Secured Transactions History: The Northern Struggle to Defeat the Judgment Lien in the Pre-Chattel Mortgage Act Era
Flint, George Lee, Jr.
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Reformers recently have attacked the priority accorded the Anglo-American nonpossessory secured transaction both under bankruptcy and non-bankruptcy law. These reformers believe that the law should reserve some of the debtors’ assets for general creditors, most notably tort claimants with judgment liens. The priority rule like many legal rules was adopted to solve some problem. The problem has disappeared, yet the rule remains. Thus, lawmakers must determine if some new rationale justifies the rule and, if so, the rule takes on a new life. If not, then lawmakers should change rules to accommodate the new conditions. This article aims to provide an understanding of the original reason for the rule granting a nonpossessory secured transaction priority. Further, this article endeavors to examine the historical record to determine in what situations the parties used the early nonpossessory secured transaction; what rules the courts developed to handle the transaction; and which parties benefitted from the old rules, which parties desired to ban the transaction, and which parties sought the reform of recording through the chattel mortgage acts. To accomplish this, this article examines the readily findable pre-chattel mortgage act appellate opinions for factual data bearing on the early use of the nonpossessory secured transaction.