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Secured Transactions History: The Impact Of Textile Machinery On The Chattel Mortgage Acts Of The Northeast, George Lee Flint Jr

Faculty Articles

The northeastern states passed chattel mortgage statues in the 1830s to replace the rebuttable rule acknowledging third party rights to the collateral, which created litigation to enforce a nonpossessory secured transaction. The rebuttable rule presumed that debtor possession of the collateral was fraud, but also allowed the secured party to present rebuttal evidence of his good faith in the transaction. The rebuttable rule negatively affected the textile machinery industry, allowing third parties to collect over the original creditor. In an effort to maneuver around the rebuttable rule, machinery manufacturers turned to a host of legal remedies, but eventually decided on …