent as they relate to sales).
59. For a case involving redemption, see, for example, Chapman v. Turner, 5 Va. 280, 285-86
(1798) (ruling a pledge with repurchase was a conditional sale, and was not subject to redemption); see
also Garrard Glenn, The Condifional Sale at Common Law and As a Statutoy Secuntiy, 25 VA. L. REV. 559,
569 (1939) ("[W~hile the purchaser has no claim for a refund of instal[I]ments previously paid, on the
other hand the vendor is allowed no claim for any balance that would otherwise have become
due . . . ."). For cases involving accounting, see Guilford, Wood & Co. v. McKinley, 61 Ga. 230,
232-33 (1878) (ruling the vendor did not need to return payments made); Duke, 56 Miss. at 553-55
(concluding that in an action for replevin, a vendor may recover without refund). But see Preston v.
Whitney, 23 Mich. 260, 267-68 (1871) (deciding in a vendor's action on the note for conditional sale,
that it had no provision for forfeiture or right to keep payments, and the vendor was only entitled to
the amount of use after repossession).
60. See Minneapolis Harvester Works v. Hally, 8 N.W. 597, 598 (Minn. 1881) (deciding that an
action for deficiency could not be maintained); see also Garrard Glenn, The ConditionalSale at Common
I-an, and As a Statutoy Securiy, 25 VA. L. REV. 559, 570 (1939) ("One who holds a pledge or chattel
mortgage is at liberty to sue the debt to judgment and at the same time retain the collateral, which
thus will secure the judgment itself. Not so, however, with the conditional sale.") (citation omitted).
61. See Stadtfield v. Huntsman & Co., 92 Pa. 53, 55 (1879) ("It has long been an established
rule in Pennsylvania, that a sale and delivery of personal property, with an agreement that the
ownership shall remain in the vendor until the purchase-money is paid, is fraudulent and void . .. .");
see also Martin v. Mathiot, 14 Serge. & Rawle 214, 215 (Pa. 1826) ('The cases which have generally
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ST. MARY's LA wJOuRNAL
[Vol. 44:317
and Illinois rejected it as fraudulent, as did Louisiana under its version of
the Napoleonic Code, which generally disallows mortgages on
personalty.62
This Article's aim is to determine when, where, and under what
circumstances the first conditional sales acts arose, and to explain why
been brought before courts of justice, are those in which the seller has remained in possession; those
have been adjudged fraudulent.").
62. Because Pennsylvania regarded the conditional sale as fraudulent, the Pennsylvania
Supreme Court refused to enforce it against third parties. See In re Wylie, 90 Pa. 210, 216 (1879)
(stating that conditional sales are fraudulent); Creps v. Dunham, 69 Pa. 456, 460-61 (1871) (declining
to allow a contingent sale to prevail over actual possession of the chattel); Martin, 14 Serge. & Rawle
at 216 (asserting that possession is the defining characteristic of ownership); see also In re Jenkins's
Estate, 8 Pa. D. & C. 743, 745 (1926) (finding that Martin v. Mathiot was still valid except as modified
by a 1923 recording act that provided where documents should be recorded). Similarly, Illinois
rejected the transaction when judgment liens challenged it. See Ketchum v. Watson, 24 Ill. 591, 592
(1860) (warning there must be a change of possession to pass title to protect third parties from
fraud); see also Harkness v. Russell, 118 U.S. 663, 678 (1886) (discussing the error of the PennsylvaniaIllinois rule and citing cases that did not deal with the conditional sale, but rather conditional
deliveries, chattel mortgages, and bailment leases); Lucas v. Campbell, 88 ill. 447, 449 (1878)
(refusing to honor a lease where monthly installment payments paid toward the purchase price would
vest title upon foll payment). See generaly Garrard Glenn, The ConditionalSale at Common Law andAs a
Statutory Security, 25 VA. L. REv. 559, 566-67 (1939) (discussing Pennsylvania's and Illinois's
application of the English bankruptcy laws). However, Illinois enforced the transaction against the
parties to the transaction. See, e.g., Latham v. Sumner, 89 Ill. 233, 235-36 (1878) (declaring the
vendor need not return payments made on breach of condition). Louisiana followed the French civil
law, which forbade enforcement of chattel mortgages and conditional sales against third parties. See
LA. REV. Civ. CODE art. 3227 (1870) (recognizing that vendors may assert a privilege if the vendee
retained possession of a movable item); Chaffee v. Heyner, 31 La. Ann. 594, 599 (1879) (refusing to
enforce a foreign security interest against local inhabitants); see also LA. CIV. CODE ANN. art. 3289
(1870) (declaring what may be mortgaged); George Lee Flint, Jr. & Marie Juliet Alfaro, Secured
TransactionsHistory: The Impact of English Smugghng on the ChattelMortgage Acts in the Spanish Borderlands,
37 VAL. U. L. REV. 703, 746-49 (2003) (discussing conditional sales and chattel mortgages under
Napoleonic law). In 1908, Louisiana ruled that under its version of the Napoleonic Code, the
conditional sale is impossible. Barber Asphalt Pay. Co. v. St. Louis Cypress Co., 46 So. 193, 194 (La.
1908) (stating that the civil code considers a sale complete as soon as there is an agreement, even
though the good has not been delivered or paid for). There are no pre-1880 appellate cases in
Louisiana dealing with a conditional sale. However, Louisiana did provide a privilege to vendors of
movables over creditors of the vendee, provided the vendee still had the property. See LA. CIV.
CODE ANN. art. 3227 (1870); see also Baldwin v. Young, 17 So. 883, 883-84 (La. 1895) (recognizing
the privilege even when the personalty is attached to real estate). Commentators criticize the
Pennsylvania and Illinois rule because it follows the inapplicable English bankruptcy rule that banned
reputed ownership. See Garrard Glenn, The ConditionalSale at Common Law and As a Statutory Security,
25 VA. L. REV. 559, 563-67 (discussing Pennsylvania's and Illinois' application of the English
bankruptcy rule); see also Francis M. Burdick, Codi ing the aw of ConditionalSales, 18 COLUM L. REV.
103, 103-04 (1918) (describing laws regarding conditional sales in Illinois and Pennsylvania). In
Pennsylvania's defense, it was the only state to have a reputed ownership clause in its own insolvency
laws, albeit from 1785 to 1792. See George Lee Flint, Jr., Secured Transactions History: The Northern
Struggle to Defeat the Judgment Lien in the Pre-ChattelMortgage Act Era, 20 N. ILL. U. L. REv. 1, 44-45
(2000) (discussing Pennsylvania's rejection of the chattel mortgage).
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SECURED TRANSACTIONS HISTORY
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legislatures adopted them. This Article first examines the unsatisfactory
explanations of past legal historians. The Article then examines the
historical data by analyzing the reported American opinions concerning
conditional sales to ascertain the precise circumstances that gave rise to the
first conditional sales acts. The conditional sales transaction arose in the
first half of the nineteenth century, primarily in connection with the sale of
livestock.13 When confronted with a battle between the vendor and a
vendee's creditor or good faith purchaser, courts typically provided priority
But in the late 1860s, a judicial
to the transaction with the vendor."
development in New York threatened the rule for conditional sales, by
providing an exception to vendor priority for good faith purchasers. 6 5
This exception could have potentially rendered an assignment of the
conditional sale transaction to a farm lender worthless. The main tool to
eliminate a good faith purchaser's interference with the conditional sale
transaction is to provide notice. 6 6 Part IV reviews the earliest conditional
sales acts and the scant legislative history for clues as to their origin. Farm
states in northern New England, followed by the farm states of the Upper
Mississippi Valley, adopted the first conditional sales acts in the early
1870s. 67 This Article then reviews the post-act court pronouncements for
the passage of the conditional sales acts to reveal their shortcomings and
accuracies. The primary concern was vendee fraud. Lastly, Part VI
investigates the economic and political backgrounds of the respective
states. Two assumptions aid this inquiry. First, legal change comes from
the inability to achieve the desired result under the old rules. Regarding
the conditional sale, change arose out of the vendor's title priority's
inability to prevent interference from good faith purchasers and judgment
liens. Second, legislative change only comes from the group with control
of the legislative power. Therefore, those states with farm lender control
of the legislatures would pass the legislation necessary to preserve their
farm-funding technique.
63. See, e.g., Wait v. Green (Wait II), 36 N.Y. 556, 556 (1867) (discussing vendor's rights against
bona fide purchasers in a conditional sale of a horse).
64. See id. (ruling that in a conditional sale, when a vendor delivers chattel to a vendee, the
vendor loses rights in the property with regard to the vendee's bona fide purchasers who had no
notice of the conditional sale); see also Ballard & Sampson v. Burgett, 47 Barb. 646, 646 (N.Y. Gen.
Term 1866), affd, 40 N.Y. 314 (1869) ("Possession alone is not sufficient to enable the person having
it to transfer the title to personal property, by a sale even to a bonafide purchaser.").
65. See Wait II, 36 N.Y. at 556 (holding the vendor's right is superior to all but the vendee's
bona fide purchasers).
66. See id (urging that bona fide purchasers cannot have notice of the vendor's right).
67. See Francis M. Burdick, Codi[ingthe Law of ConditionalSales, 18 COLUM. L. REV. 103, 103-04
(1918) (comparing the conditional sales acts passed by Iowa, Missouri, New York, and Vermont).
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II.
[Vol. 44:317
THE GILMORIAN MODEL
The historical explanation for the adoption of the conditional sales acts
is woefully lacking. The one secured transactions scholar to provide much
of an explanation, Grant Gilmore,6 " in his authoritative description of preconfessed
Uniform Commercial Code secured transaction law,"
ignorance concerning the origins of the conditional sale transaction.7 0
That unfamiliarity seriously tarnishes his explanation for the passage of the
conditional sales acts.
A.
TheoreticalUnderpinnings
Rather than examining the readily accessible appellate opinions data,
Gilmore concocted a logical argument using a syllogism for those origins,
dismissing judicial opinion as though it was irrelevant. He remarked:
This notable advance in contract theory [of Lord Mansfield's 1779
flexible theory of conditions], 7 1 it is fair to assume, explains the distinction
which the courts began to make between a sale absolute and a sale on
condition.7 2 Granted that if a seller had agreed to make an absolute sale to
68. Grant Gilmore was a law professor at Yale University, respected legal historian, and a
drafter of Article 9 of the Uniform Commercial Code, which deals with secured transactions. For
Gilmore's expertise in secured transactions, see DOUGLAS G. BAIRD & THOMAS H. JACKSON,
CASES, PROBLEMS, AND MATERIALS ON SECURITY INTERESTS IN PERSONAL PROPERTY xxv (1987)
(calling Gilmore "the chief architect of Article 9"). Gilmore wrote two books on legal history:
GRANT GILMORE, THE AGES OF AMERICAN LAW (1977) and GRANT GILMORE, THE DEATH OF
CONTRACT (1974).
69. See Guillermo A. Moglia Claps & Julian B. McDonnell, Secured Credt and Insolveng Law in
Agendna and the U.S.: GainingInsightfrom a ComparativePerspective, 30 GA. J. INT'L & COMP. L. 393, 396
n.5 (2002) (describing the regulation of security devices before the introduction of Article 9). "The
most authoritative description of the complex regulation of security devices under pre-Article 9 U.S.
law is presented in 1 GRANT GILMORE, SECURITY INTEREST IN PERSONAL PROPERTY %§1.1-8.8
(1965)." Id. See generally 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 66-68
(1965) (providing a history of security devices).
70. See, e.g., 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 63 (1965)
(referring to conditional sales, Gilmore states that "[viague memories of common law origins
persisted to cloud, blur and distort the process of decision").
71. See Bernard L Shientag, Lord MangieldRevisited-A Modern Assessment, 10 FORDHAM L. REV.
341, 353 n.28 (1941) (describing Lord Mansfield's theory of conditions). "[W]here mutual covenants
go to the whole of the consideration on both sides, they are mutual conditions, the one precedent to
the other." Boone v. Eyre, 126 Eng. Rep. 160, 160 (K.B. 1777). Conversely, mutual covenants that
only go to a part of the consideration are not mutual conditions, and may provide an independent
ground for damages in a lawsuit. Id. For the conditional sale, the promise to pay and the promise to
deliver ownership were described as mutual conditions. See, e.g., WILLIAM W. STORY, A TREATISE
ON THE LAW OF SALES OF PERSONAL PROPERTY 444-45 (2d ed. 1853) (exemplifying this mutual
condition).
72. See Stone v. Grubham, 80 Eng. Rep. 1079, 1079-80 (KB. 1615) (describing the rights of a
tenant when they have actual possession); see also George Lee Flint, Jr., Secured TransactionsHistory: The
2SECURED
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329
his buyer, then, once he had lost possession, he could be only a creditor for
the price; nevertheless, if he had made the sale only on a condition that the
buyer perform. . . on condition broken, the contract was at an end, the
status quo ante should be restored and the seller, if he had lost possession of
the goods, should get them back ....
We have sketched what came to be the recognized pattern of the
[It would be absurd to suppose that
common law conditional sale ....
Lord Mansfield's theory of conditions led, as easily and naturally as we have
suggested, to so sophisticated a creation. But the sequence of thought is a
persuasive one 73 and, a [half-century] after Mansfield, the common law
courts had pretty well worked out the result.7 4
The common law uses tide to determine priority-first in time wins.7
Because the vendor retains the title, the vendor would be able to defeat a
prior or subsequent vendee creditor as well as a subsequent good faith
purchaser from the vendee.
Gilmore, inclined to find any device that creates an ostensible
ownership problem as fraudulent, concluded that the conditional sale had
no legitimate use without examining what the parties to the conditional
sale used the transaction for, much less the identity of the parties:7
The point should also be made that the conditional sale, in its early phase,
was a theoretical construct, an ivory tower abstraction, and not in any sense
FraudulentMyth, 29 N.M. L. REv. 363, 381-84 (1999) (distinguishing between an absolute conditional
sale and a conditional sale).
73. This is not how business transactions normally develop. A proper example of the
development of a normal business transaction is the bailment lease in Pennsylvania. See infra notes
123-28 and accompanying text (describing the bailment lease); seealso Myers v. Harvey, 2 Pen. & W.
478, 481 (Pa. 1831) (holding that an agreement vesting title in bailee after payment was consistent
with public policy); Martin v. Mathiot, 14 Serge. & Rawle 214, 216 (Pa. 1826) (exploring possession
and conditional sales); Clow v. Woods, 5 Serge. & Rawle 275, 284 (Pa. 1819) (rejecting the chattel
mortgage). See generally Stone, 80 Eng. Rep. at 1079-80 (K.B. 1615) (stressing that courts look at the
nature of the sale when determining whether to enforce against third parties); George Lee Flint Jr.,
Secured Transactions History: The Fraudulent Myth 29 N.M. L. REv. 363, 381-84 (1999) (analyzing the
absolute-conditional rule).
74. 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 66-67 (1965).
75. See Rankin v. Scott, 25 U.S. (12 Wheat.) 177, 179(1827) (expressing the universal principal
"that a prior lien gives a prior claim, which is entitled to prior satisfaction ... unless the lien be
intrinsically defective, or be displaced by some act of the party holding it").
76. See, e.g., Coggill v. New Haven R.R. Co., 69 Mass. 545, 548-49 (1854) (declaring that "in the
case of a conditional sale," certain conditions must be met before tide can pass from the vendor to
the vendee, and then to a subsequent good faith purchaser).
77. Other legal historians claim the use of the conditional sale was to evade the chattel
mortgage system, with its filings, redemptions, and accountings for excess. See DOUGLAS G. BAIRD
& THOMAS H.
JACKSON,
CASES, PROBLEMS, AND MATERIALS ON SECURITY INTERESTS IN
PERSONAL PROPERTY 40 (1987) ("A common means of evading the chattel mortgage system was
the conditional sale.').
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[Vol. 44:317
a commercial reality. 7 8 It should also be remembered that the result
achieved by conditional sale theory ran directly counter to one of the most
firmly rooted doctrines of the common law: the protection of creditors
against undisclosed interests in property. The conditional sale remained,
through most of the nineteenth century, a matter for occasional judicial or
scholarly speculation, of no commercial importance whatever.7 9
The common law has no such principle protecting creditors from secret
liens, much less good faith purchasers.8 o Even Gilmore's own work on
good faith purchasers admitted the common law has no such rule, and
traced the concept back to an 1824 British statute, which allowed factors
to sell their principal's goods without authority.8" The statutes provided
some relief.8 2 Legislators did not pass the chattel mortgage acts to protect
creditors and good faith purchasers as Gilmore preferred, but to prevent
The chattel
interference with security interests by these individuals."
78. If this were true, there would be no conditional sales opinions; the cases would never make
it to litigation.
79. 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 67 (1965).
80. See U.C.C. § 2A-101 cmt. (2011) ("If the transaction creates a security interest disguised as
a lease, the lessor will be required to file a financing statement .... There is no such requirement
with respect to leases [of goods].'); see also Myers v. Harvey, 2 Pen. & W. 478, 481 (Pa. 1831)
("Retention of possession by the former owner of a chattel sold at sheriffs sale, is not an index of
fraud."); George Lee Flint, Jr., Secured Transactons History: The Northern Struggle to Defeat the judgment
Lien in the Pre-ChattelMortgage Act Era, 20 N. ILL. U.L. REV. 1, 2 (2000) (remarking that because
historians did not investigate the development of non-possessory secured transactions, the
assumption in Anglo-American jurisdictions was that such transactions were fraudulent prior to the
enactment of pre-chattel mortgage law); George Lee Flint, Jr., Secured Transacions History: The
FraudulentMth, 29 N.M. L. REv. 363, 364 (1999) (noting that according to Gilmore, non-possessory
secured transactions were considered fraudulent prior to the nineteenth century because title and
possession were separated). For the common law of the conditional sale, see infra notes 196-204 and
accompanying text (evaluating the conditional sale in different contexts).
81. See Grant Gilmore, The Commercial Doctrine of Good Faith Purchase, 63 YALE L.J. 1057, 105758 (1954) ("The first English Act (4 Geo. IV, c. 83) was passed in 1824."); see also Factor's Act of
1889, 52 & 53 Vict. c. 45 § 9 (stating that under a conditional sale, a buyer's good faith purchaser has
priority over the seller).
82. See Statute of Frauds of 1677, 29 Car. II, c. 3, § 13-15, reprintedin 5 STAT. OF THE REALM
839, 841 (London, Dawsons of Pall Mall, 1810-28) (decrying the secret lien problem in changing the
effective dates for judgment statutes and recognizances); see also 4 W. & M., c. 16, reprintedin 6 STAT.
OF THE REALM 404,404-05 (Eng. 1962) (applying to land and establishing forfeiture of the equity of
redemption as the penalty).
83. See George Lee Flint, Jr. & Marie Juliet Alfaro, Secured Transactions History: The Impact of
Southern Staple Agriculture on the First ChattelMortgageAds in the Anglo-American World, 30 OHIO N.U. L.
REV. 537, 553-73 (2004) (discussing legislative acts passed by the southern colonies in the
seventeenth century); see also George Lee Flint, Jr., Secured Transactions History: The Impact of Textile
Machinery on the Chattel Mortgage Acts of the Northeast, 52 OKLA L. REv. 303, 303-08, 327-37 (1999)
(analyzing chattel mortgage acts in the northern states in the early nineteenth century).
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SECURED TRANSACTIONS HISTORY
331
mortgage statutes merely preserved the pre-chattel mortgage act era's
priority rule, assuming the lender filed the chattel mortgage.8 4
B.
Illegitimate Functions
Gilmore focused on two imagined evils of conditional sales that his
mind could conceive. Historians that follow Gilmore" described these
evils as two of the four reasons for the development of the conditional
sale, albeit not commercial: (1) to avoid the drawbacks of the chattel
mortgage with respect to the equity of redemption, and (2) usury.8 6
The first Gilmorian iniquity used the conditional sale to extract money
from the vendee."' This process avoids the chattel mortgage's equity of
redemption, and has miniscule support in the conditional sales act
appellate opinions as a reason for the development of the conditional
The harshness Gilmore lamented operates as follows: if the
sale."
conditional sales contract ended because of a broken condition, the vendor
lost any contractual claim for the unpaid amounts, but could reclaim the
item sold without refunding any moneys paid because the vendee had no
84. See George Lee Flint, Jr., Secured Transactions Histoy: The Northern Struggle to Defeat the Judgment
Lien in the Pre-ChattelMortgage Act Era, 20 N. ILL. U. L. REv. 1, 5 (2000) ("'The chattel mortgage acts
required a public filing for the priority of the nonpossessory secured transaction."); see also George
Lee Flint, Jr., Secured Transactions History: The FraudulentMyth, 29 N.M. L. REv. 363, 363 (1999) (noting
that northern states, as well as southern states, had similar acts).
85. See DOUGLAS G. BAIRD & THOMAS H.JACKSON, CASES, PROBLEMS, AND MATERIALS ON
SECURITY INTERESTS IN PERSONAL PROPERTY xxv (1987) (alluding to the time spent as Gilmore's
student).
86. See id. at 40-41 (describing the historical development of the conditional sale).
87. See 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 67-68 (1965)
(describing one of the perceived iniquities presented by the conditional sale).
88. See Weil v. State, 21 N.E. 643, 643 (Ohio 1889) (confronting a constitutional challenge to
the Ohio conditional sales act).
Oppression and hardship might, and probably did, grow out of such [conditional sale]
contracts. Under them, a purchaser might pay the purchase price for the goods, except an
insignificant sum, and failing, for any cause, to pay that, the vendor could reclaim the property,
and retain the whole amount paid; thus depriving the purchaser of both the property and
money. Consequences like these no doubt directed the attention of the legislature to the
establishment of some equitable rule of adjustment between parties to such contracts.
Id. at 644. Gilmore most likely transferred concepts from the larger land transaction onto small
personalty transactions. Cf Trucks v. Lindsey, 18 Iowa 504, 505 (1865) (describing the use of a
conditional sale in a land transaction as resorting to using "a device to defeat the equity of
redemption"); Turner v. Kerr, 44 Mo. 429, 432 (1869) ("It may often happen that a creditor would
consent to take an absolute title stipulating for a reconveyance, when he would reject a mortgage
because of the delay and expense to which he might be subjected upon a foreclosure."). The
conditional sales acts, however, did not affect the equity of redemption; they only required a filing.
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If the money paid
theory on which to reclaim the moneys paid."
exceeded the cost of money lent and the depreciation of the item
reclaimed, this option became advantageous. Alternatly, the other option
was to waive the condition, treat the contract as valid, and sue for the
price. 9 0 If the money paid did not exceed the cost of money lent plus the
depreciation of the item, this option became advantageous.
The second atrocity concerned the vendor's evasion of usury. 9 ' The
evasion Gilmore deplored arises because the conditional sale is a sale, not
a loan; therefore, it is subject to the usury statutes. 9 2 All vendors need to
do is raise the price, rather than the interest rate. The conditional sales
appellate opinions provide no support for the assertion that vendors used
the conditional sale to hide usury.93
These two perceived evils are absent from appellate opinions
concerning conditional sales with retained title because the standard
reformulation of the chattel mortgage into an absolute sale with a
repurchase condition, called a "conditional sale" by the early courts," was
used to avoid usury and extinguish the equity of redemption. 9' No lender
needed to reshape his chattel mortgage into a conditional sale to escape
the equity of redemption or usury because the lender only needed to
replace the condition defeasance with the repurchase condition.9 6
Gilmore and his followers provided two other reasons for the
development of the conditional sale: to gain priority over the afteracquired property clause and to avoid chattel mortgage filing.9 7 For years,
89. See 1 GRANT GILMORE, SECURITY INTERESTS IN REAL PROPERTY 66 (1965) (explaining
the vendor's and vendee's respective rights in the event of a breach).
90. See id. ("[qontract law has always been hospitable to the idea of waiver.").
91. See id. at 68 ("Mhe conditional sale promised a way of avoiding... the crippling
restrictions of the usury laws.").
92. Id. (recognizing that the use of conditional sales was limited to sales transactions to which
usury laws do not apply).
93. Almost none of the pre-1880 conditional sale appellate opinions faced a usury charge. In
the single pre-1880 opinion mentioning usury, the charge was dropped before trial. See Manning,
Bowman & Co. v. Keenan, 73 N.Y. 45, 45-47 (1878) (mentioning an initial action for "usurious and
void" notes).
94. See Robertson v. Campbell, 6 Va. 421, 427 (1800) ("Robertson's right in the present case,
was only that of a conditional sale. For the deed was absolute; and he had only a right to repurchase."). This article excludes the repurchase condition from the term "conditional sale."
95. See Moss v. Green, 37 Va. 251, 261-62 (1839) (avoiding the equity of redemption); see also
Robinson v. Cropsey, 6 Paige Ch. 480, 480-81 (N.Y. 1837) (deciding to construe as a mortgage not a
conditional sale to prevent usury).
96. See 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 67-68 (1965)
(discussing attempts to turn chattel mortgages into conditional sales).
97. See DOUGLAS G. BAIRD & THOMAS H. JACKSON, CASES, PROBLEMS, AND MATERIALS ON
SECURITY INTERESTS IN PERSONAL PROPERTY 40 (1987) ("A common means of evading the
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SECURED TPANSACIONs HISTORY
333
the after-acquired property clause was thwarted by the belief one could not
sell what one lacked.9 8 Therefore, it did not gain acceptance until the
1840s, though other states did not accept the idea until the 1880s," and in
some states, i.e. Maine and Wisconsin, until after the passage of their
respective conditional sales acts, which occurred long after vendors began
using the conditional sale.10 0 Clearly, the after-acquired property clause
had little to do with the development of the conditional sale.
The remaining reason for the use of the conditional sale, to avoid a
chattel mortgage filing, possesses some support. Nevertheless, this is an
ill-considered proposition because the litigation cost saved by filing to
prevent any subsequent interests far outweighs the filing cost. Moreover,
chattel mortgage system was the conditional sale."); 1 GRANT GILMORE, SECURITY INTERESTS IN
REAL PROPERTY 68 (1965) ("m[The conditional sale promised a way of avoiding both the filing
requirements and the cumbersome foreclosure procedures of chattel mortgage law.").
98. See, e.g., Pennock v. Coe, 64 U.S. 436, 440-41, 23 How. 117 (1860) (recognizing the afteracquired property clause for railroad rolling stock, which was then classified as a fixture).
99. Numerous cases from a variety of jurisdictions demonstrate the judicial rejection of the
after-acquired property clause. See, e.g., Walker v. Vaughn, 33 Conn. 577, 583 (1866) (relying upon
the validity of a mortgage for after-acquired property); Borden v. Croak, 22 N.E. 793, 795 (Ill. 1889)
(holding that a lien on property did not include subsequently acquired merchandise based upon the
vague description of personalty attached); Allen v. McCalla, 25 Iowa 464, 486-87 (1868) (noting
changes in the laws regarding mortgages and reasoning that mortgages may be applied to afteracquired goods, such as stock in trade); Long v. Hines, 19 P. 796, 796 (Kan. 1888) (ruling that corn
which had not yet been planted could not be subject to a valid mortgage); Loth v. Carty, 4 S.W. 314,
315 (Ky. 1887) (stating that after-acquired personal property was valid against the original mortgagor,
but the right did not pass to subsequent creditors); Chesley v. Josselyn, 73 Mass. 489, 490 (1856)
(holding that a mortgage failed to include stock of goods acquired after the sale); Sawyer v. Long, 30
A. 111, 112 (Me. 1894) (affirming that no legal title transfers for goods not presently owned); State v.
Tasker, 31 Mo. 445, 451 (1862) (concluding a deed of trust referring to subsequently acquired
machinery and tools was not completely void); Steele v. Ashenfelter, 59 N.W. 361, 361 (Neb. 1894)
(refusing to permit a levy of after-acquired property of a transit and power company); Smithurst v.
Edmunds, 14 N.J. Eq. 408, 414 (1862) (invalidating a lien because the furniture indicated was neither
actually nor potentially owned at the time of the mortgage); Beebe v. Richmond Light, Heat & Power
Co., 35 N.Y.S. 1, 3-4 (Sup. Ct. 1895) (stating that only personal property in existence at the time of a
mortgage was subject to the mortgage), affd, 38 N.Y.S. 395 (1896); Welch v. Pittsburgh, Fort Wayne
& Chi. R.R. Co., 2 Ohio Dec. Reprint 5, 13 (C.P. 1859) (explaining that common law held mortgages
on after-acquired property void, but in equity, such mortgages were protected), affd, 11 Ohio St. 569
(1860); Cook v. Corthell, 11 R.I. 482, 483 (1877) (holding that because the grantor delivered the
mortgaged after-acquired personalty to the grantee, the courts had no need to intervene even if the
mortgage itself was invalid); Phelps v. Murray, 2 Tenn. Ch. 746, 754 (1877) (rejecting a mortgage that
included after-acquired stock of goods as a matter of public policy); Case v. Fish, 15 N.W. 808, 8 10
(Wis. 1883) (repudiating the validity of a mortgage on after-acquired articles used for the manufacture
of wagons).
100. See infra notes 253-259 and accompanying text (concerning Maine's act); note 266 and
accompanying text (concerning Wisconsin's act).
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Gilmore's followers admit filing is not burdensome.' 0 1 Textile equipment
manufacturers did not mind filing; in fact, they sponsored the northeastern
chattel mortgage acts that required filing after their 1831 real estate filings
became ineffective. 1 02 In 1857, when rolling stock constituted real estate,
railroad companies made precautionary chattel mortgage filings in each
town through which the road ran. 1 3 Additionally, the conditional sale
developed in the northern states prior to their chattel mortgage acts,
indicating such statutes did not give rise to the conditional sale. 0 4
However, much pre-conditional sales act litigation existed over whether
courts should require vendors to record their conditional sales under the
chattel mortgage acts.1 0 s This litigation resulted from the American
adversarial tradition.' 0 6 Lawyers attempted every possible argument to
overturn the common law priority rule for conditional sales.1 0 '
Nevertheless, a few courts referenced the possible use of the conditional
sale to evade filing. 1 0 While evasion was not the origin of the conditional
101. See DOUGLAS G. BAIRD & THOMAS H. JACKSON, CASES, PROBLEMS, AND MATERIALS
ON SECURITY INTERESTS IN PERSONAL PROPERTY 40 (1987) (noting that when the value for the
property involved is taken into consideration, choosing a chattel mortgage may not seem
burdensome).
102. See George Lee Flint, Jr., Secured Transactions History: The Impact of Textile Machinery on the
Chattel Mortgage Acts of the Northeast, 52 OKLA. L. REV. 303, 346-55 (analyzing the position, political
strength, and the tactics of the textile industry in sponsoring the chattel mortgage acts in the
northeastern states).
103. See Farmers' Loan & Trust Co. v. Hendrickson, 25 Barb. 484, 485-86 (N.Y. 1857) (noting
that the railroad company filed mortgages of all the property along the length of the line).
104. See, e.g., Wheeland v. Swartz, 1 Yeates 579, 579-80 (Pa. 1795) (evidencing the use of
conditional sales as early as the late eighteenth century).
105. See, e.g., Brewster v. Baker, 20 Barb. 364, 368, 370-71 (N.Y. Gen. Term 1855) (finding it
was error to treat the conditional sale as an unfiled chattel mortgage).
106. Cf Bailey v. Harris, 8 Iowa 331, 332-33 (1859) (reversing the decision made by the
appellate court which declared that because the conditional sale was not recorded, title vested in
defendant); Haven v. Emery, 33 N.H. 66, 69 (1856) (noting there is no legal requirement for
publishing or recording the conditional sale, and notice to the agent was adequate); Ellison v. Jones,
26 N.C. 48, 49 (1843) (holding that payment, which was not in the form of a mortgage, for a horse
on a conditional sale did not need to be registered); Buson v. Dougherty, 30 Tenn. 50, 52 (1850)
(finding that there is no need to record a conditional sale); Warner v. Roth, 2 Wyo. 63, 70-71 (1879)
(declaring title remained in Warner even after a safe was assigned to Roth, a good faith purchaser
who had no notice of the unrecorded conditional sale).
107. See Sanders v. Keber & Miller, 28 Ohio St. 630, 633 (1876) (arguing in favor of a good
faith purchaser who tendered valuable consideration and did not have notice of the conditional sale;
thus, because it was not a lease, it must have vested title in the original purchaser, leaving the vendor
with only a right to reclaim); see also Couse v. Tregent, 11 Mich. 65, 66 (1862) (protesting that the
statutes indicated public policy favors innocent third parties who purchase items subject to "secret
transfers and liens" under "established elementary principles").
108. See Sanders, 28 Ohio St. at 641 (observing that the question of whether a conditional sale is
a subterfuge of registry laws is for the legislature to decide); see also Shaw v. Wilshire, 65 Me. 485,
2013]
SECURED TRANSACTIONS HisTORY
335
sale, some secured parties may have used the transaction to evade filing
requirements to their detriment.
C.
Coming ofAge As a FinamingDevice
Given Gilmore's predisposition to disregard historical facts, he claimed
that lawyers eventually put his theoretical construct to use as a security
device for two financing situations: industrial equipment financing and
0 9
consumer goods financing near the end of the nineteenth century.
Both of these fields did not use the conditional sale as a security device;
instead, they relied upon the car trust"'o and the bailment lease."
The car trust spawned a later set of recording statutes in the 1880s: the
car trust acts. 1 12 Originally, jurists treated railroad rolling stock as a
490-91 (1876) ("After it became apparent that, in place of taking mortgages to secure the purchase
money, sellers of chattels were making a practice of stipulating in the contract of sale that the
property should remain theirs until the price was paid, and the court had held ... that the statute did
not extend to liens thus created because there was no mortgage from the debtor and no
unconditional transfer of tide from the vendor, the legislature again intervened with the
requirement ... invalidating every such agreement where a note is given for the purchase money,
unless it is made and signed as part of the note and unless recorded like mortgages of personal
property, when such note exceeds thirty dollars." (internal citations omitted)).
109. See 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 67-68 (1965)
("The great mutation in the life of the conditional sale came when, shortly before the turn of the
century, it was put to work, as a security device, in two unlike fields: in industrial equipment
financing .. . and in consumer goods financing.. . .").
110. See Notes, FederalProtection of Secrity Interests in Camiers' Mobile Eqmuoment, 71 HARV. L. REV.
1516, 1521-22 (1958) (noting that beginning in 1848, railroads developed the car trust as a security
device.) A trustee would take tide to a group of cars and then sell participation certificates to
investors. Id. Under the "New York Plan," the trustee entered into a conditional sale with the
railroad, whereas under the "Philadelphia Plan," the trustee entered into a lease with the railroad. Id.
at 1522; see also Hervey v. R.I. Locomotive Works, 93 U.S. 664, 672 (1876) (affirming that an owner
of an engine must record the sale under the chattel mortgage acts to retain a security interest); Strong
v. Taylor, 2 Hill 326, 328-29 (N.Y. 1842) (regarding a contract for sale of a canal boat not as a
mortgage, but rather as a conditional sale); Haak v. Linderman & Skeet, 64 Pa. 499, 501-02 (1870)
(concluding a contract for sale of a house car was not a bailment but a conditional sale); Lehigh Co.
v. Field, 8 Watts & Serg. 232, 241 (Pa. 1844) (concluding a contract for a canal boat represented a
lease, leaving the ownership vested in the builder).
111. See infra notes 123-28 and accompanying text (describing the bailment lease); see, e.g.,
Myers v. Harvey, 2 Pen. & W. 478, 481 (Pa. 1831) (recognizing the validity of a bailment lease). Bet
see Murch v. Wright, 46 Ill. 487, 488 (1868) (concluding a transaction for a piano was a conditional
sale even though it purported to be a lease); Couse, 11 Mich. at 66-67 ("Couse sold to one Hamilton a
piano forte, conditionally, or perhaps, to speak more correctly, agreed to sell it, and gave into his
possession the instrument upon an agreement."); Pinkham v. Mattox, 53 N.H. 600, 602 (1873)
(affirming a contract for the sale of a sewing machine was a conditional sale); White v. Singer Mfg.
Co., 4 Ohio Dec. Reprint 118, 118 (Ct. Com. Pl. 1878) (referring to the lease of a sewing machine as
a conditional sale).
112. See Act of Apr. 3, 1882, ch. 215, 1882 Md. Laws 317 ("[A]uthoriz[ing] conditional sales of
Railroad Equipments and Rolling Stock"); see also LOANS, BAILMENTS AND CONDITIONAL SALES OF
336
ST. MARY'S LA WJOURNAL
[Vol. 44:317
fixture, i.e. part of the real estate, and so the car trusts did not require a
filing under the chattel mortgage acts.' 1 3 Long-term real estate recordings
worked. Unfortunately, the situation changed beginning in the 1850s and
quickened in the 1870s as states adopted constitutional provisions and
statutes that deemed railroad rolling stock personalty." 4 Then in 1880,
the United States Supreme Court declared the car trust a chattel mortgage
that required a chattel mortgage filing to gain priority."' But the lack of
filing duration under the chattel mortgage acts caused problems for longterm installment purchases of railroad rolling stock."' 6 Some statutes had
short duration limits for the chattel mortgage, instituting filing deadlines of
two months to a few years." 7 Other statutes had re-filing requirements
after a year or so." 8
Another problem with the chattel mortgage statutes was their lack of
RAILWAY ROLLING STOCK, 32d Gen. Assemb. (Ill. 1881) (providing for a valid lien against rolling
stock if instrument is in writing and recorded); Act of Mar. 17, 1882, ch. 454, 1882 Ky. Laws 43-44
("[P]rovid[ing] a security for manufacturers and vendors of railroad equipment and rolling stock in
making conditional sales thereof."); S.B. 43, 65th Gen. Assemb., 1st Sess. (Ohio 1882) (requiring
recording or filing "in the office of the secretary of state" to "be valid against creditors or innocent
purchasers"); Act of Mar. 17, 1882, ch. 106, 1882 W. Va. Laws 310-11 (regulating rolling stock and
other conditionai sales and loans, which all require a writing and filing of notice for validity against
creditors and subsequent purchasers). See generally Francis Rawle, Car Trust Securities, Paper Read at
(Aug. 20th, 1885), at 26, available at
the 8th Annual Meeting of the A.B.A.
http://archive.org/details/cu31924018840847 (enumerating adoption dates of "acts relating to
rolling stock contracts" across several states).
113. See Farmers' Loan & Trust Co. v. Hendrickson, 25 Barb. 484, 485-86 (N.Y. Gen. Term
1857) (noting the railroad company executed and filed real estate mortgages in 1853 on engines and
cars). But c 1 ISAAC REDFIELD, THE LAW OF RAILWAYS 534 (3d ed. 1867) (noting that railroads
generally had no requirement to file, until the passage of the *first conditional sales acts). See general#
Francis Rawle, Car Trust Securities, Paper Read at the 8th Annual Meeting of the A.B.A. (Aug. 20th,
1885), at 17-18, available at http://archive.org/details/cu31924018840847 (listing the states that
required recording and those that did not require recordation for valid liens against creditors and
good faith purchasers).
114. See Boston, Concord & Montreal R.R. v. Gilmore, 37 N.H. 410, 421-23 (1858) (rejecting
the concept of rolling stock as fixtures unable to be attached separately from realty); see also 1
LEONARD A. JONES, A TREATISE ON THE LAW OF MORTGAGES OF REAL PROPERTY 356 n.3 (3d
ed. 1882) (listing codes and constitutional provisions that established the classification of rolling
stock as realty, fixtures, and personalty).
115. See Heryford v. Davis, 102 U.S. 235, 244, 244-47 (1880) (rejecting the contract for railroad
cars as a lease or as a conditional sale and holding the contract constituted a mortgage).
116. See Francis Rawle, Car Trust Securities, Paper Read at the 8th Annual Meeting of the
A.B.A. (Aug. 20th, 1885), at 26, available at http://archive.org/details/cu31924018840847 (noting the
limited duration of validity given to recordation).
117. See id. (remarking that the validity of recordation is limited to short time periods, often
from only two or three years in some states).
118. See id. ("In Arkansas, Kansas, Michigan, Minnesota, New Mexico, New York, Ohio,
Nevada and Oregon, mortgages must be re-filed at the end of one year; in Wisconsin, at the end of
two years; and in Dakota, at the end of three years.").
2013]
SECURED TRANSACTIONS HISTORY
337
uniformity. Some statutes required filing at the rolling stock's location
when executing the transaction, while other statutes required filing
wherever the rolling stock existed from time to time."9 Beginning in
Illinois, corporations selling railroad equipment, led by the Baldwin
Locomotive Works of Philadelphia,' 2 0 sponsored the car trust recording
acts to achieve the desired long-term duration and uniformity in filing
standards.' 2 ' In short, the industrial equipment financing had little to do
with the conditional sales acts. Just as in the cases of the southern and
northern chattel mortgage acts, the lenders sponsored the acts.12 2
The bailment lease, developed in Pennsylvania, allowed the buyer/lessee
to lease goods with an option to purchase the goods during or at the
expiration of the term of the lease.' 2 1 Parties occasionally represented the
rent by a series of notes, especially in the case of equipment.' 24 Isaac
Merrit Singer of the Singer Sewing Machine Company adapted the
bailment lease to consumer goods financing by introducing the consumer
119. See id. (noting a wide variation in recording requirements among the states).
120. See George Gleason Bogert, The Proposed Unform ConditionalSales Act, 3 CORNELL L. Q. 1,
9 (1917) ("These existing acts are said to have been passed as a result of the efforts of the Baldwin
Locomotive Works and other corporations interested in the sale of railway equipment to railroads
under conditional sale contracts, sometimes called 'equipment trust contracts.".
121. The modern code has a five-year duration for filings, except for public-finance and
manufactured home transactions, which have a thirty-year duration, and for transmitting utilities,
including railroads, which have an indefinite duration. U.C.C. §§ 9-102(a)(80), 9-515(a), (b), (0, cmt.
2 (2011). Compare Act of Feb. 7, 1883, ch. 146, 1883 Del. Laws 211 (restricting contract term to ten
years and stipulating recordation with secretary of state and in county of principal office of buyer or
lessee), with Act of Apr. 3, 1882, ch. 215, 1882 Md. Laws 317 (limiting term to ten years and requiring
filing in county of principal office). See also Act of Mar. 17, 1882, ch. 454, 1882 Ky. Laws 43
(authorizing a maximum term of ten years and filing with secretary of state in the clerk's office in the
county of residence or principal office); S.B. 43, 65th Gen. Assemb., 1st Sess. (Ohio 1882)
(stipulating filing with the secretary of state and remaining effective until "purchase money shall have
been fully paid"). See generally LOANS, BAILIMENTS AND CONDITIONAL SALES OF RAILWAY
ROLLING STOCK, 32d Gen. Assemb. (Ill. 1881) (limiting to four years duration in each county). This
was not much of an improvement over the prior two-year period of the chattel mortgage act.
122. See George Lee Flint, Jr. & Marie Juliet Alfaro, Secured Transactions Histoy: The Impact of
Southern Staple Agriculture on the First ChattelMortgageActs in the Anglo-American World, 30 OHIO N.U. L.
REv. 537, 542-43 (2004) (outlining the history of secured transactions, beginning with the county
court records of Accomack-Northampton, Virginia between 1632 and 1640).
123. Pennsylvanians needed some sort of non-possessory security interest and so turned to the
modified lease. See, e.g., Myers v. Harvey, 2 Pen. & W. 478, 481 (Pa. 1831) (recognizing the bailment
lease because Pennsylvania had rejected the conditional sale in Martin v. Mathiot, 14 Serge. & Rawle
214, 216 (1826)).
124. See, e.g., Hervey v. R.I. Locomotive Works, 93 U.S. 664, 665 (1876) (listing rent for a
locomotive: 10% cash and three notes due at different times and in ascending amounts).
338
ST. MARY'S L4 WJOURNAL
[Vol. 44:317
installment sale.1 25 By the 1850s, factories could mass-produce consumer
durables, but the average worker lacked sufficient money to make a
purchase. 12 6 In 1856, to expand his market, Mr. Singer first proposed to
"rent" a sewing machine to housewives and credit the rent to the purchase
price.
Consequently, the first conditional sales acts passed by the
several states also covered leases of goods. 1 28
Had these two fields, industrial equipment financing and consumer
goods financing, played a role in passing the conditional sales acts, it would
seem likely that the first conditional sales acts would have appeared in the
railroad or manufacturing states-Pennsylvania for the Baldwin
Locomotive Works or New York for the Singer Manufacturing Company,
respectively.
However, the fact that farm states passed the first
conditional sales acts suggests farmers, or those lending to farmers by
taking assignments of their conditional sales transactions, played a
significant role in passage. 1 2 9
125. See Timothy J. Muris, Payment Card Regulaion and the (Mis)appeaion of the Economics of TwoSided Markets, 2005 COLUM. Bus. L. REV. 515, 529 (2005) ("Singer Sewing Machine Company was
the first large scale issuer of installment credit for consumer sales, beginning in 1850.').
126. See Davis v. Emery, 11 N.H. 230, 232 (1840) (observing that a conditional sale is a
convenient method to purchase when the buyer lacks sufficient cash for an outright purchase).
127. See, e.g.,Timothy J. Muris, Payment Card Regulation and the (Mis)application of the Economics of
Two-Sided Markets, 2005 COLUM. BUS. L. REv. 515, 529 (2005) (noting that in 1850, the Singer Sewing
Machine Company became the first consumer driven issuer of installment credit on a large scale).
128. See 30 ARiz. REv. STAT. ANN. § 2702 (1901) (requiring recordation of conditional sales
and leases similar to chattel mortgages); seealso 1 ALA. CODE § 1017 (1897) (regulating recordation of
conditional sales and leases of personalty); Conditional Sales or Transfers of Personal Property, ch.
40, 1895 Wyo. Laws 80-81 (enacting requirements that conditional sales and leases of personalty be
written and recorded); H.F. 47, 14th Gen. Assemb., Reg. Sess. (la. 1872) ("Requiring that conditional
Sales of Personal Property be executed, acknowledged, and recorded like Mortgages of Personal
Property, to be of any Validity as against bona fide Purchasers, Executions, and attaching
Creditors."); Act of Feb. 19, 1877, 1877 Neb. Laws 170-71 ("[Plrevent[ing] the fraudulent transfer of
personal property."); H.B. 1051, 66th Gen. Assemb., Adjourned Sess. (Ohio 1885) (regulating
conditional sales and leases of personalty through rates and filing requirements); H.B. 53, 3d Leg.,
Reg. Sess. (Wash. 1893) (stating regulations for conditional sales or leases of personalty against
creditors and bona fide purchasers); cf U.C.C. § 9-309 cmt. 3 (2011) ("No filing or other step is
required to perfect a purchase-money security interest in consumer goods."); id. § 9-324(a) (2011)
(stating that generally "a perfected purchase-money security interest in goods ... has priority over a
conflicting security interest in the same goods").
129. See generally H.F. 47, 14th Gen. Assemb., Reg. Sess. (la. 1872) ("Requiring that conditional
Sales of Personal Property be executed, acknowledged, and recorded like Mortgages of Personal
Property, to be of any Validity as against bona fide Purchasers, Executions, and attaching
Creditors."); Act of Mar. 16, 1870, ch. 143,1870 Me. Laws 108 (requiring recordation of conditional
sales of personalty valued over thirty dollars).
2013]
SECURED TRANSACIONS HISTORY
339
D. Redundant ConditionalSales Acts
Nevertheless, Gilmore intimated that a generation or two after the
development of the conditional sale as a security device, judges and
legislatures determined the transaction should be treated the same as a
chattel mortgage.1 3 0
Only two states, Kentucky in 1874132 and South Carolina in 1883,"'
followed this Gilmorian model of requiring recordation of conditional
sales under the chattel mortgage acts (by court decision rather than
legislative action), both doing so after the adoption of the first conditional
sales acts in other states.' 3 3 The other states, not following the Gilmorian
model, instead passed an additional set of filing statutes, but with
significant differences from the supposedly modeled-upon chattel
mortgage acts, e.g. different filings under different principles default
130. See 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 68 (1965) ("The
reaction, judicial and legislative, over a generation or two, was predictable and sensible: now that the
conditional sale was being used as a security device, it should be treated like a security device. That is
to say, it should be treated like a chattel mortgage. In a majority of jurisdictions, filing statutes were
passed. . . ."). Judges are much more conservative than Gilmore depicts. Most did not treat
conditional sales the same as chattel mortgages. When confronted with the argument that the
conditional sale should be filed the same as a chattel mortgage, most judges decided no such
requirement existed. See Bailey v. Harris, 8 Iowa 331, 332-33 (1859) (concluding that it was error to
allow a conditional sale vendor to lose to a good faith purchaser because the transaction was not on
record); Haven v. Emery, 33 N.H. 66, 69-70 (1856) (noting that because no law required notice by
either registration or publication, notice to the agents was sufficient); Grant v. Skinner, 21 Barb. 581,
584 (N.Y. 1854) (deciding the lower court erred by instructing the jury that a conditional sale was a
mortgage and that a good faith purchaser had priority because the sale was not recorded); Ellison v.
Jones, 26 N.C. 48, 49 (1843) (holding that a conditional sale was executory and thus did not have to
be recorded); Buson v. Dougherty, 30 Tenn. 50, 52 (1850) (affirming that no law requires a
conditional sale be filed when challenged by a judgment lien). Common sense indicates that
Gilmore's intimation could not be correct. If the legislatures wanted to treat conditional sales as
chattel mortgages, they would have just appended conditional sales to the chattel mortgage acts,
rather than create entirely new statutes with different filing places and different default provisions.
131. See Barney & Smith Mfg. Co. v. Hart, 1 S.W. 414, 416 (Ky. 1886) (affirming that a contract
for the construction of railroad cars must be filed and recorded for validity against creditors and bona
fide purchasers); see also Greer v. Church & Co., 76 Ky. 430, 435 (1877) (referring to registration
statutes to secure a lien for a piano against judgment by innocent purchasers); Vaughn v. Hopson, 73
Ky. 337, 343 (1874) (concluding that conditional sales must be registered under chattel mortgage act
for validity against good faith purchaser), overruling Patton v. McCane, 54 Ky. 555, 557-58 (1855)
(deciding that no registration was required for a conditional sale to be valid against a good faith
purchaser).
132. See Herring & Co. v. Cannon, 21 S.C. 212, 215 (1883) (requiring recordation of a
conditional sale under the chattel mortgage act to be valid against a judgment lien), overruling Dupree
v. Harrington, 16 S.C.L. 391 (1824).
133. See 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 68 (1965)
(observing that courts began to treat conditional sales as chattel mortgages with respect to filing
requirements, although the filing requirements differed).
ST. MARY'S LAWJOURNAL
340
[Vol. 44:317
procedures.'
After determining that a conditional sale should be treated
as a chattel mortgage, Gilmore could not provide an explanation for these
differences other than jurists desiring to preserve conditional sales as a
separate security device.' 3 5
Gilmore provided no explanation of when or where legislatures first
passed the conditional sales acts, much less who proposed them for
passage or why (other than that they resembled a chattel mortgage, which
did require a filing) 13'6 As everyone likely knows, businessmen, and the
judges and legislators they help elect are resistant to change. No change
will occur without some event spurring it, such as a decision in a
neighboring state that, if adopted in the present jurisdiction, could upset
the well-settled rule these businessmen relied on in shaping their
transactions.' 3 When a decision like Wait provides an exception to the
usual common law conditional sale rule that the vendor takes over the
judicial lien and a good faith purchaser, this would be an event sufficient
to spur such change.' 3 8
III.
THE PRE-ACT AMERICAN DECISIONS
The use of the conditional sales transaction before the adoption of the
conditional sales acts provides clues to the passage of those acts.
However, interpretation of those clues requires caution. For instance, the
evidence found in American appellate opinions contains two drawbacks.
First, the facts behind appellate opinions in the Anglo-American system
Parties do not litigate over
are often bizarre, pathological, and atypical.'
134. See id. (remarking that the files were not maintained with those of chattel mortgages, and
were set up under a different theory; in essence, the default procedures differed).
135. See id. ("The very fact that the two devices were maintained as separate entities naturally
led the courts to refined distinctions as to their 'true nature.").
136. See id. ("[Whereas] the conditional sale promised a way of avoiding both the filing
requirements and the cumbersome foreclosure procedures of the chattel mortgage law as well as the
crippling restrictions of the usury laws.").
137. See, e.g., George Lee Flint, Jr., Secured TransactionsHistog: The Impact of Textile Machiney on the
Chattel MortgageActs of the Northeast, 52 OKLA. L. REV. 303, 355-62 (1999) (discussing the roles of
different interest groups in the legislative debate in New York state that resulted in the
implementation of statutes that were hostile to chattel mortgages).
138. Wait v. Green, 46 How. Pr. 449, 450 (N.Y. 1867), afg, 35 Barb. 585 (N.Y. Gen. Term
1862). See Mowrey v. Walsh, 8 Cow. 238, 245 (N.Y. 1828) (reiterating protection of bona fide
purchasers in transactions with vendors who fraudulently obtained tide to property); see also W.
Transp. Co. v. Marshall, 37 Barb. 509, 515 (N.Y. Gen. Term 1862) (interpreting the protection of
bona fide purchasers in the context of the purchase of bills of lading).
139. KARL N. LLEWELLYN, THE BRAMBLE BUSH: ON OUR LAW AND ITS STUDY 62 (1960).
2013]
SECURED TRANSACTIONS HISTORY
341
14 0
Typical fact patterns
well-settled situations described in the legal rules.
Parties oilly
result in settlement before reaching the appellate courts.'
fight over questionable cases that do not fit the accepted legal rule.1 4 2 So,
the facts underlying some opinions might not provide an accurate
4
depiction of accepted business practices during that era.' 4 But the rule in
general use is reflected in the opinions.'" The party favored by that rule
would advocate its application. The other party would advocate an
exception. The court's rule usually modifies the generally accepted rule to
fit the bizarre situation. Historians can make inferences as to the era's
accepted business practices from the rule in general use.
Second, the facts behind appellate opinions in the Anglo-American
45
The
system are not readily available and are severely attenuated.'
46
American legal system employs an adversarial scheme.'
As a result,
parties only present those facts favorable to their position to the trial
court.14 7 Appellate lawyers further reduce these facts by disclosing to the
appellate court only those facts important to their particular point on
appeal.' 4 The appellate judges then sift these facts to present only those
facts necessary to support their opinion.
Before 1880, the various state reports included 210 appellate opinions
dealing with the conditional sales transaction, most dating from before the
Strikingly, Vermont
passage of their respective conditional sales act.'
140. See generally id. ("Being cases at law, however, they indicate in the first instance not disputes
in life, but quarrels before the courts. Now I have already argued that quarrels before the courts are
but a minor fraction of the quarrels of life. I can go further and argue that quarrels in life are still a
lesser fraction of life's business.").
141. Cf id. at 63.
142. Id.
143. See id. at 65 (discussing "the difference between the rule of law" and "the way the court[s]
interpreted the facts" (emphasis omitted)). The logical inference is that the opinions written by the
court would illustrate the rule in general use.
144. Id. at 65-66.
145. Id. at 34-35.
146. See id. at 22 ("[O]ur system of law lets the parties fight their own battles, in the main.
What they do not claim, they cannot have. What they do not or cannot prove, is irrelevant to the
court.").
147. See id. ("We have not thus far ... found out anything definite about the facts of the
original event, about what really happened. We have the plaintiff's statement, we have the
defendant's. But both may be mistaken, both may even be lying.").
148. See id. at 35 ("The two lawyers have again sifted-this time solely from the record of the
trial-what seemed to bear on [the] points upon appeal.").
149. See id. ("Finally, with a decision already made, the judge has sifted through these 'facts'
again, and picked a few which he puts forward as essential--and whose legal bearing he then
proceeds to expound.").
150. See infra Section III(A)-(D) and accompanying text (listing opinions).
ST. MARY'S LA wJouRNAL
342
[Vol. 44:317
and Maine have the most appellate opinions of all states, 42 and 17
respectively; however, Iowa has a surprising 9 opinions, placing it sixth
amongst states with conditional sales transaction cases adjudicated prior to
1880.15s Admittedly, these would become the first three states to adopt a
However, the disproportionate number of
conditional sales act. 15 2
opinions from these states reflect either the vitality of the conditional sales
transaction in these state's economies, or the litigiousness of their citizens.
To understand why the conditional sales acts arose in the 1870s
requires: (1) A determination of who took advantage of the common law
priority rule for the conditional sales transaction during the pre-conditional
sales act era; and, (2) Determining their business practices with respect to
the conditional sales transaction. The first aspect involves identifying the
vendors, vendees, their courthouse opponents, and the item conditionally
sold. The second aspect involves examining the form of the conditional
sales transactions and the legal actions they engendered. Legislators,
through passage of the conditional sales acts and their predecessor
statutes, would endeavor to alleviate the problems revealed by this analysis.
A.
The Parties
The relevant opinions seldom described the parties' occupations. When
described, the occupations enumerated divide into six groups: commercial
merchants, manufacturers, transporters, townspeople, farmers, and
Commercial merchants encompass wholesalers and
households. 1 5 3
Depending
bankers, while townspeople include retailers and lawyers.1 5
151. The industrial states followed: New York with seventeen and Massachusetts and New
Hampshire with fifteen each. The other states had considerably less: Indiana with nine, Georgia with
eight, Michigan, Pennsylvania, and Missouri with seven each, Alabama with six, Tennessee with five,
Kansas, North Carolina, South Carolina, Mississippi, and California with four each, Wyoming with
three, Nebraska, Wisconsin, Minnesota, Virginia, Connecticut, Illinois and Kentucky with two each,
and New Jersey, Ohio, Delaware, Maryland, Arkansas, Colorado, Oregon, Nevada, and the District
of Columbia with one each.
152. See infra notes 253, 260, 263 and accompanying text (listing the first three states to adopt).
153. See George Lee Flint, Jr., Secured Transactions Histoy: The Northern Struggle to Defeat the
judgment Lien in the Pre-ChattelMortgage Act Era, 20 N. ILL. U.L. REv. 1, 9-13 (2000) (providing an
analysis of the parties involved in the pre-chattel mortgage act appellate opinions).
154. See Puffer v. Peabody, 59 Ga. 295, 296 (1877) (identifying parties as "druggist" and
"Manufacturer of Soda Water Apparatus," and classifying the case as involving a townsperson
vendee and a manufacturer vendor); see also Sargent v. Metcalf, 71 Mass. 306, 306 (1855) (classifying
claims of one carriage dealer against another carriage dealer, as a case involving a commercial
merchant vendee and a commercial merchant vendor); Stadtfeld v. Huntsman & Co., 92 Pa. 53, 53
(1879) (reviewing an action for replevin by a company "engaged in the furniture business," and
classifying it as a case involving a townsperson vendor); Rowan v. State Bank, 45 Vt. 160, 160-61
(1872) (examining the right of a bank to seize property when its mortgagor fails to use the equipment
2013]1
SECURED TRANSACIONS HISTORY
343
on the opinion's description of the occupation, a difficulty may arise in
determining the occupation's group. For example, many opinions labeled
the party as an unspecified "mercantile firm."' 5 5 Those mercantile firms
that resemble wholesalers appear as commercial merchants, those
resembling retailers appear as townspeople, and those purchasing
6
manufacturing equipment appear as manufacturers.' 5
Of those opinions that do describe the parties' occupations, the majority
(seventy) describe the vendee."' Of this meager selection of vendees,
manufacturers, appeared in twenty-two of the seventy opinions (31/6),'
followed by townspeople in eighteen opinions (26%),s' transporters in
to deliver on a contract necessary to pay the mortgage, which has been classified as a case involving a
commercial merchant vendor and a manufacturer vendee).
155. See, e.g., Bradshaw v. Warner, 54 Ind. 58, 58 (1876) (examining a transaction for a safe
between an unspecified mercantile firm and an unclassified party); see also Jones v. Albin Sons & Co.,
53 Ga. 585, 586 (1875) (reviewing a dispute between two named companies regarding the purchase
of a hearse); Lane v. Borland, 14 Me. 77, 77 (1836) (involving a transaction between an unspecified
mercantile firm and an unclassified party for a horse); Giddey v. Altman, 27 Mich. 206, 206 (1873)
(contracting for the purchase of a piano by a named company in exchange for four hundred
newspaper subscription tickets); Herring v. Hoppock, 15 N.Y. 409, 410 (1857) (determining which
individual had priority on a safe under a sheriff's levy while the safe remained in the possession of a
named company); Warner v. Roth, 2 Wyo. 63, 64 (1879) (addressing the issue of a conditional sale of
a safe that arose between a named company and an unspecified party).
156. See Manning, Bowman & Co. v. Keenan, 73 N.Y. 45, 47 (1878) (examining an action
brought by a manufacturer vendor against a purchaser who was a silverware retailer); see also Flanders
& Huguenin v. Maynard, 58 Ga. 56, 57-58 (1877) (reviewing an action for trover brought against a
factor acting as a consignee for the purchaser); Whitney v. McConnell, 29 Mich. 12, 13 (1874)
(pursuing an action for replevin brought by a mercantile firm resembling a retailer against a
household vendee); Griffin v. Pugh, 44 Mo. 326, 326 (1869) (discussing an action of replevin by a
purchaser of manufactured equipment); Davis & Aubin v. John Bradley & Co., 24 Vt. 55, 56 (1851),
afd,28 Vt. 118 (1855) (considering an action for trover brought by a wholesaler of wool).
157. See infra notes 158-63 (listing cases).
158. There were twenty-two cases involving manufacturers as the described vendee: Jones v.
Pullen, 66 Ala. 306 (1880); Gluckauf v. Urton, 19 Cal. 61 (1861); Watertown Steam Engine Co. v.
Davis, 10 Del. 192 (Super. Ct. 1877); Eaton v. Munroe, 52 Me. 63 (1862); Waterston v. Getchell, 5
Me. 435 (1828); Raddin v. Arnold, 116 Mass. 270 (1874); Day v. Bassett, 102 Mass. 445 (1869);
Coggill v. Hartford & New Haven R.R. Co., 69 Mass. 545 (1854); Duke v. Shackleford, 56 Miss. 552
(1879); Wangler v. Franklin, 70 Mo. 659 (1879); Gnffin, 44 Mo. 326; Cochran v. Flint, 57 N.H. 514
(1877); Hawkins v. Brown & Jeffery, 30 Barb. 206 (N.Y. Gen. Term 1859); Grant v. Skinner, 21
Barb. 581 (N.Y. Gen. Term 1854); Creps v. Dunham, 69 Pa. 456 (1871); Jenkins v. Eichelberger, 4
Watt. 121 (Pa. 1835); Hilliard Flume & Lumber Co. v. Woods, 1 Wyo. 396 (1878); In re Binford, 3 F.
Cas. 394 (C.C. E.D. Va. 1879); Bailey v. Henderson, 2 F. Cas. 373 (D. Vt. 1878); Kellogg v. Fox &
Minogue, 45 Vt. 348 (1873); Davenport v. John G. Shants & Co., 43 Vt. 546 (1871); Rowan v. Union
Arms Co., 36 Vt. 124 (1863), afdsub nom. Rowan v. State Bank, 45 Vt. 160 (1872).
159. Eighteen cases described the vendee as townspeople: George v. Tufts, 5 Col. 162 (1879);
Tomlinson v. Roberts, 25 Conn. 477 (1857); Puffer, 59 Ga. 295; Goodwin v. May, 23 Ga. 205 (1857);
Bradshaw, 54 Ind. 58; Lane, 14 Me. 77 (1836); Burbank v. Crooker, 73 Mass. 158 (1856); Dresser Mfg.
Co. v. Waterston, 44 Mass. 9 (1841); Gidde, 27 Mich. 206 (1873); Manning, 73 N.Y. 45; Boon v. Moss,
70 N.Y. 465 (1877); Herring,15 N.Y. 409; Staats v. Hodges, Hill & Den. 211 (N.Y. 1843); In re Wylie,
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[Vol. 44:317
fourteen opinions (20%),"'o and farmers in eight opinions (11%).6' The
commercial merchant vendeeS1 62 and the households 1 6 3 trailed with four
opinions (6%) each. These figures suggest that townspeople (purchasing
finished inventory), manufacturers (purchasing unfinished inventory), and
transporters (purchasing vehicles) were the primary beneficiaries of the
conditional sale because it enabled them to purchase goods on credit.
However, the much more numerous collateral descriptions suggest
otherwise.1 6'
The collateral description opinions include the situations
that omitted description of the vendee.
Opinions identifying the vendor number even fewer than those
identifying the vendee: only fifty (24%) of the 210.165 These opinions
indicate a preponderance of commercial merchants, manufacturers, and
townspeople as vendors. Commercial merchants appeared in sixteen of
the fifty opinions (32%) selling predominately to townspeople and
manufacturers. 1 6 ' Both manufacturer vendors, selling predominately to
90 Pa. 210 (1879); Waldron v. Haupt, 52 Pa. 408 (1866); Armington v. Houston, 38 Vt. 448 (1866);
Fales v. Roberts, 38 Vt. 503 (1866); Warner,2 Wyo. 396.
160. Putnam v. Lamphier, 36 Cal. 151 (1868); Ownes v. Hastings & Saxton, 18 Kan. 446
(1877); Patton v. McCane, 54 Ky. 555 (1855); Rogers Locomotive Works v. Lewis, 20 F.Cas. 1134
(C.C. Mo. 1877); Loring v. Loring, 64 Me. 556 (1875); Brown v. Haynes, 52 Me. 578 (1864);
Blanchard v. Child, 73 Mass. 155 (1856); Marston v. Baldwin, 17 Mass. 606 (1822); Haven v. Emery,
33 N.H. 66 (1856); Tuthill v. Wheeler, 6 Barb. 362 (N.Y. Gen. Term 1849); Strong v. Taylor, 2 Hill
326 (N.Y. 1842); Martin v. Mathiot, 14 Serge. & Rawle 214 (Pa. 1826); Buson v. Dougherty, 30 Tenn.
50 (1850); Reed v. Rice, 25 Vt. 171 (1853).
161. Holman v. Lock, 51 Ala. 287 (1874); Hallowell v. Milne, 16 Kan. 65 (1876); Whitcomb v.
Tower, 53 Mass. 487 (1847); Esty v. Aldrich, 46 N.H. 127 (1865); Houston v. Dyche, 19 Tenn. 76
(1838); Bucklin v. Beals, 38 Vt. 653 (1866); Hurd v. Fleming, 34 Vt. 169 (1861); Hunter v. Warner, 1
Wis. 141 (1853).
162. A commercial merchant vendee was described in the following cases: Flanders &
Huguenin v. Maynard, 58 Ga. 56 (1877); Jones v. Albin Sons & Co., 53 Ga. 585 (1875); Sargent v.
Metcalf, 71 Mass. 306 (1855); Davis &Aubin, 24 Vt. 55.
163. Courts described a household as the vendee in the following cases: Guilford, Wood & Co.
v. McKinley, 61 Ga. 230 (1878); Benner v. Puffer 114 Mass. 376 (1874); Sanders v. Keber & Miller,
28 Ohio St. 630 (1876); Stadtfeld v. Huntsman, 92 Pa. 53 (1879).
164. See infra notes 177-95 and accompanying text (listing cases involving collateral).
165. See infra notes 157-64 (listing cases).
166. A commercial merchant vendor was described in the following cases: Fairbanks v. Eureka
Co., 67 Ala. 109 (1880); Jowers v. Blandy, 58 Ga. 379 (1877); Jones, 53 Ga. 585; Goodwin v. May, 23
Ga. 205 (1857); Gaylor v. Dyer, 10 F. Cas. 120 (C.C.D.C. 1838); Owens v. Hastings & Saxton, 18
Kan. 446 (1877); Raddin v. Arnold, 116 Mass. 270 (1874); Benner, 114 Mass. 376; Burbank v. Crooker,
73 Mass. 158 (1856); Sargent, 71 Mass. 306; Ridgeway v. Kennedy, 52 Mo. 24 (1873); Jenkins v.
Eichelberger, 4 Watts 121 (Pa. 1835); Price v. Jones, 40 Tenn. 84 (1859); Smith v. Sharpe, 45 Vt. 545
(1873); Rowan v. Union Arms Co., 36 Vt. 124 (1863), affd sub nom. Rowan v. State Bank, 45 Vt. 160
(1872); Dai &Aubin, 24 Vt. 55.
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SECURED TRANSACTIONs HISTORY
345
townspeople,'
and
townspeople,
selling
predominately
to
households,' 6 8 appeared in thirteen opinions (26%) each, while farmers
None of the vendors were
appeared in eight opinions (16%).16'
identifiable as transporters or households. Transporters provide a service
rather than sell a product, while households consume, rather than sell
These figures do not suggest the Gilmorian model:
products.
manufacturers that sell rolling stock to railroads and manufacturers that
sell goods to consumers, unless manufacturers used middleperson-dealers
to sell to the end user.
Third parties were the least identified group in appellate opinions.
Naming a sheriff or constable executing a lien, a bankruptcy trustee, or an
assignee for benefit of creditors, obscured the identity of the creditor
interfering with the conditional sale transaction to the detriment of the
vendor.' 7 0 Nevertheless, the opinions identified thirty-four of the third
The commercial merchants' 7 ' and townspeople' 7 2
parties (16%).
167. The following cases list manufacturers as vendors: George v. Tufts, 5 Col. 162 (1879);
Watertown Steam Engine Co. v. Davis, 10 Del. 192 (Super. Ct. 1877); Puffer v. Peabody, 59 Ga. 295
(1877); Pash v. Weston, 3 N.W. 713 (Iowa 1879); Rogers' Locomotive Works v. Lewis, 20 F. Cas.
1134 (C.C. W.D. Mo. 1877); Dresser Mfg. Co. v. Waterston, 44 Mass. 9 (1841); Third Nat' Bank of
Syracuse v. Armstrong, 25 Minn. 530 (1879); Manning, Bowman & Co. v. Keenan, 73 N.Y. 45
(1878); Hawkins v. Brown & Jeffrey, 30 Barb. 206 (N.Y. Gen. Term 1859); Tuthill v. Wheeler, 6
Barb. 362 (N.Y. Gen. Term 1849); Cole, Leavitt & Co v. Howe, 50 Vt. 35 (1877); Allen v.
Whittemore, 1 F. Cas. 521 (D.C. Vt. 1876); Burnell v. Marvin, 44 Vt. 277 (1872).
168. These cases identify townspeople as the vendor: Guilford, Wood & Co., 61 Ga. 230; Waters
v. Cox, 2 Ill. App. 129 (1878); Hanway v. Wallace, 18 Ind. 377 (1862); Thomas v. Winters, 12 Ind.
322 (1859); Hall v. Draper, 20 Kan. 137 (1878); Marston v. Baldwin, 17 Mass. 606 (1822); Whitney v.
McConnell, 29 Mich. 12 (1874); Heard v. Dubuque Cnty. Bank, 8 Neb. 10 (1878); Boon v. Moss, 70
N.Y. 465 (1877); Sanders, 28 Ohio St. 630; Stadfeld, 92 Pa. 53; In re Wylie, 90 Pa. 210 (1879); Reed v.
Rice, 25 Vt. 171 (1853).
169. The following cases identified the vendor as a farmer: Flanders & Huguenin v. Maynard,
58 Ga. 56 (1877); Hallowell v. Milne, 16 Kan. 65 (1876); Brown v. Haynes, 52 Me. 578 (1864);
Waterston v. Getchell, 5 Me. 435 (1828); Whitcomb v. Tower, 53 Mass. 487 (1847); Wait v. Green
(Wait 1), 36 N.Y. 556 (1867); Wait v. Green (Wait l), 35 Barb. 585 (N.Y. Gen. Term 1862); Creps v.
Dunham, 69 Pa. 456 (1871); Bucklin v. Beals, 38 Vt. 653 (1866).
170. See, e.g., George Lee Flint, Jr., Secured Transactions History: The Northern Struggle to Defeat the
Judgment Lien in the Pre-ChattelMortgageAct Era, 20 N. ILL. U.L. REv. 1, 18-19 (2000) (discussing the
involvement of different types of creditors for secured parties and the general population who were
unable to secure their interests).
171. Commercial merchants were the identified third party in the following cases:Putnam v.
Lamphier, 36 Cal. 151 (1868); Watertown Steam Engine Co., 10 Del. 192; Flanders & Huguenin, 58 Ga.
56; DresserMfg. Co., 44 Mass. 9; Wangler v. Franklin, 70 Mo. 659 (1879); Haven v. Emery, 33 N.H. 66
(1856); In re Binford, 3 F. Cas. 394 (C.C.E.D. Va. 1879); Bucklin, 38 Vt. 653; Ron'an, 36 Vt. 124, afd
sub nom. Rowan v. State Bank, 45 Vt. 160 (1872); Dais &Aubin, 24 Vt. 55 (1851), affd, 28 Vt. 118
(1855); Hilliard Flume & Lumber Co. v. Woods, 1 Wyo. 396 (1878).
172. Cases identifying townspeople as the third party were: Jones & Albin Sons & Co., 53 Ga.
585 (1875); Burbank v. Crooker, 73 Mass. 158 (1856); Sargent v. Metcalf, 71 Mass. 306 (1855);
ST. MARY'S LAi WJOURNAL
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[Vol. 44:317
appeared in eleven opinions (32%) each. Households appeared in five
opinions (15%),171 manufacturers in three opinions (9%),74 and
farmers 1 7 5 and transporters 1 6 in two opinions (6%) each. Although
there are too few identifiable interlopers to determine with certainty, these
figures suggest that the common law rule damaged commercial merchants
and townspeople the most, having made an unsecured lending of credit to
the vendee or purchaser from the vendee without inquiring about the
origins of the goods acquired.
B.
The 'Collateral
However, the goods sold that were always identifiable revealed a
different picture. At best, the collateral implicates the vendee. However,
the middleperson dealer and the end user are both considered vendees,
with small quantities suggesting the end user. Some collateral can have
more than one type of end user. For example, all groups utilized the horse
for transportation, but even if you remove horses from the picture, the
77
results are astounding. Cases involving horses appeared in 45 opinions,
Cardinal v. Edwards, 5 Nev. 36 (1869); McFarland v. Farmer, 42 N.H. 386 (1861); Staats v. Hodges,
Hill & Den. 211 (N.Y. Sup. Ct. 1843); Haak v. Linderman, 64 Pa. 499 (1870); Duncan v. Stone, 45
Vt. 118 (1872); Clark v. Wells, 45 Vt. 4 (1872); Fales v. Roberts, 38 Vt. 503 (1866); Riley A. Deming
& Co. v. Lull, 17 Vt. 398 (1845).
173. Households were the identified third party in the following cases: Harrington v. King, 121
Mass. 269 (1876); Deyoe v. Jamison, 33 Mich. 94 (1875); Giddey v. Altman, 27 Mich. 206 (1873);
Jillson v. Wilbur, 41 N.H. 106 (1860); Maynard v. Anderson, 54 N.Y. 641 (1873).
174. Manufacturers were the identified third parties in only three cases: Day v. Bassett, 102
Mass. 445 (1869); Barrett v. Pritchard, 19 Mass. 512 (1824); Ketchum v. Brennan, 53 Miss. 596
(1876).
175. The following cases identified farmers as third parties: Davis v. Emery, 11 N.H. 230
(1840); West v. Bolton, 4 Vt. 558 (1832).
176. The identified third parties in the following cases were transporters: Coggill v. Hartford &
New Haven R.R. Co., 69 Mass. 545 (1854); Wayne & Wayne v. Sherwood, 14 Barb. 633 (N.Y. Gen.
Term 1853).
177. The cases involving horses were as follows: Elmore v. Fitzpatrick, 56 Ala. 400 (1876);
Holman v. Lock, 51 Ala. 287 (1874); Carroll v. Wiggins, 30 Ark. 402 (1875); Lucas v. Birdsey, 41
Conn. 357 (1874); Tomlinson v. Roberts, 25 Conn. 477 (1857); Boyer v. Ausburn, 64 Ga. 271 (1879);
Ketchum v. Watson, 24 Ill. 591 (1860); Dunbar v. Rawles, 28 Ind. 225 (1867); Vanschoiach v.
Farrow, 25 Ind. 310 (1865); Hanway v. Wallace, 18 Ind. 377 (1862); Shireman v. Jackson, 14 Ind. 459
(1860); Collins v. Bradbury, 64 Me 37 (1875); Bunker v. McKenney, 63 Me. 529 (1874); Allen v.
Delano, 55 Me. 113 (1867); Whipple v. Gilpatrick, 19 Me. 427 (1841); Lane v. Borland, 14 Me. 77
(1836); Tibbetts v. Towle, 12 Me. 341 (1835); Little v. Page, 44 Mo. 412 (1869); King v. Bates, 57
N.H. 446 (1876); McFarland v. Farmer, 42 N.H. 386 (1861); Kimball v. Jackman, 42 N.H. 242 (1860);
Gaither v. Teague, 26 N.C. 65 (1843); Whitcomb v. Hungerford, 42 Barb. 177 (N.Y. Gen. Term
1864); Wait v. Green (Wait 1), 35 Barb. 585 (N.Y. Gen. Term 1862), affd, 36 N.Y. 556 (1867);
Clayton v. Hester, 80 N.C. 275 (1879); Parris v. Roberts, 34 N.C. 268 (1851); Ellison v. Jones, 26
N.C. 48 (1843); Martin v. Mathiot, 14 Serge. & Rawle 214 (Pa. 1826); Bennett v. Sims, 24 S.C.L. 421
2013]
SECURED TRANSACIONs HIsTORY
347
leaving 165 opinions.
Farmers had the greatest presence in these opinions. Sixty-one opinions
of the 165 opinions (37%) involved farm-related goods, revealing
conditional sales purchases by farmers of oxen, cattle, mules
(predominately in the South), sheep, wagons, agricultural machinery, and,
The remaining groups numbered
in the ante-bellum South, slaves.'17
almost equally, at less than half as much as the farmers. Twenty-nine
opinions (18%) revealed townspeople's conditional sales purchases of
various inventory items such as wool, millinery, rum, chaises, boarding
house provisions, and various equipment such as safes, printing
equipment, billiard tables, soda fountains, blacksmith's tools, hotel
(1839); Reeves v. Harris, 17 S.C.L. 563 (1830); Dupree v. Harrington, 16 S.C.L. 391 (1824); Holmark
v. Molin, 45 Tenn. 482 (1868); Houston v. Dyche, 19 Tenn. 76 (1838); Clark v. Hayward, 51 Vt. 14
(1878); Bedell v. Foss, 50 Vt. 94 (1877); Kelsey v. Kendall, 48 Vt. 24 (1875); Kent v. Buck, 45 Vt. 18
(1872); Clayton v. Scott, 43 Vt. 553 (1871); Hefflin v. Bell, 30 Vt. 134 (1858); White v. Langdon, 30
Vt. 599 (1858); Buckmaster v. Smith, 22 Vt. 203 (1850); Hunt v. Douglass, 22 Vt. 128 (1849); Smith
v. Foster, 18 Vt. 182 (1846); Bigelow v. Huntley, 8 Vt. 151 (1836); Hunter v. Warner, I Wis. 141
(1853).
178. The following cases involved oxen: Helm v. Dumars, 3 Cal. 454 (1853); Brown v. Haynes,
52 Me. 578 (1864); Rawson v. Tuel, 47 Me. 506 (1859); George v. Stubbs, 26 Me. 243 (1846);
Leighton v. Stevens, 19 Me. 154 (1841); Heath v. Randall, 58 Mass. 195 (1849); Vincent v. Cornell, 30
Mass. 294 (1832); Clay v. Bohonon, 54 N.H. 474 (1874); Ballard & Sampson v. Burgett, 47 Barb. 646
(N.Y. Gen. Term. 1866), afd, 40 N.Y. 314 (1869); Johnson v. Worden, 47 Vt. 457 (1874); Pollard v.
Bates, 45 Vt. 506 (1873); Fuller v. Buswell, 34 Vt. 107 (1861); Collins v. Perkins, 31 Vt. 624 (1859);
Martin v. Eames, 26 Vt. 476 (1854). The cases involving cattle were: Thomas v. Winters, 12 Ind. 322
(1859); Woodman v. Chesley, 39 Me. 45 (1854); Fifield v. Elmer, 25 Mich. 48 (1872); Pickett v.
Bullock, 52 N.H. 354 (1872); Esty v. Aldrich, 46 N.H. 127 (1865); Bailey v. Colby, 34 N.H. 29 (1856);
Dais, 11 N.H. 230; Taylor v. Finley, 48 Vt. 78 (1875); Bucklin v. Beals, 38 Vt. 653 (1866); Wilder v.
Stafford, 30 Vt. 399 (1858); Root v. Lord, 23 Vt. 568 (1851); West, 4 Vt. 558; Gregory v. Morris, 1
Wyo. 213 (1875). The cases involving wagons were: Putnam v. Lamphier, 36 Cal. 151 (1868);
Plummer v. Shirley, 16 Ind. 380 (1861); Techmeyer v. Waltz, 49 Iowa 645 (1878); Hallowell v. Milne,
16 Kan. 65 (1876); Boynton v. Libby, 62 Me. 253 (1874); Drew v. Smith, 59 Me. 393 (1871); Cardinal
v. Edwards, 5 Nev. 36 (1869); Buson v. Dougherty, 30 Tenn. 50 (1850); Wright v. Vaughn, 45 Vt.
369 (1873); Duncan v. Stone, 45 Vt. 118 (1872); Burnell v. Marvin, 44 Vt. 277 (1872); Child v. Allen,
33 Vt. 476 (1860); Williams v. Porter, 41 Wis. 422 (1877). The cases involving agricultural machinery
were: Pash v. Weston, 3 N.W. 713 (Iowa 1879); Knoulton v. Redenbaugh, 40 Iowa 114 (1874); Third
Nat'l Bank of Syracuse v. Armstrong, 25 Minn. 530 (1879); Heard v. Dubuque Cnty. Bank, 8 Neb. 10
(1878); Aultman, Miller & Co. v. Mallory, 5 Neb. 178 (1876); Smith v. Sharpe, 45 Vt. 545 (1873).
The cases involving slaves were: Corse v. Patterson, 6 H. & J. 153 (Md. 1824); Lewis v. Gilmer, 11
Miss. 560 (1844); Mount v. Harris, 9 Miss. 185 (1843); Crawley v. Littlefield, 34 S.C.L. 154 (1848);
Gambling v. Read, 19 Tenn. 281 (1838); Randolph v. Randolph, 17 Va. 99 (1812). The cases
involving mules were: Dudley v. Abner, 52 Ala. 572 (1875); Gluckauf v. Urton, 19 Cal. 61 (1861);
Sims v. James, 62 Ga. 260 (1879); Vaughn v. Hopson, 73 Ky. 337 (1874); Robbins v. Phillips, 68 Mo.
100 (1878). The cases involving sheep were: Bryant v. Crosby, 36 Me. 562 (1853); Whitcomb v.
Tower, 53 Mass. 487 (1847); Hurd v. Fleming, 34 Vt. 169 (1861). One case involved a chaise: Sawyer
v. Shaw, 9 Me. 47 (1832).
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ST. MARY'S LA WJOURNAL
[Vol. 44:317
furniture, silverware, and hearses. 17 9 Twenty-eight opinions (17%) dealt
with household goods, exposing householders' conditional sales purchases
to be predominately musical instruments (e.g., organs and pianos),
domestic sewing machines, household furniture, and watches.1 8 o
Manufacturers appeared in twenty-five opinions (15%)"' with conditional
179. In several cases, the inventory item described was a safe: Gaylor v. Dyer, 10 F. Cas. 120
(C.C.D.C. 1838); Hodson v. Warner, 60 Ind. 214 (1877); Bradshaw v. Warner, 54 Ind. 58 (1876);
Warner v. Jameson, 2 N.W. 951 (Iowa 1879); Herring v. Hoppock, 15 N.Y. 409 (1857); Price v.
Jones, 40 Tenn. 84 (1859); Warner v. Roth, 2 Wyo. 63 (1879). Several cases involved the conditional
sale of store equipment: Fairbanks v. Eureka Co., 67 Ala. 109 (1880); Jones v. Albin Sons & Co., 53
Ga. 585 (1875); Goodwin v. May, 23 Ga. 205 (1857); Bailey v. Harris, 8 Iowa 331 (1859); Staats v.
Hodges, Hill & Den. 211 (N.Y. 1843); Fairbanks, Brown & Co. v. Davis & Wright, 50 Vt. 251 (1877).
There were cases involving inventory items: Sargent v. Metcalf, 71 Mass. 306 (1855); Marston v.
Baldwin, 17 Mass. 606 (1822); Manning, Bowman & Co. v. Keenan, 73 N.Y. 45 (1878); Towner v.
Bliss, 51 Vt. 59 (1878); Armington v. Houston, 38 Vt. 448 (1866). There were cases that involved
unspecified goods: Burbank v. Crooker, 73 Mass. 158 (1856); Ridgeway v. Kennedy, 52 Mo. 24
(1873); Waldron v. Haupt, 52 Pa. 408 (1866); Riley A. Deming & Co. v. Lull, 17 Vt. 398 (1845).
There were three cases involving printing equipment: Dresser Mfg. Co. v. Waterston, 44 Mass. 9
(1841); Boon v. Moss, 70 N.Y. 465 (1877); In re Wylie, 90 Pa. 210 (1879). There were two cases
involving soda fountains: George v. Tufts, 5 Col. 162 (1879); Puffer v. Peabody, 59 Ga. 295 (1877).
There were two cases involving billiard tables: In re Lyon, 15 F. Cas. 1180 (D.C. Minn. 1872); Allen v.
Whittemore, 1 F. Cas. 521 (D.C. Vt. 1876).
180. The following cases involved a conditional sale of a musical instrument: Guilford, Wood
& Co. v. McKinley, 61 Ga. 230 (1878); Latham v. Sumner, 89 Ill. 233 (1878); Waters v. Cox, 2 Ill.
App. 129 (1878); Hall v. Draper, 20 Kan. 137 (1878); Sumner v. McFarlan, 15 Kan. 600 (1875);
Deyoe v. Jamison, 33 Mich. 94 (1875); Whitney v. McConnell, 29 Mich. 12 (1874); Giddey v. Altman,
27 Mich. 206 (1873); Preston v. Whitney, 23 Mich. 260 (1871); Couse v. Tregent, 11 Mich. 65 (1862);
Esty v. Graham, 46 N.H. 169 (1865); Maynard v. Anderson, 54 N.Y. 641 (1873). Cases involving the
conditional sale of sewing machines were as follows: Sumner v. Wood, 52 Ala. 94 (1875); Domestic
Sewing Co. v. Arthurhultz, 63 Ind. 322 (1878); Farrar v. Peterson, 3 N.W. 457 (Iowa 1879); Shaffer v.
Sawyer, 123 Mass. 294 (1877); Pinkham v. Mattox, 53 N.H. 600 (1873); Cole v. Berry, 42 N.J.L. 308
(1880). In the following cases, the item conditionally sold was household furniture: Hegler v. Eddy,
53 Cal. 597 (1879); Harrington v. King, 121 Mass. 269 (1876); Benner v. Puffer, 114 Mass. 376
(1874); Parmlee v. Catherwood, 36 Mo. 479 (1865); Porter v. Pettengill, 12 N.H. 299 (1841); Sanders
v. Keber, 28 Ohio St. 630 (1876); Stadtfield v. Huntsman & Co., 92 Pa. 53 (1879). Three cases
involved the conditional sale of watches: Mowbray v. Cady, 40 Iowa 604 (1875); Holt v. Holt, 58
N.H. 276 (1878);Jillson v. Wilbur, 41 N.H. 106 (1860).
181. Six cases dealt with steam engines: Jones v. Pullen, 66 Ala. 306 (1880); Watertown Steam
Engine Co. v. Davis, 10 Del. 192 (Super. Ct. 1877); Jowers v. Blandy, 58 Ga. 379 (1877); Raddin v.
Arnold, 116 Mass. 270 (1874); Duke v. Shackleford, 56 Miss. 596 (1879); Griffin v. Pugh, 44 Mo. 326
(1869). Three cases dealt with saw mill machinery: Cochran v. Flint, 57 N.H. 514 (1877); Cole,
Leavitt & Co. v. Howe, 50 Vt. 35 (1877); Davenport v. John G. Shants & Co., 43 Vt. 546 (1871).
Four cases dealt with various types of machinery: Day v. Bassett, 102 Mass. 445 (1869); Ketchum v.
Brennan, 53 Miss. 596 (1876); In tr Binford, 3 F. Cas. 394 (C.C. Va. 1879); Rowan v. Union Arms
Co., 36 Vt. 124 (1863), affd sub norm. Rowan v. State Bank, 45 Vt. 160 (1872). Four cases dealt with
various other types of manufacturing inventory: Eaton v. Munroe, 52 Me. 63 (1862); Creps v.
Dunham, 69 Pa. 456 (1870); Jenkins v. Eichelberger, 4 Watt. 121 (Pa. 1835); Kellogg v. Fox &
Minogue, 45 Vt. 348 (1873). Two cases dealt with mills: Baker v. Hall, 15 Iowa 277 (1863); Wangler
v. Franklin, 70 Mo. 659 (1879). Two cases dealt with shingle machinery: Hawkins v. Brown &
2013]
SECURED TRANSACTIONs HISTORY
349
sales purchases of manufacturing equipment such as steam engines, saw
mills, grinding mills, shingle machinery, and manufacturing inventory, such
as logs and wool. The transporters appeared in nineteen opinions
(10/)182 with purchases of canal boats, stagecoaches, locomotive engines,
and stags (i.e., unspecified male animals) as beasts of burden, and
transportation equipment (e.g., railroad ties and rails). The commercial
merchants appeared in two opinions (1/0).183 Farmers were the vast
majority of the vendees using the conditional sales as a means of
purchasing needed goods.
Removing horses from consideration as not indicative of the vendee,' 8 4
the starkest contrast lies between the value of items purchased by the
townspeople, manufacturers, transporters, and households compared to
the value of items purchased by the farmers. Setting the bar at $200, 8 3 %
(five of six) of the transporters' purchases,' 8 5 80% (eight of ten) of the
townspeople's purchases,' 8 6 75% (six of eight) of the manufacturers'
Jeffrey, 30 Barb. 206 (N.Y. Gen. Term 1859); Grant v. Skinner, 21 Barb. 581 (N.Y. Gen. Term 1854).
Two cases dealt with logs: Bailey v. Henderson, 2 F.Cas. 373 (D.C. Vt. 1878); Waterston v. Getchell,
5 Me. 435 (1828). Two cases involved wool to a manufacturer: Cogill, 69 Mass. 545; Barrett v.
Pritchard, 19 Mass. 512 (1824).
182. Several cases involved the conditional sale of canal boats: Haynes v. Hart, 42 Barb. 58
(N.Y. Gen. Term 1864); Hutchings v. Munger, 41 Barb. 396 (N.Y. Gen. Term 1864), affd, 41 N.Y.
155 (1869); Brewster v. Baker, 20 Barb. 364 (N.Y. 1855); Wayne & Wayne v. Sherwood, 14 Barb. 633
(N.Y. 1853); Janes v. Osgood, 6 N.Y. 233 (1852); Tuthill v. Wheeler, 6 Barb. 362 (N.Y. Gen. Term
1849); Strong v. Taylor, 2 Hill 326 (N.Y. 1842). Several cases involved railroads: Ownes v. Hastings
& Saxton, 18 Kan. 446 (1877); Rogers' Locomotive Works v. Lewis, 20 F. Cas. 1134 (C.C. W.D. Mo.
1877); Haven v. Emery, 33 N.H. 66 (1856); Haak v. Linderman, 64 Pa. 499 (1870); Hilliard Flume &
Lumber Co. v. Woods, 1 Wyo. 396 (1876). Four cases involved a conditional sale of a stage coach:
Patton v. McCane, 54 Ky. 555 (1855); Blanchard v. Child, 73 Mass. 155 (1856); Clark v. Wells, 45 Vt.
4 (1872); Fales v. Roberts, 38 Vt. 503 (1866). Two cases involved stags that were classified as beasts
of burden: Phelps v. Bemis, 51 Vt. 487 (1879); Reed v. Rice, 25 Vt. 171 (1853). One case involved a
ship: Loring v. Loring, 64 Me. 556 (1875).
183. The cases involving commercial merchants were: Flanders & Huguenin v. Maynard, 58
Ga. 56 (1877); Davis & Aubin v. John Bradley & Co., 24 Vt. 55 (1851), afd, 28 Vt. 118 (1855).
184. The cases removed involving horses were: Lucas v. Birdsey, 41 Conn. 357 (1874); Dunbar
v. Rawles, 28 Ind. 225 (1867); Hanway v. Wallace, 18 Ind. 377 (1862); Shireman v. Jackson, 14 Ind.
459 (1860); Allen v. Delano, 55 Me. 113 (1867); Whipple v. Gilpatrick, 19 Me. 427 (1841); Tibbetts v.
Towle, 12 Me. 341 (1835); King v. Bates, 57 N.H. 446 (1876); Whitcomb v. Hungerford, 42 Barb.
177 (N.Y. Gen. Term 1864); Martin v. Mathiot, 14 Serge. & Rawle 214 (Pa. 1826); Kelsey v. Kendall,
48 Vt. 24 (1875); Hefflin v. Bell, 30 Vt. 134 (1858); Buckmaster v. Smith, 22 Vt. 203 (1850).
185. Hutchings, 41 Barb. 396; Brewster,20 Barb. 364; Tutbill, 6 Barb. 362; Stong, 2 Hill 326; Fales,
38 Vt. 503; HilhardFlume & L.umber Co., 1 Wyo. 396.
186. In re Lyon, 15 F. Cas. 1180 (D.C. Minn. 1872); Flanders &I Huguenin, 58 Ga. 56; Jones v.
Albin Sons & Co., 53 Ga. 585 (1875); Bradshaw v. Warner, 54 Ind. 58 (1876); Sargent v. Metcalf, 71
Mass. 306 (1855); Marston v. Baldwin, 17 Mass. 606 (1822); Boon v. Moss, 70 N.Y. 465 (1877); Staats
v. Hodges, Hill & Den. 211 (N.Y. 1843); Allen v. Whittemore, 1 F. Cas. 521 (D.C. Vt. 1876); Warner
v. Roth, 2 Wyo. 63 (1879).
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purchases,' 8 7 and 50% (six of twelve) of the households' purchases1 8 8
exceeded $200. For the farmers, only 22% (seven of thirty-two) of their
The farmers used the conditional sales for
purchases exceeded $200.1"
small purchases on credit.
Because the opinions suggest the lesser-valued transactions constitute
the primary use of the conditional sale, their documentation reveals the
business practices associated with conditional sales.
A clear
pronouncement of the documentation of the conditional sale does not
The opinion language of
appear in all of these value opinions.
"agreement" or "contract" does not differentiate between an oral
transaction and one with written documentation. All opinions involving
households' 9 0 clearly described the documentation, with five short written
contracts,1 9 1 four promissory notes with word notations denoting the
good received and the title retention, constituting the Holmes' note,19 2
187. Baker v. Hall, 15 Iowa 277 (1863); Eaton v. Munroe, 52 Me. 63 (1862); Waterston v.
Getchell, 5 Me. 435 (1828); Duke v. Shackleford, 56 Miss. 552 (1879); Griffin v. Pugh, 44 Mo. 326
(1869); Grant v. Skinner, 21 Barb. 581 (N.Y. Gen. Term 1854); Kellogg v. Fox & Minogue, 45 Vt.
348 (1873); Davenport v. John G. Shants & Co. 43 Vt. 546 (1871).
188. Hegler v. Eddy, 53 Cal. 597 (1879); Latham v. Sumner, 89 Ill. 233 (1878); Domestic
Sewing Co v. Arthurhultz, 63 Ind. 322 (1878); Sumner v. McFarlan, 15 Kan. 600 (1876); Benner v.
Puffer, 114 Mass. 376 (1874); Deyoe v. Jamison, 33 Mich. 94 (1875); Whitney v. McConnell, 29 Mich.
12 (1874); Parmlee v. Catherwood, 36 Mo. 479 (1865); Pinkham v. Mattox, 53 N.H. 600 (1873); Cole
v. Berry, 42 N.J.L. 308 (1880); Maynard v. Anderson, 54 N.Y. 641 (1873); Sanders v. Keber, 28 Ohio
St. 630 (1876).
189. Putnam v. Lamphier, 36 Cal. 151 (1868); Gluckauf v. Urton, 19 Cal. 61 (1861); Helm v.
Dumars, 3 Cal. 454 (1853); Sims v. James, 62 Ga. 260 (1879); Plummer v. Shirley, 16 Ind. 380 (1861);
Pash v. Weston, 3 N.W. 713 (Iowa 1879); Knoulton v. Redenbaugh, 40 Iowa 114 (1874); Vaughn v.
Hopson, 73 Ky. 337 (1874); Boynton v. Libby, 62 Me. 253 (1874); Drew v. Smith, 59 Me. 393 (1871);
Brown v. Haynes, 52 Me. 578 (1864); Sawyer v. Shaw, 9 Me. 47 (1832); Vincent v. Comell, 30 Mass.
294 (1832); Fifield v. Elmer, 25 Mich. 48 (1872); Clay v. Bohonon, 54 N.H. 474 (1874); Pickett v.
Bullock, 52 N.H. 354 (1872); Esty v. Aldrich, 46 N.H. 127 (1865); Davis v. Emery, 1t N.H. 230
(1840); Ballard & Sampson v. Burgett, 47 Barb. 646 (N.Y. Gen. Term 1866), affd, 40 N.Y. 314
(1869); Buson v. Dougherty, 30 Tenn. 50 (1850); Gambling v. Read, 19 Tenn. 281 (1838); Phelps v.
Bemis, 51 Vt. 487 (1879); Taylor v. Finley, 48 Vt. 78 (1875); Pollard v. Bates, 45 Vt. 506 (1873);
Smith v. Sharpe, 45 Vt. 545 (1873); Duncan v. Stone, 45 Vt. 118 (1872); Burnell v. Marvin, 44 Vt. 277
(1872); Bucklin v. Beals, 38 Vt. 653 (1866); Fuller v. Buswell, 34 Vt. 107 (1861); Collins v. Perkins, 31
Vt. 624 (1859); Wilder v. Stafford, 30 Vt. 399 (1858); West v. Bolton, 4 Vt. 558 (1832).
190. See supra note 188 (listing cases involving household goods).
191. For a short contract, see, for example, Lane v. Borland, 14 Me. 77, 78 (1836) ("Bangor,
January 4th, 1834. This certifies, that we, the firm of Washburn & Fling, bought a bay horse of
Oliver Lane, of St. Albans, and the said horse shall remain in our hands until the said Lane receive his
pay, then the said horse shall be our property, otherwise, shall be the property of said Lane, the
payments become due, forty dollars in March and forty dollars in June with interest. /s/ George W.
Washburn, /s/ Sanford Fling.'.
192. For a promissory note with added words, see, for example, Tibbetts v. Towle, 12 Me. 341,
342-43 (1835) ("This may certify that I promise to pay Mr. James Tibbetts of Dexter, one hundred
and twenty-two dollars and fifty cents, in June next, for a pair of oxen five years old-one red and
SECURED TRANSACTIONS HISTORY
2013]
351
and three verbal agreements. For opinions dealing with non-horse farm
livestock, the opinions clearly describe seven promissory notes with word
93
notations, four verbal agreements, and three short written contracts.'
For farm equipment, the opinions specify three contracts with notes, one
The farmers'
short written agreement, and one verbal agreement.''
seven
months,
four
transactions ordinarily had short durations: thirty days,
months, eight months, one year (four times), fourteen months, and one
95
long-term deal of two-and-a-half years.'
The appellate opinions reveal three differences from the Gilmorian
model. In the mid-nineteenth century, the conditional sale was principally
an agricultural security device. Parties used it primarily for small credit
transactions of short duration. They briefly documented the conditional
sale transaction, denoting it with promissory notes, short written contracts
or oral agreements.
C.
Type ofAction
An overwhelming number of these opinions dealt with actions
concerning the common law priority rule favoring the vendor. These
vendor opinions can be divided into two groups. First, the vendor
contending with the vendee's purchaser, who had wrongfully taken the
goods owned by the vendor, appeared in 69 of the 210 opinions (33%),
196
or trover
and were primarily replevin actions to recover the goods
the other brindle; likewise a black mare eight years old, fifty dollars-and this certifies that the said
Tibbetts holds the above cattle and mare till the above debt is paid, and the interest. The above
cattle and mare are to be paid for in June next."). For the origin of the term "Holmes' note," see
supra notes 316-21 and accompanying text.
193. See supra note 189 (involving farmer actions).
194. Id.
195. Id.
196. The cases that were replevin actions, or other actions to recover goods, which found title
in vendor are: Fairbanks v. Eureka Co., 67 Ala. 109 (1880); Elmore v. Fitzpatrick, 56 Ala. 400 (1876);
Carroll v. Wiggins, 30 Ark. 402 (1875); Putnam v. Lamphier, 36 Cal. 151 (1868); Hodson v. Warner,
60 Ind. 214 (1874); Dunbar v. Rawles, 28 Ind. 225 (1867); Thomas v. Winters, 12 Ind. 322 (1859);
Baker v. Hall, 15 Iowa 277 (1863); Bailey v. Harris, 8 Iowa 331 (1859); Hall v. Draper, 20 Kan. 137
(1878); Hallowell v. Milne, 16 Kan. 65 (1877); Sumner v. McFarlan, 15 Kan. 600 (1875); Patton v.
McCane, 54 Ky. 555 (1855); Eaton v. Munroe, 52 Me. 63 (1862); Corse v. Patterson, 6 H. & J. 153
(Md. 1824); Sargent v. Metcalf, 71 Mass. 306 (1855); Coggill v. Hartford & New Haven R.R. Co., 69
Mass. 545 (1854); Whitney v. McConnell, 29 Mich. 12 (1875); Couse v. Tregent, 11 Mich. 65 (1862);
Ketchum v. Brennan, 53 Miss. 596 (1876); Griffin v. Pugh, 44 Mo. 326 (1869); Parmlee v.
Catherwood, 36 Mo. 479 (1865); Maynard v. Anderson, 54 N.Y. 641 (1873); Ballard & Sampson v.
Burgett, 47 Barb. 646 (N.Y. Gen Term 1866), afd, 40 N.Y. 314 (N.Y. 1869); Clayton v. Hester, 80
N.C. 275 (1879); Sanders v. Keber, 28 Ohio St. 630 (1876); Dupree v. Harrington, 16 S.C.L. 391
(1824); Halmark v. Molin, 45 Tenn. 482 (1868). But see Sumner v. Woods, 52 Ala. 94, 94 (1875)
(discussing the good faith purchaser rule for retinue involving a sewing machine); Gluckauf v. Urton,
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actions to recover the value of the goods at the time of the wrongful
taking.'1 7 The common law protected the vendor from such forms of
fraud, leaving the good faith purchaser, the one dealing with the fraudster,
to go after the culprit.1 9 8
Some vendors used other actions, e.g.,
injunctions against foreclosure, trespass, conversion, and assumpsit,
against the vendee's mortgagee.' 9 9 With respect to the replevin actions,
19 Cal. 61, 61-62 (1861) (reversing judgment in favor of vendor because the vendor authorized the
sale); George v. Tufts, 5 Colo. 162, 165-66 (1879) (holding a conditional sale void because it was not
filed under the Chattel Mortgage Act); Vaughn v. Hopson, 73 Ky. 337 (1874) (involving sale through
the use of a promissory note); Robbins v. Phillips, 68 Mo. 100, 100 (1878) (holding the vendor
waived condition by waiting six months); Jones v. Osgood, 6 N.Y. 233, 236 (1852) (affinring
judgment of replevin for a canal boat); Stadtfeld v. Huntsman, 92 Pa. 53, 54 (1879) (deciding replevin
action to recover furniture).
197. The following cases involved trover actions that found tide in the vendor: Tomlinson v.
Roberts, 25 Conn. 477 (1857); Sims v. James, 62 Ga. 260 (1879); Flanders & Huguerin v. Maynard,
58 Ga. 56 (1877); Brown v. Haynes, 52 Me. 578 (1864); Whipple v. Gilpatrick, 19 Me. 327 (1841);
Lane v. Borland, 14 Me. 77 (1836); Tibbetts, 12 Me. 341; Sawyer v. Shaw, 9 Me. 435 (1832); Dresser
Mfg. Co. v. Waterston, 44 Mass. 9 (1841); Barrett v. Pritchard, 19 Mass. 512 (1824);Jillson v. Wilbur,
41 N.H. 106 (1860); Haven v. Emery, 33 N.H. 66 (1856); Staats v. Hodges, Hill & Den. 211 (N.Y.
1843); Gaither v. Teague, 26 N.C. 65 (1843); Houston v. Dyche, 19 Tenn. 76 (1838); White v.
Langlon, 30 Vt. 599 (1858); Hilliard Flume & Lumber Co. v. Woods, 1 Wyo. 396 (1876). But see In re
Binford, 3 F. Cas. 394 (C.C.E.D Va. 1879) (deciding that vendee's mortgagee wins when good faith
purchaser rule is applied); Dudley v. Abner, 52 Ala. 572, 577-79 (1875) (following Alabama's good
faith purchaser rule); Watertown Steam Engine Co. v. Davis, 10 Del. 192 (Super. Ct. 1877) (deciding
jury should determine fixture status). For a post-conditional sales act trover case, see, for example,
Kelsey v. Kendall, 48 Vt. 24 (1875) (indicating the vendor has a lien in the proceeds for unfiled
conditional sale because the buyer has actual notice).
198. See, e.g.,Lane, 14 Me. at 81-82 (refusing to apply the commercial paper rule, and instead
following the personalty title rule when confronted with two innocents dealing with the fraudulent
vendee).
199. For conversion actions finding tide in vendor, see Holman v. Lock's Adm'r, 51 Ala. 287,
288 (1874) (finding the trial court erred in not admitting evidence of a contract that would have
shown defendant did not convert plaintiffs property); Benner v. Puffer, 114 Mass. 376, 378 (1859)
(explaining that vendor had tide to property until purchaser paid all money due to vendor); Burbank
v. Crooker, 73 Mass. 158, 159 (1856) (ruling that vendor still had tide to property though purchaser
had no notice of the lien at the time of the purchase); Rawson v. Tuel, 47 Me. 506, 506 (1859)
(holding that tide was properly vested in seller); Manning v. Keenan, 73 N.Y. 45, 51 (1878)
(recognizing that vendor's recovery on notes does not bar conversion action); Bucklin v. Beals, 38 Vt.
653, 660 (1866) (holding plaintiffs were not required to demand property before bringing suit where
evidence was sufficient to show property's conversion). For assumpsit actions, see, for example,
Bryant v. Crosby, 36 Me. 562, 571 (1853) (granting a new trial to allow defendant to prove
consideration had not been paid); Kimball v. Jackman, 42 N.H. 242, 245 (1860) (finding that
vendor's agent's conditional sale for money had and received constituted the amount due on the
conditional sale note). For injunction against foreclosure, see, for example, Goodwin v. May, 23 Ga.
205, 206 (1857) (bringing action to prevent defendant mortgagee from selling property rightfully
belonging to vendor); Gambling v. Read, 19 Tenn. 281, 282 (1838) (praying defendants be enjoined
from selling slave and requesting that slave be retained by plaintiff as security for debt owed by
defendant). For trespass actions finding tide in vendor see, for example, Waterston v. Getchell, 5
Me. 435, 438 (1828) (finding defendant liable for trespass for taking logs that belonged to plaintiff).
2013]
SECURED TRANSACTIONs HISTORY
353
two significant cases came out of New York in 1867, Waioo and its
companion case, Western Transportation Co. v. Marshall.20 The New York
court reversed the common law priority rule and recognized a good faith
purchaser doctrine for the sale of a horse, but was subsequently rejected
by the same New York court two years later.2 0 2 New York has a history
of protecting its retailers from their lenders' liens. 2 03 This case could
upset those transactions entered into based on the common law priority
rule if adopted in other states, as Alabama and Kentucky courts did in the
next decade. 2 04
The second group of vendor actions dealt with the vendor contending
with the vendee's judgment lien creditor or the sheriff, his stand-in, who
wrongfully took the goods owned by the vendor by levying against the
property of the debtor. These vendors appeared in 58 of the 210 opinions
(28%), and again primarily involved replevin actions to recover the
goods20s or trover actions to recover the value of the goods at the time of
For intestate administration see, for example, Puffer v. Peabody, 59 Ga. 295, 299 (1877) (reversing
judgment for administrator, finding that sale of property to intestate was conditional only). For postconditional sales act assumpsit cases, see, for example, Bedell v. Foss, 50 Vt. 94, 97 (1877) (bringing
an action for assumpsit on buyer's promise to pay remainder, the court mandated a retrial to
determine whether there was a promise and made no mention of filing).
200. See Wait v. Green (Wait 1), 35 Barb. 585 (N.Y. Gen. Term 1862), affd, 36 N.Y. 556, 558
(1867) (affirming judgment of lower court, which found defendant was a bona fide purchaser and his
title was protected).
201. See W. Transp. Co. v. Marshall, 37 Barb. 509, 514 (N.Y. Gen. Term Ct. 1862) (discussing
the conditional delivery of grain), afd, 4 Abb. Dec. 575 (N.Y. 1867), overruled ly Ballard & Sampson
v. Burgett, 40 N.Y. 314 (1869).
202. See Wait 1, 35 Barb. at 588.
203. See George Lee Flint, Jr., Secured Transactions Histog.- The Northern Struggle to Defeat the
JudgmentLien in the Pre-ChattelMortgageAct Era, 20 N. ILL. U. L. REV. 1, 52-57 (2000) (noting the high
number of opinions dealing with secured transaction suits coming out of New York courts); see also
George Lee Flint, Jr., Secured Transactions HistoU: The Impact of Textile Machinet on the Chattel Mortage
Acts of the Northeast,52 OKLA. L. REv. 303, 339-40 (1999) (highlighting the statute as another ground
to invalidate a non-possessory chattel mortgage).
204. See Dudley v. Abner, 52 Ala. 572, 576 (1875) (citing Wait P. Green and holding that bona
fide purchaser's title was protected) overruled 1 Sumner v. Woods, 67 Ala. 139 (1880); Vaughn v.
Hopson, 73 Ky. 337, 343 (1874) (overruling precedent in holding that bona fide purchaser acquired
perfect title against original vendor).
205. Replevin actions or other actions to recover the goods appeared in the following cases:
Lucas v. Birdsey, 41 Conn. 357 (1874); Gaylor v. Dyer, 10 F. Cas. 120 (C.C.D.C. 1838); Waters v.
Cox, 2 Ill. App. 129 (1878); Bradshaw v. Warner, 54 Ind. 58 (1876); Vanshoiach v. Farrow, 25 Ind.
310 (1865); Hanway v. Wallace, 18 Ind. 377 (1862); Mowbray v. Cady, 40 Iowa 604 (1875); Knoulton
v. Redenbaugh, 40 Iowa 114 (1874); Ownes v. Hastings & Saxton, 18 Kan. 446 (1877); Blanchard v.
Child, 73 Mass. 155 (1856); Marston v. Baldwin, 17 Mass. 606 (1822); Drew v. Smith, 59 Me. 393
(1871); Leighton v. Stevens, 19 Me. 154 (1841); In re Lyon, 15 F. Cas. 1180 (D.C. Minn. 1872);
Wangler v. Franklin, 70 Mo. 659 (1879); Rogers Locomotive Works v. Lewis, 20 F. Cas. 1134 (C.C.
W.D. Mo. 1877); Aultman, Miller & Co. v. Mallory, 5 Neb. 178 (1876); Cardinal v. Edwards, 5 Nev.
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ST. MARY'S LAlw jOURNAL
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levy.2 0 6 Some vendors used other actions such as trespass, conversion,
Some opinions
injunctions against levy, and bills of accounting. 2 0 7
involved Vermont's 1854 statute, which its legislature designed to bring
some relief to the good faith purchaser. Under the statute, the good faith
purchaser kept the goods, provided he or she paid the amount owed to the
vendor. 2 08 This statute indicated the legislative desire to insure the
vendor received the entire payment for the credit extended but allowed the
good faith purchaser to keep any excess at the good faith purchaser's
36 (1869); Strong v. Taylor, 2 Hill 326 (N.Y. 1842); Warner v. Roth, 2 Wyo. 63 (1879). But see Helm
v. Dumars, 3 Cal. 454, 456-57 (1853) (prohibiting the vendor from recovering property because the
transaction was not in writing which violated the statute of frauds). Three cases involved postconditional sales act replevin: Techmeyer v. Waltz, 49 Iowa 645 (1878); Boynton v. Libby, 62 Me.
253 (1874); Williams v. Porter, 41 Wis. 422 (1877).
206. The trover action to recover the value of the goods cases were as follows: George v.
Stubbs, 26 Me. 243 (1846); Holt v. Holt, 58 N.H. 276 (1878); Esty v. Aldrich, 46 N.H. 127 (1865);
McFarland v. Farmer, 42 N.H. 386 (1861); Porter v. Pettengill, 12 N.H. 299 (1841); Parris v. Roberts,
34 N.C. 268 (1851); Ellison v. Jones, 26 N.C. 268 (1843); Bennet v. Sims, 24 S.C.L. 421 (1839);
Buson v. Dougherty, 30 Tenn. 50 (1850); Johnson v. Worden, 47 Vt. 457 (1874); Pollard v. Bates, 45
Vt. 506 (1873); Armington v. Houston, 38 Vt. 448 (1866); Buckmaster v. Smith, 22 Vt. 203 (1850);
Bigelow v. Hunting, 8 Vt. 151 (1836). But see Ketchum v. Watson, 24 Ill. 591, 592 (1860) (applying
Illinois' chattel mortgage act to invalidate conditional sale); Waldron v. Haupt, 52 Pa. 408, 411 (1866)
(reversing trial court's judgment in favor of vendor and holding that public policy prevented vendor
from maintaining an interest in the property once the vendor gave up possession); Jenkins v.
Eichelberger, 4 Watt. 121, 123 (Pa. 1835) (identifying public policy reasons for divesting vendor of
title once vendor no longer has possession). The post-conditional sales act trover cases were: Warner
v. Jameson, 2 N.W. 951 (Iowa 1879); Towner v. Bliss, 51 Vt. 59 (1878); Fairbanks, Brown & Co. v.
Davis & Wright, 50 Vt. 251 (1877); Bailey v. Henderson, 2 F. Cas. 373 (D.C. Vt. 1878).
207. For trespass actions to recover damages where the court found title in the vendor, see
Hurd v. Fleming, 34 Vt. 169, 172-73 (1861) (determining a vendor cannot sue for trespass when time
for payment has not yet elapsed). But see Martin v. Mathiot, 14 Serge. & Rawle 214, 215 (Pa. 1826)
(establishing Pennsylvania's fraud rule). For a post-conditional sales act trespass case, see, for
example, Cole, Leavitt & Co. v. Howe, 50 Vt. 35, 38 (1877) (determining that a vendor's
memorandum was timely filed even though antedated). For a conversion action seeking to recover
damages finding tide in vendor, see, for example, Herring v. Hoppock, 15 N.Y. 409, 412 (1857)
(affirming that defendant purchaser had no title to vendor's property even though he was a purchaser
in good faith). For a bill for accounting, see, for example, In re Wylie, 90 Pa. 210, 216 (1879)
(reiterating that a vendor cannot win against creditors under Pennsylvania fraud rule). For an
injunction against levy, see, for example, Randolph v. Randolph, 17 Va. 99, 99 (1812) (allowing
vendor to get injunction to prevent the sale of the property). For an example of the successful use of
the common law rule as a defense in a suit by the vendee's creditor against the sheriff for not levying
on vendor's goods, see, for example, Riley A. Deming & Co. v. Tull, 17 Vt. 398, 400 (1845)
(recognizing earlier decisions which established that vendor's property could not be attached by
vendee's creditors).
208. Outside the common law rule, and under the 1854 Vermont statute, which allowed the
creditor to possess the goods provided the creditor paid the amount owing to the owner, the vendor
won if the creditor did not comply. 1854 Vt. Acts & Resolves 15. See generally Duncan v. Stone, 45
Vt. 118, 123 (1872) (protecting the vendor by holding that attaching creditor had no right to vendor's
property unless creditor made payment pursuant to the relevant statute).
2013]
SECURED
kANSACTIONs HISTORY
355
option.
Of the remaining opinions, fifty-six opinions (27%) involved various
upstream and downstream parties. 2 0 9 These actions involved eight
different situations. The more interesting actions involved the upstream
persons because they indicate the fourth variance from the Gilmorian
model; the assignment of the farmer's promissory notes to third
These opinions involved the vendee against upstream
parties.2 o
21
persons, 1 downstream persons against upstream persons,212 upstream
209. See infra notes 211-15 (listing cases).
210. Id.
211. Vendee actions against vendor's successors only involved one note assignment. See Taylor
v. Finley, 48 Vt. 78, 82 (1875) (recognizing an action of replevin against vendor's note assignee,
finding vendee can pay after it becomes overdue). For vendor's successor from levy, see Woodman
v. Chesley, 39 Me. 45, 51 (1854) (deciding replevin against vendor's levy purchaser, who has same
rights as vendor); Tuthill v. Wheeler, 6 Barb. 362, 364 (N.Y. Gen. Term 1849) (deciding an action of
trover against vendor's judgment lien tax collector, finding vendee has no title to maintain suit). For
vendor's agent, see Pickett v. Bullock, 52 N.H. 354, 354 (1872) (finding conditional sale waives
vendee's prior lien for keeping cows); West v. Bolton, 4 Vt. 558, 563 (1832) (rejecting trespass action
against vendor's agents; vendee who did not timely pay has no right against vendor). For vendor
successors from resale of the good after condition is broken, see Deyoe v. Jamison, 33 Mich. 94, 95
(1875) (addressing vendee's replevin action against vendor's second buyer after vendor's levy against
good faith purchaser; second buyer waived condition by refusing tender of payment); Hutchings v.
Munger, 41 Barb. 396, 401 (N.Y. Gen. Term 1864), af'd, 41 N.Y. 155 (1869) (deciding a case of
conversion against vendor's second buyer after the condition was broken, and finding that vendee
tendered payment before the sale, so vendor's sale was wrongful); Hunter v. Warner, 1 Wis. 141,
147-48 (1853) (evaluating an action of replevin, and finding no tide in the vendee because he broke
the condition).
212. Only one case involved downstream persons against vendor's note assignee. See Brewster
v. Baker, 20 Barb. 364, 368-69 (N.Y. Gen. Term 1855) (reversing an action by vendor's assignee for
value against vendee's buyer, holding vendee has no title to transfer). For vendor's successors from
levy, see Child v. Allen, 33 Vt. 476, 479 (1860) (concluding that in an action for vendee's buyer's
trespass against vendor's judgment lien sheriff that vendor's title was not affected by attachment);
Collins v. Perkins, 31 Vt. 624, 628 (1859) (deciding an action for vendee's buyer's trespass against
vendor's judgment lien sheriff, finding sheriff liable for the use and selling of property). For vendor's
agent, see Pash v. Weston, 3 N.W. 713, 714 (Iowa 1879) (reversing lower court's decision for
vendee's buyer's replevin action against vendor's agent, finding that late filing does not constitute
notice, and there was no evidence that the vendee was a party to the filing); Davis & Aubin v. John
Bradley & Co., 24 Vt. 55, 60-61 (1851), affd, 28 Vt. 118 (1855) (affirming judgment on vendee's
buyer's trover action against vendor's shipper, holding in favor of attachment by vendee's judgment
lien, noting that party cannot turn an absolute sale into conditional sale on oral evidence). For
vendor successors from resale of the good after condition is broken, see King v. Bates, 57 N.H. 446,
449 (1876) (upholding jury verdict on vendee's buyer's replevin action against vendor's second buyer,
holding that vendee paid before second buyer so title in vendee's buyer); Smith v. Sharpe, 45 Vt. 545,
548 (1873) (finding title in trustee); Clark v. Wells, 45 Vt. 4, 7 (1872) (allowing repairman to sue for
wheels that he added); Reed v. Rice, 25 Vt. 171, 177 (1853) (concluding that conditional sale was
undone before trial by vendee's purchaser paying).
356
ST. MARY's LAw1jouRNAL
[Vol. 44:317
persons against the vendee, 2 13 upstream persons against downstream
persons,2 1 4 and downstream persons against the vendor.2 1 5
213. Vendor successor actions against the vendee involved four note assignments. See
Domestic Sewing Mach. Co. v. Arthurhultz, 63 Ind. 322, 326 (1878) (deciding vendor's assignee's
replevin action, finding tide in vendor); Collins v. Bradbury, 64 Me. 37, 39 (1875) (involving vendor's
note and assignee's action on note, finding note is negotiable, so vendor can sue based on the note);
Third Nat'l Bank of Syracuse, N.Y. v. Armstrong, 25 Minn. 530, 532 (1879) (reviewing a case on
vendor's note and assignee's action on note, finding the note was not negotiable, so assignee could
not sue on it); Heard v. Dubuque Cnty. Bank, 8 Neb. 10, 14 (1878) (affirming a case involving
vendor's note and assignee's action on note, concluding the note was not negotiable due to condition
on payment). For vendor's agent, see Jowers v. Blandy, 58 Ga. 379, 383 (1877) (involving vendor's
agent's trover action, allowing tide in vendor even when reserved in agent for vendor). For vendor's
heir, see Crawley v. Littlefield, 34 S.C.L. 154, 156-57 (1848) (reviewing vendor's heir's trover action,
noting statute of limitations does not begin until a demand is made). For assignment of bailment
lease cases, see Fairbank v. Phelps, 39 Mass. 535, 540 (1839) (addressing a trover action brought by
assignee for benefit of creditors, finding levy before lease term was over, so there was no right to
possession); Goodell v. Fairbrother, 12 R.I. 233, 236 (1878) (enforcing judgment of lower court in
trover action by sewing machine company assignee of vendor of piano, holding that vendee has no .
interest after the condition is broken).
214. Vendor successor actions against the vendee's successor involved eight note assignments.
See Hegler v. Eddy, 53 Cal. 597, 599 (1879) (deciding vendor's assignee wins replevin action against
vendee's buyer as tide was in vendor's successor); Lewis v. Gilmer, 11 Miss. 560, 563-64 (1844)
(considering a right to try title under the southern fraudulent conveyance statute, holding in favor of
judgment lien because vendor's assignee did not record the conveyance in time); Mount v. Harris, 9
Miss. 185, 196 (1843) (concluding that assignee of entire contract can obtain an injunction against
levy because title was in vendor's successor); Esty v. Graham, 46 N.H. 169, 170 (1865) (ruling that
assigned note carries assignors interest); Boon v. Moss, 70 N.Y. 465, 475-76 (1877) (allowing
vendor's assignee to obtain rights to vendee's successor partnership's goodwill, subscription list, and
firm name, as tide was in vendor); Wright v. Vaughn, 45 Vt. 369, 371 (1873) (accepting that vendor's
note assignee loses trespass action against vendee's judgment lien when vendor changed contract
from absolute sale to conditional sale); Burnell v. Marvin, 44 Vt. 277, 280 (1872) (clarifying that as
owner against vendee's judgment lien, vendor's note buyer can sue for trover). But see Wait v. Green
(Wait 1), 35 Barb. 585, 587-88 (N.Y. Gen. Term 1862) (ruling that on a vendor's note, assignee loses
in a replevin action against vendee's buyer after New York established the good faith purchaser rule),
affd, 36 N.Y. 556 (1867). For post-conditional sales act note assignments, see Allen v. Whittemore, 1
F. Cas. 521, 521 (D.C. Vt. 1876) (stating that bankruptcy trustee must pay on conditional sale notes);
Clark v. Hayward, 51 Vt. 14, 19 (1878) (granting that vendor's colt was protected because the mare's
progeny was legally included in the note). For vendor successors from resale of the good after
condition is broken, see Raddin v. Arnold, 116 Mass. 270, 271-72 (1874) (holding that vendor's
second buyer after breach of condition loses conversion to vendee's lease assignee because goods
affixed to reality are no longer chattels); Reeves v. Harris, 17 S.C.L. 563, 567 (1830) (allowing vendor
to sell horse in vendee's possession upon non-payment by vendee because sold with vendee's
consent); Smith v. Foster, 18 Vt. 182, 185 (1846) (concluding that vendor's second purchaser of
interest in good prevails in a trover action as tide was in vendor).
215. For actions by those claiming through vendee against vendor, see Day v. Bassett, 102
Mass. 445, 445 (1869) (noting in a trespass action by vendee's buyer, tide passed to buyer when
vendee subsequently tendered payment); Giddey v. Altman, 27 Mich. 206, 212 (1873) (detailing
vendee's buyer's replevin action, and explaining that because the vendor failed to declare the contract
void, the good faith purchaser wins); Fifield v. Elmer, 25 Mich. 48, 51 (1872) (concluding in a
vendee's buyer's trover, tide was in vendor); Little v. Page, 44 Mo. 412, 415 (1869) (determining that
2013]
SECURED TRANSACIONS HISTORY
357
Vendors converting their vendees' debt to immediate value by
assignment to those willing to risk the vendee's insolvency, accelerated in
the 1870s. 2 16 In the farm states, local village merchants, acting as private
bankers, provided lending services on discounted promissory notes
because of the capital requirements for incorporated state and national
banks. 2 1 7 Rural merchants bought agricultural commodities from farmers
and provided them with cloth, ironware, and crockery, while local
merchants extended them credit and served as their bankers by keeping
farmers' deposits in their safes.2 1 8 By the 1870s these local merchants had
advanced to discounting promissory notes held by farmers and secured by
the conditional sale. The other opinions involved the vendee against
2 2 0 and
downstream persons,29 downstream persons against the vendee,
2
2
1
downstream persons against other downstream persons.
The other twenty-six opinions (12%) involved lawsuits between the
parties to the conditional sales agreement and, therefore, did not involve
in vendee's buyer's action to recover personalty, title was in vendor); Cochran v. Flint, 57 N.H. 514,
546 (1877) (denying a bill for an injunction that would have prevented removal by vendee's prior
mortgagee on the attached fixture without vendor's consent); Bailey v. Colby, 34 N.H. 29, 39 (1856)
(explaining that trespass by vendee's buyer, on tender of price, has title); Haynes v. Hart, 42 Barb. 58,
60 (N.Y. Gen. Term 1864) (stating that under vendee's assignee's action to recover amounts paid,
assignee cannot maintain suit after vendee's default in payment); Grant v. Skinner, 21 Barb. 581, 584
(N.Y. Gen. Term 1854) (announcing that under vendee's judgment lien's buyer's action for value
against vendor as judgment lien, no title was in vendee); Haak v. Linderman, 64 Pa. 499, 501-02
(1870) (finding that sheriffs interpleader action before levy with the vendor as plaintiff, but brought
by vendee's judgment lien, conditional sale was void against creditor under Pennsylvania law); Phelps
v. Bemis, 51 Vt. 487, 489 (1879) (describing a trover action by vendee's judgment lien, which was
retried as there was some evidence showing there was no lien, vendor retook possession due to an
unfiled and structured deal to avoid filing); Davenport v. John G. Shants & Co., 43 Vt. 546, 552-53
(1871) (explaining that under a bill to foreclose by vendee's mortgagee, priority is based on the
following order: fixtures on prior realty mortgage, vendor's lien, subsequent realty mortgage); Rowan
v. Union Arms Co., 36 Vt. 124, 137 (1863) (permitting vendee's buyer to pay the remaining amount
owed for possession of the goods under 1854 Vt. Statute, No. 12, 1854 Vt. Laws 15), affd sueb nom.
Rowan v. State Bank, 45 Vt. 160 (1872).
216. Cf supra notes 212-15 (involving various types of vendors).
217. See GEORGE E. BARNET, STATE BANKING IN THE UNITED STATES SINCE THE
PASSAGE OF THE NATIONAL BANK ACT 56 (1902) (proclaiming that because of the title
examination and mortgage preparation costs for real estate security, one-year loans to farmers were
cost-prohibitive, so local merchants provided farmers credit). Capital requirements for national
banks ($50,000) and state incorporated banks ($10,000) caused banking to be left largely to private
bankers, because they had no capital requirements in Missouri before 1877. Id. at 80, 85, 87.
218. R. DOUGLAS HURT, AMERICAN AGRICULTURE: A BRIEF HISTORY 150 (1994).
219. See Harrington v. King, 121 Mass. 269, 271 (1876) (accepting that vendee has sufficient
title with vendor's consent to maintain conversion action).
220. See Ridgeway v. Kennedy, 52 Mo. 24, 24 (1873) (concluding that title remained in vendor).
221. See Jones v. Albin Sons & Co., 53 Ga. 585, 588 (1875) (concluding that when vendor takes
mortgage in ignorance, vendor's title is unaffected).
358
ST. MARY'S LAw JOURNAL
[Vol. 44:317
the common law priority rule.2 22 However, half involved the rules that
Gilmore deplored. Vendor actions under replevin for return of the goods
appeared in six opinions, 2 2 3 while vendor actions under trover for the
value of the goods appeared in five opinions,2" both of which were
denounced by Gilmore as reclaiming the goods and keeping the moneys
paid without refund. 2 2 5 Vendor actions under assumpsit (the contract
action) for the price, decried by Gilmore as suing for the price when the
fair market of the goods had declined, 2 2 6 appeared in three opinions. 2 2 7
D. Bailment-Lease Opinions
The results for the bailment-lease, involved in forty-four pre-1880
opinions, differed in two aspects. First, the number of opinions involving
household goods exceeded those dealing with farm goods. Household
goods appeared in fourteen opinions (320/),228 farm goods in twelve
opinions
(27%),"9 townspeople's
goods in
ten opinions
(23%),23o
222. Jones v. Pullen, 66 Ala. 306 (1880); Boyer v. Ausburn, 64 Ga. 271 (1879); Guilford, Wood
& Co. v. McKinley, 61 Ga. 230 (1878); Singer Mfg. Co. v. Treadaway, 4 Ill. App. 57 (1879); Latham
v. Sumner, 89 Ill. 233 (1878); Plummer v. Shirley, 16 Ind. 380 (1861); Shireman v. Jackson, 14 Ind.
459 (1860); Farrar v. Peterson, 3 N.W. 457 (Iowa 1879); Loring v. Loring, 64 Me. 556 (1875); Bunker
v. McKenny, 63 Me. 529 (1874); Allen v. Delano, 55 Me. 113 (1867); Shaffer v. Sawyer, 123 Mass.
294 (1877); Heath v. Randall, 58 Mass. 195 (1849); Vincent v. Cornell, 30 Mass. 294 (1832); Preston
v. Whitney, 23 Mich. 260 (1871); Duke v. Shackleford, 56 Miss. 552 (1879); Clay v. Bohonon, 54
N.H. 474 (1874); Pinkham v. Mattox, 53 N.H. 600 (1873); Davis v. Emery, 11 N.H. 230 (1840);
Whitcomb v. Hungerford, 42 Barb. 177 (N.Y. Gen. Term 1864); Hawkins v. Brown & Jeffery, 30
Barb. 206 (N.Y. Gen. Term 1859); Kent v. Buck, 45 Vt. 18 (1872); Fuller v. Buswell, 34 Vt. 107
(1861); Martin v. Eames, 26 Vt. 476 (1854); Root v. Lord, 23 Vt. 568 (1851); Gregory v. Morris, 1
Wyo. 213 (1875).
223. Jones, 66 Ala. 306; Plummer, 16 Ind. 380; Bunker, 63 Me. 529; Allen, 55 Me. 113; Shaffer, 123
Mass. 294; Duke, 56 Miss. 552.
224. Boyer, 64 Ga. 271; Vincent, 30 Mass. 294; Kent, 45 Vt. 18; Root, 23 Vt. 568. But see Kellogg
v. Fox, 45 Vt. 348, 353 (1873) (declining to allow vendor to sue vendee for partnership property).
225. 1 GRANT GILMORE, SECURITY INTEREST INPERSONAL PROPERTY 66 (1965).
226. Id.
227. Clay, 54 N.H. 474; Pinkham, 53 N.H. 600; Fuller,34 Vt. 107.
228. Kohler v. Hayes, 41 Cal. 455 (1871); Lucas v. Campbell, 88 Ill. 447 (1878); Murch v.
Wright, 46 Ill. 487 (1868); Mosely v. Shattuck, 43 Iowa 540 (1876); Greer v. Church & Co., 13 Bush.
430 (Ky. App. 1877); Chase v. Ingalls, 122 Mass. 381 (1877); Smith v. Lozo, 3 N.W. 227 (Mich.
1879); Sumner v. Cottey, 71 Mo. 121 (1879); Sargent v. Gile, 8 N.H. 325 (1836); White v. Singer Mfg.
Co., 4 Ohio Dec. Reprint 118 (Ct. Com. Pl. 1878); Singer Mfg. Co. v. Graham, 8 Or. 17 (1879); Crist
v. Kleber, 79 Pa. 290 (1875); Goodell v. Fairbrother, 12 R.I. 233 (1878); Kimball v. Post, 44 Wis. 471
(1878).
229. Hughes v. Kelly, 40 Conn. 148 (1873); Clark v. Hale, 34 Conn. 398 (1867); Hart v.
Carpenter, 24 Conn. 427 (1856); Galvin v. Bacon, 11 Me. 28 (1833); Fairbank v. Phelps, 39 Mass. 535
(1849); Van Hoozer v. Cory, 34 Barb. 9 (N.Y. Gen. Term 1860); Chamberlain v. Smith, 44 Pa. 431
(1863); Myers v. Harvey, 2 Pen. & W. 478 (Pa. 1831); Dunham v. Lee, 24 Vt. 432 (1852); Bradley v.
2013]
transporter's
SECURED TPANSACIONs HISTORY
goods in six
opinions
machinery in two opinions (5/6).232
(14%),231
359
and manufacturer's
Second, the largest number of
opinions, ten, came from Pennsylvania, which recognized the bailmentlease but rejected the conditional sale.23 3 As with the conditional sale, the
common law rule provided lessor priority over creditors and good faith
purchasers, except in Illinois, where courts considered the transaction a
chattel mortgage requiring a filing under the chattel mortgage act, and in
Kentucky, where the good faith purchaser rule dominated.2 3 4
Arnold, 16 Vt. 382 (1844); Walker v. McNaughton, 16 Vt. 388 (1844); Grant v. King, 14 Vt. 367
(1842).
230. Cragin v. Coe, 29 Conn. 51 (1860); Singer Mfg. Co. v. Treadaway, 4 Ill. App. 57 (1879);
Stevens v. Older, 26 La. Ann. 634 (1874); Currier v. Knapp, 117 Mass. 324 (1875); Neidig v. Eifler,
18 Abb. Pr. 353 (N.Y. 1865); Person v. Civer, 29 How. Pr. 432 (N.Y. 1865); Enlow v. Klein, 79 Pa.
488 (1875); Rowe v. Sharp, 51 Pa. 26 (1865); Price v. McCallister, 3 Grant 248 (Pa. 1858); Clark v.
Jack, 7 Watts 375 (Pa. 1838).
231. Fosdick v. Schall, 99 U.S. 235 (1878); Hervey v. R.I. Locomotive Works, 93 U.S. 664
(1876); Forbes v. Marsh, 15 Conn. 384 (1843); Pittsburgh Locomotive & Car Works v. State Nat'1
Bank of Keokuk, 19 F. Cas. 785 (C.C. Iowa 1875); Farmers Bank v. McKee, 2 Pa. 318 (1845); Lehigh
Co. v. Field, 8 Watts & Serg. 232 (Pa. 1844).
232. Miller v. Steen, 30 Cal. 402 (1860); Henry v. Patterson, 57 Pa. 346 (1868).
233. Connecticut and Illinois had five opinions each; Vermont had four opinions;
Massachusetts and New York had three opinions each; California and Iowa had two opinions each;
and Maine, New Hampshire, Michigan, Ohio, Missouri, Louisiana, Kentucky, Wisconsin, Rhode
Island, and Oregon had one opinion each. See supra notes 228-32 (listing cases).
234. The following cases were replevin actions by lessor that used the common law rule:
Kohler v. Hayes, 41 Cal. 455 (1871); Hughes, 40 Conn. 148; Galin, 11 Me. 28; Neidg, 18 Abb. Pr. 353;
Crist v. Kleber, 79 Pa. 290 (1875); Myers, 2 Pen. & W. 478. But see Hervg, 93 U.S. 664, 671-74
(finding Illinois law did not comply with chattel mortgage act); Singer Mf. Co., 4 Ill. App. at 60
(finding tide remained with lessor); Murch v. Wright, 46 Ill. 487, 488-89 (1868) (lessor loses to
lessee's judgment lien, lessor lien fraudulent); Greer v. Church & Co., 13 Bush. 430, 433-35 (Ky.
App. 1877) (finding the use of a lease was to avoid filing, the good faith purchaser rule should be
used, and the lessor loses to lessee's buyer); Price v. McCallister, 3 Grant 248, 249-50 (Pa. 1858)
(holding that the lessor loses to lessee's landlord; the rent rule is that goods on premises are subject
to distress for rent). The following cases were trover actions by a vendor using the common law rule:
Clark, 34 Conn. 398; Cragin,29 Conn. 51; Hart,24 Conn. 427; Forbes, 15 Conn. 384; Smith v. Lozo, 3
N.W. 227 (Mich. 1879); Sargent v. Gile, 8 N.H. 325 (1836); Singer MEg. Co. v. Graham, 8 Or. 17
(1879); Lehgh Co., 8 Watts & Serg. 232; Bradley, 16 Vt. 382; Grant, 14 Vt. 367. The folowing cases
were trespass actions by a vendor using the common law rule: Van Hooter, 34 Barb. 9; Chamberlain, 44
Pa. 431; Clark, 7 Watts 375; Dunham, 24 Vt. 432. The following were cases involving conversion
actions by a vendor using the common law rule: Mosely v. Shattuck, 43 Iowa 540 (1876); Sumner v.
Cottey, 71 Mo. 121 (1879); Person, 29 How. Pr. 432. The following cases involved sheriff interpleader
actions using the common law rule: Stevens, 26 La. Ann. 634; Enlow, 79 Pa. 488; Henry, 57 Pa. 346.
The following cases were actions by lessee using the common law rule: Farmer's Bank of Buck Cnty.
v. McKee, 2 Pa. 318 (1845); Walker v. McNaughton, 16 Vt. 388 (1844). The following case was a
foreclosure case brought by lessee's prior mortgagee: Fosdick, 99 U.S. 235. The following cases
involved various other actions: Miller, 30 Cal. 402; Lucas v. Campbell, 88 Ill. 447 (1878); Chase v.
Ingalls, 122 Mass. 381 (1877); Currier v. Knapp, 117 Mass. 324 (1875); White v. Singer Mfg. Co., 4
Ohio Dec. Reprint 118 (Ct. Com. Pl. 1878). The following cases involved actions brought under
360
E.
ST. MARY'S LA WJOURNAL
[Vol. 44:317
Origin of the ConditionalSale
Opinions decided prior to 1841 emphasize the general trend of farmers
using the conditional sale for livestock purchases. There are twenty pre1840 opinions. 23 s Of the nine opinions mentioning the value of the
goods, all except one involve amounts under $200.236 Fifteen opinions
(75%) deal with farming, of which ten concern livestock.2 3 7 The
documentation type reverses that of later transactions, with domination by
oral transactions in four opinions, 2 3 8 all in the South, and promissory
notes with notations and small contracts in three opinions each. 2 3 9
These numbers reverse the corresponding numbers for chattel
mortgages, where in the pre-chattel mortgage era of the North, the
commercial merchants and manufacturers dominated the opinions, with
the townspeople and farmers in the minority. 2 4 0 Clearly, commercial
their respective conditional sales acts: Pittsburgh Locomotive & Car Works, 19 F. Cas. 785; Kimball v.
Post, 44 Wis. 471 (1878). The following case involved a trover action brought by lessor's assignee
using the common law rule: Goodell v. Fairbrother, 12 R.I. 233 (1878). But see Fairbank, 39 Mass. at
539-40 (1849) (holding the good faith purchaser had no right of possesion).
235. Gaylor v Dyer, 10 F. Cas. 120 (C.C. D.C. 1838); Lane v. Borland, 14 Me. 77 (1836);
Tibbetts v. Towle, 12 Me. 341 (1835); Sawyer v. Shaw, 9 Me. 47 (1832); Waterston v. Getchell, 5 Me.
435 (1828); Corse v. Patterson, 6 H. & J. 153 (Md. 1824); Vincent v. Cornell, 30 Mass. 294 (1832);
Barrett v. Pritchard, 19 Mass. 512 (1824); Marston v. Baldwin, 17 Mass. 606 (1822); Davis v. Emery,
11 N.H. 230 (1840); Jenkins v. Eichelberger, 4 Watt. 121 (Pa. 1835); Martin v. Mathiot, 14 Serge. &
Rawle 214 (Pa. 1826); Bennett v. Sims, 24 S.C.L. 421 (1839); Reeves v. Harris, 17 S.C.L. 563 (1830);
Dupree v. Harrington, 16 S.C.L. 391 (1824); Gambling v. Read, 19 Tenn. 281 (1838); Houston v.
Dyche, 19 Tenn. 76 (1838); Bigelow v. Huntley, 8 Vt. 151 (1836); West v. Bolton, 4 Vt. 558 (1832);
Randolph v. Randolph, 17 Va. 99 (1812).
236. Sanyer, 9 Me. at 47 (1832) ($168); Tibbetts, 12 Me. at 341 ($172); Waterston, 5 Me. at 435
(5107); Vincent, 30 Mass. at 294 ($50); Davis, 11 N.H. at 230 ($50); Martin, 14 Serge. & Rawle at 214
($60); Gambing, 19 Tenn. at 281 ($150); West, 4 Vt. at 558 ($18). But see Gaylor, 10 F. Cas. at 120
(C.C.D.C. 1838) (identifying a case in trover that was worth $594).
237. See Tibbetts, 12 Me. at 341 (selling a mare); Lane, 14 Me. at 77 (selling a horse); Vincent, 30
Mass. at 294 (selling oxen); Davis, 11 N.H. at 230 (selling a cow); Bennett, 24 S.C.L. at 421 (selling a
mare); Reeves, 17 S.C.L. at 563 (selling a horse); Dupree, 16 S.C.L. at 391 (selling a horse); Houston, 19
Tenn. at 76 (selling a horse); West, 4 Vt. at 558 (selling a cow); Bigelow, 8 Vt. at 151 (selling a pair of
horses).
238. Bennett, 24 S.C.L. at 421 (identifying a case that involved an oral contract for a conditional
sale of a mare); Gambling, 14 Serge. & Rawle at 214 (identifying a case that involved an oral contract
for a conditional sale of a slave); Randopb, 17 Va. at 99 (identifying a case that involved an oral
contract for a conditional sale of a slave); West, 4 Vt. at 558 (identifying a case that involved an oral
contract for a conditional sale of a cow).
239. Lane, 14 Me. at 77 (providing an example of a farmer's conditional sale of his horse);
Tibbetts, 12 Me. at 341 (providing an example of a farmer's conditional sale of his yoke of oxen);
Vincent, 30 Mass. at 294 (providing an example of a farmer's conditional sale of his cow).
240. See George Lee Flint, Jr., Secured Transactions Histoy. The Northern Stnggle to Defeat the
judgment Lien in the Pre-ChattelMortgageAct Era, 20 N. ILL. U.L. REV. 1, 9-21 (2000) (comparing the
2013]
SECURED TRANSACTONS HISTORY
361
merchants and manufacturers used chattel mortgages, while farmers and
townspeople used conditional sales. Courts found no reason to apply
chattel mortgage rules to different situations. Farmers used conditional
sales for small, short-term transactions. The reason was simple. The
conditional sales involved a convenient method to purchase an item when
the buyer lacked sufficient cash for an outright purchase.24 ' The vendor
was typically a local person or friend, not a commercial merchant or
manufacturer who did not know the borrower. Parties typically made
deals orally, or with minimal documentation, namely a promissory note
with a notation of the transaction or a short contract. Short-term lenders
frequently converted the debt represented by the conditional sale to value
by assigning the conditional sale to a local investor.
The surprising fact arising from the appellate opinions, for those
steeped in Gilmorian industrial theory, is that vendors used the conditional
Farming communities used the
sale long before Gilmore would allow."
conditional sale because it was a great deal to sell horses and oxen on
credit. The opinions encouraged the common law rule of giving credit and
to permitting its assignment, thus providing priority to the conditional sale
vendor and its assignee over the other claimants to the goods sold.2 4 3 A
threat to the status quo of farm lending would likely engender a farm state
reaction that would preserve that lending.
IV. THE CONDITIONAL SALES ACTS
The failure of the traditional legal historians to explain a legal
development adequately, such as the passage of the conditional sales acts,
encourages inquiry into their legislative history to find an explanation.
State legislatures enacted conditional sales acts in four waves: the first
beginning in 1870, the second in the late 1870s, the third in the 1880s, and
larger amount of industry-related cases that arose in the early nineteenth century with the smaller
amount of non-commercial cases).
241. See Davis, 11 N.H. at 232 ("Sales of property are frequently made in the mode attempted in
this case, and it is important that the respective rights of the parties to contracts of this description
should be distinctly understood. Such contracts that parties are fairly enter into on reasonable terms,
may afford a convenient means of purchase of property by those unable to advance at once the
property is its full value. But to make it a contract at all available for the benefit of the proposed
purchaser, he must have important rights under it, as well as the owner of the property, and should
have a liberal opportunity to complete any purchase contemplated by the parties.").
242. 1 GRANT GIUfoRE, SECURITY INTERESTS IN PERSONAL PROPERTY 25 (1965)
(describing the use of conditional sales by various merchants in the eighteenth century).
243. See Garrard Glenn, The CondidonalSale at Common Law andAs a StatutoU Secily, 25 VA. L.
REV. 559, 559 (1939) (describing the wide use of the conditional sale and how courts widely
approved of it).
362
ST. MARY's LA wrJouRNAL
[Vol. 44:317
the fourth in the 1890s. To eliminate the potential impact of the 1867
New York cases of Wait and Western TransportationCo., Maine and Vermont
passed the first conditional sales acts on March 16, 1870, and November
22, 1870, respectively.
A.
The FirstWave New EnglandStatutes
The first wave of conditional sales acts consisted of five statutes, two
passed in northern New England in 1870 and three passed in the Upper
Mississippi Valley in 1872 and 1873:
Year
1870
State
Maine 2 4 4
Vermont 2 4 5
1872
1873
lowa 2 4 6
Minnesota2 4 7
Wisconsin 2 4 8
Location of Filing
Recording as for mortgages on personalty
Town clerk where vendee resides
Recording as for chattel mortgages
Town clerk where vendee resides
Town clerk where vendee resides
These states were farm states2 4 9 with none of the acts coming from the
manufacturing states mandated by the Gilmorian model. Wisconsin, the
244. Act of Mar. 16, 1870, ch. 143, 1870 Me. Acts 108 ("An act to provide for the recording of
certain contracts.").
245. Act of Nov. 22, 1870, No. 63, 1870 Vt. Acts 103 ("An Act Related To Liens Reserved On
Property Sold.").
246. Act of Apr. 18, 1872, ch. 140, 1872 Iowa. Acts 63 ("An Act Requiring that conditional
Sales of Personal Property be executed, acknowledged, and recorded like Mortgages of personal
Property, to be of any Validity as against bona fide Purchasers, Executions, and attaching
Creditors.").
247. Act of Mar. 10, 1873, ch. 65, 1873 Minn. Acts 185-86 ("An act to provide for filing
certain notes or other evidences of indebtedness or contracts in the office of town clerks.").
248. See Act of Mar. 11, 1873, ch. 113, 1873 Wis. Acts 146 ("An Act to prevent frauds in the
sale of property.").
249.
FRANCIS A. WALKER, COMPENDIUM OF THE NINTH CENSUS 594 (1870), available at
www.hathitrust.org. The percentage of farmers is computed by dividing those engaged in farming by
the total in all occupations for each state. The result is as follows: Iowa (210,263/344,276 or 61.1%);
Kansas (73,228/123,852 or 59.1%); Minnesota (75,810/132,657 or 56.7/0); Wisconsin
(159,667/292,808 or 54.5%); Vermont (57,983/108,763 or 53.3%); Nebraska (23,115/43,837 or
52.7%); Missouri (263,918/505,556 or 52.2/o); Illinois (376,441/742,015 or 50.7%); Ohio
(397,024/840,889 or 47.21%); Michigan (187,211/404,164 or 46.3%); Indiana (206,777/459,368 or
45.00/); Oregon (13,248/30,651 or 43.2%); Maine (82,011/208,225 or 39.3%); New Hampshire
(46,573/120,168 or 38.7%); Pennsylvania (260,051/1,020,544 or 25.50/); New York
(374,323/1,491,018 or 25.1%); Connecticut (43,653/193,421 or 22.7%); New Jersey (63,128/296,036
or 21.3%); California (47,863/238,638 or 20.1%); Rhode Island (11,780/88,574 or 13.3%);
Massachusetts (72,810/570,884 or 12.80/); and Nevada (2,070/26,911 or 7.7%). See also CHARLES E.
CLARK, MAINE: A BICENTENNIAL HISTORY 92 (1977) (stating that 55,000 of Maine's 298,000
citizens were farmers).
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SECURED TRANSACTIONS HyroRY
363
last of these five states, became the first to include the word "fraud" or
"fraudulent" in the title of its act, strongly suggesting that fraud did not
spawn these acts.2 5 0 The fraud of not notifying subsequent purchasers
and levying interests concerned the Wisconsin legislators. 2 5 1 Wisconsin's
conditional sales act rendered such fraud impossible by providing for the
previously undisclosed notice. 25 2
On March 16, 1870, Maine became the first state to pass a conditional
sales act.25 3 This statute followed the Gilmorian scenario; it required a
filing with the chattel mortgages, but only for promissory notes over
$30.254 It also provided a filing exception for small transactions (albeit
smaller than those exhibited in the pre-conditional sales act appellate
opinions), and did not subject the conditional sale to the other provisions
applicable to chattel mortgages. The Maine conditional sale statute
provided:
No stipulation in a note for more than thirty dollars that the goods and
chattels for which the note is given shall remain the property of the payee
until payment, shall be valid against any other person than the parties
thereto, unless possession of such property is retained by the payee or the
note is recorded in the same place and manner as mortgages of personal
property. 2 5 5
The other first wave conditional sales acts did not provide for the small
transaction exception.
Prior to this, in 1869, Maine passed a statute entitled "An Act in
Relation to Conditional Sales of Personal Property" aimed at the oral
documentation problem by requiring the conditional sale be written on the
250. See Act of Mar. 11, 1873, ch. 113, 1873 Wis. Acts 146 ("An Act to prevent frauds in the
sale of property.").
251. Id.
252. Id.
253. Act of Mar. 16, 1870, ch. 143, 1870 Me. Acts 108 ("An act to provide for the recording of
certain contracts.").
254. The legislature corrected this oversight in the following year, extending the filing to
agreements for which a note is given. Id. "No agreement that that personal property bargained and
delivered to another, for which a note is given, shall remain the property of the payee till the note is
paid, is valid, unless it is made and signed as a part of the note; nor when it is so made and signed in a
note for more than thirty dollars, unless it is recorded like mortgages of personal property.". Id.; see
also Boynton v. Libby, 62 Me. 253, 254 (1874) (quoting the language of the Maine act regarding the
recording of certain contracts). The revised statutes omitted the validity between the parties, so the
legislature made a correcting amendment on February 20, 1874, adding "except as between the
original parties to said agreement" after "dollars." See Act of Feb. 20, 1874, ch. 181, 1874 Me. Acts
128-29 (amending the language of the statute so as to emphasize the validity between parties).
255. Act of Mar. 16, 1870, ch. 143, 5 1, 1870 Me. Acts 108 ("An act to provide for the
recording of certain contracts.").
364
ST. MARY'S LAWJOURNAL
[Vol. 44:317
note signed by the vendee. 5 6 This statute suggests the Maine legislature's
concern involved encouraging the assignment of the promissory note, by
providing documentation of the note's security interest. The conditional
sales act would further enhance that encouragement by warding off
interlopers (good faith purchasers and judgment liens) that could seriously
increase the discount involved in the assignment.
This very first conditional sales act contradicts Gilmore's tale. His
explanation of the use of the conditional sales involved two
This act covers neither. No mention is made of
transactions.2 "
of
locomotives, because at the time, the law considered
sales
conditional
258
locomotive fixtures a part of real estate, and not personalty.
Additionally, for small consumer goods, this conditional sales act provided
an exception.25
On November 22 of the same year, Vermont became the second state
to adopt a conditional sales act. This statute made no reference to chattel
mortgages, and required filing with the town clerk:
No lien reserved upon personal property sold conditionally and passing into
the hands of the conditional purchaser, shall be valid against attaching
creditors or subsequent purchasers, unless the vendor of such property shall
take a written memorandum signed by the purchaser, witnessing such lien,
and the sum due thereon, which memorandum shall be recorded in the town
clerk's office of the town where the purchaser of such property resides,
256. See Act of Feb. 4, 1869, ch. 11, 1869 Me. Acts 9 ("An act in relation to conditional sales of
personal property: . .. No agreement or stipulation hereafter made shall be valid, whereby the title to
personal property, bargained and delivered, shall remain the property of the payee of a note given
therefore, unless the agreement or stipulation is in writing and made part of the note, and signed by
the payor or his lawful agent.").
257. See 1 GRANT GILMORE, SECURITY INTERESTS IN PERSONAL PROPERTY 68-69 (1965)
(describing.the two separate transactions of the conditional sale).
258. See The Farmers' Loan & Trust Co. v. Hendrickson, 25 Barb. 484, 484-85 (N.Y. Gen.
Term 1857) (summarizing how a railroad filed real estate mortgages in 1853 on engines and cars);
FRANCIS RAWLE, CAR TRUST SECURITIES, AMERICAN BAR ASSOCIATION TRANSACTIONS, at 17-18
(1885) (discussing the states' differing perspectives on a conditional sale regarding locomotives); 1
ISAAC REDFIELD, THE LAW OF RAILWAYS 590 (1867) (determining railroads generally had no
requirement to file, because they were seen as fixtures); see also Boston, C. & M.R.R. v. Gilmore, 37
N.H. 410, 410-13, 423 (1858) (discussing the change in law with regard to locomotives as personalty
after changes in the law concerning conditional sales of property).
259. The $30 exemption does not cover sewing machines and pianos. A sewing machine costs
about $100 and a piano costs several hundred dollars. See, e.g., Pinkharn v. Mattox, 53 N.H. 600,
600-01 (1873) (stating a conditional sale applied to a sewing machine); Maynard v. Anderson, 54
N.Y. 641, 641 (1873) (explaining that a conditional sale applied to a piano).
2013]
SECURED TRANSACIONS HISTORY
within thirty days after such property
purchaser. 2 6 0
shall be delivered
365
to such
Sixteen years earlier, Vermont passed legislation ensuring the vendor
received full payment for the conditional sale when a good faith purchaser
bought the item.2 6' The 1854 statute allowed the good faith purchaser to
keep the item as long as it paid the outstanding amount due the vendor.2 62
This statute suggests the Vermont legislature's concern involved
encouraging the assignment of the promissory note by providing full
payment on the promissory note. The conditional sales act would further
enhance that encouragement by warding off the other type of interlopers
(judgment liens) that could seriously increase the discount involved in the
assignment.
B.
The FirstWave: UpperMississopi Valleg Statutes
A year-and-a-half later, the states of the Upper Mississippi Valley began
to pass conditional sales acts. On April 18, 1872, Iowa followed the
Gilmorian scenario by requiring a filing in the same manner as chattel
mortgages, but without subjecting the conditional sale to the other
provisions concerning chattel mortgages. The Iowa statute covered the
conditional sale, as well as the bailment lease:
That no sale, contract, or lease, wherein the transfer of title or ownership of
personal property is made to depend upon any condition, shall be valid
against any creditor or purchaser of the vendee, or lessee, in actual
possession, obtained in pursuance thereof, without notice, unless the same
be in writing, executed by the vendor or lessor, acknowledged, and recorded,
the same as chattel mortgages. 2 63
The following year, on March 10, 1873, Minnesota adopted a lengthy,
six-sectioned conditional sales act:
Every note of hand or other evidence of indebtedness or contract, the
conditions of which are that the title or ownership to the property for which
said note or other evidence of indebtedness or contract is given, remains in
260. Act of Nov. 22, 1870, No. 63, § 1, 1870 Vt. Acts 103 ("An Act Relating To Liens
Reserved On Property Sold.").
261. Act of Nov. 10, 1854, No. 12, 1854 Vt. Laws 15-16 ("An Act in Relation To Liens And
Chattels Mortgaged.").
262. Id.
263. Act of Apr. 18, 1872, ch. 140, 1872 Iowa. Acts 69 ("An Act Requiring that conditional
Sales of Personal Property be executed, acknowledged, and recorded like Mortgages of personal
Property, to be of any Validity as against bona fide Purchasers, Executions, and attaching
Creditors.").
ST. MARY'S LA WJOURNAL
366
[Vol. 44:317
the vendor, shall be absolutely void as against the creditors of the vendee,
and as against subsequent purchasers and mortgagees in good faith, unless
the note or other evidence of indebtedness or contract, or true copies
thereof, or if said contract be oral, then a memorandum expressing the terms
and conditions thereof be filed as hereinafter provided. 2 6 4
Section 2 called for filing with the town clerk where the vendee resided;
section 3 provided a time limit for the filed lien (meaning the lien would
become invalid upon failure to enforce the lien within the time limit) of
one year beyond the note's due date; section 4 provided that copies
certified by the clerk could be used as evidence in court; and section 5
provided for a withdrawal method. 2 6 5
The following day, on March 11, 1873, Wisconsin adopted a conditional
sales act, also calling for a filing with the town clerk and providing the
same time limit to the lien as did Minnesota:
No contract or agreement for the sale of personal property, by the terms of
which the title or right of property is to remain in the vendor, and the
possession thereof in the vendee, until the purchase price is paid, or other
conditions of sale are complied with, shall be valid against any other person
than the parties thereto, unless such contract or agreement shall be reduced
to writing, and the same or a copy thereof shall be filed in the office of the
town clerk of the town where said vendee resides, or if he shall not be a
resident of the state, then in the town where such contract or agreement is
made, and such town clerk shall . . . receive the same compensation
therefor[e] as is provided by law for filing chattel mortgages: provided, that the
effect of such filing shall not extend beyond one year from maturity of the
contract price, or consideration therein reserved.2 6 6
C.
The Second Wave Statutes
The second wave states, two states adjacent to those in the Upper
Mississippi Valley, enacted their conditional sales acts in 1877.
Year
1877
State
Nebraska 2 6 7
Missouri 26 8
Location of Filing
County clerk where vendee lives
Recording as for chattel mortgages
264. Act of Mar. 10, 1873, ch. 65, § 1, 1873 Minn. Acts 185-86 ("An act to provide for filing
certain notes or other evidences of indebtedness or contracts in the office of town clerks.").
2 6 5. Id.
266. See Act of Mar. 11, 1873, ch. 113, S 1, 1873 Wis. Acts 146 ("An Act to prevent frauds in
the sale of property.").
267. See Act of Feb. 19, 1877, § 1, 1877 Neb. Acts 170 ("An Act to prevent fraudulent transfer
of personal property.").
2013]
SECURED TRANSACTIONS HISTORY
367
On February 19, 1877, Nebraska adopted its conditional sales act,
calling for filing with the county clerk and providing the same time limit to
the lien as Minnesota and Wisconsin:
That no sale, contract or lease, wherein the transfer of title or ownership of
personal property is made to depend upon any condition, shall be valid
against any purchaser or judgment creditor of the vendee or lessee, in actual
possession, obtained in pursuance of such sale, contract or lease, without
notice, unless the same be in writing, signed by the vendee or lessee, and a
copy thereof filed in the office of the clerk of the county within which such
vendee or lessee resides ..
..
All such sales and transfers shall not remain
valid against purchasers in good faith, or judgment or attaching creditors
without notice, for a longer period than one year, unless such vendor or
leasor shall, within thirty days prior to the expiration of one year from the
date of such sale or transfer, file a copy thereof, verified as aforesaid, in the
office of said clerk ....
On March 15, 1877, Missouri passed the last of the first wave's
conditional sales acts by amending its fraudulent conveyance statute,
adding the following words at the end of Section 10 of Chapter 107:
[N]o sale of goods and chattels, where possession is delivered to the vendee,
shall be subject to any condition whatever as against creditors of the vendee,
or subsequent purchasers from such vendee in good faith, unless such
condition shall be evidenced by writing, executed and acknowledged by the
vendee, and recorded as now provided in cases of mortgages of personal
property. 2 7 0
D. The Third and Fourth Wave Statutes
Of the twelve states that made up the third wave, ten states, located in
the northeast and south, enacted their conditional sales acts in the 1880s,
from 1881 to 1889:
268. Compare Act of Mar. 15, 1877, ch. 107, 1877 Mo. Acts 320 (amending Section 10 of
Chapter 107 to read: "[N]o sale of goods and chattels, where possession is delivered to the vendee,
shall be subject to any condition whatever as against creditors of the vendee, or subsequent
purchasers from such vendee in good faith unless such condition shall be evidenced by writing,
executed and acknowledged by the vendee, and recorded as now provided in cases of mortgages of
personal property"), with A.F. DENNY, THE GENERAL STATUTES OF THE STATE OF MiSSOURI 440
(1866) (citing Section 10 of chapter 107 on fraudulent conveyances).
269. See Act of Feb. 19, 1877, 5 1, 1877 Neb. Acts 170-71 ("An Act to prevent fraudulent
transfer of personal property.")
270. Act of Mar. 15, 1877, ch. 107, 1877 Mo. Acts 320.
368
Year
1881
1882
1883
1884
1885
1887
1889
ST. MARY'S LAwJOURNAL
State
Georgia 2 7
W. Virginia 27 2
N. Carolina 27 3
New York27 1
Ohio 2 7 5
Texas2 7 6
New Hampshire27 7
Virginia2 7 1
KansaS2 7 9
New Jersey2 8 0
[Vol. 44:317
Location of Filing
Recording as for chattel mortgages
County clerk where goods are located
Recording as for chattel mortgages
Town clerk where vendee lives
Town clerk where vendee lives
Recording as for chattel mortgages
Town clerk filing where vendee lives
County clerk where goods are located
Deed filing where goods are located
County clerk where vendee lives
Two states, New York and New Jersey, only invalidated unregistered
conditional sales for subsequent purchasers (including subsequent
271. See Act of Sept. 27, 1881, No. 293, 1881 Ga. Acts 143-44 ("An Act to require the
conditional sales of personal property to be evidenced in writing, and for other purposes.'.
272. See Act of Mar. 17, 1882, ch. 106, 1882 W. Va. Acts 310-11 ("An Act to amend and reenact section three of chapter seventy-four of the code of West Virginia.').
273. SeeAct of Mar. 12,1883, ch. 342,1883 N.C. Acts 511 ("An Act to require the conditional
sales of personal property where title is retained to be registered.').
274. See Act of May 21, 1884, ch. 315, 1884 N.Y. Acts 380 ("An Act requiring contracts for the
conditional sale of personal property on credit to be filed in the town clerks' and other offices.").
The New York statute did not remain intact very long. In 1894, the legislature exempted a long list
of personalty from the statute, primarily items used by consumers and farmers. See Act of May 8,
1894, ch. 420, 1894 N.Y. Acts 861 (exempting "household goods, pianos, organs, scales, engines,
boilers and portable furnaces, and boilers for heating purposes, portable saw mills and saw machines,
threshing machines and horse powers, mowing machines, reapers and harvesters and grain drills, with
their attachments; vehicles, coaches, hearses, carriages, buggies and phaetons, bicycles and tricycles of
all kinds, and any other device for locomotion by human power").
275. See Act of May 4, 1885, H.B. No. 1051, 1885 Ohio Acts 238 (making it a misdemeanor to
fail to file instruments pertaining to conditional rates and sales of personal property).
276. See Act of Mar. 31, 1885, ch. 78, 1885 Tex. Acts 76 ("An Act to regulate reservations in
sales of personal property.").
277. See Act of Aug. 12, 1885, ch. 30, 1885 N.H. Acts 245 ("An Act providing that all liens
reserved on personal property sold conditionally and passing into the hands of the purchaser shall be
evidenced in writing and recorded.").
278. See CODE OF VA. § 2462 (1887) (requiring sales and contracts to be evidenced by a writing
and admitted to record; also mandating railroad rolling equipment filing with marginal notes of
railroad rolling equipment filing acts of 1883); see also McComb v. Donald's Adm'r, 5 S.E. 558, 56162 (Va. 1888) (holding unrecorded mortgages are void so subsequent purchasers acquire no tide
against the original vendor).
279. See Act of Mar. 1, 1889, ch. 255, 1889 Kan. Acts 387 ("An act to regulate the recording of
title notes or evidences of conditional sales.").
280. See Act of May 9, 1889, ch. 271, 1889 N.J. Acts 421 ("An Act requiring contracts for the
conditional sale of personal property to be recorded.").
2013]
SECURED TRANSACIONS HISTORY
369
mortgagees), and not for previous creditors (judgment liens).28 1
Massachusetts only went so far as to pass an act in 1884 giving a vendee of
furniture or other household effects under a conditional sale the right of
redemption. 2 Tennessee was the only state to pass an act in 1889
providing for a foreclosure sale with the excess proceeds, if any, to go to
the purchaser.2 8 3
The fourth wave jurisdictions, four states, five territories, and one
district, predominately in the west and south, adopted their conditional
sales acts between 1893 and 1901:
Year
1893
State
S. Dakota Terr.2
1895
Washington 2 8 5
Connecticut 2 8 6
Wyoming Terr.2 8
N. Dakota Terr."8
Alabama2 89
1896
4
Location of Filing
County registrar of deeds where vendee
resides
County auditor where vendee resides
Town clerk where vendee resides
County clerk where goods are located
County registrar where goods are
County probate judge where vendee
resides
281. See id. ("An Act requiring contracts for the conditional sale of personal property to be
recorded."); Act of May 21, 1884, ch. 315, 1884 N.Y. Acts 380 ("An Act requiring contracts for the
conditional sale of personal property on credit to be filed in the town clerks' and other offices.").
The District of Colombia and Montana later followed this approach. See Deeds of Chattels Act of
1901, ch. 854, 31 Stat. § 547 (1901) (requiring conditional sales of chattels to be in writing and
recorded); Act of Mar. 3, 1899, S.B. No. 91, 1899 Mont. Acts 124 ("An Act To Provide For the
Filing Of Contracts, Notes And Instruments For The Sale Of Personal Property Where Title Is To
Remain In The Vendor Until Purchase Price Is Paid.").
282. See Act of June 2, 1884, ch. 313, 1884 Mass. Acts 342 ("An Act concerning conditional
sales of furniture or other household effects.").
283. See Act of Mar. 15, 1889, ch. 81, 1889 Tenn. Acts 117 ("An Act to provide a remedy for
purchaser and seller in conditional sales of personal property.").
284. See Act of Feb. 20, 1893, ch. 36, 1893 S.D. Terr. Acts 56 ("[Fjiled with the register of
deeds of the county where the vendee resides.").
285. See Act of Mar. 10, 1893,ch. 106, 1893 Wash. Acts 253 ("An Act in relation to conditional
sales and leases of personal property.").
286. See Act of May 25, 1893, ch. 147, 1893 Conn. Acts 287 ("An Act concerning Conditional
Sales of Personal Property.").
287. See Act of Feb. 5, 1895, ch. 40, 1895 Wyo. Terr. Acts 80 ("An Act requiring all conditional
sales or transfers of personal property to be in writing, and that such writing be made a matter of
record.").
288. See N.D. TERR. CODE § 4732 (1895), at 876 (listing in Article 3 for Mortgages of Personal
Property, with no marginal source provided).
289. CODE OF ALA. § 1017 Ala. (1897), at 367 (requiring conditional sales of personal property
to be filed with a probate judge). But 0C Ensley Lumber Co. v. Lewis, 25 So. 729, 730-31 (Ala. 1899)
(finding that as of March 16, 1896, no recording statute for conditional sales existed).
ST. MARY's LA
370
1897
1899
1901
irJOURNAL
[Vol. 44:317
Oklahoma Terr.2 9 0
County registrar of deeds where goods
.are located
County clerk where goods are located
Montana 2 9 1
County recorder where goods are located
Arizona Terr. 2 9 2
Dist. of Columbia'" Recording as for chattel mortgages
Tennessee added to its meager effort to pass an act in 1899 requiring
the conditional sale to be in writing. 2 9 4
E. Legislative History
The legislative history of the first wave conditional sales acts confirms
the origins of the conditional sales transaction and provides several clues
to the origin of the conditional sales acts. Ordinarily, legislative history
consists of gubernatorial messages, bills, hearings, committee reports,
legislative debates, and preambles, as well as legislative journals and
statutory tides. 2 95 For the farm states during the Gilded Age (the time
spanning roughly from 1877 to 1893), this material suffers from two
drawbacks. First, legislatures frequently did not preserve records of many
of these proceedings. State legislative journals in the Gilded Age seldom
mention proposed amendments and do not mention bill wording, floor
debates, or committee proceedings. 2 96 With rare exceptions, they merely
provide perfunctory bill tides and conclusions, without actually providing
any details. 2 9 7 Second, when records do exist, they are difficult to access.
290. See Act of Mar. 6, 1897, ch. 26, 1897 Okla. Terr. Acts 220 ("An Act requiring that all
evidences of a conditional sale of property shall be recorded before becoming effective.").
291. See Act of Mar. 3, 1899, S.B. No. 91, 1899 Mont. Acts 124 (providing for filings for the
sale of personal property).
292. Compare ARIZ. TERR. REV. CODE tit. 30, § 2702 (1901), at 719 (requiring contracts for the
sale of personal property to be filed with the county recorder), with id. 5 2036 (1887) (lacking language
on filing contracts).
293. See Deeds of Chattels Act of 1901, ch. 854, 31 Stat. 5 547 (1901) (requiring conditional
sales of chattels to be in writing and recorded).
294. See Act of Jan. 26, 1899, ch. 15, S.B. No. 30, 1899 Tenn. Acts 24 ("An Act to regulate the
retention of title in conditional sales of personal property, and require that such retention of title in
conditional sales of personal property shall not be legal or valid, unless evidenced by written
contract.").
295. See 2A NORMAN SINGER, SUTHERLAND STATUTORY CONSTRUCTION 283-346 (4th ed.
1984) (detailing extrinsic aids to interpretation).
296. See id. at 318 (acknowledging many states do not retain an official verbatim record of
committee hearings).
297. See id. at 313 (observing that with "most state statutes there [are] no standing committee
report[s] which [are] of any interpretive value").
SECURED TRANSACTIONS HISTORY
2013]
371
For the Gilded Age, the legislative materials consisted predominately of
legislative journals and statutory titles.
1.
Maine
The legislative history of Maine reveals lawyers' interest in passing the
conditional sales acts and the agricultural origin of the transaction. In
Maine, the first state to pass a conditional sales act, the bill arose in the
state's senate. The year before, in 1869, the Maine legislature required that
parties write the conditional sales agreement on the underlying promissory
notes.2 9
On January 12, 1870, Senator Thomas Brackett Reed, a
Republican attorney from Portland, Cumberland County, Maine, and the
future Speaker of the United States House of Representatives, moved
"[t]hat the Committee on the Judiciary be instructed to inquire into the
expediency of requiring a record of notes containing stipulations that the
chattels for which notes are given shall remain the property of the payee
until payment."' 9 9 Maine used a committee system where members of
both the house and the senate served on the important standing
committees, such as the Committee on the Judiciary. Only lawyers served
on the Maine Committee on the Judiciary.3 0 0 The next day, the Maine
House concurred in the order to the Committee on the Judiciary."o' Later
298. See Act of Feb. 4, 1869, ch. 11, 1869 Me. Acts 9 ("An Act in relation to conditional sales
of personal property.").
299. H.R. JOURNAL, 49th Leg., at 66 (Me. 1970). Thomas Brackett Reed, born in Portland,
Maine on October 18, 1839, died December 7, 1902 in Washington, D.C. He was a Republican, and
an attorney who was serving his only term as a state senator in 1870. Reed was admitted to the bar in
1865. He served twice as a state representative in 1868 and 1869, later as attorney general of Maine
from 1870 to 1872, as city solicitor of Portland from 1874 to 1877, as congressman from 1877 to
1899, and as Speaker of the House 1889 to 1891 and 1895 to 1899. See ANDREW R. DODGE,
BIOGRAPHICAL DIRECTORY OF THE UNITED STATES CONGRESS 1774-2005, at 1794 (2005). He
appeared in his father's household in the 1870 census, Thomas B. Reed (Sr.), as Thomas B. Reed, age
30, a lawyer with $2,500 in realty. See U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF 7TH
WARD, PORTLAND, CUMBERLAND CO., ME., at 274 (1870).
300. See S. JOURNAL, 49th Leg., at 53 (Me. 1870), available at http://books.google.com/
books?id=ebrlJA-Fd8C&printsec=frontcover#v=onepage&q&f= false (detailing the members of
the Committee of the judiciary). Members of the senate were: Stephen D. Lindsey, lawyer, of
Somerset; Marquis D.L. (Mark R.) Lane, lawyer, of Cumberland; and Thomas Bracket (Thomas B.)
Reed, lawyer, of Cumberland. Members of the house were: Charles R. (Ches. R.) Whidden, lawyer,
of Calais; Lewis Barker, lawyer, of Stetson; Edwin B. Smith, lawyer, of Saco; Percival Bonney
(Bonny), lawyer, of Portland; Hiram Bliss, Jr., lawyer, of Washington; Cyrus M. Powers, lawyer, of
Houlton; and T.W. (Thomas W.) Vose, lawyer, of Winterport. Their names and occupations come
from U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF MAINE (1870), available at
(listing census data, including
http://www.heritagequestonline.com/hqoweb/library/do/index
occupations of Maine legislators in 1870). Parentheticals reflect Heritage Quests' index spelling.
301. H.R.JOURNAL, 49th Leg., at 66 (Me. 1870).
372
ST. MARY'S L4 WJOURNAL
[Vol. 44:317
that day, the house initiated its own proposal to handle the situation.
Upon the motion of Representative Asher H. Barton, a wealthy farmer, 3 0 2
the house ordered "[t]hat the Committee on the Judiciary inquire into the
expediency of amending chapter 11 of the laws of 1869, entitled 'an act in
relation to conditional sales of personal property."'3 0 3 The statute slated
for amendment was the statute requiring the parties to write the
conditional sales agreement on the promissory notes. 30 4 The journals of
Maine's Senate and House did not record any proposed house amendment
to the 1869 statute. Two months later on March 9, 1870, Senator Reed
reported to the senate from the Committee on the Judiciary on the "order
relating to recording 'Holmes' notes,' so called,"3 0 s his bill for "'an act to
provide for the recording of certain contracts.'"aos On March 11, the
Maine house received that same report of the Committee on the
Judiciary. 3 0 7 On March 14, Senator Reed reported to the senate that the
legislation on Maine house's order with regard to the proposed
amendment to Chapter 11 of the laws of 1869 was inexpedient.os His
recordation bill handled the situation. On March 15, the house received
the same report, that their order to amend the 1869 statute was
inexpedient.3 0 9 That same day, the house passed the recordation bill, had
the speaker sign it, and sent it to the senate.3 1 o On March 16, 1870, the
Maine Senate passed it for enactment in concurrence. 3 1 '
Thomas Bracket Reed, an attorney since 1865 and sponsor of the Maine
302. Asher H. Barton, aged 51, appeared in the 1870 census of Benton, Kennebec Co., Me., as
a farmer and representative in the legislature, with $30,000 in realty and $8,000 in personalty. See U.S.
NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF BENTON CO., ME., at 138 (1870).
303. H.R. JOURNAL, 49th Leg., at 68 (Me. 1870) (sending orders to the senate); S. JOURNAL,
49th Leg., at 73 (Me. 1870), available at http://books.google.com/books?id=ebrilJAFd8C&printsec= frontcover #v= onepage&q&f= false (providing that house orders were severally
read and passed in concurrence on January 14th).
304. See Act of Feb. 4, 1869, ch. 11, 1869 Me. Laws 9 (requiring conditional sales agreements
be written on promissory notes).
305. S.JOURNAL, 49th Leg., at 320-21 (Me. 1870).
306. See id. at 320-21, 328 (Mar. 9: reported, read the bill once, and ordered its second reading;
Mar. 10: read the bill the second time and passed it to be engrossed in concurrence).
307. See H.R. JOURNAL, 49th Leg., at 338, 351 (Me. 1870) (Mar. 11: received report, accepted
the report in concurrence, and read the bill twice; Mar. 14: read the recordation bill a third time and
passed it for engrossment).
308. See S. JOURNAL, 49th Leg., at 342 (Me. 1870) (arguing the Maine House's order to amend
Chapter 11 was inexpedient).
309. See H.R. JOURNAL, 49th Leg., at 352 (Me. 1870) (recording the house received the same
report as the senate).
310. See id.at 355 (passing the bill in the house on the same day as it was received).
311. See S. JOURNAL, 49th Leg., at 351, 404 (Me. 1870) (Mar. 15: Committee on Engrossed Bills
reported the recordation bill engrossed, passed; listing it as a bill passed).
2013]
SECURED TRANSAcIONS HISTORY
373
bill, had six cases before the courts of Maine prior to the passage of
Maine's conditional sales act that appear in the reports of the Supreme
These reported opinions reveal that he represented
Court of Maine.'
Only two cases involved creditors, with Senator
creditors and debtors.
Reed representing a local holder of a promissory note and a local bankrupt
The other lawsuits involved insurance contracts and admiralty
trader.3
libel actions.3 1 s His experiences would make him knowledgeable of the
legal risks involved with promissory notes.
The origin of the term "Holmes' note," used by Thomas Bracket Reed
during the passage of the bill, confirms the agricultural use of the
conditional sales.3 1 '6 "Holmes' notes" derived from, Ebenezer Rawson
Holmes of Hebron, Oxford County, Maine.3 1 James Holmes leased his
oxen, cattle, and sheep to settlers clearing the forests because few had the
means of stocking their farms.3 ' When Ebenezer Holmes inherited the
leases, he cancelled them and sold the livestock to the farmers, often for
promissory notes.3 1 1 In the 1830s, he began the custom of inserting a
proviso in the notes that the livestock remained Mr. Holmes' property
312. See Spaulding v. N.Y. Life Ins. Co., 61 Me. 329, 329 (1870) (representing a Maine agent of
a New York insurance company that lost renewal commissions after the agency terminated him,
although industry custom was to the contrary); Wagener v. Minot, 28 F. Cas. 1323, 1323 (D. Me.
1870) (representing a ship master who was found liable for assault and battery upon an insubordinate
seaman who was on duty at the wheel); In re W.D.B., 29 F. Cas. 480, 480 (D. Me. 1869) (representing
client that was awarded towing and damage costs for towing a wrecked ship to Portland); Bailey v.
Hope Ins. Co., 56 Me. 474, 482 (Me. 1869) (representing a Rhode Island insurance company with a
Maine agent that lost on assumpsit based on an insurance policy claim for fire loss to a New
Hampshire hotel because a policy condition violated Maine statutory law); In re Gay, 10 F. Cas. 105,
107 (D. Me. 1868) (representing a trader who was denied discharge under the Bankruptcy Act of
1867 for engaging in fraudulent preference); Tillock v. Webb, 56 Me. 100, 101 (Me. 1868)
(representing a creditor who lost the case because contracts were void on Sundays).
313. See supra note 312 (listing cases argued and parties represented).
314. See In re Gay, 10 F. Cas. at 107 (representing a trader who was denied discharge for
engaging in fraudulent preference); Tillock, 56 Me. at 101 (representing a creditor who lost the case).
315. See supra note 312 (listing cases argued and parties represented).
316. See The FactsAbout the 'Holmes Note", 12 LAW NOTES 1, 188 (1909) (detailing the history
of the term "Holmes' note" and its agricultural uses).
317. See "United States Census, 1870," ER Holmes in Household of ER Holmes, Maine, United States,
FAMILY SEARCH, http://familysearch.org/pal:/MM9.1.1/M6DP-F6H (last visited Dec. 1, 2012)
(providing facts on E.R. Holmes from Maine). E.R. Holmes, aged 68, appeared on the 1870 census
of Oxford, Oxford Cnty., Me., as a wealthy farmer owning $5,000 in real estate and $6,300 in
personal property along with his wife Louisa, three adult children, and three hired hands. See U.S.
NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF OXFORD, OXFORD CO., ME., at 292 (1870).
318. The FactsAbout the 'Holmes Note", 12 LAW NOTES, 1, 188 (1909).
319. Id. at 189.
374
ST. MARY'S LA WJOURNAL
[Vol. 44:317
until payment of the note.320 Others adopted the form, labeling them
"Holmes' notes." 3 2 1
2.
Vermont
The legislative history of Vermont confirms the lawyer interest in
passing the conditional sales acts.
Senator William M. Pingry, a
Republican attorney, from Weathersfield, Windsor County, Vermont,
introduced Vermont's second conditional sales act, on November 11,
1870, Senate Bill 108, entitled "An Act Relating to Liens Reserved On
Property Sold." 3 2 2 The Vermont Senate referred the bill that day to the
Committee on the Judiciary, which Senator Pingry served on.3 2 3 On
November 15, 1870, the committee reported favorably on the bill. 3 2 ' The
next day, the Vermont Senate passed the bill.3 2 5 On November 17, 1870,
the Vermont house received Senate Bill 108 from the Vermont Senate and
referred the bill to the House Committee on the Judiciary.3 2
On
November 22, 1870, Representative Lewis H. Bisbee, a lawyer from
320. Id.
321. Maine lawyers continued to use the term into the late nineteenth century. See Field v.
Gellerson, 80 Me. 270, 272 (Me. 1888) (referencing the use of the term "Holmes' Note" by Maine
lawyers into the late nineteenth century). In 1891, the Maine legislature deleted the "'in a note for
more than thirty dollars"' from the conditional sales act with "[a]n Act to amend section five of
chapter one hundred and eleven of the Revised Statutes, relating to recording of Holmes' notes." See
Act of Feb. 5, 1891, ch. 11, 1891 Me. Acts 9 (affmiung goods sold and delivered with a note shall
remain payee's in void unless recorded in a note).
322. See Act of Nov. 22, 1870, No. 63, 1870 Vt. Laws 103 ("No lien upon personal property
shall be valid unless the lien be in writing and recorded in the town clerk's office within thirty days
from time of sale."). William M. Pingry was born in Salisbury, New Hampshire, on May 28, 1806.
He was a Baptist, a Republican, and an attorney, serving his fifth term as a state senator in 1870. See
S. JOURNAL, Biennial Sess., at 343 (Vt. 1870). He was admitted to the bar in Caledonia County,
Vermont, in 1832, practiced law in Washington County, Vermont, until 1841, married his first wife,
Lucy G. Brown, in Waitsfield, Washington County, Vermont, on May 26, 1836, and married his
second wife, Lucy Cornelia Carpenter, in Weathersfield, Windsor County, Vermont, on February 12,
1868. He appeared in the 1870 and 1880 censuses of Weathersfield, Windsor County, Vermont, as a
lawyer, aged 64, with wife Lucy in 1870, and as an assistant judge of the county court with wife Lucy
C. Pingry and daughter Anna R. Richardsen in 1880. See HAMILTON CHILD, GAZETEER OF
WASHINGTON COUNTY, VT., 1789-1889, at 84-86 (William Adams ed. 1889); IntemationalGenealogical
Index, FAMILY SEARCH (last visited Dec. 1, 2012); U.S. NAT'L ARCHIVES & RECORDS ADMIN.,
CENSUS OF 1870, WEATHERSFIELD, WINDSOR CO., VT., at 589 (1870); U.S. NAT'L ARCHIVES &
RECORDS ADMIN., CENSUS OF 1880, WINDSOR CO., VT., at 321C (1880).
323. See S.JOURNAL, Biennial Sess., at 11 (Vt. 1870) (signifying Mr. Pingry as a member of the
Judiciary Committee).
324. See id. at 194 (Nov. 15: reporting in favor of Senate Bill 108 and ordering it engrossed and
read a third time).
325. See id. at 210 (Nov. 16: engrossed, read a third time, and passed).
326. See H.R. JOURNAL, Biennial Sess., at 309 (Vt. 1870) (Nov. 17: received the bill; bill is read
and submitted to judiciary Committee).
2013]
SECURED TRANSACTIONS HISTORY
375
Newport, Orleans County, Vermont, from the House Committee on the
Judiciary reported in favor of the passage of Senate Bill 108.127 The
Vermont House passed it in concurrence. 12
On November 22, 1870,
both houses of the legislature presented the bill to the Vermont governor
for approval, and it was subsequently received.3 2 9
William M. Pingry, attorney since 1832 and sponsor of the Vermont bill,
had seven cases before the courts of Vermont prior to the passage of
Vermont's conditional sales act that appear in the reports of the Supreme
Court of Vermont, revealing the sort of clients he represented. Senator
Pingry generally represented lenders and their successors, with the more
recent, in 1863 and 1870, involving promissory note assignments.3 3 o
Senator Pingry's law practice
Occasionally he represented the debtor. 13
enlightened him concerning legal issues of promissory notes, their security,
and more recently, their assignment.
327. See id. at 359 (Listing Mr. Bisbee as the committee member who reported the passage of the
Bill). Lewis H. Bisbee appeared on the 1870 census of Newport, Orleans Co., Vt., aged 31, attorney
with $5,000 in realty and $500 in personalty. See U.S. NAT'L ARCHIVES & RECORDS ADMIN.,
CENSUS OF NEWPORT, ORLEANS CO., VT., at 229 (1870).
328. See H.R. JOURNAL, Biennial Sess., at 359 (Vt. 1870) (Nov. 21: bill is read the third time
and passed in concurrence); S.JOURNAL, Biennial Sess., at 266 (Vt. 1870) (receiving word of passage
of the bill in the house).
329. See S. JOURNAL, Biennial Sess., at 283 (Vt. 1870) (reporting the bill as signed and
presented to the governor); H.R.JOURNAL, Biennial Sess, at 396 (Vt. 1870) (reporting the receipt of
the governor's signature).
330. See Chapman v. Comings, 43 Vt. 16, 19-20 (1870) (losing half of assignee's interest in
estate administrators proceeds from estate sale due to recognition by the court of a prior agreement
between administrator and debtor to split the difference between amount due and what had been
paid on debtor's note); Alford v. Baxter, 36 Vt. 158, 160-64 (1863) (winning for client, payee of
promissory note from three sureties, because a new law allowed discharge of one surety without
discharging the remainder); ExparteDavis, 18 Vt. 401, 403-05 (1846) (losing lender's plea to prevent
flight by keeping debtor in prison based on court's decision that there was insufficient evidence to
prolong incarceration under habeas corpus); Lockwood v. Hoskisson, 18 Vt. 37, 38-39 (1843)
(winning a book account lawsuit for laborer against employer who agreed to repay promissory note
issued by labor to manufacturer for the amount of services but refused to pay after manufacturer
mistakenly recovered amount owed from laborer's account).
331. See Bingham v. Town of Springfield, 41 Vt. 32, 38-41 (1868) (losing against military
deserter's claim for enlistment bounty on grounds that client and Bingham signed a contract to meet
the town's enlistment quota by enrolling, not for Bingham to fulfill a distinctly separate contract with
the federal government by completing his service requirement); Lovejoy v. Whipple, 18 Vt. 379, 38284 (1846) (losing on behalf of debtor who signed promissory note on Sunday, contra statute, but did
not deliver note on Sunday, thereby rendering note valid and actionable within the law); Onion v.
Clark, 18 Vt. 363, 364 (1846) (defeating partition petition for levy on behalf of tenants in common,
one of whom filed for bankruptcy under federal law prior to levy).
ST. MARY'S LAw/JOURNAL
376
3.
[Vol. 44:317
Iowa
The legislative history of Iowa provides strong evidence that the
Gilmorian scenario is incorrect. In Iowa, the third state to adopt a
conditional sales act, Senator William H. Fitch, a Republican farmer from
Calhoun County, Iowa, introduced Senate File No. 47, "A bill for an act to
protect persons in the possession of personal property[,]" on January 24,
1872. 2 The tide indicates this farmer intended to protect good faith
purchasers and levying creditors as called for by Gilmore. This farmer,
more importantly, reflects the infection in farm states of the New York
The Iowa Senate referred the bill to
good faith purchaser rule of W'ait."
the Iowa Senate Committee on the Judiciary.3 3 4 That committee,
composed only of lawyers, could not tolerate the bill.3 3 s A month later on
February 22, 1872, Senator James S. Hurley,3 3 6 a Republican lawyer from
Wapello County and chair of the Iowa Senate Committee on the Judiciary,
reported that the committee had considered the bill, made a substitution
for the original bill, and recommended the substitute pass. 3 3 ' The Senate
Journal did not report the substance of the substitute other than that the
The Senate Journal did not specify the new
title was also amended. 3
title. Two weeks later, on March 12, 1877, the Iowa Senate passed the
substitute bill.3 3
332. S.JOURNAL, 14th Sess., at 64 (Iowa 1872).
333. See supra notes 1-29 and accompanying text (describing the history behind the New York
good faith purchaser rule).
334. See S. JOURNAL, 14th Sess., at 64 (Iowa 1872) (reading the bill two times and then
referring it to the Committee on the Judiciary).
335. The Senate Committee on the Judiciary consisted of Senators Hurley, McKean, Claussen,
Fairall, Burke, Willett, Stone, Russell, and McCoid. See id. at 23. These men were all lawyers. Infra
note 352. Of these Senators, Burke and McKean voted against the final bill, and Russell did not
vote. Id.
336. James S. Hurley, a native of Champaign County, Ohio, was born on May 18, 1829. He
came to Wapello, Louisa County, Iowa, in 1840. He entered law school in 1853 and was admitted to
the bar in 1854. He served four terms as a Republican state senator. He appeared in the 1870 census
in Wapello, aged 39, born in Ohio, as a state senator, with $7,200 in realty and $1,700 in personalty,
along with wife Martha, and on the 1880 census in Wapello, aged 51, born in Ohio, as a lawyer, with
wife Martha. See Senator James Hur/y, IOWA LEGISLATURE (last visited Dec. 1, 2012), available at
http://www.legis.iowa.gov/Legislators/legislator.aspx?Ga=14&PID=5017; U.S. NAT'L ARCHIVES &
RECORDS ADMIN., CENSUS OF WAPELLO, LOUISA CO., VT., at 229 (1880).
337. See S. JOURNAL, 14th Sess., at 175 (Iowa 1872) (Feb. 22: "Your committee on judiciary to
whom was referred S.F. No. 47, [a] bill for [an] act to protect persons in the possession of personal
property, beg leave to report that they have had the same under consideration and have instructed
me to report the following substitute for the original bill, with the recommendation that the
substitute ... pass. James S. Hurley, Chairman. Passed on file.").
338. See id. at 300 (referring to the substitute, but not explicitly naming it).
339. See id. (Mar. 12: passing with 33 yeas, 7 nays, and 10 absent or not voting).
2013]
SECURED TRANSACHONS HISTORY
377
The bill's new title, and hence what the Iowa Senate Committee on the
Judiciary found reprehensible, became obvious in the Iowa House. The
Iowa Senate sent the "[s]ubstitute for [Senate File] No. 47, A bill for an act
requiring that conditional sales of personal property be executed,
acknowledged, and recorded like mortgages of personal property, to be of
any validity as against bona fide purchasers, [executions, and attaching
creditors)," to the Iowa House on March 13, 1872, for concurrence. 34 0
The senate committee reversed the original bill so it did not protect good
faith purchasers, but instead protected the vendor by eliminating the
possibility of a good faith purchaser with a filing requirement.3 4 1 That
same day, the Iowa House referred it to the Iowa House Committee on
the Judiciary, which was composed only of lawyers. 3 4 2 On April 8, 1872,
Representative Washburn A. Stow, a Democrat attorney from the
reported back and recommended that it be
Committee on the Judiciary,
S.F. No. 47, A bill for an act to protect persons in the possession of personal property, with
report of committee recommending substitute, was taken up and considered. The substitute
was adopted. Senator Willett moved to suspend the rule and read the bill a third time. On the
question, "Shall the bill pass?" The yeas were-Senators Allen, Beardsley, Bemis, Burke,
Campbell, Claussen, Crary, Dague, Fairall, Fitch, Gault, Havens, Howland, Ireland, Kephart,
Larrabee, Leavitt, Maxwell, McCoid, McCormack, McCulloch, Miles, Richards, Russell, Shane,
Stone, Stuart, Taylor, Vale, West, Willett, Wonn, and Young-33. The nays were-Senators
Converse, Dashiell, Dysart, Kinne, McKean, Murray and Smith-7. Absent or not votingSenators Atkins, Boomer, Chambers, Hurley, Ketcham, Lowry, McIntyre, McNutt, Merrill and
Read-10. So the bill passed and the tide was amended and agreed to.
Id.
340. See H.R. JOURNAL, 14th Sess., at 412 (Iowa 1872) (announcing the request for
concurrence on senate bills and resolutions on March 13th).
341. Id. at 625 (indicating necessity for conditional sales of property to be recorded).
342. See id. at 426 (Mar. 13: read twice and referred). The Iowa House Committee on the
Judiciary consisted solely of lawyers: "Pratt, Green, Williams, Clark of Benton, Heberling, Wood of
Clay, Rice, Leahy, Ainsworth, Duncombe, Merrell, Hall, O'Donnell," and Stow. See id at 89, 101
(designating Stow as a committee member); infra note 350 (detailing the occupations of
representatives of the Iowa House Committee on the Judiciary). Of these, only Duncombe voted
against the final bill.
343. Washburn A. Stow, born in Waybridge, Vermont, July 8, 1842, died in Omaha, Nebraska,
October 21, 1887, was a Democrat who came to Iowa, was admitted to the bar in 1866, practiced law
in Waverly, Bremer County, Iowa, married Eliza M. Tyler on July 5, 1868. He came to Hamburg,
Fremont County, Iowa, in 1870, and in 1873, he formed a law partnership with J.M. Hammond and
served as Mayor of Hamburg in 1875 and 1878. Stow appeared in the 1880 census of Hamburg,
Fremont County, Iowa, as an attorney at law, aged 38, born in Vermont, with wife Eliza M., and
moved to Omaha, Nebraska, in 1882, where he practiced law and served as a Nebraska state senator
in 1886 and 1887. U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF HAMBURG, FREMONT
Co., IOWA, at 131 (1880); see Representative Washburn Stow, IOWA LEGISLATURE,
https://www.legis.iowa.gov/Legisators/legisator.aspx?GA=14&PID=5051 (last visited Dec. 1,
2012) (providing a biography of Representative Stow until 1887); see also Death ofHon. W. A. Stow,
COUNCIL BLUFFS NONPAREIL, 2d ed., Oct. 22,1887, at 3 (chronicling his life outside of Iowa).
378
ST. MARY'S LA
WJOURNAL
[Vol. 44:317
amended in its entirety, except the enacting clause, and with a newspaper
publication clause. 3 1 4 Five days later, on April 13, 1872, the Iowa House
considered the recommendation.
Upon the motion of Representative
Frank G. Clark, a Republican attorney from Benton County, Iowa,3 4 6 the
Iowa House struck the second section of the amendment, the publication
clause.34 7 Upon the motion of Representative Benton J. Hal, 3 4 the
Iowa House added the words "obtained in pursuance thereof' after the
The Iowa House then passed the bill sixty-two to
word "possession.""
three, with thirty-five absent or excused.3 5 o
344. See H.R.JOURNAL, 14th Sess., at 625 (Iowa 1872) (Apr. 8: reporting changes to the bill).
1st. Strike out all after the enacting clause, and enact the following:
"That no sale, contract, or lease wherein the transfer of title or ownership of personal
property is made to depend upon any condition, shall be valid against any creditor or purchaser
of the vendee or lessee in actual possession, without notice; unless the same is in writing
executed by the vendor or lessor, acknowledged and recorded the same as chattel mortgages.["]
Section 2. This act being deemed by the General Assembly of immediate importance, shall
take effect and be in force from and after its publication in the Daily State Register and the
Daily State Leader, newspapers published at Des Moines, Iowa.
Id.
345. See id. at 722 (Apr. 13: "A bill for an act requiring the conditional sales of personal
property, &c., with report of committee recommending a substitute, was taken up and considered.").
346. See Representative Frank Clark, IOWA LEGISLATURE (last visited Dec. 1, 2012), available at
https://www.legis.iowa.gov/Legislators/legislator.aspx?GA=14&PID=4991 (providing a biography
of Representative Clark).
347. See H.R.JoURNAL, 14th Sess., at 722 (Iowa 1872) (Apr. 13: "Mr. Hall moved to amend as
follows: Insert after the word 'possession' 'obtained in pursuance thereof.' The amendment was
adopted. The substitute was adopted.").
348. See Representative Benton Hall, IOWA LEGISLATURE (last visited Dec. 1, 2012), available at
https://www.legis.iowa.gov/Legislators/legislator.aspx?GA=14&PID=4349 (providing a biography
of Representative Hall).
349. See H.R. JOURNAL, 14th Sess., at 722 (Iowa 1872) (Apr. 13: "Mr. Hall moved to amend as
follows: Insert after the word 'possession' 'obtained in pursuance thereof.' The amendment was
adopted. The substitute was adopted.").
350. See id. (Apr. 13: "Mr. Hall moved that the rule be suspended, that the bill be considered
engrossed, and read a third time now. The motion prevailed, and the bill was read a third time.").
The votes were as follows: the sixty-two yeas: Lucian L. Ainsworth (L.L. Arnsworth) of West Union,
lawyer; Amos R. (A.R.) Appleton of Sioux City, mill owner; John Beatty of Jasper County, farmer;
John (I.) Beresheim of Pottawattamie County, merchant; Knot Bergh (Norwegian) of Winneshiek
County, professor; William W. Blackman (W.W. Buckman) of Mitchell County, physician, druggist,
and surgeon; Fletcher Blake of Buena Vista County, manufacturer; Isaac Blakely of Davis County,
farmer; Peter Bonewitz of Jones County, farmer; Caleb Booth of Dubuque, Sec. & Treas. R.R. Co.
(banker); Edward Campbell of Jefferson County, farmer; John Carver of Wapello County, farmer;
John Christoph (Bavarian) of Dubuque County, farmer; Frank G. (F.G.) Clark of Benton County,
lawyer; John C. Clarke of Iowa County, farmer; James Crawford of Wayne County, farmer; Warren
Danforth of Winneshiek County, farmer; Frances (Franklin) Davis of Adams County, lawyer; Elmus
Day of Muscatine County, farmer; Henry Dayton of Allamakee County, lawyer; Ira E. Draper of
Jasper County, merchant (banker); Samuel (S.B.) Dumont of Butler County, farmer; Francis A.
2013]
SECURED TRAINSACTIONS HISTORY
379
On April 16, 1872, the Iowa Senate received the Iowa House's
substitute bill for concurrence. 3 5 That same day the Iowa Senate voted
Duncan of Louisa County, farmer; David T. Durham of Marion County, farmer; Lauren F. (L.F.)
Ellsworth of Mahaska County, minister; Charles J.A. (C.J.A.) Ericson of Boone County, retired
merchant (banker); William C. Evans of Muscatine County, farmer; Robert Flenniken of Clayton
County, millwright; Joseph H. Freeman of Scott County, farmer; Marshall (M.) Goodspeed of
Washington County, nursery man; John W. Green of Davenport, attorney at law; Benton J. (B.J.)
Hall of Burlington, attorney at law; John M. Hanson of Henry County, farmer; George C. Heberling
of Jackson County, lawyer; William Hopkirk of Jefferson County, farmer; John P. Irish of Iowa City,
editor; Andrew Johnston of Ringgold County, farmer; William Litzenberg of Linn County,
wheelwright; David (D.J.) McCoy of Lucas County, farmer; Nathaniel A. Merrell of Clinton County,
attorney at law; Claudius B. Miller of Appanoose County, farmer; Joshua G. 0.G.) Newbold of
Henry County, farmer; Frederick O'Donnell (Fred Odonnell) of Dubuque County, lawyer; Charles
G. Perkins of Monona County, farmer; Henry 0. Pratt of Charles City, lawyer; William Reed of
Cedar County, farmer; James Rice of Clarke County, lawyer; George Rule of Clinton County, miller;
Andrew (T.) Sandry of Allamakee County, farmer; Conrad Schweer of Lee County, farmer; James A.
Skillen (Skiller) of Bremer County, farmer; Eli M. (E. Mat.) Stedman of Benton County, Ret. Dry
Goods & Gro.; Washburn Stow (Walter A. Ston) of Fremont County, lawyer; Robert Struthers of
Pocahontas County, farmer; John Tasker of Jones County, farmer; Fred Teale of Decatur County,
nursery man; John 0. Tufts of Cedar County, farmer; James M. Tuttle of Polk County, pork packer;
Hugo G. Van Meter of Dallas County, proprietor grist mill; James L. Williams of Marshall County,
lawyer (banker); Henry B. Wood of Clay County, lawyer; John R. Wright of Van Buren County,
farmer; the three nays: Cicero (C.) Close of Blackhawk County, farmer; William McAllister (W.L.
Mcalister) of Mahaska County, M.D.; Appler R. Wright of Mills County, farmer; the thirty-five
excused: Webster (Wm) Ballinger of Lee County, lawyer; James Beatty of Clarence, Cedar County,
farmer; Lewis 0. Bliss of Hardin County, merchant; William Butler of Page County, stock broker;
Samuel T. (S.T.) Caldwell of Wapello County, dry goods merchant ret.; Phineas Cadwell of Harrison
County, farmer; Leander E. (L.E.) Cardell of Poweshiek County, farmer; David Davisson of Madison
County, physician; John F. O.F.) Duncombe of Webster County, lawyer; John H. Gear of Burlington,
Des Moines County, wholesale grocer; Darius Hanan (Hamrah) of Chickasaw County, lawyer;
Sumner B. Hewitt (or Hewett) of Wright County, farmer; James Hilton of Monroe County, farmer;
Joseph Uoseph M.) Hovey of Buchanan County, justice of the Peace; John A. Kasson of Des
Moines, Polk County, lawyer; Benjamin F. Keables, of Marion County, physician; Michael A. Leahy
of Pocahontas County, farmer; John gohn M.) Lee of Warren County, carpenter; George M.
Maxwell of Story County, variety store; Joseph McClure of Linn County, farmer; Oliver Mills of Cass
County, county banker; John Morrison, Jr. of Keokuk County, farmer; George Paul of Johnson
County, farmer; Cornelius T. Peet of Delaware County, farmer; Louis Reuther of Clayton County,
laborer; Mathias J. Rohlfs of Scott County, farmer; David Secor of Winnebago County, farmer;
Erastus M. (E.M.) Stewart of Lee County, farmer; James T. Van Deventer of Clinton County, retired
lawyer; George B. Van Saun (George B. Van Faun) of Black Hawk County, grain dealer (banker);
Samuel Whitten of Van Buren County, physician; Charles H. Wilson of Washington County,
hardware merchant; Mr. Speaker James Wilson of Tama County, farmer ; John F. Wilson of Keokuk
County, farmer; William K. Wood of Story County, farmer. Legislator's occupations came from
Iowa's legislative website. See IOWA LEGISLATURE, https://www.legis.iowa.gov/ Legislators/
historicalinfo.aspx (last visited Dec. 1, 2012) (select "House"; then search "1872").
351. S.JOURNAL, 14th Sess., at 575 (Iowa 1872).
Also that the House has passed Substitute for S.F. No. 47, [a] bill for an act requiring that
conditional sales of personal property be executed, acknowledged[,] and recorded like
mortgages of personal property to be of any validity against bona fide purchasers, executions[,]
and attaching creditors, with the following [amendments], in which the concurrence of the
380
ST. MARY'S LAWJOURNAL
[Vol. 44:317
in favor of the concurrence. 3 5 2 On April 17, 1872, Representative Knut
Bergh, an agricultural professor3sa from the Committee on Enrolled Bills,
reported the printer correctly enrolled the bill.
On April 18, 1872,
Representative Bergh reported in the house, and Senator Alonzo Converse
in the senate, that they presented the bill to the Iowa Governor for his
Senate is asked: Strike out all of the enacting claim, and insert the following.
Sec. 1. That no sale, contract or lease, wherein the transfer of title or ownership of personal
property is made to depend upon any condition, shall be valid against any creditor or purchaser
of the vendee or lessee in actual possession, obtained in pursuance thereof, without notice,
unless the same be in writing, executed by the vendee or leasee, acknowledged[] and [recorded]
the same as chattel mortgages.
Id.
352. See id. at 585 (Apr. 16: "Substitute for S.F. No. 47, [a] bill for an act requiring that
conditional sales of personal property be executed, acknowledged and recorded like mortgages of
personal property to be of any validity as against bona fide purchasers, executions and attaching
creditors, with the House amendments was taken up and considered. On the question: 'Shall the
Senate concur in the House amendments?' .. . [there were thirty yeas, eleven nays, and nine not
voting s]o the Senate concurred in the House amendments.'). The votes were as follows: the thirty
yeas: Charles Atkins of Monona County, dry goods merchant; Albert Boomer of Delaware County,
physician; Hans R. Claussen of Scott County, attorney at law;Joseph Dysart of Tama County, farmer;
Samuel H. Fairall of Johnson County, lawyer; William H. Fitch of Calhoun County, farmer; Edward
J. Gault of Appanoose County, farmer; Joseph W. Havens of Keokuk County, editor; Elisha A.
Howland of Franklin County, real estate agent; James Hurley of Louisa County, lawyer; Alexander B.
Ireland of Clinton County, physician; Samuel H. Kinne of Allamakee County, attorney; William
Larrabee of Fayette County, merchant miller; John H. Leavitt of Black Hawk County, banker; Robert
Lowry of Scott County, farmer; George W. Maxwell of Story County, variety store; Moses A.
McCoid of Jefferson County, lawyer, John L. McCormack of Marion County, editor; E.S. McCulloch
of Lee County, farmer; Joseph H. Merrill of Wapello County, wholesale grocer; Benjamin F. Murray
of Madison County, lawyer; Martin Read of Wayne County, lawyer; John Shane of Benton County,
lawyer; Elisha T. Smith of Taylor County, banker; Lewis W. Stuart of Jackson County, miller; R.
Howe Taylor of Marshall County, retail druggist; Jacob G. Vale of Van Buren County, lawyer; John
P. West of Henry County, farmer; George R. Willett of Winneshiek County, lawyer; and James A.
Young of Mahaska County, county treasurer; the eleven nays: Charles Beardsley of Des Moines
County, editor; John E. Burke of Bremer County, lawyer; Frank T. Campbell of Jasper County, book
and store merchant; John C. Chambers of Cedar County, store keeper Alonzo Converse of Butler
County, farmer and lawyer; Oliver W. Crary of Clayton County, farmer; John McKean of Jones
County, lawyer; Samuel McNutt of Muscatine County, farmer; Joseph D. Miles of Washington
County, physician; Benjamin B. Richards of Dubuque County, real estate agent; and Horatio A.
Wonn of Davis County, farmer; the nine absent or not voting: Benjamin Allen of Polk County,
banker; George W. Bemis of Benton County, dry goods merchant; Robert A. Dague of Clarke
County, editor; Mark A. Dashiell of Warren County, physician; Ezekiel B. Kephart of Linn County,
president of Wesleyan College; James P. Ketcham of Iowa County, lumber dealer; J.S. McIntyre;
John J. Russell of Greene County, lawyer; and John Y. Stone of Mills County, lawyer. Legislators'
biographical information came from Iowa's legislative website.
IOWA LEGISLATURE,
https://www.legis.iowa.gov/Legislators/historicallnfo.aspx (last visited Dec. 1, 2012) (select
"Senate"; then search "1872').
353. IowA LEGISLATURE, https://www.legis.iowa.gov/Legislators/historicallnfo.aspx
(last
visited Dec. 1, 2012) (select "House"; search "1872'.
354. See H.R. Journal, 14th Sess., at 770-71 (Iowa 1872) (Apr. 17).
2013]
SECURED TRANSACTIONS HsTORY
381
approval.3 5
The two lawyers sponsoring the substitute bills in the senate and house
had experience with lawsuits involving debts. James S. Hurley, an attorney
since 1854.56 and sponsor of the Iowa Senate's substitute bill, had eight
cases; Washburn A. Stow, an attorney since 1866311 and sponsor of the
Iowa House's substitute bill, had three cases, all before the courts of Iowa
prior to the passage of Iowa's conditional sales act, that appear in the
reports of the Supreme Court of Iowa, revealing the sort of clients they
represented. Senator Hurley possessed experience in land transactions
involving good faith purchasers battling secret oral mortgages and
subsequent mortgage releases. 358 Representative Stow represented a
foreclosing mortgagee, a mechanic enforcing a mechanic's lien, and a
purchaser of cattle against an agister's lien. 3 s9 These actions would
suggest some familiarity with the legal problems of creditors in claiming
debts.
355. See id. at 786-87 (reporting Senate File No. 47 had been submitted to the Governor for
approval); S.JOURNAL, 14th Sess., at 626-27 (Iowa 1872) (reporting similarly).
356. See supra, note 352 (noting Senator Hurley was admitted to the bar in 1854).
357. See supra,note 350 (noting Senator Stow was admitted to the bar in 1866).
358. Senator Hurley was involved in the following cases: Arthur v. Thomas, 35 Iowa 591, 59192 (1872) (asserting a jury verdict based on conflicting evidence will not be disturbed on appeal);
Barnes v. McDaniels, 35 Iowa 381, 381-82 (1872) (explaining the grant of a new trial was not error
when plaintiffs denial was given to the clerk, but not filed); Cowins v. Tool, 36 Iowa 82, 84-87
(1872) (finding no evidence to support a charge of fraud in the administration of an estate); Marshall
v. Sloan, 35 Iowa 445, 446-48 (1872) (holding mandamus is not available against school directors
when there is an adequate remedy on appeal); Thompson v. Linn, 35 Iowa 361, 363 (1872) (holding
mandamus will not issue to compel a school district to sign a contract for employment of an
individual the district does not wish to employ); Cowin v. Toole, 31 Iowa 513, 515 (1871) (noting an
action for fraud is not barred by the statute of limitations when the fraud was discovered within five
years of the commencement of the action); Key v. McCleary, 25 Iowa 191, 191-93 (1868) (holding a
conveyance purporting to be a deed may be shown by parol evidence to be a mortgage); McClure v.
Burris, 16 Iowa 591, 593 (1864) (stating that where two purchasers are found by courts to hold tile
to the same land, the title will be quieted in the name of the second purchaser if the first did nothing
to provide notice of his interest); State v. Fleming, 13 Iowa 443, 443-44 (1862) (holding if the right
to appeal is not exercised within one year of a final judgment, it is waived).
359. Representative Stow was involved with the following cases: Drain v. Doggett, Bassett &
Hills, 41 Iowa 682, 682-84 (1875) (representing a lender who had taken a security in a third party's
promissory note; issue was acceptance of an insolvent insurance company's draft payment on the
note); McCoy v. Hock, 37 Iowa 436, 436-37 (1873) (announcing that an agister may retain
possession of cattle until he is paid for keeping them); Burdick v. Moon, 24 Iowa 418, 419 (1868)
(reversing a dismissal of Stow's client's action to enforce mechanic's lien for work and labor
performed on a wife's house under contract with husband as wife's agent with her consent); Moores
v. Ellsworth, 22 Iowa 299, 300 (1867) (commenting that Stow's client's action to foreclose on a
mortgage to pay two promissory notes against the executors on an estate was not waived by proving
the claim in probate court).
ST. MARY'S L4 WJouRNAL
382
[Vol. 44:317
Of the various
Of those senators voting, 73% favored the bill.3"o
occupational groups, 100% of manufacturers (millers) favored the bill,
80% of commercial merchants favored the bill, while 72% of townspeople,
and 67% of farmers favored the bill.3 61 Of the occupational groups with
significant representation (i.e., over two), the largest percentages in favor
of the bill came from bankers (100%), millers (100%), and lawyers
(77%).362 This suggests those behind the conditional sales acts were those
who provided credit to farmers, namely bankers, merchant investors, and
their lawyers. They introduced the bill and shepherded it to passage.
4.
Minnesota
The Minnesota effort to pass a conditional sales act reveals private
banker support. Representative Simeon Potter Child, 6 ' a Republican
from Blue Earth, Faribault County, Minnesota, introduced the fourth
conditional sales act on February 7, 1873, entitled "[a] bill to provide for
filing certain notes, contracts or other evidences of indebtedness in the
office of town clerks.""
Mr. Childs "engaged in private banking, real
estate[,] ... collections[, and] also opened a brick yard and manufactured
brick for a number of years."3 6 s The Minnesota House referred the bill to
the Committee on the Judiciary. 6 6 On February 15, 1873, Representative
George Potter Wilson, a lawyer from Winona, Winona County, Minnesota,
of the Committee on the Judiciary reported the committee's
recommendation to pass the bill with the Minnesota House adopting its
report.3 67 On February 25, 1873, the Minnesota House passed it, with
360. See szra note 352 (listing information about the various senators).
361. Id.
362. Id.
363. See U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF BLUE EARTH CITY,
FARIBAULT CNTY., MINN., at 1205 (1870) (listing census information for Simeon Child); U.S. NAT'L
ARCHIVES & RECORDS ADMIN., CENSUS OF BLUE EARTH CITY, FARIBAULT CNTY., MINN., at 96A
(1880) (listing census information for Simeon Child); Minnesota Legislators Past and Present, MINN.
LEGIS. REFERENCE LIBR., http://www.leg.state.mn.us/legdb/fulldetail.aspx?ID=11635 (citing C.L.
HALL, BIOGRAPHICAL SKETCHES OF THE OFFICERS OF THE STATE GOVERNMENT OF
MINNESOTA AND THE 19TH MINNESOTA STATE LEGISLATURE 32 (1877)) (last visited Dec. 1, 2012)
(noting that Child was a "staunch Republican").
364. See H.R.JOURNAL, 15th Sess., at 172 (Minn. 1873) (showing that H.F. No. 212 was read
for the first time and referred to committee).
365. See JAMES ERWIN CHILD, CHILD'S HISTORY OF WASECA COUNTY, MINNESOTA 784
(1905) (listing the various occupations of Representative Child).
366. See H.R.JOURNAL, 15th Sess., at 172 (Minn. 1873) (referring the bill).
367. See id. at 218 (noting the house adopted the committee's report recommending the bill
should pass). Biographical information for Representative Wilson appears on Minnesota's Legislative
Reference Library website. Minnesota Lgislators Past and Present, MINN. LEGIS. REFERENCE LIBR.,
2013]
SECURED TRANSACTIONS HISTORY
383
fifty-seven yeas and twenty-three nays.3 6 The Minnesota Senate adopted
the bill on March 5, 1873.369 On March 6, 1873, the Minnesota House
enrolled the bill. 37 0
The private banker's concern was more acute than a lawyer's. A private
Banks made profits
banker would have his own money at risk.
discounting promissory notes by making discounted loans with promissory
notes as security. 3 7 1 Courts held the conditional sale note with the title
retention negotiable; so the assignee could successfully enforce the
http://www.leg.state.mn.us/legdb/search.aspx?search=sessionsearch (last visited Dec. 1, 2012)
(select "15th, 1873"; select "House") (listing biographical information for Representative George
Wilson).
368. See H.R. JOURNAL, 15th Sess., at 354 (Minn. 1873) (listing the house members who voted
for and against the bill). The votes were as follows: the fifty-seven yeas came from Adams, farmer;
Anderson, county auditor; Armstrong, farmer; Baasen, lawyer; Baldwin, farmer; Beatty, farmer; Benz,
liquor dealer; Brower, county auditor; Campbell, farmer; Carpenter, banker; Castle, wholesaler; Child
H.A., lawyer; Child S.P., private banker; Clarke, farmer; Cox, lawyer; Devereaux, farmer; Dunham,
lumbering; Durant, steamboat pilot; Du Toit, printer; Fletcher, mercantile business; Fuller, farmer;
Gesner, former broker; Greenleaf, mercantile business; Hanson, farmer; Hobbs, real estate; Huganin,
merchant; Jenks, railroad agent; Johnson, T., farmer; Knappen, lawyer; Lindsay, mercantile business;
McCann, lumbering; Meacham, farmer; Mealey, mercantile business; Miller H.H., printer; Miller S.,
railroad land agent; Osmundson, farmer; Pfaff, milling; Pirtz, farmer; Rice, farmer; Rockwell, farmer;
Rogers J.N., lawyer; Rosendahl, farmer; Ryder, lumbering; Saufferer, farmer; Schnell, merchant;
Sencerbox, former banker; Stowe, farmer; Swanstrom, lumbering; Tirrell, farmer; Thompson A.,
farmer; Trisler, farmer; Van Dyke, lawyer; Wilkins, farmer; Williston, lawyer; Wilson, lawyer; Wing,
farmer; and the Speaker (Hall), merchant. The twenty-three nays came from Adley, hotel keeper;
Buchmann, builder; Becker, farmer; Benson, farmer; Berry, farmer; Brandt, farmer; Charles, farmer;
Colquhoun, farmer; Corey, farmer; Daniel, dairyman; Finhart, farmer; Hopkins, lumbering; Howe,
civil engineer; Lewis, grain trade; McCracken, farmer; Neville, mercantile business; Norsving, farmer;
Peterson, Baptist minister; Seager, lawyer; Stimson, farmer; Tibbets, United Brethren minister;
Westcott, farmer; and Wheeler, farmer. Finally, the twenty-six not listed as voting were Ameson,
farmer; Barto, lawyer; Beard, farmer; Blake, civil engineer; Brainard, dairy farmer; Chadderdon,
lawyer; Commerford, editor; Cooper, grain merchant; Demeules, merchant; Dilley, clerk; Felton,
merchant; Ficker, farmer; Flom, farmer; Frink, farmer; Gaskill, physician; Hawks, lumberman; Kellet,
merchant; Kelley, farmer; Krebs, teacher; Mealey, merchant; Reed, farmer; Rich, lumberman; Rieland,
farmer; Rodgers, blacksmith; Swain, farmer; and Thompson, J., farmer. Biographical information for
the representatives appears on Minnesota's Legislative Reference Library website. Minnesota
Legislators Past and Present, MINN. LEGIS. REFERENCE LIBR., http://www.leg.state.mn.us/ legdb/
search.aspx?search=sessionsearch (last visited Dec. 1, 2012) (select "15th, 1873"; select "House").
369. See H.R. JOURNAL, 15th Sess., at 493 (Minn. 1873) (informing the Speaker of the House
that the Minnesota Senate had passed House File No. 212).
370. See id. at 593 (confirming H.F. No. 212 was correctly enrolled).
371. Cf 1876 Minn. Laws, ch. 92 § 1 (amending Minnesota's banking statute to include the
purchase of notes); Banks and Banking, 1866 Minn. Laws, ch. 33 5 13 (authorizing the discounting of
debt instruments to carry on banking activities in Minnesota); see also National Banking Act, ch. 106,
13 U.S. Stat. 101 (1864) (authorizing the discounting of promissory notes and other evidences of
debt in order to carry out the business of banking); Farmers & Mechanics' Bank v. Baldwin, 23 Minn.
198, 206 (1876) (noting banks were not authorized to purchase until 1876).
ST. MARY'S LAWlJOURNAL
384
[Vol. 44:317
note.3 7 2 A challenge to the enforceability of the conditional sale notes,
such as eliminating the priority rule in favor of the vendor's successor,
often a private banker, could have seriously curtailed this aspect of the
business by endangering the collateral for discounted loans based on
conditional sales notes.
The Minnesota legislative website provides the occupations of past
members.3 7 Because the Minnesota House Journal provided the names
of those voting for and against the bill, the occupations of those in favor
and against readily appear. Of those voting, 71% favored the bill. 3 7 ' No
occupation was recognizable as a manufacturer or householder. Of the
other groups, 100% of transporters favored the bill, as did 93% of retail
townspeople, 83% of commercial merchants, 53% of farmers, and 44% of
non-retail townspeople.3 s Of the occupational groups with significant
members (i.e., over four), the largest favorable percentages came from the
bankers (100%), merchants (1000/), lawyers (89%), mercantile
businessmen (80%), and lumber dealers (75%).36 Obviously, those who
provided credit to the farmers, namely bankers, merchant investors, and
their lawyers, advocated the conditional sales acts. Like the Iowa
legislators, they introduced the bill and shepherded it to passage.
5.
Wisconsin
In Wisconsin, the fifth state to adopt a conditional sales act, legislators
introduced the "bill to prevent frauds in the sale of personal property" in
372. See, e.g.,Collins v. Bradbury, 64 Me. 37, 38-39 (1875) (holding a note for a colt that was
payable for a specific sum of money is negotiable); seealso Arnold v. Rock River Valley Union R.R.
Co., 5 Duer 207, 214-15 (N.Y. Super. 1856) (holding a note is not rendered non-negotiable by lack
of a stamp for a mortgage); U.C.C. § 3-106(b) (2003) (stating a reference to collateral does not render
an agreement conditional). But seeThird Nat'l Bank of Syracuse v. Armstrong, 25 Minn. 530, 533
(1879) (holding a note non-negotiable when it was issued for a conditional sale).
373. See Minnesota Lgislators Past and Present, MINN. LEGIS. REFERENCE LIBR.,
http://www.leg.state.mn.us/legdb/search.aspx?search=sessionsearch (last visited Dec. 1, 2012)
(select "15th, 1873"; select "House") (listing biographical information of members of the house).
However, there is some occupational ambiguity. Commercial merchants include those in the
"mercantile business," while townspeople were labeled "merchants."
374. See H.R. JOURNAL, 15th Sess., at 354 (Minn. 1873) (listing the legislators who voted for
and against the bill).
375. See id. (providing voting information); Minnesota Lgislators Past and Present, MINN. LEGIS.
REFERENCE LIBR., http://www.leg.state.mn.us/legdb/search.aspx?search=sessionsearch (last visited
Dec. 1, 2012) (select "15th, 1873"; select "House") (listing occupations).
376. See H.R. JOURNAL, 15th Sess., at 354 (Minn. 1873) (listing those legislators voting for and
against the bill); Minnesota Legislators Past and Present, MINN. LEGIS. REFERENCE LIBR.,
http://www.leg.state.mn.us/legdb/search.aspx?search=sessionsearch
(last visited Dec. 1, 2012)
(select "15th, 1873"; select "House") (listing occupations).
2013]
SECURED TRANSACTIONs HISTORY
38 5
the Wisconsin House.
On February 24, 1873, the Wisconsin House
sent the bill to the Wisconsin Senate for concurrence. 78 The Wisconsin
Senate referred it to the Judiciary Committee. 3 79 The following day, the
Judiciary Committee reported the bill back to the senate with amendment
and recommended the bill pass with the amendments.3 so On February
26, 1873, the Wisconsin Senate met in a committee of the whole and
reported that the Wisconsin Senate had agreed to the bill as amended. 8
On March 3, 1873, the Wisconsin House informed the Wisconsin Senate
they had concurred with the senate amendments to the bill.38 2 On March
10, 1873, the President of the Wisconsin Senate signed the bill, the Speaker
of the Wisconsin House having previously signed it.3 8 3
6.
Nebraska
Although Nebraska was a second wave state, its experience is even
more telling against the Gilmorian position. That experience clearly
rejected the approach of providing protection to creditors and the good
faith purchasers. The good faith purchaser deals with the fraudulent
vendee when the vendee commits the fraud, not the vendor.3 8 4 The
Nebraska House considered four bills relating to the subject of conditional
sales. The first and most virulent one, "an act to declare void conditional
sales of personal property as against innocent purchasers and from
creditors of the vendee," introduced by Representative W.C. Griffith, a
stock dealer from Lincoln, Lancaster County, Nebraska, 8 5 did not get
beyond the Committee of the Judiciary's recommendation that the bill not
377. See S. JOURNAL, 26th Sess., at 284 (Wis. 1873) (introducing a conditional sales bill that
passed in the house).
378. See id. at 284 (asking for a concurrence from the senate in No. 204, A.).
379. See id. at 287 (referring No. 204, A. to the judiciary committee).
380. See id. at 308-09 (reporting No. 204, A. back to the senate with recommended
amendments).
381. See id. at 320, 339 (indicating the senate's agreement to No. 204, A).
382. See id. at 383 (indicating the assembly concurred in the senate's amendments to No. 204,
A).
383. See id. at 446, 448 (recording the presentation of the bill to the President of the senate for
his signature).
384. See e.g., Coggswell v. Griffith, 36 N.W. 538, 543 (Neb. 1888) (holding a bona fide
purchaser must deal with a fraudulent vendee when the vendee commits the fraud).
385. See U.S. NAT'L ARCHIVES & RECORDS ADMIN., Census of Lincoln, Lancaster Cnty., Neb.,
at 24 (1870) (listing 1870 census information for Representative Griffith); U.S. NAT'L ARCHIVES &
RECORDS ADMIN., Census of Lincoln, Lancaster Cnty., Neb., at 22 (1880) (listing 1880 census
information for Representative Griffith).
386
ST. MARY'S LAlWJOURNAL
[Vol. 44:317
pass. 38 6 No doubt Representative Griffith, as a purchaser of cattle,
desired to terminate any security interest from a conditional sale to his
seller."
Again, an American legislative body refused to protect good
faith purchasers as called for by Gilmore. Instead, the legislature turned to
the destruction of good faith purchaser status. The other three bills dealt
with filing and recording certain promissory notes, conditional transfers of
personalty, and transfers of personalty.3 " The house passed all three of
these late in the session.3 8 9 The senate read them twice and referred them
to the general file where they languished. 9 0
Two bills from the Nebraska Senate relating to the subject of
conditional sales, however, did become statutes,3 9 1 providing the reason
why the Nebraska House recording bills stalled. Senator Peter Wilbert
Birkhauser, a miller born in Prussia, residing in Salem, Nebraska, 3 9 2
introduced the first bill, "[A]n act to prevent fraudulent transfer of
386. See H.R. JOURNAL, 14th Sess., at 130 (Neb. 1877) (introducing HR No. 12 for the first
reading); id. at 142 (Neb. 1877) (referring HR No. 12 to the judiciary committee); id. at 183 (reporting
the judiciary committee recommended the bill not pass) (the author's notes on file indicate that the
author viewed the source, but the St. Mat's Law Joumal has been unable to obtain a copy of the
source from the Nebraska State Historical Society due to its advanced age and fragile state).
387. But see Coggswell, 23 Neb. 334 (holding a bona fide purchaser must deal with a fraudulent
vendee when the vendee commits the fraud).
388. See H.R. JOURNAL, 14th Sess., at 167 (Neb. 1877) (Jan. 11: H.R. 67 Mr. Thos. A. Healey
introducing a bill which would require promissory notes be recorded in certain cases) (the author's
notes on file indicate that the author viewed the source, but the St. Mary's Law Journal has been
unable to obtain a copy of the source from the Nebraska State Historical Society due to its advanced
age and fragile state); id. at 235 (describing H.R. 123 as a bill for which would provide for filing and
recording conditional transfers of personal property; and H.R. 124 as a bill which would provide for
filing and recording of a transfer of personal property) (the author's notes on file indicate that the
author viewed the source, but the St. Mary's Law Journal has been unable to obtain a copy of the
source due to its advanced age and fragile state).
389. See id. at 561-62, 596 (recording passage) (the author's notes on file indicate that the
author viewed the source, but the St. Mary's Law Journal has been unable to obtain a copy of the
source from the Nebraska State Historical Society due to its advanced age and fragile state); see 1877
Neb. Acts (listing session laws but omitting names of voting members of the legislature).
390. See S. JOURNAL, 14th Reg. Sess., at 664, 689, 691-92, 704, 707 (Neb. 1877) (recording
legislative action on H.R. 67, 123, and 124) (the author's notes on file indicate that the author viewed
the source, but the St. Mar's Law Joumal has been unable to obtain a copy of the source from the
Nebraska State Historical Society due to its advanced age and fragile state).
391. See 1877 Neb. Acts 5 (making selling, transferring, disposing, or removing out of the
county mortgaged personalty without the consent of the mortgagee with intent to deprive the
mortgagee a felony with a prison term not exceeding 10 years; approved Feb. 13, 1877); id. 170
(approving the conditional sales act February 19, 1877).
392. See U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF SALEM, RICHARDSON
CNTY., Neb., at 112 (1870) (listing Peter W. Birkhauser in the 1870 census).
2013]
SECURED TRANSACTIONs HISTORY
387
Lawyers did
personal property," a recordation bill on January 9, 1877.
not draft the bill, and the Senate's Committee on the Judiciary--chaired by
Senator Sam M. Chapman,3 9 4 a lawyer of Plattsmouth, Nebraskarecommended its indefinite postponement.3 95 Nine days later, the senate
as a whole, recognizing the importance of the bill, ended the
postponement and recommitted the bill to the Committee on the Judiciary
with instructions to perfect the bill. 39 1 On February 9, 1877, after lawyers
redrafted the bill, Senator Chapman provided a substitute bill as an
amendment with the recommendation for passage.3 9 7 On February 9,
1877, the senate passed the bill twenty-five to zero with five
abstentions. 8 The Nebraska House then passed the recordation bill,
which barred the existence of a good faith purchaser, on February 15,
1877, with a seventy-four to three vote and seven abstentions.3 9 9 On
February 15, 1877, after the Joint Committee on Engrossed and Enrolled
Bills reported the bill examined, the President of the senate signed the bill,
and the senate sent the bill to the Governor for his signature. 4 0 0
The Nebraska Senate's second bill reveals this heinous offense: a vendee
could fraudulently transfer property subject to a conditional sale to the
detriment of the vendor.4 0 ' Those who lent secured conditional sales
notes to farmers were injured by this dastardly act and acted to end this
travesty. On January 16, 1877, Senator Edmund C. Carns, a grain dealer
of Seward County, Nebraska,4 02 introduced a "bill for an act for the
393. See S. JOURNAL, 14th Reg. Sess., at 148 (Neb. 1877) (the author's notes on file indicate
that the author viewed the source, but the St. Mar's Law Joumal has been unable to obtain a copy of
the source from the Nebraska State Historical Society due to its advanced age and fragile state).
394. See U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF PLATESMOUTH, CASS CNTY.,
NEB., at 92 (1870) (describing Samuel M. Chapman, aged 29, attorney at law, with $500 realty and
$2,000 in personalty).
395. See S. JOURNAL, 14th Reg. Sess., at 150, 171, 202-03 (Neb. 1877) (recording the bill as
read, referred to the judiciary committee, and the judiciary committee reporting the recordation bill
be indefinitely postponed).
396. See id. at 270, 273 (recommitting the bill).
397. See id. at 385 (providing Senator Chapman's report on the bill).
398. See id. at 497 (recommending the bill be passed); id. at 558-59 (reading the bill and voting
on it).
399. See H.R.JOURNAL, 14th Reg. Sess., at 766 (Neb. 1877) (voting to pass the bill).
400. See S. JOURNAL, 14th Reg. Sess., at 849 (Neb. 1877) (sending the bill to the governor for
his signature).
401. The governor approved the criminal statute on February 13, 1877. See 1877 Neb. Acts 5
(codifying the criminal statute).
402. See U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF SEWARD, SEWARD CNTY.,
NEB., at 445 (1880) (listing E.C. Cams, age 36, as a grain dealer); see also WILLIAM W. Cox, HISTORY
OF SEWARD COUNTY, NEBRASKA 248 (1888) (stating Edmund C. Cams was born in Pennsylvania in
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punishment of persons for the sale, transfer, disposal or removal of
personal property under mortgage."403 This bill made it a felony to
remove personalty from the county by certain specified transactions
without the consent of the mortgagee and with the intent to deprive a
mortgagee of his or her property; the crime was punishable by up to ten
years in prison.4 0 4 Nebraska already had a chattel mortgage statute,4 05 so
the only mortgage on personalty capable of fraudulent transfer (a secret
lien) was the conditional sale or an unrecorded chattel mortgage.4 06 It
became obvious that Senator Cam's concern dealt with the conditional
sale when the Senate Committee on the Judiciary amended the bill to give
it the same title as the recordation bill for conditional sales.4 0 7 On
February 6, 1877, the senate passed the criminal bill twenty-four to one
with five abstentions. 4 0 8 Subsequently, the house passed the criminal bill
on February 12, 1877, with a seventy-four to nothing vote and ten
abstentions. 4 0 9 Instead of protecting good faith purchasers, the legislators
protected the vendor from the defalcating vendee.
7.
Missouri
Missouri was also a second wave state, but its result confirms the
Nebraska experience. The heinous act was the vendee's commission of
fraud. The Missouri House considered and passed House Bill 149 (the
Missouri Conditional Sales Act), which was entitled, "[An act] to amend
section ten (10) of chapter one hundred and seven (107) of the General
Statutes of Missouri." 4 1 0 Meanwhile, the Missouri Senate considered
"[a]n act to prevent the mortgagor or grantor in trust deeds of personal
property from the fraudulent use or disposition of such property, and to
1844, served as a soldier in Minnesota, eventually settled in Seward in 1873, served as a Nebraska
state senator, and was elected Lieutenant Governor in 1878 and 1880).
403. See S.JOURNAL, 14th Reg. Sess., at 192 (Neb. 1877) (introducing the bill).
404. See id. (criminalizing the action).
405. See E. ESTABROOK, THE REVISED STATUTES OF THE TERRITORY OF NEBRASKA 294-95
(1866) (providing the language of the chattel mortgage statute in section 73).
406. See id. (failing to address secret liens stemming from conditional sales or unrecorded
chattel mortgages).
407. Cf S.JOURNAL, 14th Reg. Sess., at 340 (Neb. 1877) (amending the bill).
408. See id. at 453 (documenting the vote).
409. See H.R. JOURNAL, 14th Reg. Sess., at 398, 421, 432, 540, 599, 604, 620 (Neb. 1877)
(detailing the bill's passage); see also S. JOURNAL, 14th Reg. Sess., at 637, 687, 699, 714 (Neb. 1877)
(documenting passage of the bill).
410. The bill referenced Missouri's fraudulent conveyance statute. Act of Mar. 15, 1877, ch.
107, 1877 Mo. Acts 320.
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SECURED TRANSACTIONS HISTORY
389
declare a punishment therefor[e]." ' The Missouri Senate passed this bill
Broader than the Nebraska act, the Missouri act
on February 26, 1877.
made destroying, selling, or disposing of personalty by a mortgagor or
grantor "for the purpose of defrauding the mortgagee or trustee[,] or
beneficiary," in the form of a deed of trust, a misdemeanor punishable by
a prison term of up to one year and a fine not exceeding $100. '
Two days earlier, the Missouri Senate received the House Bill No. 149
amending the fraudulent conveyance act.4 1 4 On February 27, 1877, the
senate referred House Bill No. 149 to the Missouri Senate's Committee on
Judiciary. 4 15 On March 6, 1877, Senator William B. Thompson, of the
Committee on Judiciary, reported that the committee had considered
House Bill No. 149 and recommended its passage.
On March 12,
The
1877, the senate passed it twenty-one to six with one abstention."
sales
act.
conditional
Missouri's
bill became
The legislative histories of these states reflect the agricultural origins of
the conditional sale. Further, the legislative history of the first conditional
sales act refers to Holmes' notes, a term describing a method of selling
livestock on credit in westernmost Maine in the 1830s.4 m These
legislative histories strongly suggest that those who were the most
concerned about the conditional sale were bankers, lawyers, and town
merchants. These groups strongly supported the conditional sales act in
Iowa and Minnesota. Lawyers introduced the first three conditional sales
411. See S. JOURNAL, 29th Gen. Assemb., Reg. Sess. at 68, 70, 75, 133, 136, 160, 162 (Mo.
1877) (documenting the introduction, committee referral, and readings of Senate Bill 86).
412. See id. at 164,169-70 (detailing passage of the bill).
413. See 1877 Mo. Acts 236 ("An act to prevent the mortgagor or grantor in trust deeds of
personal property, from the fraudulent use or disposition of such property, and to prevent the
mortgagor or grantor from disposing of the same without the written consent of the mortgagee or
trustee, and without informing the person to whom the same is sold of such mortgage or trust
deed.').
414. See S. JOURNAL, 29th Gen. Assemb., Reg. Sess. at 160-61 (Mo. 1877) ("I am instructed by
the House of Representatives to inform the Senate that there has been introduced into and passed
the House, House bill No. 149, entitled ['An act to amend section 10 of chapter one hundred and
seven (107) of the General Statutes of Missouri.[]'); id. at 164, 166 ("The following House bills were
taken up and read the first time: .. . 149. .. .").
415. See id. at 176 ("House bills Nos.
149 ... were read and referred to the Committee on
judiciary.").
416. See id. at 203 ("Sen. Thompson, from the Committee on judiciary, submitted the following
report: Mr. President: Your committee, to whom was referred House bill No. 149, beg leave to
report that they have considered the same, and recommend that they do pass; which was read, and
ordered to its third reading on (tomorrow].").
417. See id. at 219 (recording passage and votes of senators).
418. See supra notes 316-21 and accompanying text (explaining the origins of the term
"Holmes' note").
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acts to their respective legislatures in Maine, Vermont, and Iowa, with the
fourth in Minnesota introduced by a private banker. The one lawyer
sponsor with long legal experience also had an extensive background with
promissory note assignments. Farmers turned their credit lending into
immediate value by assigning the notes to lawyers, bankers, and town
merchants for cash, goods, or services. The legislators had no desire to
protect good faith purchasers. Bills to protect the good faith purchaser,
arising in Iowa and Nebraska and proposed by a farmer and a stock dealer,
met ignominious ends at the hands of the legislators. The offense these
legislators desired to punish lay with preventing the embezzling vendee
from committing fraud. The legislators behind the second wave of acts in
Nebraska and Missouri also passed criminal statutes for those vendees
transferring to a good faith purchaser with intent to damage the vendor.
Any benefit to a potential good faith purchaser was merely incidental.
V.
COURT AND PRIOR HISTORICAL EXPLANATIONS FOR THE PASSAGE OF
THE CONDITIONAL SALES ACTS
After the passage of the first wave of conditional sales acts, the courts in
those states, in seven opinions prior to 1890 including two opinions in
Missouri, which was a second wave state during the same time period,
provided three explanations for the passage: to treat the conditional sale as
a chattel mortgage, to protect good faith purchasers, and to prevent
vendee fraud."' Twentieth century legal historians, however, only
propounded two of these suggestions, overlooking the legislative history's
support for the third.
A. Jurists' Refusal to Treat ConditionalSales As ChattelMortgages
First, legislators passed the conditional sales acts to reverse appellate
opinions that held that the respective state's chattel mortgage acts did not
419. For Iowa, see Warner v. Johnson, 21 N.W. 483, 483-84 (Iowa 1884) (benefiting judgment
liens and good faith purchasers). For Maine, see Shaw v. Wilshire, 65 Me. 485, 487-92 (1876)
(demonstrating the evasion of the chattel mortgage acts). For Minnesota, see Dyer v. Thorstad, 29
N.W. 345, 345-46 (Minn. 1886) (examining the role of sufficient notice, whether actual or
constructive, in preventing vendee fraud). For Missouri, see Eidson v. Hedger, 38 Mo. App. 52, 5557 (1889) (per curiam) (using Missouri's conditional sales statute to protect good faith purchasers);
Peet v. Spencer, 2 S.W. 434, 434-35 (Mo. 1886) (discussing the prevention of vendee fraud). For
Vermont, see Cole, Leavitt & Co. v. Howe, 50 Vt. 35, 37-38 (1877) (concerning benefit judgment
liens and good faith purchasers); Fairbanks, Brown & Co. v. Davis & Wright, 50 Vt. 251, 254-57
(1877) (regarding recordation of a contract to provide adequate notice to subsequent purchasers and
For Wisconsin, see Kimball v. Post, 44 Wis. 471, 475-77 (1878)
prevent vendee fraud).
(acknowledging that the purpose of the statute was to protect good faith purchasers); Williams v.
Porter, 41 Wis. 422, 427-28 (1877) (treating conditional sales the same as chattel mortgages).
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SECURED TRANSACIONs HISTORY
391
require a filing of a conditional sale.4 2 0 In 1876, opinions from Maine, the
first state to pass a conditional sales act, and Wisconsin, the fifth state to
pass one, lend some support to this twentieth century position. Justice
William G. Barrow of Maine opined:
After it became apparent that, in place of taking mortgages to secure the
purchase money, sellers of chattels were making a practice of stipulating in
the contract of sale that the property should remain theirs until the price was
paid, and the court had held ... that the [chattel mortgage] statute did not
extend to liens thus created because there was no mortgage from the debtor
and no unconditional transfer of tide from the vendor, the legislature again
intervened with the requirement now embodied in [the conditional sales act],
invalidating every such agreement where a note is given for the purchase
money, unless it is made and signed as part of the note and unless recorded
like mortgages of personal property, when such note exceeds thirty
dollars. 4 2 1
In 1877, Justice William P. Lyon of Wisconsin stated: "The manifest
object of the statute is to place ... [the conditional sale] on the footing of
chattel mortgages; and if a contract of that kind is not reduced to writing
and filed in the proper office, it is void as to third persons . ."422 But,
both states lacked an appellate opinion to reverse.
These historians correctly noted that the nineteenth century jurists
would tolerate the secret lien problem for the conditional sale. Of those
lawyers who argued conditional sales were the same as chattel mortgages,
where parties have to file them under the previously adopted chattel
mortgage acts, most lost.4 2 4 Worse yet, only one of the first five states to
pass a conditional sales act, Iowa, had previously confronted the issue,'
suggesting that for the states adopting conditional sales acts the chattel
Only after passage of the first
mortgage filing was not the issue.
conditional sales acts did any jurist express dissatisfaction with the refusal
420. See Garrard Glenn, The ConditionalSale at Common Law andAs a Statutog Security, 25 VA. L.
REv. 559, 578 (1939) (noting Maine passed a recording act because courts held that statutes already
in existence did not extend to liens on chattel mortgages).
421. Shaw, 65 Me. at 490-91.
422. Williams, 41 Wis. at 428.
423. But cf infra notes 427-39 and accompanying text (providing decisions from other states
regarding conditional sales).
424. See, e.g., Grant v. Skinner, 21 Barb. 581, 584 (N.Y. Gen. Term 1854) (determining it was
error to instruct the jury that the transaction was a chattel mortgage and that a good faith purchaser
had greater right to the property because the transaction was not filed).
425. See, e.g., Bailey v. Harris, 8 Iowa 331, 332-33 (1859) (finding it was error to rule that the
conditional sale vendor loses to a good faith purchaser because the transaction was not on record).
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to permit conditional sales filings under the chattel mortgage acts.426
The earliest of these opinions disallowing a chattel mortgage filing
appeared in 1843.427 The Supreme Court of North Carolina had no
difficulty in determining that a conditional sale needed no filing for validity
(and priority) against a buyer's creditor's judgment liens. 4 28 After all, a
conditional sale is a sale to the buyer/borrower, not a sale to the
seller/lender as for a mortgage. During the next decade, several courts
found similarly: 1850 in Tennessee, 4 29 1854 in New York,4 3 0 1856 in
New Hampshire, 4 31 1857 in Georgia, 4 3 2 1859 in Iowa,4 3 3 one of the early
states passing a conditional sales act, and in 1862 in Michigan 4 3 4 ---while
leaving the issue of changing the rule to the legislature. Even after the
initial states passed their conditional sales acts, the trend continued: in
1875 for Kansas, 4 3 s 1876 in Ohio4 3 6 (while leaving the issue of changing
the rule to the legislature), 1877 in Missouri (once for a conditional sale4 3 7
426. See, e.g.,George v. Tufts, 5 Col. 162, 165 (1879) (describing various courts' treatment of
filing conditional sales under chattel mortgage acts).
427. See Ellison v. Jones, 26 N.C. 48, 49 (1843) (per curiam) (determining because the
transaction was a conditional sale, and not a mortgage, it did not need to be filed).
428. See id. (ruling in favor of the vendor in a conditional sale that was not filed).
429. See Buson v. Dougherty, 30 Tenn. 50, 51-52 (1850) (declaring there was no error in a jury
instruction that stated a conditional sale need not be registered).
430. See Neidig v. Eifler, 18 Abb. Pr. 353, 354 (N.Y. Sup. Ct. 1865) (concluding a chattel
mortgage filing would be irrelevant and rendering judgment in favor of a bailor over a good faith
purchaser); Grant v. Skinner, 21 Barb. 581, 584 (N.Y. Gen. Term 1854) (identifying error in
instructing a jury that the transaction was a chattel mortgage, rather than a conditional sale, and a
good faith purchaser had priority because it was not filed).
431. See Haven v. Emery, 33 N.H. 66, 69-70 (1856) (deciding that for a conditional sale, the
"law provided no method of giving general notice by registration or publication," and thus notice to
an agent sufficed for notice to the principal).
432. See Goodwin v. May, 23 Ga. 205, 209-10 (1857) (upholding a conditional sale against a
subsequent good faith purchaser (mortgagee) and stating, "There is nothing in the fact that the
contract was not reduced to writing and recorded").
433. See Bailey v. Harris, 8 Iowa 331, 332-33 (1859) (holding it was error to rule that a
conditional sale vendor lost to a good faith purchaser because the transaction was not recorded).
434. See Couse v. Tregent, 11 Mich. 65, 68 (1862) (determining the secret lien problem may
exist with conditional sales as it does with chattel mortgages, but left the matter for the legislature to
decide and affirmed a judgment for the vendor as opposed to the good faith purchaser).
435. See Sumner v. McFarlan, 15 Kan. 600, 601-02 (1875) (declaring neither the chattel
mortgage statute, nor the statute of frauds helped the good faith purchaser).
436. See Sanders v. Keber & Miller, 28 Ohio St. 630, 640-42 (1876) (leaving the issue of
whether conditional sales defeat the purpose of chattel mortgage acts to the legislature and affirming
judgment for a vendor over a good faith purchaser).
437. See Rogers Locomotive Works v. Lewis, 20 F. Cas. 1124, 1135 (W.D. Mo. 1877) ("It may
be that the registry laws, if wisely framed, ought to extend to such a case as this [conditional sale],
and to require the seller to place the evidence of his rights on record, and accordingly we find that
some of the states have recently passed enactments of the character suggested. But there is no such
legislative requirement in Missouri.').'
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SECURED TRANSACTIONS HISTORY
393
while leaving the issue of changing the rule to the legislature and once for
a bailment-lease),4 3 and 1879 in Wyoming.13 9
Only after the passage of the first conditional sales acts in a few
jurisdictions did it dawn on any court that courts should require some
filing for conditional sales. In 1874, a Kentucky court recognized priority
for a vendee and their good faith purchaser over the vendor under a
conditional sale due to the secret lien problem and intimated that parties
could create a lien for a conditional sale by filing in the conveyance or
mortgage records. 4 4 0 In 1876, and again in 1878, the United States
Supreme Court, under Illinois law, which did not recognize the conditional
sale as viable,"' found the state's substitute device, a bailment lease,4
required a chattel mortgage filing for priority over judgment liens and
In 1879, a Colorado court held
good faith purchasers (mortgagees). 4
void a conditional sale with respect to a good faith purchaser (a
mortgagee) because the vendor had not filed it under the chattel mortgage
act.44
The one case where the vendor acted as Gilmore would have him (i.e.,
treated the conditional sale as a chattel mortgage), did not turn out the way
Gilmore hypothesized.s The conditional sale vendor filed as a chattel
mortgage,4 4 yet a good faith purchaser took the goods. The Alabama
438. See Sumner v. Cottey, 71 Mo. 121, 125-26 (1879) (rejecting a good faith purchaser's
argument that the bailment lease was not recorded, and affirming judgment for the vendor).
439. See Warner v. Roth, 2 Wyo. 63, 69, 71 (1879) (discounting a good faith purchaser's
argument that the conditional sale was not recorded as a chattel mortgage).
440. See Vaughn v. Hopson, 73 Ky. 337, 343 (1874) (explaining a lien could be created for a
conditional sale by recording it in conveyance or mortgage records).
441. See supra note 62 and accompanying text (providing an overview of Illinois's rejection of
the conditional sale).
442. See supra note 123-28 and accompanying text (discussing bailment leases).
443. See Fosdick v. Schall, 99 U.S. 235, 250-51 (1878) (involving a good faith purchaser);
Hervey v. R. I. Locomotive Works, 93 U.S. 664, 672-73 (1876) (involving a judgment lien).
444. See George v. Tufts, 5 Colo. 162, 165-66 (1879) (voiding a conditional sale because the
vendor failed to file it).
445. See Fairbanks, Morse & Co. v. Eureka Co., 67 Ala. 109, 113-14 (1880) (favoring the
vendor's rights to property in a conditional sale though no adequate notice was provided to a
subsequent good faith purchaser).
446. The reason the vendor filed the conditional sale under the chattel mortgage laws was that,
in 1875, two Alabama courts suggested the conditional sale was in the nature of a chattel mortgage,
which required a filing. See Dudley v. Abner, 52 Ala. 572 (1875) (affirming a judgment for the good
faith purchaser because the nature of the transaction was that of a chattel mortgage and no notice
was given); Sumner v. Woods (Sumner 1), 52 Ala. 94 (1875) (reversing judgment for a good faith
purchaser because he failed to prove he was a bona fide purchaser without notice, i.e. that there was
no conditional sales filing in the chattel mortgage records). Both of these decisions were overruled in
1880 as contrary to well-established Alabama law. See Sumner v. Woods (Sumner II), 67 Ala. 139
(1880) (reversing the second judgment for a good faith purchaser and overruling Sumner I and Dudly
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ST. MARY'S LAWJOURNAL
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court in 1880, considerably prior to the passage of the Alabama
conditional sales act in 1896,
recognized a filing not required by statute
provides no notice and determined that the conditional sale vendor did not
need to file and had priority over the good faith purchaser.4 4 The judicial
opinion provided little to no support for Gilmore's judicial scenario of
treating the conditional sale as a chattel mortgage.
Several southern states had a provision in their fraudulent conveyance
statute that covered long-term installment purchases requiring a filing after
the expiration of a lengthy time period.4 4" Even under these statutes,
southern courts found no requirement under any other statute or principle
to file conditional sales until the expiration of the specified period
contained in the fraudulent conveyance statute. 4 so
Grant Gilmore's idea that jurists and legislators decided after a
generation or two to treat the conditional sale the same as a chattel
mortgage is clearly overbroad. If jurists truly felt that way, then they
should require a chattel mortgage filing for the conditional sale. The
majority of the cases, however, determined the opposite: a conditional sale
did not require a filing under the chattel mortgage acts.4 s' The jurists
to the extent that those decisions were inconsistent with the conditional sales rule that the vendor has
priority over a good faith purchaser).
447. CODE OF ALA. § 1017 (1897), at 367; seealso Ensley Lumber Co. v. Lewis, 25 So. 729, 730
(Ala. 1899) (recognizing there was no recording statute for conditional sales as of March 16, 1896).
448. See Fairbanks,Morse & Co., 67 Ala. at 114 ("The contract was recorded; but the record, not
being authorized by statute, does not afford notice to the world; and so it is was claimed by the
appellee, who purchased from the vendee, without notice of the contract by which he acquired
possession."); see also Sumner II, 67 Ala. at 142 (reversing a judgment that favored the good faith
purchaser).
449. See, e.g., 1823 Fla. Territory Acts 67 § 4 ("[Where any reservation ... by way of
condition ... in goods and chattels ... remained in another,. . . the same shall be taken as ... to be
fraudulent . .. unless such loan, reservation ... were declared by . .. deed in writing, proved and
recorded as aforesaid.").
450. Kentucky's fraudulent conveyance statute had a five-year period. Under this statute,
Kentucky determined that a conditional sale need not be filed until the expiration of the five-year
period. See Patton v. McCane, 54 Ky. 555, 557-58 (1855) (finding that the good faith purchaser jury
instruction was in error because the fraudulent conveyance statute, which required a filing, had not
reached its five-year expiration period). Mississippi's fraudulent conveyance statute had a three-year
period. Under this statute, Mississippi determined that a conditional sale need not file until the
expiration of the three-year period. See Ketchum v. Brennan, 53 Miss. 596, 607 (1876) (determining
that a vendor did not have to file within the three-year period). Florida amended its statute in 1859
to provide for a two-year period, and a failure to file a conditional sale after the expiration of the
period allowed a judgment lien to have priority. See Hudnall v. Paine, 21 So. 791, 794 (1897)
(recognizing the two-year period).
451. Most statutes similarly treated the conditional sale differently than the chattel mortgage,
with only seven of the first twenty-seven jurisdictions adopting conditional sales acts providing that
SECURED TL4NSACTIONs HISTORY
2013]
395
opposed the idea.
Even if modern historians accept the twentieth century position,
probably concocted to support early-twentieth century efforts to eliminate
the distinction amongst the various nonpossessory security devices,"'
there would remain finding the reason legislators would overturn the
wisdom of the jurists. This position also overlooks the post-conditional
sales acts judicial pronouncement: the justices only advocated filing, not
the other trappings of the chattel mortgage such as the removal of the
avoidance of the equity of redemption and usury evasion.
B.
Protection of the Good Faith Purchaser
The second twentieth century historical claim asserted that legislators
desired to protect the good faith purchaser from the secret lien created by
the conditional sale.4 '
Opinions from Iowa, the third state to adopt a
conditional sales act, and Wisconsin, the fifth state, support this twentieth
century position.
In 1884, Justice Joseph Rea Reed of Iowa opined:
It was doubtless to prevent the injustice that parties were sometimes
enabled to practice under the rule established by these cases that the section
was enacted .
. .
. It is very clear that this statute in no manner changes, as
between themselves, any of the rights of the immediate parties to a
conditional transfer of property that are created or reserved by their
contract. But it is the rights and interests of the creditors of, or purchasers
from, the vendee which was intended to be protected by it.4 5 4
the filing was to be the same as for chattel mortgages. See supra notes 244-48, 267-68, 271-80, 28493 and accompanying text (derailing passage of the conditional sales acts).
452. See Francis M. Burdick, Codifying the Law of ConditionalSales, 18 COLUM. L. REv. 103, 107
(1918) ("[Ilt was suggested that the act be discarded, and in its place a brief statute be recommended,
to the effect that every conditional sale be declared a chattel mortgage, and be subject to existing
statutes on that topic.").
453. See Francis M. Burdick, Codifying the Law of ConditionalSales, 18 COLUM. L. REV. 103, 105
(1918) ("The object of these statutes was judicially declared to be, 'to prevent secret and unrecorded
transactions and contract of sale from being used to the detriment of unsuspecting creditors of, or
purchasers from, the vendee of personal property apparently the owner thereof."' (quoting Coover v.
Johnson, 86 Mo. 533, 538 (1885))); Garrard Glenn, The Condional Sale at Common Law and As a
Statutoy Security, 25 VA. L. REV. 559, 577 (1939) (discussing the protection of good faith purchasers).
454. Warner v. Johnson, 21 N.W. 483, 483-84 (Iowa 1884). But see Myer v. W. Car Co., 102
U.S. 1, 7 (1880) (quoting appellant's brief: "The purposes of the statute are to be considered. Like all
similar legislation which aims at prohibiting the separation of the apparent or reputed title from the
real ownership, it is to be construed for the prevention of fraud upon creditors and others, who rely
upon the apparent ownership, which the possession and use of chattels indicate. Had an actual
purchaser bought and paid for the cars, there can be no question that his title would be sustained as
.[TJhe
against the real owner, and the statute expressly puts 'any creditor' in the same position . ...
principle of such statutes is that a divorce of the apparent ownership, manifested by possession, from
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ST. MARY'S LA WJOURNAL
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In 1878, Justice David Taylor of Wisconsin concluded:
The object of the statute is to protect those dealing with the possessor
of personal property against secret trusts or claims of those having no
connection with the possession and no apparent connection with the title,
and not to protect those making no claim thereto by purchase or assignment
from the party in possession. In other words, it was not intended for the
protection of mere trespassers. 45 5
The judicial opinions, rendered by judges and not legislators, 4 " reflect
little desire to provide that protection. The almost universal rule was the
conditional sale vendor had priority over the vendee's good faith
purchaser. Almost all of these opinions come from the northern states.4 5 7
Many of these opinions occurred in the first three states to adopt a
conditional sales act-Maine, Vermont, and Iowa-suggesting good faith
purchasers felt aggrieved enough to challenge their jurists.4 '
The earliest of these opinions 4 5 ' established the priority of the vendor
over the good faith purchaser, with Massachusetts in 1824,460 Indiana in
1859,461 Maine in 1864,462 Missouri in 1865,46 Michigan in 1874,464
the actual ownership, shall not avail as against creditors who rely upon the possession."); Nat'l Cash
Register Co. v. Maloney, 64 N.W. 618, 619 (Iowa 1895) ("This statute was enacted to prevent the
injustice to subsequent purchasers which might result by reason of a transfer of the possession of
property, by way of sale, with a secret reservation of the title in the seller.").
455. Kimball v. Post, 44 Wis. 471, 476 (1878).
456. See supra notes 377-83 and accompanying text (exemplifying a judicial response to
protecting the good faith purchaser).
457. See infra notes 459-83 (listing cases).
458. See id. (listing cases).
459. Opinions dealing with conditional delivery, consignments, and retained liens are omitted.
For opinions dealing with bailment leases, see infra note 467-74 and accompanying text (listing cases).
460. See Coggill v. Hartford & New Haven R.R. Co., 69 Mass. 545, 546-50 (1854) (holding
vendor held priority over vendee's bailee and rejecting a good faith purchaser proposition); Barrett v.
Pritchard, 19 Mass. 512, 515-17 (1824) (establishing priority of vendor over vendee's mortgagee, and
holding that until the sale was paid for, vendor defeats vendee's creditors).
461. See Bradshaw v. Warner, 54 Ind. 58, 61 (1876) (holding vendor had priority over good
faith buyer); Dunbar v. Rawles, 28 Ind. 225, 229-31 (1867) (announcing vendor had priority over a
good faith buyer); Thomas v. Winters, 12 Ind. 322, 323-24 (1859) (establishing priority of vendor
over good faith buyer, and holding that tide does not pass until paid).
462. See Brown v. Haynes, 52 Me. 578, 580-84 (1864) (finding vendor had priority over a good
faith purchaser (citing Cogil, 69 Mass. 545).
463. See Wangler v. Franklin, 70 Mo. 659, 660-61 (1879) (holding vendor had priority over
good faith purchaser (citing Robbins v. Philips, 68 Mo. 100 (1878)); Robbins, 68 Mo. at 100-01
(holding vendor had priority over good faith purchaser (citing Parmlee v. Catherwood, 36 Mo. 479
(1865); Little v. Page, 44 Mo. 412 (1869))); little, 44 Mo. at 413-15 (holding vendor had priority over
second good faith purchaser (citing Parmlee, 36 Mo. 479)); Parmlee, 36 Mo. at 480-81 (establishing
priority of vendor over good faith purchaser, and rejecting contrary New York cases).
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SECURED TRANSACTIONS HISTORY
397
Iowa (refusing to apply its 1872 conditional sales act retroactively to a
1872 pre-code transaction),4 6 5 and Ohio... in 1876. A second set of
opinions (most earlier in time for the same state, except for Indiana)
asserted the priority of the vendor over the judgment lien, with Vermont
in 1836,467 New York in 1842, '46 Maine in 1846,46' New Hampshire in
1861,470 Missouri in 1873,471 Indiana in 1876,472 and New Jersey in
A similar result occurred for the bailment lease in New
1880.47
Hampshire in 1836,474 Connecticut in 1843,'" Massachusetts in 1877,47
and Missouri in 1879.4H
Only two states' courts flirted with protecting good faith purchasers, but
464. See Whitney v. McConnell, 29 Mich. 12, 13-14 (1874) (holding vendor had priority over
vendee's pledge (citing Couse v. Tregent, 11 Mich. 65 (1862))); Conse, 11 Mich. at 66-68 (establishing
priority of vendor over good faith purchaser).
465. See Moseley v. Shattuck, 43 Iowa 540, 541-44 (1876) (establishing priority of vendor over
good faith purchaser, and holding conditional sales act does not apply retroactively).
466. See Sanders v. Keber & Miller, 28 Ohio St. 630, 637-42 (1876) (establishing priority of
vendor over good faith purchaser (citing Coggill, 69 Mass. 545).
467. See Duncan v. Stone, 45 Vt. 118, 118-24 (1872) (explaining that vendor had priority over
judgment lien constable); Armington v. Houston, 38 Vt. 448, 448-53 (1866) (clarifying that vendor
had priority over judgment lien constable); Fales v. Roberts, 38 Vt. 503, 507-09 (1866) (providing
that vendor had priority over judgment lien deputy sheriff); Hefflin v. Bell, 30 Vt. 134, 135-38 (1858)
(proclaiming vendor had priority over judgment lien sheriff); Buckmaster v. Smith, 22 Vt. 203, 20304 (1850) (indicating vendor had priority over judgment lien); Smith v. Foster, 18 Vt. 182, 184-86
(1846) (holding vendor had priority over judgment lien); Bigelow v. Huntley, 8 Vt. 151, 151-55
(1836) (establishing priority of vendor over judgment lien sheriff).
468. See Herring v. Hoppock, 15 N.Y. 409, 411-13 (1857) (holding vendor had priority over
judgment lien purchaser (citing Stmng, 2 Hill 326)); Strong v. Taylor, 2 Hill 326, 327-29 (N.Y. 1842)
(stating priority of vendor over judgment lien sheriff's bailee (citing Barrett v. Pritchard, 19 Mass. 512
(1824))).
469. See George v. Stubbs, 26 Me. 243, 247-50 (1846) (establishing vendor's priority over
judgment lien constable).
470. See McFarland v. Farmer, 42 N.H. 386, 389-92 (1861) (describing vendor's priority over
judgment lien sheriff).
471. See Ridgeway v. Kennedy, 52 Mo. 24, 24-26 (1873) (detailing vendor's priority over
judgment lien).
472. See Bradshaw v. Warner, 54 Ind. 58, 60-62 (1876) (affirming vendor's priority over
judgment lien constable).
473. See Cole v. Berry, 42 N.J.L. 308, 308-15 (1880) (advancing vendor's priority over
judgment lien constable).
474. See Sargent v. Gile, 8 N.H. 325 (1836) (declaring bailor's priority over good faith
purchaser).
475. See Hart v. Carpenter, 24 Conn. 427, 430-31 (1856) (reporting vendor's priority over good
faith purchaser (citing Forbes v. Marsh, 15 Conn. 384 (1843))); Forbes, 15 Conn. at 385, 393-400
(establishing vendor's priority over judgment lien sheriff).
476. See Chase v. Ingalls, 122 Mass. 381, 381-83 (1877) (analyzing priority of vendor over
judgment lien sheriff).
477. See Sumner v. Cottey, 71 Mo. 121, 121-26 (1879) (noting priority of vendor over good
faith purchaser).
398
ST. MARY'S LA FJOURNAL
[Vol. 44:317
shortly thereafter reverted to the general rule. The New York effort came
with the Wait opinion 4 7 ' in 1867, declaring good faith purchasers, but not
creditors, had priority over the conditional sales vendor. Two years later,
the highest court in New York returned to the rule that gave the
conditional sales vendor priority, distinguishing the prior opinion as
involving a chattel mortgage. 47 9 The Alabama effort came in 1875 by
determining that a conditional sale required filing as a chattel mortgage so
that for an unfiled conditional sale, the good faith purchaser only needed
to show the absence of actual notice of the conditional sale. 4 8 0 The
Alabama court overruled these opinions in 1880 and reverted to the rule
that gave the conditional sale vendor priority over good faith
purchasers. 8 1
After the initial adoption of conditional sales acts in some states, two
478. See Wait v. Green (Wait II), 36 N.Y. 556, 556-57 (1867) ("When chattels are thus sold and
delivered conditionally, the vendor's right to the property remains good as against the vendee and his
voluntary assignee, and others who purchase with knowledge of the condition, but not as against bona
fide purchasers from the vendee."), affg 35 Barb. 585 (N.Y. Gen. Term 1862); see also W. Transp. Co.
v. Marshall, 6 Abb. Pr. (n.s.) 280, 283 (N.Y. 1867) (applying the same rule but for conditional delivery
case), afg 37 Barb. 509 (N.Y. Gen. Term 1862). Shortly after the opinion, courts in other states
began to see the argument made on behalf of good faith purchasers against the conditional sale. See
Dudley v. Abner, 52 Ala. 572, 576 (1875) (citing Wait I in support of opinion changing Alabama law
to recognize right of good faith purchaser) overruled by Sumner v. Woods, 67 Ala. 139 (1880);
Ketchum & Cummings v. Brennan, 53 Miss. 596, 602 (1876) (citing Wait I in brief of the good faith
purchaser, but failing to persuade the judges against conditional sales rule); Little v. Page, 44 Mo. 412,
412 (1869) (citing Wait II in brief of losing good faith purchaser); Parmlee v. Catherwood, 36 Mo.
479, 480-81 (1865) (acknowledging contrary New York rule, but determining the conditional sale
rule is the better); Cardinal v. Edwards, 5 Nev. 36, 40 (1869) (citing Wait II in brief of losing vendor
attempting to convince court to reverse judgment for judgment lien); Sanders v. Keber & Miller, 28
Ohio St. 630, 635-40 (1876) (finding Wait II unpersuasive with regard to right of good faith
purchaser because it was overruled in New York); Warner v. Roth, 2 Wyo. 63, 68 (1879) (citing Wait
II in brief of winning good faith purchaser, but failing to prevent reversal under conditional sales
rule); see also Williamson v. Russell, 39 Conn. 406, 410 (1872) (citing Wait Il in brief of winning good
faith purchaser in fraudulent vendee cases); Woodruff & Beach Iron Works v. Adams, 37 Conn. 233,
236 (1870) (citing Wait II in brief of winning good faith purchaser); Hirschorn v. Canney, 98 Mass.
149, 151-52 (1867) (rejecting the argument in conditional delivery cases because Massachusetts law
governed and not New York law); Old Dom. S.S. Co. v. Burckhardt, 72 Va. 664, 682 (1879) (citing
Wait II to support opinion for good faith purchaser in fraudulent vendee case).
479. See Ballard & Sampson v. Burgett, 40 N.Y. 314, 316, 319, 321, 324, 327 (1869) (giving of
the Wait II note with the title retention language interpreted as giving title to the vendee and taking
the note as security in the nature of a chattel mortgage), afd,40 N.Y. 314 (1869).
480. See Sumner v. Woods, 52 Ala. 94, 95-96 (1875) ("It was incumbent upon the defendant to
show that he was a bonafide purchaser without notice."), overruled by Sumner, 67 Ala. 139 (1880); Dudley,
52 Ala. at 574-82 (1875) (holding conditional sale was void as against the bona fide purchaser
without regard to registration laws), overraledby Sumner, 67 Ala. 139.
481. Fairbanks, Morse & Co. v. Eureka Co., 67 Ala. 109, 111-14 (1880) (holding vendor
prevails over good faith purchaser); Sumner, 67 Ala. at 141-42 (holding vendor prevails over good
faith purchaser).
2013]1
SECURED TRANSACTIONS HISTORY
399
other states flirted with the good faith purchaser rule by finding technical
reasons to thwart the vendor: the condition is waived by either an absolute
delivery of the goods4 8 2 or a failure to declare the contract void.4 11
If protection of the good faith purchaser was the goal, the legislators
could follow these aberrational opinions and give the good faith purchaser
priority, as the British did in 1889.4'
However, they did not. Instead,
they rejected that approach when proposed. In 1873, the Iowa Senate
contemplated "[a] bill for an act to protect persons in the possession of
The bill was amended in its entirety into the
personal property.""
In 1877, the Nebraska House considered "[a] bill for
recording statute.'
an act to declare void conditional sales of personal property as against
innocent purchasers from and creditors of the vendee." 4 7 The Nebraska
House adopted the report of the House Judiciary Committee, which
advised the bill not pass.48
But at least this twentieth century historical explanation reaches the
prime problem. The situation arose because the vendee committed fraud
on two innocent parties, the vendor and the subsequent creditor or good
faith purchaser. The issue then, as explained by a Maine justice regarding a
482. See Vaughn v. Hopson, 73 Ky 337, 341 (1874) ("Every absolute delivery of goods sold on
condition is presumptive evidence of a waiver of the condition by the vendor, and of an intention on
his party to rely wholly on the personal security of the vendee for the payment of the price of the
goods; that after actual delivery (although as between the parties to the sale such delivery may be
conditional) a [bona fide] purchaser from the vendee gets a perfect title.') (quoting Smith v. Lynes, 5
N.Y. 46 (1851)) (internal quotation marks omitted).
483. See Giddey v. Altman, 27 Mich. 206, 211 (1873) (concluding the vendor "was not entitled
to possession of the [property] when he took it, unless he had previously exercised his right to
declare the contract of sale terminated").
484. See Grant Gilmore, The Commenial Doctrine of Good Faith Purchase, 63 Yale L.J. 1057, 1058
n.1 (1954) ("The first English Act (4 George IV, c. 83) was passed in 1824."); see also Factor's Act of
1889, 52 & 53 Vict. c. 45 § 9 (stating a buyer's good faith purchaser under a conditional sale has
priority over the seller).
485. See S.JOURNAL, 14th Gen. Assemb., at 64 (Iowa 1872) ("By Senator Fitch: S.F. No. 47, A
bill for an act to protect persons in possession of personal property. Read first and second time, and
referred to Committee on Judiciary.").
486. See id. at 300 (Iowa 1872) ("S.F. No. 47, A bill for an act to protect persons in the
possession of personal property, with report of committee recommending substitute, was taken up
and considered. The substitute was adopted.").
487. See H.R. JOURNAL, 14th Reg. Sess., at 130 (Neb. 1877) ("By Mr. Griffith, House Roll No.
12, A bill for an act to declare void conditional sales of personal property as against innocent
purchasers from and creditors of the vendee. Read first time and ordered to a second reading[]").
488. See id. at 183-84 (Neb. 1877) ("The report of the judiciary committee was taken up and
disposed of as follows: House Roll No. 12, A bill for an act to declare void conditional sales of
personal property as against innocent purchaser from, and creditors of, the vendee. Your committee
report the same back, with the recommendation that it do not pass. On motion, the report to the
committee was adopted.').
400
ST. MARY'S LAWJOURNAL
[Vol. 44:317
conditional sale as early as 1836, was: should the rule favor the vendor
because the good faith purchaser/judgment lien failed to inspect the
vendee's chain of title, or favor the vendee because the vendor in trusting
In
the vendee created the opportunity for the vendee to commit fraud?'
short, the twentieth century historians may have imputed a purpose from a
beneficial result.
C. Prevention of Vendee Fraud
Twentieth century historians, due to their conviction that the
conditional sales transaction is immoral, overlooked the prevention of the
fraud of the vendee. Most of the post-conditional sales act opinions stated
prevention of fraud as the purpose behind the conditional sales acts: two
opinions from Vermont, the second state to pass a conditional sales act,
one from Minnesota, the fourth state, and two from Missouri, the sixth
state. In 1877, Chief Justice Isham Pierpoint opined a notice purpose:
"The object of the statute ... is, not to make the instruments valid and
binding between the parties, but to give notice to all the world of the true
state of the titles." 4 9 0
In 1881, Justice Jonathan Ross of Vermont stated more clearly the
purpose of the notice requirement is to end the cost of litigation by the
vendor seeking to recover the property or its value:
It has always been considered that upholding such conditional sales
infringed considerably upon the common law rule that possession of
personal property is evidence of its ownership. It clothed the purchaser with
apparent ownership, and so often furnished him with the means of obtaining
a false credit; and was sometimes, doubtless, used by the dishonest debtor to
cover up his property, and, by secret trusts, to place it beyond the reach of
489. See Lane v. Borland, 14 Me. 77, 81-82 (1836) ("[W~e perceive no reason to doubt that the
transaction was fair, and free from fraud on the part of the [vendor]. It does not appear, that he had
any reason to suspect, that [the vendees] would make the fraudulent use they did of the bill of sale he
gave them. It was a fraud upon him, as well as upon the purchaser, bringing into jeopardy the
interest of both, and subjecting them to the hazard and expense of a lawsuit. But it is said the
[vendor] ought to lose his horse; because by his bill of sale, he enabled [vendees] to commit a fraud.
This consequence could not have been meditated or designed by him .. . . It contributed to enable
[vendees] to deceive a purchaser; and purchasers are often deceived by the evidence of property,
arising from possession alone, without impairing the title of those, who may have entrusted the
fraudulent party with such possession. As the law now is, the purchaser of personal property, is
always exposed to the [e]ncumbrance of a secret mortgage. From the bill of sale, the purchaser had
reason to believe, that the former owner of the horse had transferred his title; but he would learn
from the same paper that it was not paid for; and he ought to have known, that he incurred the
hazard of a mortgage, made to secure him or some other person.").
490. Fairbanks, Brown & Co. v. Davis & Wright, 50 Vt. 251, 255 (1877).
2013]
SECURED TRANSACTIONS HISTORY
401
his creditors; attaching creditors and subsequent purchasers were also
frequently involved in litigation with prior conditional vendors.
Whatever may have been the evils intended to be reached by the
passage of the acts named, it is apparent the legislature intended that such
sales should be invalid against such creditors and purchasers, unless the
*491
provisions of the act were complied with.
Justice Daniel A. Dickinson of MVinnesota in 1886 reiterated the notice
purpose to prevent vendee fraud:
We consider the manifest purpose of the statute to be to afford notice
(in respect to property sold upon condition) that the title remains in the
vendor; the object being to thus protect those who otherwise might be
defrauded. This is in accordance with the construction which has ordinarily
492
been placed upon similar statutes, and upon registry laws generally.
In 1885, Justice Thomas Adiel Sherwood of Greene County, Missouri,
affirmed the prevention of vendee fraud:
It cannot be doubted that the legislature, by these sections, intended to
make a radical change in the law relating to conditional sales of personal
property, and to prevent secret and unrecorded transactions and contracts of
sale from being used to the detriment of unsuspecting creditors of, or
purchasers from, the vendee of personal property apparently the owner
thereof. This I regard as the whole object, purpose and scope of the law, as
it now stands.4 9 3
491. Bugbee v. Stevens, 53 Vt. 389, 392 (1881). But seeCole, Leavitt & Co. v. Howe, 50 Vt. 35,
36 (1877) (asserting in brief of defendant that "[t]his statute was not made for the benefit of either
party to the contract, but for the benefit of attaching creditors and subsequent purchasers").
492. Dyer v. Thorstad, 29 N.W. 345, 346 (Minn. 1886).
493. Coover v. Johnson, 86 Mo. 533, 538 (1885); seealso Knoop ex rel. Miller v. Nelson
Distilling Co., 26 Mo. App. 303, 316 (1887) ("The [conditional sales act] rests upon the same
considerations as other statutes requiring the registration of certain instruments of conveyance, and
the settled construction of these statues is, where not so expressed in terms, that they are intended to
give notice to subsequent purchasers and mortgagees of the vendor of the change of title to the
property, which has taken place."); Defiance Mach. Works v. Trisler, 21 Mo. App. 69, 72 (1886)
("That policy is, that a person shall not be allowed, by the possession of personal property which
does not belong to him, or upon which another has a secret lien, to acquire a false credit to the injury
of those who may deal with him, either by giving him credit, or by becoming purchasers of the
property."). But see Eidson v. Hedger, 38 Mo. App. 52, 55 (1889) (asserting the common law "rule
was so abused,-innocent purchasers were so often deprived of property, bought of those in
possession, and apparently the owners, because of some secret understanding between the one in
possession and the former owner,-that the legislature in 1877 amended the old [fraudulent
conveyance act]" in order to prevent vendor fraud); Collins v. Wilhoit, 35 Mo. App. 585, 587 (1889)
(disagreeing with the assertion in respondent's brief that the "case reste[d] upon the [conditional sales
act], which was intended to protect subsequent creditors and subsequent purchasers in good faith, of
the vendee").
402
ST. MARY'S L1 WJOURNAL
[Vol. 44:317
Justice Francis Marion Black of Jackson County, Missouri, in 1885
confirmed this rationale:
No doubt the act of 1877 was designed to and does work a radical
change in the law as respects these conditional contracts and leases .... As
was said [by Justice Sherwood above; the conditional sales] act of 1877 was
intended to prevent secret and unrecorded contracts of sales from being
used to the detriment of unsuspecting creditors or purchasers from the
vendee. 4 9 4
These pronouncements indicate the statutory purpose was to protect
the vendor against vendee fraud. Vendee fraud would occur when the
vendee sells vendor's property to a good faith purchaser or allows a
judgment lien to levy on the vendor's property. Without the recording, the
vendor must bring a replevin action or sue for trover, both at the
courthouse, unless the vendor is a skilled negotiator and can convince the
good faith purchaser or sheriff to surrender the property. The recording
ensured that no good faith purchaser could exist, much less a valid levy.
The vendor is saved the hassle and cost of litigation to recover the
property. A beneficiary of this filing would be the other innocent party,
the vendee's potential good faith purchaser and the vendee's judgment
creditors.
This purpose to protect the vendor from vendee fraud comports with
the post-conditional sales act decisions and the earlier Vermont legislation
that protected vendors against vendees' judgment liens. After Vermont
passed its conditional sales act, it dealt with the issue of late filing (the
vendor handed the documents timely, but the clerk did not timely
record) 9 5 and creditor back-dating (on the note to reflect the calculation
If protecting good faith purchasers and subsequent
of interest)."' 6
creditors was the goal, these courts should not have tolerated the secret
liens, albeit for short time periods. As to the legislative effort, in 1854, to
ensure the vendor under a conditional sale obtained his full price, the
Vermont legislators required attaching vendee creditors to pay or tender to
the vendor the residue of the vendee's purchase money within ten days
494. Peet v. Spencer, 2 S.W. 434, 435 (Mo. 1886).
495. See Fairbanks,Brown & Co., 50 Vt. at 256-57 (1877) (holding a written contract of sale was
deemed to have been recorded in the clerk's office on the date it was given to the clerk's agent for
that purpose).
496. See Cole, Leavitt & Co., 50 Vt. at 38 ("The description given of the notes is no part of the
memorandum, except as being descriptive of the sum due, and the time when the memorandum was
given must be determined independently of the date of the notes described.").
403
SECURED TRANSACTIONS HISTORY
2013]
after the attachment.
This statute clearly indicates vendors, not
subsequent creditors or good faith purchasers, receive state aid. So
naturally, when the threat came from the other third party to the
transaction (i.e., the good faith purchaser through the spread of the
Wait"9 opinion to other states), the vendors and their legislators had to
react.
VI.
PASSAGE OF THE CONDITIONAL SALES ACTS
Because the conditional sales transaction aided the financing of farmers,
the ones potentially threatened by the Wait good faith purchaser rule were
those lending to the farmers using the conditional sales note as security.
The states with a majority of farmers could possibly prevent that damage
by defeating the good faith purchaser status by a filing of notice of the
conditional sales transaction. Eight northern states possessed a majority of
farmers in 1870: Iowa, Kansas, Minnesota, Wisconsin, Vermont,
Nebraska, Missouri, and Illinois.4 " This list includes four out of the five
497. See Act of Nov. 10, 1854, No. 12, 1854 Vt. Laws 15 ("[Alny creditor of the vendee may
attach or levy his execution upon said property, and, upon payment, or tender, to the vendor, his
agent or attorney, within ten days after such attachment, or levy, of the residue of such purchase
money, remaining unpaid, may hold the said property discharged from the claim of such vendor
thereon."); see also Towner v. Bliss, 51 Vt. 59, 61 (1878) (addressing interplay between the 1854
statute and the 1870 recording statute); Duncan v. Stone, 45 Vt. 118, 122-24 (1872) (holding
property stolen from constable is no defense); Fales v. Roberts, 38 Vt. 503, 507-09 (1866) (deciding a
vendee creditor must pay vendor within ten days of attachment, even if the due date had yet to
come); Rowan v. Union Arms Co., 36 Vt. 124, 139-41 (1863) (determining a creditor can compel
accounting to determine residue of purchase money); Hefflin v. Bell, 30 Vt. 134, 137 (1858)
(declaring an improper tender by judgment lien was insufficient).
498. See supra notes 1-29 and accompanying text (detailing the facts and circumstances of the
Wait opinion).
499. See FRANCIS A. WALKER, COMPENDIUM OF THE NINTH CENSUS (June 1, 1870) 594
(Wash. Gov't Printing Office 1872) (listing total employed persons by state and total engaged in
agriculture). The percentage of farmers can be computed by dividing those engaged in farming by
the total in all occupations for each state. The result is as follows: Iowa (210,263/344,276 or 61.1%),
Kansas
(73,228/123,852
or
59.1/6),
Minnesota
(75,157/132,657
or
56.7%),
Wisconsin
(159,687/292,808 or 54.5%), Vermont (57,983/108,763 or 53.3/6), Nebraska (23,115/43,837 or
52.7%), Missouri (263,918/505,556 or 52.2%), Illinois (376,441/742,015 or 50.7%), Ohio
(397,024/840,889 or 47.21%), Michigan (187,211/404,164 or 46.3/o), Indiana (206,777/459,369 or
45%), Oregon (13,248/30,651 or 43.2%), Maine (82,011/208,225 or 39.3%), New Hampshire
(46,573/120,168 or 38.7%), Pennsylvania (260,051/1,020,544 or 25.5%), New York
(374,323/1,491,018 or 25.1%), Connecticut (43,653/193,421 or 22.7%), New Jersey (63,128/296,036
or 21.3/6), California (47,863/238,648 or 20.1%), Rhode Island (11,780/88,574 or 13.3/0),
Massachusetts (72,810/579,884 or 12.6%), and Nevada (2,070/26,911 or 7.7%). The list does not
include southern states because their recording statutes also encompassed sales of personalty.
George Lee Flint, Jr., & Marie Juliet Alfaro, Secured TransactionsHistog: The FirstChattelMortgageActs in
the Anglo-American World, 30 WM. MITCHELL L. REv. 1403, 1406-07 (2004). Some southern states
had fraudulent conveyance statutes that also required recording after a number of years of personaity
404
ST. MARY's L'lw JoURNAL
[Vol. 44:317
states of the first wave of states that passed the conditional sales acts, and
both states of the second wave to pass the acts.soo Of the two interlopers,
Illinois and Kansas, Illinois did not recognize the conditional sale as a valid
transaction.5 0 Maine, the remaining first wave state, did not appear on
the list. One of its major industries, however, involved acquisition of oxen
from farmers to haul logs over snow to the banks of ice-covered rivers. 5 0 2
If the farm financiers in these farm states also possessed political power in
the respective legislature, the potential threat of the Wait opinion would
cease.
A. Maine
In the late 1860s, Maine's industries included lumber manufacturing,
shipbuilding, and textile manufacturing. Lumbering was the principal
Maine export in the nineteenth century.5 o Lumbermen would toil in the
forests during December through March, cutting pine trees and skidding
them over the snow by oxen and horse sled to the riverbank, so that when
the snow melted, the logs could be tumbled into the river and floated to a
sawmill near a port.5 0 4 Although the lumbering industry had moved to
Wisconsin and Minnesota in the 1850s and cutting spruce for pulp mills
manufacturing paper was developing in the late 1860s, the late 1860s and
Shipbuilding
early 1870s still produced record lumber exports. 50 5
climaxed in the 1850s and declined considerably after the panic of
1857.506 Textile mills had spilled over from Boston Associates' New
Hampshire operations.5 0 7 But Maine's farmers remained the state's main
transactions involving a change of possession without a transfer of ownership. See supra notes 44950 and accompanying text (exemplifying some of the southern states that had fraudulent conveyance
statutes with recording requirements).
500. See supra notes 244-49, 267-70 (describing the second wave).
501. See Ketchum v. Watson, 24 Ill. 591, 592 (1860) ("To pass the title as between third
persons, there must be a change in possession, so that others may not be deceived and defrauded by
the appearance of ownership in one, while the title is really in another."); see also Lucas v. Campbell,
88 Ill. 447, 448-52 (1878) (holding a written transaction with monthly advances toward a purchase is
not a lease, but a sale); Murch v. Wright, 46 Ill. 487, 488-89 (1868) (declaring the transaction a
conditional sale, even though "made to assume the form of a lease").
502. See CHARLES E. CLARK, MAINE: A BICENTENNIAL HISTORY 92 (1977) ("Four months
out of the year, December to March, woodsmen lived in the forest, cut pine logs, skid[d]ed them
over snow by ox and horse sled, and piled them by the river bank.").
503. Id.
504. Id.
505. Id. at 136.
506. Id. at 104.
507. Id. at 93, 135.
405
SECURED TRANSACTIONs HISTORY
2013]
economic force, both by value of property and number of employees.s 0 8
These four groups were well-represented in the Maine Senate of 1870,
Of the thirty-one
in which the first conditional sales bill arose.so,
senators, ten were farmers (32%), five were manufacturers (16%) with four
in lumber and one in textiles, and three were transporters (10%) with two
The retail townspeople were more numerous, with
in shipbuilding.5"o
twelve (390/), including six lawyers, five unspecified merchants, and one
grocer, all of the groups likely to lend to farmers taking the Holmes' note
as security.5 1' The two commercial merchants (6%) consisted of a lumber
merchant and corn and flour dealer. 5 12
The farmers and their lenders also dominated the Maine House, but in
reverse numbers.5 1 3 Farmers comprised 56 of the 147 representatives
508. S.JOURNAL, 49th Leg., at 44 (Me. 1870).
509. See id. at 3-4 (listing 31 senators: Samuel Hanson of Buxton, clothing manufacturer; John
B. Nealley of South Berwick, farmer; Joseph C. Roberts of Waterborough, grocer; Marquis D.L. Lane
of Standish, lawyer; Charles E. Gibbs of Bridgton, teamster; Henry Carvill of Brunswick, merchant;
Thomas B. Reed of Portland, farmer; William W. Bolster of Dixfield, lawyer; Thomas P. Cleaves of
Brownfield, lawyer; Daniel Holland of Lewiston, farmer; Edwin R. French of Chesterville, farmer;
J(acob) P. Morse of Bath, shipbuilder; Thomas S. Lang of Augusta, lumberman; Joshua Gray of
Gardiner, manufacturer of lumber; George E. Minot of Belgrade, farmer; Stephen D. Lindsey of
Norridgwock, attorney at law; Luther H. Webb of Hartland, merchant; John G. Mayo of Dover,
farmer; Thomas R. Kingsbury of Bradford, merchant; Charles Buffumn of Orono, lumber
manufacturer; Timothy Fuller of Lincoln, farmer, Benjamin D. Metcalf of Damariscotta, ship builder,
Philander J. Carlton of Camden, merchant; Ruggles S. Torry of St. George, sailor; T.H. Cushing of
Wintersport, lumber merchant; Lorenzo Garcelon of Troy, farmer; John A. Buck of Orland, corn
and flour dealer; Hiram S. Bartlett of Trenton, farmer; F. Loring Talbot of East Machias, lumber
manufacturer; Putnam Rolf of Princeton, merchant; Samuel W. Collins of Lyndon, farmer); see also
U.S.
NAT'L
ARCHIVES
&
RECORDS
ADMIN.,
CENSUS
OF
MAINE
(1870),
available at
http://www.heritagequest.com (providing occupations of senators).
510. See supra note 509.
511. See id.
512. See id.
513. See H.R. JOURNAL, 49th Leg., at 46-56 (Me. 1870) (listing 147 representatives: John
Quincy Adams of Biddeford, lawyer; John Q. (John L.) Adams of Mayfield, farmer; George
Alexander of Belmont, farmer; Winkworth S. Allan of Corinna, farmer; John S. Ames of Jefferson,
farmer; Joseph Baker of Augusta, attorney at law; Lewis Barker of Stetson, lawyer; Orrin Bartlett of
Harrison, clergyman; Asher H. Barton of Benton, farmer and representative in the legislature; Edwin
R. Bean of Corinth, farmer; Samuel R. Bearce of Lewiston, lumber dealer and manufacturer; Zebulon
H. Bearce of Turner, farming and representative in the legislature; Thomas H. Berry of Buxton,
works in sawmill; George S. Berry of Damariscotta, apothecary; Sidney W. Bird of Rockland,
merchant and manufacturer of lime; Granville Blake of Auburn, salesman in furniture store; Hiram
Bliss, Jr., of Washington, lawyer; Percival Bonney (Bonny) of Portland, lawyer; Thaddeus F. (T.F.)
Boothby of Embden, farmer; David Boyd of Newcastle, keeps country store; Samuel M. Brackett of
Cumberland, farmer; Alden (Aldon) Bradford of Eastport, dealer and manufacturer of clothing;
Henry Brawn (Brown) of Old Town, lumber manufacturer; William H. (Wm. H.) Brown of Anson,
hotel keeper; Caleb U. (Caleb V.) Burbank of Acton, farmer; Henry H. Burgess of Portland, dealer in
paints and oils; John H. Burnham of Biddeford, brass and iron foundry; Samuel W. (Sami. W.)
406
ST. MARY'S LA WJOURNAL
[Vol. 44:317
Campbell of Deer Isle, farmer; James H. Chamberlain of Ellsworth, retd. merchant; Abner B. Chase
of Winn, Rt. Grocer; Alden Chase of Woodstock, farmer; Harvey D. Clark of Holden, farming;
Gustavus Clark of Readfield, farmer; Cyrus Cole of Cape Elizabeth, retired merchant; Charles (Chas)
Cornforth (Conforth) of Fairfield, farmer; James Cotton of Troy, farmer; Enoch Cousens (Cousins)
of Kennebunkport, retail grocer; Charles Cox of East Machias, wheelright and representative to
legislature; Robert Crockett of Rockland, master mariner; John S. Cushing of Sidney, physician;
Washington L. Daggett of Strong, merchant; Horatio N. Darling of Lincoln (Patten), farmer; E.
Adams (E.A.) Davis of Lubec, mason; A.J. (Adoniran J.) Dearborn of Falmouth, farmer; John A.
Dennett of South Berwick, farmer; William (Wm.) Dickey of Fort Kent, no occupation listed; Orrin
(Owen) Douglass of Naples, farmer; Edward A. (Edwin A.) Duncan of Kittery, brick layer; James
Dunning of Bangor, president of bank; Alanson B. (A.B.) Farwell of Augusta, lawyer; Levi H.
Folsom of Skowhegan, retired lumberman; Isaac Foster of Argyle, farmer; James Foss of Abbot,
shovel handle man.; Michael F. Gannett of Bath, grocer and farming utensils; Rufus Gates of
Robbinston, farmer; Joseph G. Gott (Gatt) of Leeds, farmer; Samuel L. Gould of Albany, clergyman;
Leonard F. (Lenord) Green of Wilton, farmer; Austin Greenleaf of Edgecomb, representative in
legislature; William L. Guptill of Gouldsboro, blacksmith; John S.P. Ham of Lewiston, produce
dealer; J.S. Games) Hamilton of Orono, lumberman; Henry E. Hammond of Paris, farmer; George
W. (G.W.) Hammond of Westbrook, agent paper mill; Roscoe G. Harding of Gorham, grocer
(retired); Williard P. (William P.) Harriman of Belfast, lawyer; William L. Hathorn (house of Going
Hathorn) of Pittsfield, lumberman; Sylvanus T. Hinks of Bucksport, house carpenter; Samuel A.
Holbrook of Freeport, merchant; George S. Holman of Dixfield, dry goods ret.; Harrison (Harison)
Hume of Cherryfield, lawyer; Samuel F. Humphrey of Bangor, lawyer; Daniel W. Hussey (Huzzy) of
Sangerville, farmer; William Irish of Sherman, farmer; George P. (Geo. P.) Jones of Norway, dentist;
Coan Jordan of Brunswick, farmer; Marshall Jordan Gordon) of Minot, merchant; Israel G. Kimball
of Bethel, farmer and representative to legislature; John W. Lane of Hollis, farmer; Andrew Leighton
of Yarmouth, farmer; James Lewis of Liberty, farmer; Warren R. Lewis of Pittston, farmer; Albert 0.
Libbey (Libby) of Limerick, dry goods merchant; Benjamin H. (Benj. H.) Lord of Lebanon,
carpenter; John T. Main of Unity, physician; Jonathan H. (ohn H.) Martin of Rumford, farmer; John
C. Mason of Hiram, farmer; John May of Winthrop, farmer; Ebenezer H. (Eben. H.) Mayo of
Windham, makes barrels; Alexander (Alex) McDougal of Meddybemps, farmer; William McGilvery
of Searsport, ship builder; Cyrus McKown (McCown) of Boothbay, ship owner; John McLain of
New Vineyard, farmer; Daniel M. Means of Sedgwick, farmer; John Mears of Bristol, shoe maker;
Frank B. Mildram of Wells, unlocated; Abraham C. Milliken of Tremont, without occupation;
George V. Mills of Brooksville, farmer; Moses S. (Morres S.) Moulton of Porter, representative;
Charles Newcomb of Brewer (Orrington), engineer; A.E. (Alfred E.) Nickerson of Swanville, school
teacher; Ezra Pray of Albion, farmer; Daniel C. (D.C.) Palmer of Gardiner, sawyer of lumber; James
F. Patten of Bath, merchant; William S. (William P.) Peavey of Whiting, merchant; Major A. (Mayer
A.) Phillips of Weld, clerk in store; John Pierce of Machias, lumberman; Edward Plummer of Lisbon,
lumber dealer; Cyrus M. Powers of Houlton, lawyer; Robert Purinton (Purington) of Bowdoinham,
ship builder; A. Judson (A.J.) Ray of Harrington, carpenter; Isaac Reed of Waldoboro, ship builder;
Kerwin W. (Kervin W) Riggs of Georgetown, grocery trader; Robert Sargent of Hermon, brick
mason; Albert N. Sawyer of Gray, farmer; Isaac W. Sherman of Camden, master mariner; Calvin W.
Sherman of Islesboro, mariner; John M. Skinner of St. Albans, farmer and lumberer; Joseph 0. Smith
of Hodgdon, merchant; Oramandel (Ora P.) Smith of Litchfield, farmer; Harrison G.O. Smith of
Parsonsfield, farmer; Edwin B. Smith of Saco, lawyer; Edwin Smith, Jr., of Warren, conveyance;
Joseph W. Spaulding of Richmond, lawyer; Daniel Stickney of Preque Isle, editor and publisher;
James M. Stone of Kennebunk, lawyer; Lemuel H. Stover of Harpswell, farmer; James G. Sturgis of
Standish, physician; Isaac F. Thompson of Hallowell, deputy sheriff; George R. (G.R.) Thurlough of
Newburg, farmer; Stephen L. Tobey of Athens, farmer; Thomas E. Twitchell of Portland, grocer;
T.W. (Thomas W.) Vose of Winterport, lawyer; Nahum (Nahin) Warren of Veazie, farmer; Samuel
Wasson of Surry, farmer, Joshua W. Waterhouse of Portland, retail merchant, Alfred Watts of
2013]
SECURED TRANSACTIONS HISTORY
407
The retail townspeople included thirty-five more (24%) with
(38%).s'
thirteen lawyers and eight unspecified merchants."' Less numerous were
the non-retail townspeople with twenty-three (16%), the manufacturers
with ten (7%), the transporters with eight (5%), all in shipping, and the
commercial merchants, including one banker and the households each
with seven (5/5).s5
These numbers suggest the groups lending to farmers, lawyers, and
shop-owning merchants, allied with a few farmers could dominate both
the Maine Senate and Maine House. But such alliances in Maine during
the Gilded Age were unnecessary. After 1856, the Republican Party in
Maine dominated the legislature and governorship, typically by two-to-one
margins and sometimes four-to-one margins in the Maine house, and
several times, the entire Maine Senate.5 1 ' The collapse of the Democratic
Party over slavery tied to the Republican acceptance of a liquor prohibition
plank to appeal to the moralistic Maine political culture produced that
dominance.5 "a
These Republicans desired to nurture and expand the
Nationally, that nurturing "meant a protective
nation's economy."'
tarifff], 'sound money,'
governmental promotion of railroads,
homesteading in the West, support for a revitalized merchant marine, [and]
an expanded navy." 5 2 0 Locally, it meant protecting discounted lending on
Holmes' notes to the area's principal economy: agriculture. Therefore,
when a threat arose to that lending as posed by the New York good faith
purchaser rule typified by Wait in the late 1860s, these groups could easily
Thomaston, retired master mariner; George H. Wentworth of North Berwick, farmer; Andrew J.
Weston of Poland, farmer; John C. Wheeler of Chesterville, farmer; Charles R. (Ches. R.) Whidden
of Calais, lawyer; Daniel White of Bangor, jeweler; Josiah Whitehouse of St. George, huckster; John
Whitney of Exeter, farmer; Isaac Wilder of Fort Fairfield (Washburn), millwright and farmer; Miles
Wilson (Willson) of Bradford, farmer; Roland M. (Rowland M.) Young of Hancock, insurance agent);
see also U.S. NAT'L ARCHIVES & RECORDS ADMIN., CENSUS OF MAINE (1870), available at
www.heritagequest.com (providing occupations for Allen, Boyd, Brackett, Wentworth, and White)
(parentheticals reflect Heritage Quests' index spelling)).
514. See supra note 513 (providing occupations of each representative organized by state and
county).
515. Id.
516. Id.
517. See MATTHEW C. MOEN, KENNETH T. PALMER & RICHARD JOHN POWELL, CHANGING
MEMBERS: THE MAINE LEGISLATURE IN THE ERA OF TERM LIMITS 20 (2005).
518. KENNETH T. PALMER, G. THOMAS TAYLEOR & MARCUS A. LIBRIzZI, MAINE POLITICS
AND GOVERNMENT 26-27 (1992).
519. PAUL T. BURLIN, IMPERIAL MAINE AND HAWAI'I: INTERPRETATIVE ESSAYS IN THE
HISTORY OF NINETEENTH-CENTURY AMERICAN EXPANSION 163 (2006).
520. Id.
408
[Vol. 44:317
ST. MARY'S LA WJOURNAL
take care of the problem by eliminating the good faith purchaser through
notice. The result was the first conditional sales act.
B.
Vermont
In the late 1860s, Vermont's economy was more agriculturally oriented
Only one out of every thirty persons worked in
than Maine.
manufacturing."' The principal farm product was wool, fostered by high
tariffs between 1828 and 1857, with some farmers devoted exclusively to
raising sheep and providing wool for local woolen millS. 5 2 2 Demand for
other farm products, such as cheese, butter, and eggs, encouraged country
stores to become middlemen in gathering these products for export when
the railroads provided transportation to out-of-state urban centers.5 2 3
The occupations of the members of the Vermont Senate of 1870 in
which the second conditional sales bill arose reflected this skewed
economy.5 24 Thirteen of the thirty senators (43%) numbered among the
retail townspeople, with ten lawyers. 5 2 5 Next came farmers with nine
The non-retail townspeople trailed with four (120/), the
(30%).s2'
manufacturers with three (10%), the commercial merchants with three
(10%), and the transporters with one (3%).52
One Senator had an
521. EDWARD DAY COLLINS, A HISTORY OF VERMONT 222 (1903).
522. See id. at 214 (attributing increased wool production in Vermont to high wool prices
resulting from federal tariffs); SAMUEL B. HAND, THE STAR THAT SET: THE VERMONT
REPUBLICAN PARTY, 1854-1974, at 2 (2002) (stating that in the 1830s, sheep raising in Vermont
"reached the proportions of the craze").
523. EDWARD DAY COLLINS, A HISTORY OF VERMONT 221 (1903).
524. See S. JOURNAL, Biennial Sess., at 3-9 (Vt. 1869) (listing the 30 senators as George W.
Grandey of Vergnees, lawyer; Calvin Hill of Middlebury, saddler; Abraham B. Gardner of Pownal,
farmer; William T. Horrobin, of Bennington, overseer; Jonathan Ross of St.Johnsbury, lawyer and
farmer; John M. Martin of Peachem, farmer; George G. Benedict of Burlington, editor; Frederick C.
Kennedy of Colchester, agent of woolen mill; George W. Brownell, farmer; John W. Hartshorn of
Lunenburg, cattle dealer; R. James Saxe of St. Albans, merchant; Dana R. Bailey of St. Albans, lawyer;
Arvin A. Brown of Richford, farmer; Alexander K. Hibbard of North Hero, farmer; Asa R. Camp of
Stowe, merchant; Heman A. White of Washington, lawyer; Harry H. Niles of Thetford, physician;
Jerry E. Dickerman of Derby, lawyer; E.Plumby Colton of Irasburg, joiner; George A. Merrill of
Rutland, steamboat.; Lucius Copeland of Middletown, farmer; Rodney C. Abell of W. Haven, farmer
and lawyer; Charles H. Health of Plainfield, attorney; J.H. Hastings of Waitsfield, farmer; Heman
Carpenter of Northfield, lawyer; Charles B. Eddy of Rockingham, farmer and lawyer; William W.
Lynde of Marlboro, merchant; William M. Pingry of Weathersfield, lawyer; Albert G. Dewey of
Hartford, cloth manufacturer; William Collamer of Woodstock, lawyer); see also U.S. NAT'L
ARcHIvES & RECORDS ADMIN., CENSUS OF VERMONT (1870), available at www.heritageq
uestonline.com (providing occupations).
525. Id.
526. Id.
527. Id.
2013]
SECURED TRANSACTIONS HISToRY
409
undetermined occupation. 5 2 8
Similar to the Maine House, farmers dominated the Vermont House,
but to a greater extent.5 29 Of the 234 representatives, 136 were farmers
528. Id.
529. See MANUAL OF THE LEGISLATURE OF VERMONT, FOR THE YEARS 1870-71, at 17-28
(1870), available at http://hdl.handle.net/2027/ucl.b3141699 (listing 234 house members: Edward
Gorham of Addison, farmer; John 0. Hamilton of Bridport, farmer; Jonathan B. Dike of Bristol,
farmer; Julius B. Benedict of Cornwall, farmer; J. Warren Barnes of Ferrisburgh, farmer; Edward J.
Brown of Goshen, farmer; Horatio N. Bull of Hancock, farmer; William Powers of Leicester,
manufacturer; Howard Clark, 2nd of Lincoln, butcher; James M. Slade of Middlebury, merchant;
George F. Skiff of Monkton, farmer; Ezra C. Smith of New Haven, farmer; Rodney F. White of
Orwell, farmer; Josiah S. Tappan of Panton, farmer; Parsons Billings of Ripton, farmer; Horace
Thomas of Salisbury, farmer and mechanic; Julius N. North of Shoreham, farmer; Albert Orvis of
Starksboro, farmer; Paschal Maxfield of Vergennes, physician; Harry Evers of Waltham, farmer; John
Brittell of Weybridge, farmer; Ashael H. Hubbard of Whiting, farmer; Aaron G. McKee of Arlington,
farmer; Luther R. Graves of Bennington, banker; William A. Tyrel of Dorset, marble dealer; George
Eddy of Glastenbury, lumberman; James S. Thomson of Landgrove, farmer; Mason S. Colburn of
Manchester, leather manufacturer; Jonathan Hapgood of Peru, farmer; Thomas Rickards of Pownal,
manufacturer; Daniel Carpenter of Readsboro, farmer; George Hopkins of Rupert, farmer; Elisha B.
Hurd of Sandgate, mechanic; Joseph Crosier of Searsburgh, carpenter; Seth W. Munroe of
Shaftsbury, farmer; James R. Houghton of Stamford, manufacturer; Giles B. Bacon of Sunderland,
farmer; Austin P. Graham of Winhall, manufacturer; Amos Aldrich of Woodford, lumberman; L.
Downer Hazen of Barnet, merchant; Jesse Marshall of Burke, farmer; Abial C. Palmer of Danville,
farmer; Almon L. Clark of Groton, miller; Levi R. Goodrich of Harkwick, farmer; Joseph Nickerson
of Kirby, farmer; Isaac W. Sanborn of Lyndon, farmer; Marshall W. Stoddard of Newark, farmer;
Orman P. Hooker of Pescham, farmer; James Dickey of Ryegate, farmer; William L. Pearl of
Sheffield, merchant; Harvey N. Kingsbury of Stannard, farmer; Franklin Fairbanks of St. Johnsbury,
manufacturer; Nahum K Campbell of Sutton, drover and farrier; Lyman Damon of Walden,
clergyman; Ezra A. Parks of Waterford, farmer; Jesse G. Gray of Wheelock, farmer; Francis E. Briggs
of Bolton, mechanic; Walter Carpenter of Burlington, physician; Alanson Edgerton of Charlotte,
bridge builder; Alonzo J. Stevens of Colchester, mechanic; Asa Brigham of Essex, farmer; Noble L.
Partch of Hinesburgh, farmer; Alfred E. Bates of Huntington, farmer; Adrian S. Lee of Jericho,
dentist; Ransom A. Jones of Richmond, tanner; Albert G. Whittemore of Milton, attorney; Lee
Tracy of Shelburne, wool dealer; Lemuel S. Drew of South Burlington, farmer; Tiras Isham of St.
George, farmer; Patrick Barrett of Underhill, farmer; Solomon H. Macomber of Westford, farmer;
William B. Douglas of Williston, farmer; Nelson Snow of Bloomfield, farmer; Levi Pinney of
Brighton, farmer; Andrew J. Taylor of Brunswick, farmer; Harvey H. Lucas of Canaan, farmer;
Charles Chase of Concord, boot and shoe dealer; Oscar T. Walter of East Haven, farmer; Marcus L.
Reed of Granby, farmer; William C. Washburn of Guildhall, carpenter and joiner; Frank L. Hadlock
of Lemington, farmer; Luther A. Nichols of Lunenburgh, farmer; John W. Webb of Maidstone,
farmer; Samuel P. Kneeland of Victory, lumberman; Ira F. Dean of Bakersfield, merchant; Ethan A.
Hull of Berkshire, farmer; Daniel B. Stetson of Enosburgh, merchant; George A. Ballard of Fairfax,
attorney; James M. Soule of Fairfield, farmer; Harvey Olmsted of Franklin, farmer; Cephas A.
Hotchkiss of Georgia, farmer; Henry Baxter of Highgate, physician; Heman Hopkins, Jr. of
Montgomery, farmer; William C. Brown of Richford, farmer; Samuel B. Green of Sheldon, merchant;
Edward A. Smith of St. Albans, manufacturer; George M. Hall of Swanton, physician; Edwin H.
Landon of Alburgh, farmer; Sereno G. Macomber of Grand Isle, farmer; Henry H. Goodsell of Isle
La Motte, farmer; Amass B. Hazen of North Hero, farmer; Benajah Phelps of South Hero, merchant;
Luther H. Hurlburt of Belvidere, merchant; Edward P. Mudgett of Cambridge, farmer; Edwin C.
White of Eden, mechanic; David Cook of Elmore, farmer; Carroll S. Page of Hydepark, merchant;
410
ST. MARY's LA rJouRNAL
[Vol. 44:317
John Holmes of Johnson, farmer; Charles R. Page of Morristown, merchant; Vernon Wilkins of
Stowe, butcher; Elias Willey of Waterville, farmer; Earl Guyer of Wolcott, manufacturer; Henry C.
McDuffee of Bradford, surveyor; William H. Nichols of Braintree, farmer; Zadoc P. Fuller of
Brookfield, farmer; Lyman G. Hinckley of Chelsea, attorney; S. Dana Huntington of Corinth, farmer;
Perley Mason of Fairlee, farmer; John Bailey, Jr. of Newbury, farmer; James Houghton of Orange,
farmer; Nathan S. Clark of Randolph, farmer; Nathan B. Cobb of Strafford, farmer; Harvey Dodge
of Thetford, farmer; Horace White of Topsham, farmer; Nathaniel H. Austin of Tunbridge, farmer;
Moses Spear of Vershire, farmer; B.W. Bartholomew of Washington, banker; Edwin S. Cook of West
Fairlee, stage producer; Henry D. Abbott of Williamstown, farmer; Enoch Rowell of Albany, farmer;
William W. Grout of Barton, attorney; Samuel R. Jenkins of Brownington, farmer; Andrew J. Lang of
Charleston, farmer; Daniel P. Walworth of Coventry, farmer and merchant; Charles Chamberlin of
Craftsbury, farmer; Charles Lunt of Derby, farmer; Sidney K.B. Perkins of Glover, clergyman; Josiah
C. Robinson of Holland, farmer; George B. Brewster of Irasburgh, farmer; T. Abel Chase of Jay,
merchant; Harry B. Parker of Lowell, farmer; Richard Maplesden of Morgan, farmer; Lewis H.
Bisbee of Newport, attorney; Louis Shedd of Salem, farmer; M. Kennedy, Jr. of Troy, farmer; Edson
Farman of Westfield, farmer; William Silsby of Westmore, farmer; Loyal C. Kellogg of Benson,
attorney; Zachariah Clark of Brandon, tobacconist; Pitt W. Hyde of Castleton, manufacturer; Hiram
F. Baird of Chittenden, farmer; Linus F. Colvin of Clarendon, farmer; Eletcher R. Hawley of Danby,
artist; Horace G. Wood of Fair Haven, attorney; Sam. W. St. John of Hubbardton, farmer; Leonard
W. Day of Ira, farmer; Ezra Edson of Mendon, blacksmith; Roswell Buel of Middletown, attorney;
Aaron W. Cook of Mount Holly, farmer; Silas G. King of Mount Tabor, carpenter and joiner; Jerome
C. Bromley of Pawlet, attorney; Joel Ranney of Pittsfield, farmer; Carlos A. Hitchcock of Pittsford,
sheriff and insurance agent; John B. Beaman of Poultney, attorney; Charles H. Joyce of Rutland,
attorney (Speaker); Richard D. Estabrooks of Sherburne, farmer; Napoleon B. Smith of Shrewsbury,
farmer; James K. Foster of Sudbury, farmer; Lansford W. Congdon of Wallingford, farmer; Rodney
M. Lewis of Wells, manufacturer; Rollin Hitchcock of West Haven, farmer; William E. Whitcomb of
Barre, millwright and iron foundry; Abraham H. Holt of Berlin, farmer; Theron L. Lance of Cabot,
farmer; Jesse J. Ridley of Duxbury, lumberman; James A. Coburn of East Montpelier, farmer; Azro
D. Bragg of Fayston, farmer; George Wooster of Marshfield, merchant; Jarvil C. Leland of
Middlesex, farmer; Joseph Poland of Montpelier, editor and publisher; Lorenzo D. Hills of
Moretown, farmer; David W. Hadley of Northfield, farmer; Joseph Lane of Plainfield, farmer;
Erastus N. Spaulding of Roxbury, lumberman; Hiram Carleton of Waitsfield, attorney; James Cardell
of Warren, merchant; Frank E. Ormsby of Waterbury, farmer; Nathaniel C. McKnight of Woodbury,
farmer; Phineas A. Kemp of Worcester, farmer; Jervine 0. Kingsley of Athens, farmer; Edward
Crosby of Brattleboro, merchant; Erastus Whitney of Brookline, farmer; Laban Jones Jr. of Dover,
farmer; Stephen L. Dutton of Dummerston, farmer; Francis Phelps of Grafton, hotel and livery
keeper; Rodney B. Field of Guilford, merchant; Alpheus H. Stone of Halifax, farmer; Charles S.
Clark of Jamaica, mechanic; Charles M. Adams of Marlboro, farmer; Dana D. Dickinson of
Newfane, manufacturer; Samuel E. Wheat of Putney, farmer; Elliot R. Osgood of Rockingham,
manufacturer; Sumner Curtis of Somerset, farmer; Jacob B. Grout of Stratton, farmer; Philip H.
Rutter of Townshend, farmer; John Hunt of Vernon, farmer; David H. Eager of Wardsboro, farmer;
Ralph S. Safford of Westminster, merchant; Lucius P. Mowry of Whitingham, farmer; Oscar E.
Butterfield of Wilmington, attorney; Jason D. Jones of Windham, mechanic; Albert E. Stannard of
Andover, farmer; Rollin C. Sherwin of Baltimore, farmer; Salmon C. Thayer of Barnard, farmer;
Augustus M. Marsh of Bethel, farmer; William C. Bugbee of Bridgewater, carpenter and joiner;
Horatio S. Pierce of Cavendish, merchant; Hugh Henry of Chester, attorney; Noah B. Safford of
Hartford, farmer; Edwin H. Bagley of Hartland, tinsmith; Ervin J. Whitcomb of Ludlow, merchant;
Charles A. Scott of Plymouth, physician; John Brockway of Pomfret, farmer; Hiram F. Thomas of
Reading, merchant; Charles Morgan of Rochester, general dealer; Cyrus B. Drake of Royalton, retired
clergy; W. H.H. Walbridge of Sharon, clerk; Frederick G. Field of Springfield, merchant; Ezra M.
Collom of Stockbridge, furniture dealer; Charles Amsden of Weathersfield, manufacturer; Joseph C.
2013]
SECURED TRATNSACTIONS HISTORY
411
4
(58%).53o Trailing were the forty-one retail townspeople (18%) with
twenty-five merchants and fifteen lawyers, the non-retail townspeople with
thirty (13%), the manufacturers with fourteen (60/), and the commercial
These
merchants with thirteen (6%), including five lumbermen. 5 3 '
numbers suggest the people who lent to the farmers (the retail
townspeople), in addition to the farmers themselves, could easily control
both the Vermont Senate and House.
By 1870, Vermont had become a one-party state under the Republican
Party.5 3 2 The Democratic Party's tariff reductions in the 1850s, which
had devastated Vermont's woolen industry, when coupled with their
acquiescence to slavery, lead to the Democratic Party's demise in
Vermont.5 3 3 When the remainder of the Whig Party joined with the
Republicans in 1855, the Republican majorities were overwhelming, with
twenty-nine of thirty senators and 145 of 206 house members being
Republican.5 3 4 So when the good faith purchaser concept, embodied in
Wait, threatened discounted lending on notes for agriculture, the state's
principal economy, the retail merchants and farmers could easily remove
the problem.s5 3 The result was the second conditional sales act.
C.
Iowa
In Iowa, all was geared in favor of the farmer. Iowa farming differed
from that of New England subsistence farming. Iowa farmers could
acquire land from the government for specie, but had to borrow the specie
at high interest rates. 5 3 1 Instead of rock removal, the Iowa farmer had to
get rid of the grass' matted root system, which required a gigantic wheelmounted machine with a wooden moldboard, covered with iron, pulled by
several yoke of oxen, and "could cut a furrow two feet wide.""' The
high cost of acquiring the land and preparing it for farming posed the
Iowa farmer with an ultimatum-become a commercial farmer or
Fenn of Weston, farmer; Daniel Benjamin of West Windsor, farmer; Jonathan B. Farnsworth of
Windsor, attorney; Lorenzo Richmond of Woodstock, insurance agent).
530. Id.
531. Id.
532. See SAMUEL B. HAND, THE STAR THAT SET: THE VERMONT REPUBLICAN PARTY, 18541974, at 3, 17 (2002) ("[T]he Republican party was so inclusive that fusion among rival factions
offered no threat to its dominance.").
533. See id. at 2, 3, 17 (detailing the Democratic Party's fall).
534. See id. at 3, 17 (describing the Whig Party's fall).
535. Wait v. Green (Wait 11), 36 N.Y. 556, 556-57 (1867).
536. See JOSEPH FRAZIER WALL, IOWA: A BICENTENNIAL HISTORY 122 (1978) ("[Elven the
most successful farmers had difficulty accumulating [the] amount of acceptable specie.").
537. See id. at 124 (describing Iowa farming).
412
ST. MARY'SIoutAL
4437
[o
44:317
[Vol.
perish."' The towns existed to supply the needs of these Iowa farmers:
with "a mill, [a] general store," post office, blacksmith, and houses for
Similarly, the townsmen lured the railroad companies to
merchants.5 3
their towns, knowing the railroads would provide farmers with a market
because the nearest rail station had grain elevators and stockyards, which
allowed farmers to purchase goods from the merchants while in town.5 4 0
Because Iowa had little industry to begin with, due to the railroad and the
rapid development of banks, it did not develop in urban centers on the
Mississippi River, but in the small towns near the farms.5 41 Consequently,
the industry focused on processing farm produce: meatpacking, grain
milling, and manufacturing farm implements. 5 4 2
The lower house of the Iowa legislature, which amended the senate's
543
third conditional sales bill in its entirety, mirrored these demographics.
Of the one hundred members, the farmers numbered the most with fifty
(50%).54' The retail townspeople had twenty-eight members (28%) with
twenty lawyers and four merchants.5 4 5 Commercial merchants numbered
four, (4%) which included a banker, a stockbroker, a grain dealer, and a
wholesale grocer.5 4 6 Two of the lawyers and two of the merchants later
became bankers, suggesting that they lent to farmers.5 4 7 The six
manufacturers (6%) included four millers and one pork packer while the
5 8
eleven non-retail townspeople (110/) included five physicians.
The Iowa Senate, which replaced a good faith purchaser protection
statute with a recording statute, became another senate body with retail
townspeople dominance over the farmers.5 4 9 Of the fifty senators,
twenty-one were retail townspeople (42 %) with fifteen lawyers, followed
by ten non-retail townspeople (20%) with four physicians, and nine
farmers (18%).55o Rounding out the group were seven commercial
merchants (14%) with three bankers, two manufacturers (4%), and one
538. See id.at 123 ("[Tmhe Iowa farmer was a commercial not a mere subsistence farmer.").
539. See id.at 138-39 (describing Iowa towns).
540. See id.at 141 (illustrating railroad towns in Iowa).
541. See id. (examining railroads in Iowa).
542. See id. (explaining how "agricultural-related products quickly dominated ... on Iowa's list
of manufactured goods").
543. See supra note 350 (listing members of the house).
544. Id.
545. Id.
546. Id.
547. See id. (enumerating biographical information for Booth, Draper, Erickson, and Williams).
548. Id.
549. See supra note 352 (documenting the senate members' occupations).
550. Id.
2013]
SECURED TRANSACIONS HISTORY
413
with an unknown occupation.55' Again, an allegiance consisting of the
retail townspeople and a few farmers possessed the political power.
The townsmen dominated the Iowa legislature far beyond their
numbers. 55 2 "[The town merchant, banker, lawyer, and physician," not
the farmer, molded Iowa.5 5 The townsmen maintained loyalty to the
Republican Party, believing in laissez-faire and free enterprise, and fearing
big business, big government, and big unions.ss This dominance arose at
the end of the Civil War, providing Iowa with a one-party Republican state
for over a hundred years.5 5 Therefore, when the threat of the potential
good faith purchaser, posed by Wait, threatened their lending to farmers
through discounted loans backed by promissory notes from conditional
sales, the result was the third conditional sales act.
D. Minnesota
Minnesota differed both economically and politically from the other
early states adopting the early conditional sales acts. Its economy started
with commercial lumbering in the forests, stretching southwest of Duluth
and up along the Mississippi, by transporting both personnel and
techniques from New England's forests, cutting pine trees during the
winter and dragging the logs to the river for floating downriver to the
sawmills in Minneapolis when the ice melted.5 5 6 The second wave of
settlement came to the southeastern prairie with the immigration of
"descendants of New England" puritans arriving "from upstate New
York," Wisconsin, and Illinois seeking the cheap land from 5the
57
government and "with a desire to become economically successful."
Again, the cost of preparing the prairie meant they needed a commercial
crop, so they switched from corn to exportable spring wheat in the 1850s
using mechanical reapers and horse-drawn threshers.5 " This cash crop
551. Id.
552. See JOSEPH FRAZIER WALL, IOWA: A BICENTENNIAL HISTORY 150 (1978) (illustrating
how "the townspeople have .. . dominated the state legislature").
553. See id. ("[It has been the influential people in Iowa's small towns who have molded the
state in their own image.'.
554. See id. at 149-50 (describing how "laissez-faire and the free-enterprise system are most
fervently ... believed in").
555. Id. at 154 (illustrating Republican dominance).
556. See WILLIAM E. LASS, MINNESOTA: A BICENTENNIAL HISTORY 77, 141, 148 (1977)
(depicting the early lumber industry in Minnesota).
557. See DANIEL JUDAH ELAZAR, VIRGINIA GRAY & WYMAN SPANO, MINNESOTA POLITICs
& GOVERNMENT 9 (1999) (describing Minnesota's settlers).
558. See WILLIAM E. LASS, MINNESOTA: A BICENTENNIAL HISTORY 129, 131-32 (1977)
(detailing the switch from corn to wheat).
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required flourmills, which were financed by lumber fortunes in
Minneapolis. 5 5 9
The Minnesota house that introduced the fourth conditional sales bill
reflected this dichotomy.5 6 o Of the 106 members of the Minnesota
Twenty-one (20%) were
house, forty-nine (46%) were farmers. 5 6
commercial merchants, including six lumber merchants, five merchant
Eighteen (17%) were retail
businessmen, and four bankers. 5 62
townspeople, including eleven lawyers and seven merchants.5 6 3 Trailing
in number were fifteen non-retail townspeople (14%) and three
transporters (3%).64
The Minnesota Senate reflected the same make-up as the other
conditional sales states, namely, strong retail representation and less strong
farm representation.16 5 Of the forty-one senators, fourteen comprised
the retail townspeople (34%) with seven merchants and five lawyers, while
twelve made up the farmers (29%).s66 Commercial merchants numbered
seven (17%) with three lumbermen, while non-retail townspeople
numbered six (15%) and manufacturers numbered two (5/6).ss7
The political situation in Minnesota differed from the other states.
Democrats dominated Minnesota territorial politics until statehood in 1858
due to federal patronage delaying the appearance of the Republican Party's
559. See id.at 132, 136, 151 (summarizing the development of flour mills).
560. See supra note 368 (listing the House members' occupations).
561. Id.
562. Id.
563. Id.
564. Id.
565. See Minnesota Legislators Past and Present, MINN. LEGIS. REFERENCE LIBR.,
http://www.leg.state.mn.us/legdb/search.aspx?search=sessionsearch (last visited Dec. 1, 2012)
(select "15th, 1873"; select "Senate") (listing the forty-one senators: H.H. Atherton, merchant;
George Washington Batchelder, merchant; Luther Loren Baxter, lawyer; Samuel S. Beman, attorney;
Henry C. Burbank, merchant; Levi Butler, lumberman; Reuben J. Chewning, farmer; Amos
Coggswell, lawyer; Charles E. Cutts, farmer; Thomas H. Everts, physician; Charles Hinman Graves,
merchant; John 0. Haven, farmer; J.S.G. Honer, farmer; Lucius Frederick Hubbard, grain dealer;
Edward Harrison Hutchins, tinsmith; T.G. Johnsrud, private banker; Robert Bruce Langdon, builder;
Jonas Lindall, merchant; John Louis MacDonald, lawyer; John F. Meagher, merchant; William
Meighen, farmer; John G. Nelson, farmer; John Nicols, iron trade; N.K. Nobel, grocery; John W.
Peterson, farmer; John Sargent Pillsbury, hardware merchant; Henry Poehler, mercantile business;
O.S. Porter, hotel keeper; Andrew Railson, farmer; Edmund Rice, lawyer; William D. Rice, farmer;
G.A. Ruckoldt, farmer; Dwight May Sabin, lumberman; William H. Stevens, manufacturer; Marshall
B. Stone, farmer; Freeman Talbot, farmer; Edward Thompson, lumberman; William G. Ward, civil
engineer; John P. Waste, physician; Milo White, merchant; James G. Whittemore, physician).
566. Id.
567. Id.
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SECURED TRANSACTIONS HISTORY
415
ascendance.5 6 8 Once the ascendancy took hold, dissidents constantly
challenged the Republican Party establishment and sometimes would win
if they allied with the remnants of the Democratic Party.5 6 9 In 1868, a
Republican Congressman allied himself with the Republican Radicals to
challenge the state Republican Party establishment, though a split vote
In 1869, a
permitted the election of a democrat congressman. 5 7 0
Temperance Party arose and ran a close second for governor due to
Thus, when the
ignorance of the issues by the Republican Party.5 7
farmers organized granges in 1869 to oppose high, discriminatory railroad
rates and fraudulent grain weighing and grading by grain elevators, the
Republican Party gave the farmers serious attention.5 72 The result was a
granger law in 1871 that created a railroad commissioner and set railroad
rates.5 7' In this political atmosphere, a challenge to farm lending for both
livestock and machinery from the New York good faith purchaser rule,
evidenced by Wait, would lead to the fourth conditional sales act.
E.
Wisconsin
Wisconsin and Minnesota were in similar economic situations, but
Wisconsin was more developed. "The northern two-thirds of" the state
possessed pine forests that attracted the New England lumbermen, while
the southern one-third had prairie grass that attracted northern farmers;
there were also lead mines in the southwest that attracted Missouri
miners.s" The lumbermen had earned fortunes floating pine logs down
the Chippewa River to the Mississippi sawmills and down the Fox River to
the Great Lakes sawmills.5 7 s Due to the farming start-up costs, farmers
went commercial with spring wheat as soon as possible. They produced
568. See DANIELJUDAH ELAZAR, VIRGINIA GRAY & WYMAN SPANO, MINNESOTA POLITICS
& GOVERNMENT 21 (1999) (describing the "Republican ascendancy").
569. See id. at 21-22 (exploring how "Populist-Progressive parties won elections").
570. See THEODORE C. BLEGEN, MINNESOTA: A HISTORY OF THE STATE 290 (2d ed. 1975)
("Andrews and Donnelly split the Republican vote, with the result that a Democrat ... [triumph],
though he polled 8000 fewer votes than his Republican opponents combined.").
571. Id. at 291 (describing the Temperance Party formation).
572. See WILLIAM E. LASS, MINNESOTA: A BICENTENNIAL HISTORY 165 (1977); THEODORE
C. BLEGEN, MINNESOTA: A HISTORY OF THE STATE 292 (2d ed. 1975) ("The Grangers worked for
reasonable railroad rates, opposed discriminations, and favored railroad regulation through state
laws.").
573. See THEODORE C. BLEGEN, MINNESOTA: A HISTORY OF THE STATE 292 (2d ed. 1975)
("By state law maximum fares and rates were prescribed, and the office of railroad commissioner was
established.").
574. See RICHARD NELSON CURRENT, WISCONSIN: A BICENTENNIAL HISTORY 9, 14, 110
(1977) (detailing the state's landscape).
575. See id at 109 ("Circumstances favored Wisconsin as a lumbering state.").
416
ST. MARY's LwJouRNAL
[Vol. 44:317
larger crop harvests by buying or renting horse-drawn mechanical
McCormick reapers that were manufactured in Chicago, Illinois. They also
used horse-powered Case threshing machines manufactured locally in
Racine, Wisconsin, thereby spawning a small scale milling industry and
grain-exporting business throughout the Great Lakes.5 7 ' However, by the
1870s, legislators became concerned about the serious depletion of the
forests. Around this time, farmers began experimenting with alternative
crops, primarily hops and wool, but later dairy products, to replace the
wheat crops that exhausted the soil of its nitrogen.5 7 7
Politically, Wisconsin differed from the other states participating in the
first wave of conditional sales acts. Wisconsin had a significant immigrant
population that, with their American-born children, equaled the Yankee
element in numbers.5 7 '
Due to the influx of German and Irish
immigrants in the 1870s, one-quarter of the population was Catholic.5 7 9
Their culture clashed with the Puritanical sabbatarian and temperance
movements favored by the Yankee dominance in the Republican Party, so
the Catholic elements sided with the Democrat Party.58s Nevertheless,
the Republican Party could dominate if they appealed to the German
Lutherans' hostility towards Catholicism and "avoided nativistic and
moralistic platforms.""
The Republican Party's departure from this
procedure by the legislature that passed the conditional sales act in 1873,
resulted in the only one-year break in their thirty-five year dominance in
Wisconsin.5 8 2
The 1873 Wisconsin legislative manual lists the thirty-three members of
the Wisconsin Senate and the ninety-nine members of the Wisconsin
576. See id. at 68, 70 (describing the transition into the wheat industry and its prosperity in
Wisconsin).
577. See id. at 22-23, 71 ("Wheat growing exhausted the soil of its nitrogen [so s]ome farmers
did experiment[s] with new products.").
578. See id. at 36 (describing the significant immigrant population of Wisconsin).
579. See id. at 40 ("[In] 1870 the Catholics, with almost a fourth of all the church members,
could claim to be the largest of the state's religious groups.").
580. See id. at 48 (describing the political affiliations of the Catholics in Wisconsin).
581. See id. at 50 (stating the Republican party "could hold on to its immigrant Lutheran
following-and thereby hold on to its control of the state--only so long as it avoided nativistic and
moralistic platforms").
582. See id. at 51 (noting the passage of the temperance law); see also A.J. TURNER, THE
LEGISLATIVE MANUAL FOR THE STATE OF WISCONSIN 1874 at 472-73, 474-76 (1874), availableat
http://www.hathitrust.org (stating the senate was composed of seventeen Republicans, thirteen
Democrats, two Liberal Republicans, and one Reformed, and the house was composed of forty-two
Democrats, forty-one Republicans, ten Liberal Republicans, two Reformed, two Independents, and
one Free Thinker).
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SECURED TRANSACTIONs HISTORY
417
House, along with their occupations, birthplaces, and party affiliation.5 8 3
583. See A.J. TURNER, THE LEGISLATIVE MANUAL FOR THE STATE OF WISCONSIN 1873, at
457, 459-61 (Atwood & Culver 1874), available at http://www.hathitrust.org (describing the
composition of the Wisconsin legislature). The senate was composed of Orrin Bacon, miller and
woolen manufacturer, Mass., Rep.; Robert H. Baker, manufacturer, Wis., Rep.; William Blair,
machinist, Scot., Rep.; Orlando Brown, farmer, N.Y., Lib.; Samuel D. Burchard, manufacturer, N.Y.,
Dem.; Francis Campbell, farmer, Ir., Rep.; Frederick W. Cotzhausen, lawyer, Ger., Dem.; Horatio N.
Davis, banker, N.Y., Rep.; Romanzo E. Davis, farmer, N.Y., Lib.; Henry L. Eaton, farmer, N.Y.,
Rep.; Walter S. Greene, miller and lumberman, N.Y., Dem.; William H. Hiner, iron manufacturer,
Pa., Rep.; Gideon C. Hixon, lumberman, Vt., Rep.; John C. Holloway, banker, N.Y., Rep.; Joseph E.
Irish, clergyman, N.Y., Rep.; John A. Johnson, merchant, Nor., Rep.; Evan 0. Jones, agricultural
implements, Wales, Rep.; George Kreis, manufacturer, Fr., Dem.; Myron P. Lindsley, lawyer, N.Y.,
Rep.; Francis Little, farmer, Ir., Rep.; Myron H. McCord, lumberman, Pa., Rep.; Robert McCurdy,
lumberman, N.B., Rep.; John L. Mitchell, farmer, Wis., Dem.; William Nelson, editor, Scot., Rep.;
Patrick H. O'Rourk, lawyer, Wis., Dem.; Robert L.D. Potter, lawyer, N.Y., Rep.; Samuel Pratt,
farmer, Mass., Rep.; John B. Quimby, lawyer, Ir., Dem.; Adam Schantz, farmer and merchant, Ger.,
Dem.; Carl H. Schmidt, editor, Get., Dem.; Thomas B. Scott, lumberman, Scot., Rep.; Joseph G.
Thorp, merchant and lumberman, N.Y., Rep; and Joseph Wagner, farmer, Ger., Dem.. The house
had James H. Allen, prop. of Sparta Mineral Well, N.Y., Rep.; William H. Armstrong, lawyer and
farmer, Ill., Rep.; Sherman Bardwell, merchant, N.Y., Rep.; Henry D. Barron, lawyer, N.Y., Rep.;
William P. Bartlett, lawyer, Me., Rep.; William H. Bartran, physician, N.Y., Rep.; John A. Becher, real
estate dealer and money broker, Get., Rep.; Mortiz N. Becker, produce dealer, Ger., Dem; Adelbert
E. Bleekman, lawyer, N.Y., Rep.; Julius Bodenstab, farmer, Ger., Lib.; Henry C. Brace, farmer, Mass.,
Rep.; Samuel S. Brannan, editor, N.Y., Rep.; Seth W. Button, lawyer, Mich., Rep.; Charles A. Cady,
farmer, N.Y., Rep.; Columbus Caldwell, farmer, N.Y., Rep.; Charles E. Chamberlin, dentist, N.Y.,
Dem.; Dustin G. Cheever, farmer, Vt., Rep.; Satterlee Clark, lawyer, Wash. D.C., Dem.; David R.
Clements, lumberman, N.Y., Rep.; William H. Clise, farmer, Va., Rep.; Hiram H. Cornwell, farmer
and teacher, N.Y., Rep.; Joseph S. Curtis, lawyer, Ohio, Rep.; Peter Daane, Jr., merchant, Holl., Rep.;
John W. Davis, banker, Wales, Dem.; Orsamus S. Davis, wagon maker and farmer, Vt., Rep.; Patrick
Devy, cooper and farmer, Ir., Dem.; Denis Dewane, farmer, Ir., Dem.; Carlos L. Douglass, farmer
and manufacturer, N.Y., Rep.; Peter Doyle, book-keeper, Ir. Dem.; John Elkins, watchmaker, N.H.,
Rep.; John M. Evans, physician, Vt., Rep.; Asahel Farr, surgeon, Vt., Rep.; Truman M. Fay, farmer,
N.Y., Dem.; Eugene K. Felt, farmer, N.Y., Rep.; Appollos D. Foote, merchant and farmer, N.Y.,
Rep.; Carleton Foster, manufactures lumber, N.Y., Rep.; Wilfred C. Fuller, farmer, N.Y., Dem.;
David C. Fulton, real estate dealer and speculator, N.Y, Lib.; Charles R. Gibbs, farmer, N.Y., Rep.;
Ferdinand Gnewuch, farmer, Ger., Dem.; Horace E. Houghton, lawyer, N.Y., Rep.; Richard W.
Hubbell, lawyer, N.Y., Rep.; Christopher Hutchinson, lead ore smelter and farmer, Eng., Rep.;
Norman L. James, merchant, N.H., Rep.; Peter Jerman, farmer, Nor., Rep.; Jonathan Kellogg,
merchant, N.Y., Rep.; Charles S. Kelsey, mechanic, N.Y., Rep.; Otto Kerl, farmer, Ger., Dem.;
Robert Lees, farmer, Scot., Dem.; Frank Leland, editor, N.Y., Rep.; Rensselaer M. Lewis, commission
grain merchant, N.Y., Lib.; Alonzo A. Loper, farmer, N.Y., Rep.; Jonathan Luchsinger, farmer,
Switz., Rep.; Thomas Lynch, grain merchant, Wis., Dem.; Thomas McConnell, editor, Ind., Rep.;
James McGrath, contractor, Ir., Dem.; Alex McMillan, lumberman, Can., Rep.; Edward E. Merritt,
editor, Vt., Rep.; Jonathan Monteith, farmer, Scot., Rep.; Henry F.C. Nichols, lumberman, N.H.,
Rep.; James W. Ostrander, furniture manufacturer, N.Y., Rep.; Henry L. Palmer, lawyer, Pa., Dem.;
Francis G. Parks, real estate and insurance agent, Vt., Rep.; Henry A. Patterson, lawyer, N.Y., Rep.;
James H. Persons, farmer, N.Y., Rep.; Daniel L. Plumer, banker and real estate dealer, N.H., Lib.;
Jonathan L. Porter, farmer, N.Y., Rep.; Albert E. Pound, lumberman, Pa., Rep.; Otto Puhiman,
miller, Ger., Dem.; George W. Putnam, farmer and nurseryman, Vt., Rep.; Joseph Rankin, general
business, N.J., Dem.; David Rhoda, farmer, N.Y., Rep.; Corydon L. Rich, farmer, N.Y., Dem.;
418
ST. MARY'S LA WJOURNAL
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The Wisconsin legislature reflected the ethnic background of the state.
Membership in the house was 33% foreign-born, with fifteen German
members and six Irish members.51 4 The senate had fourteen (42%)
foreign-born members, with four German members and three Irish
members.s"
Nevertheless, the Republican Party held overwhelming
majorities in both the senate with 60% and the house with 67%.s8
The Wisconsin bill arose in the house, where farmers had thirty-three of
the ninety-nine members (33%), while the retail townspeople had twenty-
two (22%) members, fourteen of which were lawyers and eight were
merchants, the non-retail townspeople numbered seventeen (17%) with
four editors, three physicians and accountants each, and two insurance
agents.s8 The commercial merchants numbered fourteen (14%) with six
lumbermen, two bankers, and two grain merchants, while the
manufacturers numbered thirteen (13%) with four millers.5 8 8 In the
Wisconsin Senate, the commercial merchants with six lumbermen and two
bankers and farmers both numbered eight (24%), while the retail
townspeople with five lawyers and two merchants and the manufacturers
both numbered seven (21%).'
The non-retail townspeople numbered
three (10%).s"o Again, those lending to farmers, merchants, bankers, and
lawyers, allied with sufficient numbers of farmers, could pass a conditional
sales bill when challenged by the good faith purchaser threat from New
York.
Richard Richards, farmer and stock grower, Wales, Rep.; William Robinson, farmer, Eng., Rep.;
Jonathan A. Roemer, merchant, Ger., Dem.; William E. Rowe, farmer and miller, Eng., Lib.;
Jonathan Runkel, merchant, Ger., Dem.; Jacob Sander, cattle dealer, Ger., Lb.; Casper M. Sanger,
tanner, Ger., Lib.; Hiram W. Sawyer, lawyer, N.H., Dem.; David F. Sayre, farmer, N.J., Rep.; Galen
B. Seaman, lawyer, N.Y., Rep.; Dennis Short, farmer, Ir., Dem.; De Wayne Stebbins, book-keeper,
N.Y., Rep.; Casper H. Steinfort, farmer, Ger., Lb.; Jonathan B. Stemper, insurance agent, Ger.,
Dem.; Thomas G. Stephens, smelting, Eng., Lib.; J. Henry Tate, merchant, Vt., Rep.; Oliver W.
Thornton, farmer, N.Y., Rep.; Thomas Tobin, farmer, Ir., Dem.; Isaac W. Van Schaick, miller, N.Y.,
Rep.; Levi B. Vilas, retired lawyer, Vt., Dem.; Thomas Wall, lumberman, N.Y., Dem.; Baruch S. Weil,
farmer, Fr., Dem.; Gotdob E. Weiss, accountant, Ger., Dem.; Alson Wood, miller, Vt., Rep.; John
Young, farmer, Ohio, Rep.; Adolph Zimmermann, brewer, Ger., Dem.; and Charles R. Zorn, farmer,
Ger., Dem.
584. Id. at 459-61.
585. Id. at 457.
586. Id. at 457, 459-61.
587. Id. at 459-61.
588. Id.
589. Id. at 457.
590. Id.
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SECURED TRANSACTIONS HISTORY
419
Farmers and their lenders-who were predominantly non-retail
townspeople and commercial merchants-held the political power in the
first wave of states to pass conditional sales acts. These groups could have
their lending, secured by Holmes' notes, destroyed by the New York good
faith purchaser rule typified by Wait. The conditional sales acts protected
that lending by ensuring there would be no good faith purchasers of the
item sold on credit underlying the Holmes' note. That political power
resulted in the passage of the first five conditional sales acts.
VII.
CONCLUSION
The conditional sales transaction arose in the early nineteenth century as
a device to purchase farm goods, primarily horses. The transactions
before the appellate courts rarely involved Gilmorian locomotives and
pianos. Parties preformed these latter sales through a form of the
bailment lease, the equipment trust, or hire purchase, not the conditional
sale. Half of the appellate opinions concerning the conditional sale before
1880 dealt with the conditional sale of farm goods, and 42% involved
horses with or without wagons, which was the mode of transportation in
the nineteenth century. 5 9 ' The reason is obvious. It provides a method
of allowing a credit purchase for a relatively inexpensive item, but one
beyond the immediate cash capabilities of the vendee. Most were shortterm obligations. The item sold provided the security of repayment in the
event the vendee was unable to complete payment in a timely manner.
Not only did the conditional sales transaction involve short-term credit,
Vendors used the
but it encompassed relatively small amounts.s9 2
an amount that
$200,
less
than
transaction to sell items that frequently cost
a vendee could pay relatively quickly. Promissory notes, oral agreements,
and sometimes short, one-paragraph written contracts, documented the
transactions, as they appeared in the appellate opinions.5 9 3
Those legal actions that attempted to recover the item sold, or its value,
from a good faith purchaser or a judgment lien appear in an overwhelming
number of the appellate opinions (87%), and are approximately equally
split between the two types of interlopers to the conditional sales
591. See supra notes 177-78 and accompanying text (noting there were forty-five cases involving
horses plus sixty-one involving other farm goods out of 210 opinions).
592. See supra notes 184-89 and accompanying text (pointing out the relatively small amounts
in question in conditional sales transaction cases).
593. See supra notes 190-95 and accompanying text (citing cases based on promissory notes,
oral agreements, and short written contracts).
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ST. AIARY'S LA WJOURNAL
[Vol. 44:317
transaction.5 9 4 Almost all of these opinions upheld the common law
priority rule, which Gilmore refused to accord the label common law.
That rule followed the common law principle in favor of the first in time
transaction, and for the conditional sale, the transaction of the vendor.
Wait served as the lone exception, where New York courts in 1867 tried to
change the rule to favor a good faith purchaser.
Of those legal actions involving upstream purchasers, those whose title
derived from the vendor's title (42%), which was a significant portion,
involved assignments of the promissory note."' Obviously, the vendor,
to meet its own needs for cash, sold the note representing the conditional
sale at a discount to a local moneylender, the unincorporated private
banker. The litigation with the vendee's subsequent interlopers would
increase the cost of these discounts, requiring the private bankers to
include the possible cost of litigation in the discount. The possibility of
the good faith purchaser winning the litigation under a state's adoption of
the New York rule of Wait would raise the discount even further to
account for the possibility of a total loss of the collateral.
Only a handful of the litigation between vendor and vendee approached
the evils propounded by Gilmore.s"' Barely 4% of the cases involved the
action for the price, rued by Gilmore when the value of the item fell below
the amount owed, or reclaiming the item, vilified by Gilmore for refusing a
refund of any amount paid. The opinions made no references to these
two Gilmorian evils. None of the opinions involved the other Gilmorian
evils of avoiding the equity of redemption or usury that would have arisen
with the use of a chattel mortgage.
These private bankers, town merchants, and their allies had, before the
passage of their state's respective conditional sales act, flexed their
legislative power and obtained statutory assistance to enhance the value of
the conditional sale's promissory note. Vermont had an 1854 statute
requiring the good faith purchasers to pay the amount owed to the vendor
In 1869, Maine
before the vendee could keep the item purchased.s9
required the conditional sale note to be in writing, thereby facilitating its
594. See supra notes 196-221 and accompanying text (referencing sixty-nine cases involving the
good faith purchaser, fifty-eight cases involving the judgment lien, plus fifty-six cases involving
upstream and downstream persons out of 210 opinions).
595. See supra notes 210-15 and accompanying text (citing cases involving upstream purchasers
and promissory notes).
596. See supra notes 222-27 and accompanying text (referring to vendor actions for replevin
and trover).
597. See supra note 260 and accompanying text (citing the Vermont statute).
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SECURED TRANSACTIONS HISTORY
421
assignment.5 9 Iowa and Nebraska rejected a bill to codify the Wait rule
in favor of the good faith purchasers.5 9 9 Most notably, during the same
term as the passage of their conditional sales acts, Nebraska and Missouri
passed a statute criminalizing the vendee who directly or indirectly (by
sale), without consent, and with the intent to deprive the vendor of its lien,
removed the vendor's personalty from the county.6 0 0
Beginning in 1870, the farm states, not the Gilmorian industrial states,
which were controlled overwhelmingly by Republicans desirous of
fostering commerce, passed their conditional sales acts to eliminate the
threat to farm financing posed by a retail state's good faith purchaser
rule. 6 0 Revealing a concern for the financing of farmers, the Maine act
only applied to promissory notes, the Holmes' note used in Oxford
County, Maine, since the 1830s for livestock sales, while the Minnesota act
mentioned the same promissory note. With respect to oral deals, the
Vermont act applied to reserved liens and required the vendor to file a
memorandum of the deal; the Minnesota act also allowed a memorandum
filing for oral deals; and Wisconsin required conditional sales to be in
Only Iowa mentioned the lease, applicable to Gilmore's
writing.
locomotive equipment trusts and consumer hire-purchase contracts.
Lawyers and private bankers sponsored the first wave of bills that
became the respective conditional sales acts. Not a single Gilmorian
railroad locomotive or consumer goods manufacturer were among the lot.
The private banker was Minnesota's Senator Simeon Potter Child. The
lawyers were Maine Senator Thomas Bracket Reed, later Speaker of the
United States House; Vermont Senator William Morrill Pingry; Iowa
Senator James S. Hurley; and Iowa Representative Washburn A. Stow, the
lone Democrat. Each of these lawyers all had clients dealing with creditors
before their respective state supreme courts. Reed and Stow had clients
dealing with promissory notes.
Pingry's clients engaged in note
assignments while Hurley's clients confronted secret liens. Only the Iowa
lawyers represented good faith purchasers at the appellate level, yet they
replaced a bill to codify the Wait rule with a bill to enact Iowa's conditional
sales act. The Gilmorian good faith purchasers and sheriffs levying
598. See supra note 255 and accompanying text (noting that Maine law required the conditional
sale note to be in writing).
599. See supra notes 332-37, 384-88 and accompanying text (citing legislative documents
detailing the motivation behind Nebraska and Iowa's rejection of a bill to codify the Wait rule).
600. See supra notes 403-13 and accompanying text (detailing the history and context of the
statutes that criminalized vendees who removed the vendor's personalty out of the county).
601. See supra notes 244-48, 499-502 and accompanying text (referencing the farm states'
conditional sales acts and other explanatory material).
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ST. MARY's L- wJouRNAL
[Vol. 44:317
judgments lacked power in the legislative halls. However, those lending to
farmers possessed sufficient legislative power to preserve their priority rule
against the Wait attack.
Minnesota's legislative journals provided the names of those voting in
favor and against state bills, and census records provided their
occupations. 6 02 For the state's passage rate of 71%, 100% of the bankers,
89% of the lawyers, 87% of the merchants, and 8 6 % of the commercial
merchants voted in favor of the bill, while only 63% of the protected
farmer-vendors did. Obviously, those purchasing the conditional sale
notes from the farmers eagerly eliminated the possibility of becoming a
good faith purchaser by providing notice, thereby avoiding the status as a
good faith purchaser.
Appellate opinions subsequent to the conditional sales acts' passage
confirm the program to destroy good faith purchaser status.6 0 3 Vermont,
Minnesota, and Missouri judges concluded that the evil their respective
legislature intended to stop was the fraud committed by dishonest vendees
to the detriment of both vendors and the good faith purchasers. Gilmore
saw the problem as one with two innocents, the vendor, and the good
faith purchaser. Rather than follow the common law rule or the
commercial paper rule to select which of the two innocents bears the loss,
Gilmore preferred to protect the good faith purchaser. The legislators,
however, saw the problem as one of interference of the enjoyment of a
property right in the vendor by the interloper good faith purchaser and
judgment lien. Notice is all that is required to protect the vendor.
Therefore, the respective legislatures intended to prevent secret liens and
end wasteful litigation to recover personalty by providing an avenue for
that notice. The good faith purchaser and judgment lien, to the extent
they are observant, can protect themselves by observing that notice.
In contrast, Gilmore regarded the non-possessory secured transaction as
some sort of evil. According to Gilmore, legislatures, for an unknown
reason, legitimated previously illegal chattel mortgages with passage of the
chattel mortgage acts. When lenders evaded Gilmore's perceived ill effects
of the chattel mortgage acts through the conditional sale, legislators
punished the lenders with a conditional sales filing. That cannot be the
true story.
The people with political clout are unlikely to be Gilmore's general
602. See supra notes 373-76 and accompanying text (citing the source of information for voter
records and occupations).
603. See supra notes 490-507 and accompanying text (revealing cases and legislation that sought
to destroy the good faith purchaser status).
2013]
SECURED TRANSACIONS HISTORY
423
creditors, who are too lazy to get a security interest, or good faith
purchasers of second hand goods, who are too lazy to look into origins.
Legislatures passed the conditional sales acts for the same reason they
passed the chattel mortgage acts. Legislators passed the chattel mortgage
acts in New England in the 1830s because the old common law rule, the
rebuttable rule, could not forestall interference by judgment liens with the
legitimate business transaction of lending, and realty recording failed to
provide the desired notice."o4 Similarly, for the conditional sale, the
common law vendor priority rule could not forestall interference with the
legitimate business transaction of selling on credit, and recording under the
chattel mortgage acts failed to provide the desired notice.
Thus,
legislatures required filing of conditional sales in order to protect the
transaction from interference by good faith purchasers and judgment Liens,
but not under the chattel mortgage acts. Legislatures passed conditional
sales acts recognizing and preserving the transaction's unique features.
Not until the modern code, adopted after Gilmore taught that these
transactions are evil, do we get the Gilmorian features of treating
conditional sales the same as chattel mortgages with foreclosure
procedures and accounting of excesses. 6 05 The modern code also requires
filing for consignments, leaving only leases of goods without an avenue for
recording.6 0 6
604. See George Lee Flint, Jr., Secured Transactions History: The Impact of Textile Machiney on the
Chattel Morgage Acts of the Northeast, 52 OKLA. L. REv. 303, 341-47 (1999) (discussing how "[t]he
chattel mortgage acts would remove [the] threat" of previous legislation).
605. See U.C.C. § 1-201 (b)(35) (2011) (defining security interests as including conditional sales
and consignments).
606. See id. § 2A-101 cmt. (explaining the requirements for filing consignments).
424
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