In the Matter of Bernard George Luther, Whose Wife is Virginia Marie Luther, Bankrupt. Ruth Tirk, Creditor-Appellant v. Robert A. Southwell, Trustee

Ruth Tirk appeals from a judgment affirming a bankruptcy referee’s order which invalidated certain provisions of a title-retaining sales contract. We affirm.

On June 26, 1964, Mrs. Tirk and her late husband sold their hardware business to Mr. and Mrs. Stanley Carlson, Jr., and used a conditional sales contract to secure the unpaid balance of the purchase price. The contract included the store’s stock of inventory and certain other equipment used in the hardware business. The contract did not convey, either by sale or lease, the building which housed the business.

By the terms of the contract, title was reserved in the vendors in both the current inventory and the after-acquired replacement inventory until all payments had been made. The Carlsons were re quired to maintain the inventory at a specified level and to replenish it as sales were accomplished. In the event of default, the vendors had the right to repossess the entire inventory. It is this last provision which the district court struck down.

Pursuant to Washington’s statutory filing requirements, a memorandum of sale was recorded in the county where the vendees resided.

On March 20, 1967, the Carlsons, with Ruth…