Security-Chattel Mortgages-Mortgage Recorded Under Federal Aviation Act of 1958S as Affected by State Laws

Defendant, a Michigan corporation, ordered a new airplane from Air-O-Fleet, a retailer. Air-O-Fleet financed its purchase from the manufacturer through a loan from plaintiff, a Texas corporation, who took a chattel mortgage on the airplane. One day after Air-O-Fleet had made delivery to defendant and received full payment, plaintiff recorded the chattel mortgage with the Federal Aviation Authority in accordance with the Federal Aviation Act of 1958, section 1403, which provides that “no conveyance or instrument … shall be valid … against any person other than the person by whom the conveyance or other instrument is made or given, … or any person having actual notice thereof, until such conveyance is filed for recordation in the office of the Administrator.” Air-O-Fleet became bankrupt, and plaintiff filed suit against the defendant to recover the airplane or, in the alternative, the amount owing on the mortgage. On a motion by the plaintiff for summary judgment, held, denied. Since the conveyance to defendant preceded recordation of the mortgage, defendant took absolute title to the airplane unless he had actual notice of the mortgage. Even upon a trial determination that the defendant had actual notice, if the mortgage were otherwise void as to defendant under state law, federal recording would not save it. Aircraft Investment Corp. v. Pezzani b Reid Equipment Co., 205 F. Supp. 80 (E.D. Mich. 1962).