Illinois by leaving conditional sale contracts still invalid and spreading on the statute books of those states a lengthy act which had no application to them.

The last sentence of the section may, at first sight, seem open to objection on the ground that it is negative in that it states that no acknowledgment or attestation is necessary. This clause undoubtedly violates one principle of statute making, but it is considered desirable on account of the peculiar provisions in some states requiring attestation or acknowledgment of conditional sale contracts. There can be little doubt that, if this last sentence is omitted and the Uniform Conditional Sales Act is adopted in these few states, the courts of these states will still require attestation or acknowledgment. This will result in lack of uniformity. It is highly desirable for conditional sellers doing interstate business to know either that all contracts must be acknowledged or attested, or that everywhere acknowledgment or attestation is superfluous.

SECTION 3. (Place of Filing.) The conditional sale contract or copy shall be filed in the office where deeds of real property are recorded in the (city,) county, (or registration district) in which the goods are delivered for use. This section shall not apply to the contracts described in Section 5.

Considerable discussion arose in the conference as to whether the place of filing should be the office where real property instruments are recorded, or the chattel mortgage filing office. A number of commissioners were of the opinion that, since chattel mortgages and conditional sale contracts have the same practical effect and are used to accomplish the same purpose, they should both be found in the same office. The Committee on Commercial Law and the draftsman feel very strongly that it is desirable to retain as the filing office the real property office. This office is in practically all cases a county office. In the few instances where it is not a county office in name it is practically so. These instances occur where a filing district for real property instruments is half of a county, as in some cases in Massachusetts, or is a city as in New York, Baltimore and St. Louis, or is a district equivalent to a county as in the case of the parishes in Louisiana. These county offices will be well kept, orderly offices, where documents will be properly filed and indexed, and where the danger of loss or destruction is slight.

If the section were made to read that a conditional sale contract should be filed in the office where chattel mortgages are now required to be filed, a great lack of uniformity would result. In many states

chattel mortgages are filed in a county office and in many other states they are filed in a town office. In some states the filing district is determined by the residence of the chattel mortagee; in other states by the location of the goods. If the chattel mortgage office is selected as the office for filing conditional sale contracts, it will be necessary for every seller desiring to file such a contract to examine the laws of the state concerned to see what the provisions regarding the filing of chattel mortgages are. There will be no uniformity as to the place of filing. On the other hand, if the county office is selected a great deal of trouble will be obviated.

The words "city" and "registration district" are inserted in parentheses in this section because of peculiar local conditions in three or four states. In a great majority of states these words can be omitted in the adoption of the statute. The cities of Baltimore and St. Louis are not in any counties but constitute counties of themselves, and therefore, in the states of Maryland and Missouri, the insertion of the word "city" would be necessary. In Massachusetts there are certain registration districts for deeds which are smaller in size than counties and the words "registration district" would need to be inserted in that state. In Louisiana the existence of the sub-division known as a "parish" would render the same insertion necessary.

The committee and the conference found difficulty in determining how the filing district should be chosen. It might be either the filing district where the buyer lived at the time of the sale or it might be the filing district where the goods were delivered. After some debate the committee recommended that the filing district "in which the goods are delivered for use" should be the one in which filing is to be required. The reason for this was that transactions with respect to the goods between the buyer and innocent purchasers or creditors are more apt to occur in the filing district in which the goods are delivered for use then in the filing district of the buyer's residence, where the two are different. The object of this portion of the statute is to protect innocent purchasers, mortgagees and creditors, who rely on the appearance of ownership which the conditional sale gives the buyer. If the buyer resides in Albany and the goods are delivered for use in Buffalo, it is the business men of the City of Buffalo who will be deceived by the apparent ownership of the conditional buyer. For this reason it is believed that the most desirable provision is the one set forth in the section quoted above. If any difference exists between the residence of the buyer and the place of delivery for use, the latter district should control.

The use of the words "for use" is not entirely satisfactory, but some such words are necessary. It would not do to require filing simply

where the goods were delivered. If the goods are shipped by common carrier from the seller to the buyer and the buyer pays the freight, the goods are delivered to the buyer when they are placed in the hands of the common carrier, but filing at that place would obviously be absurd. The district where filing should occur is the district where the buyer receives possession of the goods for use and where they are to be kept with some degree of permanence. The committee will consider at its next meeting whether a more desirable phrasing of this sentence can be found.

SECTION 4. (Fixtures.) If the goods are so affixed to realty at the time of a conditional sale or thereafter as to become part thereof, the reservation of property shall be void after the goods are so affixed, against owners and against subsequent purchasers or mortgagees of the realty for value and without notice of the conditional seller's title, unless the conditional sale contract or a copy thereof, together with a statement signed by the seller briefly describing the realty and stating that the goods are or are to be affixed thereto, shall be filed in the office where a deed of the realty would be recorded.

This section is inserted in the act to make special provision for cases where articles to be affixed to real property are sold under a conditional sale contract. Frequently heating apparatus, machinery, electric equipment and similar articles are sold on the conditional sale plan and subsequently the rights of persons having interests in the real property conflict with the claims of the conditional seller of the chattel. The general American rule is that a conditional seller who has reserved the property in a chattel which is affixed by the buyer to the buyer's real property, has no rights against a subsequent purchaser or mortgagee of the real property, if the latter has no notice of the conditional sale of the chattel. It seems desirable to perpetuate this rule, but also to enable the conditional seller of the fixture to give constructive notice of the conditional sale so that he may have an opportunity of protecting himself. Such a provision has been made in recently adopted statutes of Massachusetts, New York, Oregon and Pennsylvania. Under these statutes a conditional seller who sells an article which is to be attached to real property must, in order to protect himself, file with the conditional sale contract a statement which will warn dealers with the real property involved. This will require searchers of real property titles to examine an additional book, but that book will be located in the office where the real property records are found and no great added burden on title searchers will ensue. The justice of allowing the conditional seller of the

fixture to reserve title in himself, if he gives a notice to the world of such reservation, is apparent.

At the conference at Saratoga criticism of this section was made on the ground that the words "as to become part thereof" in the second line were too broad. It was urged that these words would authorize the conditional sale of the boards or nails to form a part of a house. It is the opinion of the draftsman that this criticism is not just. The section must, of course, be read in the light of the existing law of real property. That law declares that articles of personal property which are so affixed to real property as to lose their identity become irrevocably real property. By such rule of the law of real property it is impossible to have a conditional sale of an article which loses its identity by annexation. This section can obviously only apply to goods which are affixed to real property but do not lose their identity. However, some changing of the phraseology so as to convey this idea with absolute clarity seems necessary, and will probably be made by the committee at its next meeting.

SECTION 5. (Railroad Equipment or Rolling Stock.) No conditional sale of railroad, street or interurban railway equipment or rolling stock shall be valid as against the purchasers, mortgagees, pledgees and creditors described in Section 2, unless the contract shall be acknowledged by the buyer or attested in like manner as a deed of real property, and the contract, or a copy thereof, shall be filed in the office of the Secretary of State; and unless there shall be plainly and conspicuously marked upon each side of any engine or car so sold the name of the seller, followed by the word "owner".

This section follows very closely statutes now in force in forty-six states. 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". It has seemed desirable to the committee and the draftsman to make complete this statute concerning conditional sales by inserting a special section here with reference to this peculiar class of goods. It is desirable that the act cover conditional sales of all kinds of personal property. If peculiar classes of goods such as fixtures or railway equipment require peculiar filing provisions, sections covering such matters should be inserted in the act. This is preferable to excluding fixtures and railway equipment from the operation of the act and allowing the common law or previously existing statutes to control such property.

The large amount of money involved in these car trust contracts seems to justify the added formality of acknowledgment or attestation and also to warrant the requirement of filing in a state office. The section as presented above and as tentatively approved by the conference, is a condensation of the existing 46 statutes and will work but slight change in the law of any state if adopted.

SECTION 6.

(Conditional Sale of Goods for Resale.) When goods are sold under a conditional sale contract, and the seller expressly or impliedly consents that the buyer may resell them prior to performance of the condition, the condition shall be void against purchasers from the buyer for value in the ordinary course of business, and as to them the buyer shall be deemed the owner of the goods, even though the contract, or a copy thereof, shall be filed according to the provisions of this act; but, if filed as herein required, the condition shall be valid as against all other purchasers, mortgagees, pledgees or creditors, described in Section 2.

In certain instances goods have been sold under conditional sale contracts with the object of resale, and the seller has expressly or impliedly consented that the buyer might resell the goods before the performance of the condition. Such a conditional sale is obviously an act consisting of two inconsistent parts. In one breath the conditional seller states that he reserves the property until the conditional buyer has paid the price, and in the next breath he states that he consents that the buyer may make some one else the owner of these goods before the condition is performed. Such a transaction is obviously a fraud on members of the public who may act upon the appearance of ownership and the right to resell. Filing should not in such a case as this be effective to reserve the property in the buyer. For example, a number of horses are sold to a retail dealer in horses under a conditional sale contract, but the buyer is given the right to resell the horses. X visits the retail dealer's stables and purchases one of the horses previously sold under the conditional sale contract. It would be unreasonable to expect X to examine records in the county clerk's office to ascertain whether these horses were the property of the retail dealer. The conduct of the conditional seller ought to estop him to assert his ownership as against such a subpurchaser.

This section states the generally prevailing rule as it has been fixed in a large number of decisions. It should be noted that according to the last clause of this section, which was inserted at the conference at Saratoga Springs, the filing of the conditional sale contracts,