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A TREATISE

ON THE

LAW OF MORTGAGES

OF

PERSONAL PROPERTY.

BY

LEONARD A. JONES,

AUTHOR OF TREATISES ON ‘MORTGAGES OF REAL PROPERTY”
AND ‘RAILROAD SECURITIES.”’

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BOSTON:
HOUGHTON, MIFFLIN AND COMPANY.

Che Riverside Press, Cambridge.
1881.
Copyright, 1881,
By LEONARD A. JONES.

All rights reserved.

K
ibs

577
c. |

The Riverside Press, Cambridge:
Printed by H. 0. Houghton and Company.
To

THE HONORABLE JOHN LOWELL, LL. D.,

JUDGE OF THE CIRCUIT COURT OF THE UNITED STATES,
This Treatise

1S RESPECTFULLY DEDICATED

BY

THE AUTHOR.
PREFACE.

THE present volume naturally follows the treatises
which I have heretofore published upon Mortgages of
Real Property and upon Railroad Securities. It com-
pletes the consideration of the general subject of mort-
gages. The nature of personal property as distinguished
from real is the foundation of broad distinctions between
mortgages of the former and of the latter, and these dis-
tinctions extend through all the principal divisions of the
subject. In many particulars, however, the same rules
and principles of law are as applicable to mortgages of the
one species of property as to those of the other. Where-
ever this is the case I have referred to my former works,
both to show that the same rule applies to mortgages of
real property, and to call attention to a fuller statement,
which may sometimes be found in them, of the point
and the authorities upon it. I have thus, except in rare
instances, avoided all occasion for citing in the present
treatise cases which relate to mortgages of real property ;
and I have thus saved space which has been devoted to
examining, more at length than otherwise would have
been practicable, disputed and doubtful questions in the
law of Chattel Mortgages. Of such disputed and doubtful

Vv
PREFACE.

questions there are many in the law of this subject ; and
some of them are of great difficulty. The matters, there-
fore, which are peculiar to the law of Chattel Mortgages
have been fully considered, while those which are common
to this law and to that of Mortgages of Real Property
have been passed over with a briefer statement, and a
reference to my volumes on that subject.

I have regarded these volumes upon different phases of
the subject of mortgages as constituting in fact one work
covering the whole subject; and I have, therefore, referred
from one treatise to another as freely as I would to other
sections of the same treatise. It is my purpose to follow
this method still further, in the preparation of two other
treatises, — one upon Pledges, including Collateral Secu-
rities, and one upon Liens,— which, with those I have
already published, will form a complete series of works on
Property Securities. The three forms of security upon
property — Mortgages, Pledges, and Liens — will then
be treated in works which are not only separately com-
plete, but which will also have reference to the relations
of the subjects to each other.

There seems to be an advantage in writing upon all the
different branches of a general subject, or in writing
upon subjects of a kindred nature; for an author has thus
an opportunity to note agreements and disagreements in
the law applicable to them, and to observe the reasons for
such agreements and disagreements. So far as he is able
to do this, and to state the relations of the different topics
to each other, and the modifications of general principles
of law as they are applied under different circumstances,

he does something to promote an orderly and rational de-
vi
PREFACE,

velopment of the law. It has been with a hope that I
might acccomplish something in this direction, and at the
same time provide for the profession books of a practical
nature which should be useful in the business of every
day, that I have undertaken and carried forward the prep-
aration of this series of works upon kindred topics.

L. A. J.

Boston, May 2, 1881.
vil
CONTENTS.

—_—+——
CHAPTER I.
NATURE OF MORTGAGES OF PERSONAL PROPERTY.

SECTIONS

I. A legal mortgage me, Oe : - a a Sy ak. hs 1-3
UU. Distinguished from a pledge . Sek ae er 4-7
III. A conditional transfer of title essential e . i ‘ . 8-18
IV. Bill of sale with separate defeasance : 3 . Fi 2 19, 20

V. An absolute bill of sale at law and in equity © 6 4g 21-25
VI. A mortgage distinguished from a conditional sale . . . 26-833

CHAPTER II.

REQUISITES OF FORM AND EXECUTION.

I. The form of a chattel mortgage al tke 2 ‘ : . 84-39
II. The parties . ew. 8 oe BP ag | Be ma 40-52
III. Description of the property a -%6 8 ee CB B-7B
IV. The debt secured ee ee ee
VY. Special provisions . «6 eee 99-101
VI. Execution and delivery 3 a : we 5 : 102-113

CHAPTER III.
SUBJECT MATTER OF CHATTEL MORTGAGES.

I. What present interests are subject to mortgage : : + 114-120
II. Statutory limitations of the subject matter of mortgages. 121-122
Ill. Mortgages of fixtures ‘ ; : Sh) (3 : + 123-137

CHAPTER IV.
MORTGAGES OF FUTURE PERSONAL PROPERTY.

I. At law ” 7 i : : . . F 138-157

II. Ratification by new yintoevening act . 2 oe whl «158-169

TI. In equity . . . : : : 7 : ie 170-175
ix
CONTENTS.

CHAPTER V.
SECTIONS
DELIVERY AND POSSESSION OF MORTGAGED CHATTELS 176-189
CHAPTER VI.
STATUTORY PROVISIONS RELATING TO RECORDING, FILING,
AND REFILING ‘ . 7 . a - : 3 190-235

CHAPTER VII.

RECORDING, FILING, AND REFILING.

I. The effect of recording or filing a chattel mortgage. . 236-247

II. The requisites of a valid record or filing 1 oe » + 248-274
III. What instruments are within the recording acts » + ~~: 275-285
IV. Refiling . ‘ eo. . . . . - 2 . 286-298

V. Law of the place of contract > x. a oS 299-307
VI. Actual notice . wee ee eee 808-318

CHAPTER VIII.
FRAUDULENT MORTGAGES. |

I. Fraud arising from the mortgagor’s continued iia with-

out record ‘ ‘ . . : . 319-332
Il. Other frauds under the etait of franda and at common ie 833-351
III. Trust assignments in the nature of mortgages : * . 352-355
IV. Fraudulent preferences under bankrupt and insolvent laws 856-366
V. Fraud in mortgages of consumable property r . : 367, 368
VI. Fraud arising from the mortgagor’s possession after default . 369-378
CHAPTER IX.
MORTGAGES OF MERCHANDISE WITH POWER OF SALE IN THE MORT-
GAGOR.

I. General statement of the subject . ‘ ‘ i : . 879-381
II. The doctrines of the state courts . a : 382-409
III. The doctrines of the federal and English patties s - 410-418
IV. A summary of authorities . 5 : ‘ 3 . 414, 415
V. The subject considered upon principle and allay ‘ : » 41 ae

x
CONTENTS.

CHAPTER X.

THE RIGHTS OF THE PARTIES BEFORE FORFEITURE.

I. The right of possession as between the parties . .

Il. The mortgagor’s right to sell the mortgaged property .
III. The mortgagor’s power to create liens upon the property .
IV. Confusion of mortgaged goods . 5 : . :

V. Rights of subsequent purchasers : 7 ‘ é
VI. Rights of subsequent mortgagees  . : .
VII. Rights of assignees : .

CHAPTER XI.

MORTGAGES OF SHIPS.

I. Laws of the United States in regard to recording ee

II. Priority as between mortgages and liens 7 ‘ :
JI. Rights and liabilities of the parties Se Rl ok Gs
IV. Remedies for enforcing such mortgages. : si :

CHAPTER XII.

ATTACHMENT AND EXECUTION.

I. Liability of the mortgagor’s interest to attachment and execution
II. Liability of the mortgagee’s interest to attachment and execution
III. The statutory provisions and equitable rules in the several states

CHAPTER XIII.
REMOVAL, CONCEALMENT, AND SALE OF MORTGAGED
PROPERTY . + mo ae oS ‘| re
CHAPTER XIV.
PAYMENT AND DISCHARGE.

J. Tender before and after default . . + +
Il. Appropriation of payments. z : : i

IIL. Changes in the form of the debt . 3 z é ‘i :

IV. Payment of the debt and its effect . a : : A
V. Merger and subrogation = é : . . .
VI. Release or discharge otherwise than by papiient Bi cs
VII. Statutory provisions for entering satisfaction of record

CHAPTER XV.

REDEMPTION . s é ‘ 5 é 3 ‘i z
xi

SECTIONS
426-453
454-468
469-477
478-483
484-491
492-500
501-519

520-531
532-539
540-549
550-554

555-565
566
567-600

601-631

632-637
638-641
642-645
646-657
658, 659
680, 662
663-680

681-698
CONTENTS.

CHAPTER XVI.

THE MORTGAGEE’S RIGHTS AND REMEDIES AFTER

SECTIONS
FORFEITURE . - . . . . . : . 699-712
CHAPTER XVII.
STATUTORY PROVISIONS RELATING TO FORECLOSURE
AND REDEMPTION . . i . * 8 e. % 713-757
CHAPTER XVIII.
FORECLOSURE IN EQUITY AND SALES UNDER POWERS.
I. Personal remedies upon the mortgage debt. a . . 758-765
II. When the right to foreclose arises _. i 2 oe ee 766-770
III. When the right to foreclose is barred . . - «© © 771, 772
IV. Sale of the mortgaged property by the mortgagee without formal
foreclosure. ij ‘i 3 ‘ 7 7 ‘ : - 173-775
Y. Foreclosure by suit in equity e ® . ‘ . 776-788
VI. Power of sale mortgages and trust deeds .  . . . + 789-821

xii
TABLE OF CASES.

Reference is to Sections.

A.

Abbott v. Goodwin 153, 391, 457

Acker v. Bender 444, 660
Ackerman v. Hunsicker 97
Ackley v. Finch 2, 632, 699
Acme, The 583, 553
Adams v. Commercial Nat. Bank
of Dubuque 63
v. Hill 65
v. Nebraska City Nat.
Bank 450, 690
v. Pratt 274
v. Tanner 141
v. Wheeler 825
v. Wildes 480, 481, 497
Addington v. Etheridge 408
Adler v. Claflin 389

Alabama Warehouse Co. v. Lewis 2

Albany, The 538
Albert v. Grosvenor Investment

Co. 704

Alden v. Lincoln 583

Aldrich v. tna Co. 525, 536

' ». Goodell 776

Alger v. Farley 806

Allen v. Carr 819, 875, 377

v. Kennedy 358, 409

v. Kimball 641

v. Massey 242

v. McCalla 308, 309, 312, 317

Almyv. Wilbur 9, 320, 325, 653, 772

Alston v. Wheatley 723
Ambler v. Warwick 758
American Cigar Co. v. Foster 156,
168

Amerman v. Wiles 51
Ames, ex parte 94, 137, 148
v. Foster 542
Anderson v. Brenneman 187
v. Case 498

v. Hooks 567

v. Howard 138, 385

v. Hunn 339, 347, 699

 

Andrews v. Jenkins 484
v. Marshall 238
Angier v. Ash 590
Ansley v. Patterson 362
Anthony v. Butler 279
Apperson v. Moore 148, 173, 174
Appleton v. Bancroft 495, 563
Appleton Iron Co. v. British Am.
Ass. Co. 100
Archer v. Cole 635

Armstrong v. McAlpin 598, 659, 712

v. Tuttle 397

Arnold v. Stock 870, 871, 454
Arques v. Wasson 141, 143
Arundell v. Phipps 320
Ash v. Savage 325
Ashley v. Wright 433, 442
Ashmead v. Kellogg 460, 462
Ashworth v. Dark 712
Atherton v. Pheenix Ins. Co. 528,
531

Atkins v. Byrnes 373, 468

Atwater v. Mower 14

Averill v. Irish 583
Ayer v. Bartlett 449
Ayres v. Wattson 758
B.
Babb v. Clemson 319
Babcock v. McFarland 828, 482
Bacon v. Bonham 278
v. Kimmel 555, 556
Badger v. Batavia Paper Manuf.
Co 51, 237, 361, 444

Badlam v. Tucker
Bagg v. Jerome

94, 379, 524, 555
120, 320, 355

Bailey v. Barton 339, 592
v. Godfrey 248, 429, 431, 433
Bainbridge, in re 45
v. Richmond 90, 401

Baker v. Baker 687
v. Buel 91

xiii
- TABLE OF CASES.

Reference is to Sections. %

Baker v. Gray 161
v. Richardson 74,77
Baldwin v. The Bradish Johnson
532, 539
Ball v. Loomis 320
__v. Wyeth 763
Ballard v. Wiltshire 539
Ballew v. Sudderth 82

Ballou v. Cunningham 707, 790, 791
Baltes v. Ripp 556, 592, 703, 704

Bame v. Drew 810
Bane v. Detrick 849
Bank of Lansingburgh v. Crary 143,
146, 592
Bank of Leavenworthv. Hunt 242,410
Bank of Rochester v. Jones 2
Bank of 8. C. v. Gourdin 825, 369
Bank of U. S. v. Huth 278
v. Lee 299°
Bank of Utica v. Finch 94, 96
Barber v. Smith 584

Barbour v. White 370, 371, 374, 501,
502, 513, 768
Bardwell v. Roberts 2

Barfield v. Cole 4,15
Barker v. Bell 444
v. Buel 583
v. Doty 318
v. Smith 242
v. Stacy 299
Barkow v. Sanger 92, 339

Barnard v. Eaton 188, 154, 173, 398,

459

v. Moore 94, 97

Barnes v. Holcomb 19, 30
Barnet v. Fergus 319, 351, 386, 459
Barnett v. Gustafson 464
v. Timberlake 427

v. Mason 9

Barr v. Hatch 320
Barron v. Morris 411
Barrow v. Paxton 7, 822, 323
Barrows, in re 401

v. Turner

88, 89, 260, 555
Barry v. Bennett

66, 488, 490, 632,

633

Bartel v. Lope 22, 637
Bartels v. Harris 14, 19, 358
Bartholomew v. Finnemore 40
Bartlett v. Thynes 688
v. Williams 320

Bartley v. Wells 342
Barton v. Dawes 77
Baskins v. Shannon 347, 488
Bates v. Wilbur 296, 444, 706
v. Wiles 426
Baxter v. Gilbert 518, 556

xiv

 

Baxter v. Spencer 427, 637, 701, 704

v. Wallace 541
Bayaud v. Fellows 439, 787
Bayne v. Patterson 584

Beach v. Derby 64, 65, 374, 429, 433,
502, 507, 577

Beall v. White 178, 474, 475

v. Williamson 299, 302, 303,

350, 369

Beaman v. Whitney 249
Bean v. Amsink 243
v. Barney 426, 699

v. Brookmire 360
Beard v. Westerman 806
Beaumont v. Yeatman 525
Becker v. Anderson 348
v. Dunham 452, 585
Beckley v. Munson 794
Beckwith v. Sibley 764
Beeman v. Lawton 2, 4, 237, 277

Beers v. Botsford 414
v. Waterbury 290, 291, 490, 785

Belding v. Read 1638, 172
Belknap v. Wendell 37, 73
Bell v. Pharr 706
v. Prewitt 64, 92, 342

v. Radcliff ' 95, 689

v. Shrieve 154
Bellamy v. Doud 444, 646, 706
Bellows v. Wells 141
Bellune v. Wallace 460
Benedict v. Smith 179
Bennet v. Vade 349
Bennett v. Ellison 363
v. Union Bank 339, 356
Bentley v. Wells 356, 361
Bentz v. Rockey 319
Bergin v. Hayward 583
Berry v. Glover 81, 38
Best v. Staple 523, 525, 527
Betts v. Ratliff 174
Bevans v. Bolton 260, 314
Bickley v. Keenan 2,191
Bicknell v. Cleverly 583
Bigelow v. Smith 508, 518, 663
Bigley v. Risher 794
Billingsley v. Bunce 397
v. Harrell 644

Bingham v. Jordan 242, 314
Bird v. Davis 639, 707, 708
v. Wilkinson 275, 320
Birkbeck v. Tucker 541
Bishop v. Cook 265, 327
v. O'Connell 319

v. Rutledge 27, 31

v. Warner 414

Bissell v. Hopkins . 14, 322, 323, 325
TABLE OF CASES.

Reference is to Sections.

Bissell v. Pearce 274,472

Bither v. Buswell 256
Black v. Hair 808
Blackman v. Wheaton 320
Blackstone Bank v. Hill 641
Blackwell v. Overby 24
Blake v. Lane 771
Blakely v. Patrick 56

Blakemore v. Taber 681, 726, 776
Blakeslee v. Rossman 92,'339, 395, 409
Blanchard v. Fearing 542
v. The Martha Wash-
ington
Blincoe v. Lee
Blodgett v. Blodgett

521

88

14, 437, 632,
684, 685, 699
400

299, 305, 306
586

96

Bloon, in re
Blystone v. Burgett
Boarman v. Catlett
Bodley v. Anderson

Bogart v. The John Jay 550, 551
Boise v. Knox 426
Bond v. Seymour 329

9, 11, 138, 522
140, 141, 164, 174

Bonsey v. Amee
Booker v. Jones

Boone v. Rains 632
Booth v. Kehoe 280
Boothby v. Brown 319
Borst v. Nalle 173

Boston & Fairhaven Iron Works
v. Montague 686, 732, 781
Bowditch v. Green 646, 658
Bowen »v. Clark 409
Bowens v. Benson 699
Bowers v. Bodley 510
Boyce v. Smith 587
Boyd v. Beck 250, 312, 643, 644
Boynton v. Warren 583
Brachmann v. Louis 294
Bracken v. Chaffin 33
Brackenridge v. Holland 481
Brackett v. Bullard 237, 426, 583
Bradford v. French 583
Bradley v. Buford 319
v. Redmond 702, 773
Bradshaw v. McLoughlin 775
Bragelman v. Daue 684, 685, 768
Brage v. N. E. Mut. F. Ins. Co. 100
Brainerd v. Peck 77, 167
Braley v. Byrnes 212, 345, 395, 443
Brandt v. Daniels 456, 466, 661
Brantly v. West 32
Breese v. Bange 280
Brennan v. Whitaker 135
Brett v. Carter 178, 174, 412, 413
Brewster v. Bailey 583
v, Baker 26

 

Briggs v. Leitelt 257
v. Light Boat 118

v. Mette 286, 291

v. Oliver 777, 779

v. Parkman 814, 393, 583
Brigham v. Avery 99
v. Potter 350

v. Weaver 260
Bringholff v. Munzenmaier 134
Brink v. Freoff 437, 769
Brinkerhoff v. Marvin 97»
Brinley v. Spring 65, 391

426, 578, 681,
707, 726, 776
331, 770

242

Broadhead v. McKay

Brock v. Headen
v. Terrell

Brockenbrough v. Brockenbrough
173, 368, 408

Bromley v. Holland 165
Brong v. Brown 174
Brookover v. Esterly 706
Brooks v. Aldrich 64
v. Bondsey 541

v. Briggs 444, 445

v. Powers 320

v. Record 466, 513

v. Ruff 2, 511, 647

v. Wimer 397
Broughton v. Atchison 814
Brown v. Allen 157
v. Bateman 161

v. Bates 566

v. Bement 4,19, 31, 435,

632, 699

v. Coats 2,141

v. Cook 444, 556, 560

. Greer 723, 776, 782

. Heathcote 241
Holmes 56

Kiefer 94

. Lipscomb 426, 632, 699

Phillips , 437, 699, 706
Platt 109, 110, 401
Rich 648
Riley 842, 375
Tanner 545

seeeseesesegs s

Thompson 72, 169, 391
v. Webb 164, 178, 238, 352, 403
Brundage v. Camp 319

Brunswick v. McClay 181, 216, 327,

329, 398

Bryan v. Bowles 541

v. Roberts 707, 711, 779
Bryant v. Carson River Lumber-

ing Co. 699, 707

v. Crosby 21

v. Pennell 151

XV
TABLE OF CASES.

Reference is to Sections.

Bryant v. Pollard 615, 648
v. Simoneau 337

v. Vix 513

Bryson v. Penix 314
Buck v. Ingersoll 565, 583, 764
v. Payne 427, 475
Buckley v. Lampett 371
Bucklin v. Thompson 825

Buffalo Steam Engine Works v.
* Sun Mut. Ins. Co.
* Bull v. Griswold
Bullock v. Narrott
v. Williams

808
187

111, 112, 337
56, 176, 188,

236, 380
Bumpas v. Dotson 357
Bunacleugh v. Poolman 8, 682, 699
Burdick v. McVanner 426, 435, 700
Burditt v. Hunt 65, 103
Burgert v. Borchert 319
Burnell v. Robertson 319, 878
Burnett v. Gustafson 247
v. Pratt 50
Burnham v. Muller 328, 370, 372
Burnhisel v. Firman 243
Burns v. Harris 64
Burnside v. Twitchell 129
Burrill v. Butterfield 437
Burrows, in re 387
Burtis v. Bradford 681, 693, 732,
758, 820
Burton v. Tannehill 642, 699
Bushnell v. Avery 686, 732
v. Wood 827, 842
Buskirk v. Cleveland 143
Butler v. Hill 140, 157
». Miller 327, 642, 645, 699
v. Rahm 392
v. Tufts 633, 646
v. Van Wyck 325, 327
v. White 17
Butt v. Ellett 1738, 174
Butterfield v. Baker 1438, 164
Butters v. Haughwort 81
Butts v. Peacock 92, 96, 339
Byram v. Gordon 79, 87, 288, 770
Byrd v. McDaniel 687, 772
v. Wilcox 13
Byrnes v. Braley 395
Byron v. May 699
Cc.
Cadle v. McLean 26
Cadwell v. Pray 156, 168, 448, 454,
455, 643
Cady v. Shepherd 46
Calkins v. Lockwood 164, 414

xvi

 

Call v. Gray 56

Callaway v. Walls 723

Camp v. Camp 181

v. Thompson 17, 358

Campanari v. Woodburn 165

Campbell v. Birch 505

v. Leonard 312, 389, 579

Canada v. Southwick 588

Cantrell, in matter of 401
Cape Fear Steamboat Co. v.

Conner 527

Capen v. Alden 638

Caring v. Richmond 401

Carnes v. Apperson 596

Carney v. Carney 320

Carpenter v. Blote 94, 97

v. Bridges 652

v. Cummings 311

v. Graham 427

v. Longan 503

v. Snelling 19, 180

v. Town 433, 442, 703

Carr v. Acraman 163, 165

v. Allatt 161, 162

v. Clough 40

v. Hilton 361

Carrington v. Roots 145

v. Smith 164

Carter v. Burris 22, 24

v. Fately 456

Carty v. Fenstemaker 593

Caruthers v. Humphre 637

Cary v. Hewitt 427, 584, 701, 706

Case v. Allen 474

v. Broughton 773

v. Jewett 267, 296, 343

v. Winship 320, 426, 428

Casey v. Cavaroc 4
Cass v. Perkins 328, 370, 371
Cassel v. Cassel 766

Caswell v. Keith 21
Catlin v. Currier 352, 353, 411, 786
Cayce v. Stovall 140
Ceas v. Bramley 2, 186
Central Bank v. Prentice 583
Chadwick v. Baker 521

v. Lamb 426, 482, 442
Chamberlain v. Clemence 460

v. Martin 707, 790, 791

v. Meeder 653

Chambers v. Hise 33
Champlin v. Butler 541, 548
v. Johnson 556, 592

Chandler v. Bunn 256
Chapin v. Cram 64, 138, 154, 282
v. Shafer 40

v. Whitsett 370, 374, 768
TABLE OF CASES.

Reference is to Sections.

Chapman v. Clough 758
v. Hunt 355, 450, 454, 566,

646, 707, 783
v. Jenkins 645, 648
v. Kellogg 43
v. State 637, 701
v. Turner 8, 33
v. Weimer 138, 164

Charter v. Stevens 632, 685, 699,
707,776, 798
117

401

Chase v. Ingalls
Chatham Nat. Bank v. O’Brien

Cheatham v. Hawkins 402, 419
Chenyworth v. Daily 262, 314
‘Chesley v. Josselyn 138
Chicago Dock Co. v. Foster 343
Chidell v. Galsworthy 161, 163
Chipron v. Feikert 178, 426
Chisolm v. Chittenden 138, 385
Chophard v. Bayard 395
Choteau v. Jones 345
Chynoweth ». Tenney 164, 165, 173
Circassian, The 536
City Bank v. Westbury 342, 401
City Nat. Bank v. Goodrich 384
City of Tawas, The 536
Claflin v. Carpenter 146
v. Houseman 362
v. Rosenberg 319
Clagett v. Salmon 237, 450, 451, 787
Clapp v. Campbell 499, 583
v. Glidden 499, 689, 730
Clark v. Dearborn 583
v. Griffith 650, 656
v. Hale 465
v. Houghton 46, 89, 103
v. Iselin 243
v. Rideout ' 435
v. Tarbell 38, 305, 312
v. Tucker 299
v. Washington Ins. Co. 549
v. Whitaker 426
v. Wilson 549
Clary v. Frayer 380
Clayton v. Hester 32

Cleaves v. Herbert 374, 886, 577, 768
Clement v. Little 590

Cline v. Libby 429, 431, 438
Clow v. Woods 319, 828, 414
Cobb v. Buswell 299, 301

v. Chase 106, 107, 108

v. Farr 120, 393

Coble v. Nonemaker 177, 312

‘ Coburn v. Pickering 320, 399
Cochran v. Paris 368
Codman v. Freeman 188, 154, 583
Coe v. Cassidy 22, 24, 27

6

 

Coggeshall v. Potter 241, 860
Colby v. Everett 85
Cole v. White 825
Coles v. Clark 236, 426, 460, 462
Colling, in re 241, 242, 361

v. Carlile 96

v. M yers 403, 420, 421
Colman v. ee 428
Colson v. Wilson 581
Colvard v. Waugh 24
Comins v. Newton 53, 68, 148

Commercial Bank of Manchester

v. Waters 586
Commonwealth v. Damon * 615
v. Strangford, 615

v. Wallace 615

Comstock v. Hollon 584
v. Rayford 320

v. Scales 138, 143, 147

Conard v. Atlantic Ins. Co. 323, 325
Conchman v. Wright 2, 3
Conderman v. Smith 148
Conger v. Robinson 818
Congreve v. Evetts 141, 161
Conkey v. Hart 433

Conkling v. Shelley 65, 395, 401, 661
Conner v. Carpenter 4

Conradt v. Sullivan 478
Constant v. Matteson 328, 378, 426,
512, 699

Constantine v. Twelves 383
Cook v. Corthell 138, 164, 178, 405
v. Farrington 365

v. Hager 195, 248

v. Stearns 146

v. Steel 140

v. Thayer 202, 328

v. Tullis 243
Cooley v. Hobart 46
Coolidge v. Melvin 320, 399

Cooper v. Brock 14, 24, 29, 211, 236,

275

v. Douglass 144

v. Jackson 106

v. Whitney 5
Copeland v. Bennet 312
Coppage v. Barnett 49
Corcoran v. Webster 124
Cordray v. Mordecai 541
Corey v. Burton 40
Cornell v. Pierson 334
Cornish v. Dews 335, 342, 356
Cornwall v. Gould 764

Coster v. Bank of Georgia 3
Cotton v. Marsh 236, 329, 393, 409,

444, 561, 600
v. Watkins 444, 506, 561, 600

, Vil
TABLE OF CASES.

Reference is to Sections.

Coty v. Barnes 14,177
Covell v. Dolloff 696, 697
Craft v. Bullard 696, 702
Craig v. Dimock 270, 315
v. Tappin j94, 96, 702, 707
Crain v. Paine 653, 772
Crandall v. Brown 186
Crane v. Pearson 11
Crapster v. Williams 334
Crawford v. Burton 312
v. Kirksey 320
Crawshay v. Collins 62
Creech v. Byron 21
Cressey v. Sabre 143, 147,£173
Critcher v. Walker 31
Crofoot v. Bennett 188
Croft v. Bunster 503
Crompton v. Pratt 117
Crosby v. Baker 68, 148
v. Wadsworth 145

Croswell v. Allis 56, 59, 122, 364
Crow v. Red River Co. Bank 65, 407
Cudworth v. Scott 146, 147
Cullum v. Branch Bank at Mobile 643

Culver v. Sisson 761

Cummings v. Tovey 318, 317

Cummins v. Griggs 319

Cunningham v. Freeborn 354

v. Hamilton 875

v. Rogers 806

v. Tucker 525

Curd v. Miller 320

v. Wunder 442, 450, 556

Currier v. Knapp 117

Curtis v. Auber 140, 174

v. Leavitt 353

v. Martz 65, 78

v. Phillips 62

v. Raymond 579

v. Tyler 82

Curtiss v. McDougal 40

Cushman v. Luther 89, 299

Cutler v. Thurlo 541

Cutter v. Copeland 820, 325, 327,

444, 446

Cutting v. Jackson » 820
D.

Dabney v. Green 764

v. Sadler 27

Dacey v. Agricultural Ins. Co. 100

Dalrymple v. Sheehan 552

Dalton v. Laudahn 11, 168, 172

Daly v. Proetz 454, 645

Dance v. Seaman 356, 368

XVili

 

Dane v. Mallory 298, 707
Daniel v. Morrison 819, 390, 418
Daniels v. Nelson 319, 826
Darst v. Gale 249
Darwin v. Handley 368
Daugherty v. Byles 637
Davenport v. Foulke 173, 387
v. Ledger 431

Davidson rv. Gorham 528, 524
v. King 352

Davis v. Blume 454
v. Hubbard 19, 444, 681, 683,

696

v, Marx 153

v. Maynard 648

v. Quincy Mut. F. Ins. Co. 100

v. Ransom 154, 237, 819, 345,

886

v. Rider 650

v. Turner 819, 320
Dawes v. Cope “819
Day v. Bassett 117
v. Griffith 106, 107, 108

v. Munson 286, 293, 312

v. Swift 4
Dayton v. People’s Savings Bank

181, 294, 295

Deal v. Palmer 32
Dean v. Davis 587
De Courcey v. Collins 246, 252, 261
v. Little 293

Dedman »v. Bridges 580
Deely v. The Ernest & Alice 550
Deering v. Lord 555
De Forest v. Bacon 354
Degnan »v, Farr 48, 583
Delano v. Wright 541
Delaware v. Ensign 401
Delop v. Windsor 207, 300, 414
Demerritt v. Batchelder 771
Denham v. Sankey 123
Denny v. Dana 350
v. Faulkner 805, 820, 707,

712

v. Lincoln 242, 314
Derby v. Weyrick 330
Deshazo v. Lewis 2, 692
Desloge v. Ranger 24, 30
Despard v. Walbridge 22

Despatch Line of Packets v. Bel-

lamy Manuf. Co. 52, 102
D’Wolf v. Harris 323, 524
Dieter v. Smith 577

Dikeman v. Puckhafer
Dillingham v. Bolt 288, 290, 292

v. Ladue 288, 293
Divver v. McLaughlin 96, 97, 323, 401

272, 273, 770
TABLE OF CASES.

Reference is to Sections.

Dixon v. Coke 17
Doak v. Bank of the State 4

v. Brubaker 183, 187
Doane v. Garretson 579

Dodds v. Johnson 401
Dodge v. Potter 61, 64, 89, 265, 272
Dole v. Bodman 106, 118
Dolson v. Saxton 401

Donaldson v. Johnson 236, 314, 342
Donnell v. Byern 351, 397
v. The Starlight 474, 536,

537

Dorland v. Bradley 375
Dorsey v. Hall 114
Dougherty v. Bonavia 436
v. McColgan 22

Doughten v. Gray 556, 566, 591
Douglas v. Shumway 146
Douglass v. Gardner 581
v. Russell 174

Dow, in re : 241
Downing v. Palmateer 450, 696, 758
Doyle v. Mizner 51, 117
v. Stevens 181, 3126
Draper v. Perkins 56, 59
v. Saxton 615, 648

Drew v. Livermore 564
Drury v. Briscoe 644
Dubose v. Dubose 331
Duff v. Bayard 541
Dugan v. Pentz 541
Duke v. Strickland 64, 69, 157
Dukes v. Jones 275
Dunham v. Waterman 354
; v. Whitehead 352
Dunlap v. Epler 870, 374
Dunning v. Mead 386
v. Stearns 13, 66, 148, 155,

481

Dupuy v. Gibson 685, 776, 779
Durfee v. Grinnell 49, 103, 202, 374,
429, 431, 452, 577, 699, 700

Durkee v. Stringham 45
Dutcher v. Swartwood 154, 329, 401
Dyer v. Cady 572
: E.
Eastman v. Avery 4, 277
v. Foster 82, 123
Easton, ex parte 538
Eaves v. Estes 125
Ebberle v. Mayer 64, 65
Eddy v. Caldwell 53, 64

Ede v. Johnson
Edgell v. Hart
Edson v. Newell

36
71, 886, 401
585

 

Edwards v. Cottrell 794
v. Harben 319, 320, 322, 379

Eggleston v. Mundy 556, 557
Eiland v. Radford 26, 27, 29
Elder v. Miller 64

v. Rouse 761

Eldridge, in re
Ellett v. Butt
Ellington v. Charleston

165, 242, 248
178, 174, 508
12, 426, 432

Ellis v. Martin 64
Ellison v. Jones 32
Elmes v. Sutherland 368
Elson v. Barrier 260, 427
Ely v. Carnley 290, 297
Emerson v. Prov. Hat Manuf. Co. 51
Emily Souder, The, 533
E. M. McChesney, The, 534
Emmons v. Dowe 508, 504
Enders v. Williams 819, 390, 418
England v. Downs 73, 74
Erskine v. Plummer 146
Esson v. Tarbell 544
Estwick v. Caillaud 356
Euwer v. Van Giesen 414
Evans v. Darlington 4
v. Graham 431

v. Merriken 149, 681

v. Roberts 145

v. Warren 555, 565
Everett v. Buchanan 720
v. Hall 117, 118

v, Whitney, 107
Everman v. Robb 141
Ewell v. Tidwell 771
Ewing v. Cargill 368, 396

F.:

Fairbanks v. Bloomfield 18, 94, 303,
324, 428, 440, 556, 592

Fairfield Bridge Co. v. Nye 79, 320,
581
Fanchion, The, 548

Farmers’ Bank of Virginia v.

Douglass 396
Farmers’ Loan & Trust Co. v.

Commercial Bank 164, 167
Farmers’ Loan & Trust Co. v.

Hendrickson 318
Farmers’ Loan & Trust Co. v. St.

Jo. & Denver City Ry. Co. 281
Farrar v. Smith 149
Farrell v. Bean 22, 770
Faulkner v. Meyers 588
Fearey v. Cummings 345
Fenelon v. Hogoboom 43

x1xX
TABLE OF CASES.

Reference is to Sections.

Fenn v. Bittleson 428, 440

Ferguson v. Clifford 274, 299, 301,
307, 426

v. Lee 566

v. Thomas 432, 442

v. Union Furnace Co. 2

Feronia, The, 532
Feurt v. Rowell 286, 260, 299, 369
Field v. Baker 401
v. Holland 639
Fifield v. Gaston 835
Fikes vy. Manchester 436, 699, 706
Finch v. Sink 795

First Nat. Bank v. Anderson 395, 401

First Nat. Bank of Alexandria v.
Turnbull

First Nat. Bank of Memphis »v.
Pettit

First Nat. Bank of Newton ».

173

596

_ Perry 579
Fisher v. Fisher 642
: v. Friedman 455
v. Willing 543

Fiske v. Harshaw 409
Fitch v. Humphrey 286, 289
Flagg v. Pierce 185
Flanagan v. Cutler 583

Flanders v. Barstowe 426, 633, 685,
692, 699, 704, 712, 768

v. Chamberlain 427, 637,

681, 685, 690, 695, 707,

712, 738
v. Thomas 685, 699, 756,

817

Fletcher v. Morey 241, 407

Flower v. Cornish 363
Floyd v. Morrow 140, 178, 567
Folger v. Weber 525
Follett v. Heath 88
Folsom v. Clemence 364, 583
v. Fowler 27, 30
Fontaine v. Beers 525
Fonville v. Casey 149
Forbes, in re 386
v. Parker 176, 236, 380, 449,

583

Ford v. Cobb 124, 125, 132
v. Ransom 14, 437, 438

v. Sutherlin 62
v. Williams 401, 403, 556
Fordyce v. Neal 61
Forest v. Tinkham 202, 237, 315

Forkner v. Stuart 33, 320
Forman v. Proctor 117, 149
Fortman v. Goepper 124, 126, 133,

185
Foster, in re 386

 

Foster v. Ames 685
v. Gillespie 308
v. Hackley 243
v. McGregor 330
v. Perkins 103, 104, 110, 522,
544
Fouke v. Fleming 352
Fountain v. Bryce 29
Fowler v. Hoffman 93, 100, 152
v. Hunt 56, 57
v. Merrill 149, 786
v. Stoneum 8, 30
Fox v. Burns 292, 699
v. Holt 532, 541
v. Kitton 429, 431°
Francis v. Rankin 334

Frank v. Miner 176, 178, 202, 237,
248, 315, 328, 426
Frankhouser v. Ellett 320, 329, 356,

357, 380, 388

Frankland v. Moulton 129, 182
Franklin v. Gummersell 319
v. Thurston 306
Franklin Bank v. Pratt 647
Fraser v. Gilbert 186, 245
Freeman v. Baldwin 19, 23, 38
v. Freeman 707, 710, 7738,

776

v. Rawson 408

French v. Haskins 504
Frey v. Drahos 136

Frisbee v. Langworthy 431, 433, 442,
561, 600, 706

Fromme v. Jones 46, 236, 312, 356,

389

Frost v. Allen 15
v. Mott 831, 345

v. Warren 839, 401

v. Willard 148, 157, 481

Fry v. Miller 328
v. Russell 394, 637
Fugate v. Clarkson 580

Fuller v. Acker 87, 298, 325, 327,

426, 699, 706

v, Cunningham 274
v. Day 453
v. Paige 237, 315, 481
v. Parrish 21, 23, 637
Funk v. Staats 202, 328, 356, 371,375
Furber v. Dearborn 583
Furlong v. Cox 431

Gaar v. Hurd

47, 183, 487, 782
Gaff v. Harding :

237, 503
TABLE OF CASES.

Reference is to Sections.

Gage v. Chesebro
v. Whittier

17, 352, 355, 358
455, 456, 465

Gaines v. Becker 875
Gaither v. Mumford 284
‘ v. Teague 18, 32
Gale v. Burnell 141, 159, 161
v. Ward 180, 281
Galen v. Brown 557
Games, ex parte 413
Gardiner v. Parmalee 36
Gardner v. Adams 325
v. Hoeg 144

v. McEwen 65, 70, 188, 351,

386, 401

Garman v. Cooper 319
Garretson v. Brown 356
Garrettson v. Pegg 386
Gassett v. Sanborn 583
Gassner v. Patterson 121, 314, 560
Gaussen v. Morton 165

Gay v. Bidwell 394,417, 418, 419, 425

Gaylor v. Harding 121
Gelhaar v. Ross 556, 557
General Buell, The, v. Long 539
George v. Norris 320
Gere v. Murray 363, 395
Gerrey v. White 102
Gevers v. Wright 173
Gibbs v. Esty 137
Gibson v. Warden 46, 102, 223, 360
Giddey v. Uhl 58
Gifford v. Ford 4,14
Gilchrist v. Patterson 517
Gildersleeve v. Landon 312
Gill v. Pinney 239, 240
Gilmore v. Gale 590
Gittings v. Nelson 147, 187
Glass v. Ellison 566
Glaze v. Blake 116
Gleason v. Drew 325
Globe Works v. Wright 473
Glover v. Austin 148
Godard v. Gould 124, 130
Godchaux v. Mulford 194, 352, 353
Goddard v. Coe 11,17
v. Weaver 241

Golden v. Cockril 56, 305
Gomez v. Kamping 26, 27
Goode v. Rawlins 723
Goodenough v. Harris 403
Goodenow v. Allen © 123
v. Dunno 522, 524
Goodheart v. Johnson 82, 319, 374,
386

Goodhue v. Berrien 350
Gooding v. Riley 38, 124, 238, 308,
312, 314

 

Goodman v. Pledger 469, 632
Goodrich v. Downs 350
v. Michael 242
v. Willard 426, 499, 732, 770
v. Williams 138, 385
Goodwin v. Kelly 26, 183
Goodwyn v. Goodwyn 320

Googins v. Gilmore 94, 325, 327, 368,

391, 449
Gordon v. Clapp 686, 803
v. Hardin 579
Gorham v. Summers 271
Gould v. Marsh 312, 501, 503, 513
v. Stanton 529
Goulding v. Swett 76
Goulet v. Asseler 560, 592
Grace Greenwood, The 525, 539
Granger v. Kellogg 583
Granite State, The 474, 536, 550
Grant v. Lewis 320
v. Skinner 26
Grantham v. Hawley 140
Graser v. Stellwagen 46
Graves v. Sayre 441
v. Weld 145

Gray v. Prather 31

Great West No. 2, The, v. Oben-

dorf 539
Greely v. Smith 530
Green v. Armstrong 145, 146

v. Gaston 777
v. Green 40
v. Jacobs 11
v. Rogers 70
v. Van Buskirk 305
Greene v. Dingley 633, 651

Greenebaum v. Wheeler 319, 328, 386
Gregg v. Sanford 148, 157, 164, 173

Gregory v. Perkins 380
*  »v. Thomas 312, 644

v. Whedon 898
Greither v. Alexander 487, 783
Griffin v. Marshall 723
v. Wertz 237, 239, 378
Griffiths, in re 241
Griswold v. Sheldon 825, 401, 419
v. The Otter 539.

Groat v. Rees 326, 401
Groton Manuf. Co. v. Gardiner ll,
173

Grove v. Wise 431
Grubbs v. Greer 320
Gruner v. Star Printing Co. 662
Gundy v. Biteler 149
Gunn v. Ruttan 77
Gurney, in re 19, 242
Gushee v. Robinson 9,11

Xxi
TABLE OF CASES.

Reference is to Sections.

 

Harris v. Aleock 582
H. v. Frank 141
v. Kennedy 61
Haake, in re 699, 778 v. Norton 312, 313
Hackett v. Manlove 237 | Harrison v. Harrison 783
Haenschen v. Luchtemeyer 266 v. Hicks 444, 683, 646
Hagan v. Walker 348 v. Lee 27, 31
Hale v. Morgan 661 | Harrison, The 536
v. Omaha Nat. Bank 454, 461, | Hart v. Burton 8, 27, 31
804 v. Farmers’ & Meehanics’
Haley v. Man. F. & M. Ins. Co. 100 Bank 157
Hall v. Bellows 450, 707, 776 v. Ten Eyck 481, 707
v. Ditson 690, 707, 801, 808, | Hartley v. Tapley 144
810 | Hartshorn v. Williams 21
v. Forqueran 642 | Harvey v. Crane 248
v. Gaylor 319 ». Dunn 202
v. Pillow 299, 301 v. McAdams 431, 445, 446
v. Redding 518 | Haskell v. Gordon 583
v. Sampson . 426, 429, 432, 437, | Haskins v. Kelly 5
556, 557, 558 | Hastings v. Cutler 310
v. Samson 592 v. Parke 401
v. Snowhill 237, 699| Hatch v. Fowler . 320
v. White 436 | Hatfield v. Montgomery 687
Halpenny v. Pennock 46 | Hathaway v. Brayman 432, 442,
Halstead v. Swartz 636, 690, 699 454, 592
Hambleton v. Hayward 380 v. Howell 266
Hamill v. Gillespie 489, 556, 560, | Hathorn v. Lewis 315, 371
561 | Hatstat v. Blakeslee 319
Hamilton v. Bredeman 653 | Hatton v. The Melita 536
v. Mitchell 440 | Haven v. Emery 128
v. Rogers 138, 154, 155, v. Low 176, 325, 555
892, 483 | Hawkins v. Alston 339, 357
Hamlyn v. Boulter 426 v. Hastings Bank 46, 395
Hammers v. Dole 249, 328, 685, 776, v. May 556
779 | Hayes v. Ward 658
Hammond v. Danielson 473 | Hayman v. Jones 237, 245
v. Plimpton 454 | Haynes v. Ledyard 11
Handley v. Howe 264, 270 v. Leppig 584
Hanes v. Tiffany 86, 244 v. Sanborn 565
Hanford v. Artcher * 320 | Haynie v. Robertson 27
v. Obrecht 370, 377 | Hays v. Cornelius 694
Hankins v. Ingols 325 v. Pacific Mail Steamship
Hannah v. Carrington 779, 797, 807 Co. 521
Hanson v. Herrick. - 583 | Hayward v. George 583
Harbinson v. Harrell 556 | Hazard v. Lorin 21, 277
Hardaway v. Semmes 191, 262, 305| Head v. Goodwin 158, 264, 270, 274
Harding v. Coburn 53, 65, 148, 583 v. Ward 825, 380
Harlow v. Birger 202 | Headrick v. Brattain 141
Harman v. Abbey 403 | Heath v. West 40
v. Hoskins 153, 350, 896 | Hedman v. Anderson 398
Harmon v. Harmon 845 | Hempstead v. Johnson 334, 342,
v. James 586 852, 356, 357
Harper v. Neff 645 | Henby v. Forgy 443
v. Ross 21 | Henderson v. Morgan 202
Harrington v. Brittan 106, 236, 267, | Hendrickson v. Walker 706
655 | Hendrix v. Gore 94
v. King 117 | Henry v. Fullerton 586

Xxil
TABLE OF CASES.

Reference is

Henshaw v. Bank of Bellows
Falls 175
v. Sumner 86, 352
Hensley v. Brodie 124
Herkelrath v. Stookey 202, 334,
335, 340, 342
Herrick v. King 292
Hesketh v. Stevens 541
Hesser v. Wilson 319, 493
Hessing v. McCloskey 335
Heyland v. Badger 4, 485, 632,
685, 699
Hiawatha, The 536
Hickman v. Cantrell 22, 27
v. Perrin 406
Hicks v. Williams 251, 260, 523
High v. Brown 788
Hill v. Beebe 293, 312, 505, 643,
644, 647
v. Gilman 248, 312
v. Wiggin 590
Hilliard v. Cagle 320, 396
Hills v. Farrington 583
Hilton, The, v. Miller 539
Hine, The, v. Trevor 539
Hinman v. Judson 448, 685, 691,
706
Hoadley v. Hadley 203
Hobart v. Jouvett 97, 583
Hobbs v. Bibb 320
v. The Interchange 527

Hodges v. Tenn. Marine & Fire
Ins. Co.
Hodgson v. Butts
Hogel v. Lindell
Hoit v. Remick
Holbrook v. Baker

22
314
1
260, 325, 380
94, 325, 555

Holly v. Brown 152
v. Huggeford 426
Holman v. Doran 203
v. Lock 117

Holmes v. Bell 426, 435
v. Hall 9, 168, 172

v. Hinkle 64, 85, 642

v. Marshall 402

v. Sprowl 264, 270, 426
Holroyd v. Marshall 171, 172, 173,
413

Holt v. Holt 728
Hombeck v. Vannetre 820, 325
Homer v. Grasholz 657

Homes v. Crane
Hooker v. Hammill

176, 325, 379, 393
216

Hope v. Hayley 141, 161, 162
Hopkins v. Scott 556
v. Thompson 24, 706

 

to Sections.

Horne v. Briggs 509, 588
v. Puckett 24
Horton v. Williams 236, 329, 350,
395, 414

Hosmer v. Sargent 799
Hotchkiss v. Hunt 446

Housatonic & Lee Banks v. Martin

488, 583

Houston v. Howard 319
Howard v. Card , 581
v. Chase 50, 494, 601

v. Gresham 660

v. ‘Odell 21, 541

Howe »v. Bartlett 583
v. Freeman 583

v. Keeler 121
Hower v. Geesaman 414
Howland v. Willett 556, 770

Hubbardston Lumber Co. v. Covert

254, 259
Hubby v. Hubby 50, 109
Hudgins v. Wood 278
Hudson »v. Isbell 22, 29
v. Warner 287, 312, 320,

369

Huebner v. Koebke 431

Huggans v. Fryer 431, 703, 707, 790,

791

Hughes v. Cory 825, 379, 380, 381,
389, 401

v. Graves 149

Hull v. Carnley 322, 323, 325, 327,
556, 560, 561, 592

Hulsen v. Walter 632, 699, 707, 773

Hume v. Breck 435
Humphries v. Bartee 22,176
Hungate v. Reynolds 793, 797, 805,
806

Hunt v. Bay State Iron Co. 128, 129
v. Bullock 62, 138, 154, 164

v. Daniels 467, 646

v. Holton 555

v. Rhodes 13

v. Rousmanier 13

v. Shackleford 61, 64

v. Williams 583
Hunter v. Bosworth 138, 173
v. Corbett 327, 413

Hurd v. Gallaher 64, 844
Hurford v. Harned 22
Hussman, in re 248
Hutchins v. Hanna 306
Hutchinson v. Ford 143, 147
Hutt v. Bruckman 436
Hutton v. Arnett 62, 64
Hyslop v. Clarke 350

Xxiii
TABLE OF CASES.

Reference is to Sections.

I.
Imboden v. Hunter 806
Ing v. Brown 22, 284
Ingalls v. Herrick 820
Ingraham v. Martin 442
J.

J. A. Brown, The 532
Jackson v. Colcord 583
v. Dean 320
v. Kimball 583
v. Packard 350
v. Turner 780
v. Willard 566
Jacobs v. McCalley 778
Jacobsen v. Dodd 516
James v. Morey 96
Jamieson v. Bruce 426, 429
Janvrin v. Fogg 6, 38, 176
Jarchow v. Pickens 477
Jardine, ex parte 75
Jarratt v. McDaniel 94, 95, 174
J. B. Martin, The 536
Jefferson v. Barkto 700
Jenckes v. Goffe 148, 405, 457
Jencks v. Smith 114, 146
Jenkins v. Wheeler 528
Jennings v. Gage 319
Jewett v. Fink 845
v. Preston 88, 104
v. Warren 82
Johns v. Church . 89
Johnson v. Clark 8, 22, 28, 31
v. Crofoot 13
v. Curtis 401
v. Hart 503
v. Jeffries 237, 247
v. Merrill 521, 522
v. Murphy 758
v. Nelson 46
v. Patterson 138, 241, 262,
385

v. Royal Mail Steam
‘Packet Co. 547
v. Sumner 583
v. Vernon 707
v. Williams 788
John T. Moore, The 521, 527, 539
Jones v. Blum 541
v. Chamberlin 157
v. Flint 145
v. Graham 245

v. Guaranty & Indemnity

Co.
Xxiv

94

 

Jones v. Henry
v. Huggeford
v. Keen
v. Richardson

v. Swayze

v. Taylor

v. Turck

v. Webster
Jordan v. Farnsworth

v. Turner
Josephine, The, in re
Joyner v. Vincent
Judge v. Vogel

Kahley, in re
Kalk v. Fielding
Kanaga v. Taylor
Kane v. Drake

Kannady v. McCarron

Kate Hinchman, The
Kaye v. Crawford
Kaysing v. Hughes

Kearney v. Pile Driver

Keeler v. Keeler
Keller v. Blanchard
Kelley v. Maxwell
Kellogg v. Brennan
v. Secord

Kelly v. Boylan

v. Purcell

v. Reid
Kemp v. Carnley

Kendall v. N. E. Carpet Co.

Kennedy v. Shaw
Kent v. Allbritain
Kerswill v. Bishop
Kessey v. McHenry
Ketchum v. Brennan
v. Watson
Kidd v, Rawlinson
Kilbourne v. Fay
Killough v. Steele
Kimball v. Marshall
v. Morrison
King v. Bailey
v. Green
Kingston v. Chapman
Kinsey v. Bailey
Kirby v. Schoonmaker
Kirkbride, in re
Kirkland v. Brune
Kirksey v. Means

758
393, 502, 519
. 536
188, 153, 154,
157, 158, 583

180

299, 301

465, 763

140, 141, 446
106, 112, 270,
274

4, 208, 387
539

14, 688, 772
96, 518, 515

44, 351, 386, 409

92
299, 301

320

426

520, 539

357

79, 92

B44

126, 130, 131
320

48

558

487

281
593, 706
56, 59
62

354

316

1

545

> 318, 817
320

117, 319

320

237, 239, 240
325

764

590

587

436

77

125, 132

44

351, 397

278

140
TABLE OF CASES.

Reference is to Sections.

 

Kirtland v. Snow 819 | Leland v. The Medora 361, 550
Kitchell v. Bratton 328 | Lemay v. Williams 237
Kleine v. Katzenberger 403 | Lemen v. Robinson 815, 370, 371
Knaggs v. Green 40 | Leonard v. Baker 320
Knight v. Nichols 275 | Lepard v. Vernon 165
Knox v. Black 29 | Lesem v. Herriford 319
Kohl v. Lynn 247, 318, 427, 687, 701 | Leslie v. Guthrie 174
Koplin v. Anderson 202, 248, 328 | Lester v. Webb 51
Korns v. Shaffer 806, 817 | Letcher v. Norton 323, 325, 328, 432
Kranert v. Simon 81, 343, 493 | Letourne v. Ringgold 138
Kreuzer v. Cooney 481 | Levy v. Welsh 178, 401
Kropholler_v. St. Paul, Minne- Lewis v. Buttrick 42
apolis & Manitoba Ry. Co. 810 v. D’Arcy 429, 483, 442, 577
Kuhn v. Graves 275, 312, 389 v. Lyman 141, 143
v. Palmer 298, 312, 658
v. Stevenson 325
L. v. Swift 319
Libby v. Cushman 565, 764
Lacey v. Giboney 706 | Lienau v. Moran 395
Lady Franklin, The 539 | Lightfoot v. Wallis 349
Laeber v. Langhor 22 | Lindsay v. Gibbs 174, 546
Laigne v. Naramore 682, 688, 690 | Liverpool Marine Credit Co. v.
Lake v. Morris 819} Wilson 545
Lamb v. Durant 46 | Livor v. Orser 556
Lamothe v. Fink 450 | Lobban v. Garnett 19
Landers v. George 682 | Locke v. Palmer 20, 27, 28, 30, 469
Landon v. Emmons 426, 485, 496, | Lockwood ». Slevin 242, 262, 314,
499, 773 316
Lane v. Borland 825 | Lodge v. Samuels 397
v. Lutz 245 | Logwood v. Hussey 26
v. Mason 255 | Long Dock Co. v. Mallery 451, 707,
v. Romer 659 710, 777
Lang v. Lee 408 | Lonsdale v. Fairbrother 86
v. Stockwell 820 | Look v. Comstock 824
Langdon v. Buel 18, 426, 508, 509, | Looker v. Peckwell 138
632, 699 | Lord v. Ferguson 541
v. Phelps 351 | Lottawanna, The 532
Langton v. Horton 171, 174 | Louis Drug Co. v. Dart 154
Langworthy »v. Little 299, 303 | Low v. Pettingill 266, 312, 343
Lanphere v. Lowe 128, 472 vu. Pew 140, 144
Larmon v. Carpenter 699 | Lowry v. Orr 345
Latimer v. Batson 820 | Loyd v. Currin 2, 22
v. Wheeler 292, 293 | Luce v. Hadley 540
Lawrence v. Evarts 54, 61, 68 | Luckenbach v. Brickenstein 328
v. Tucker 94, 96 | Lucking v. Wesson 427, 691, 701
Leach v. Kimball 39, 426, 434, 683, | Ludwig v. Kipp 138
699 | Lunn v. Thornton 158, 159, 160
Leblanc v. Bouchereau 29 | Lunt v. Whitaker 825
Lee v. Buck 788 | Lyde v. Mynn 163
v. Clark 12 | Lyon v. Coburn 583
v. Huntoon 286 v. Jones 808
Legate v. Potter 583 | Lyons v. Field 325
Leighton v. Shapley 633
Leitch v. Hollister 852 M.
Leland, in re 242, 297
v. Collver 100, 168, 394, 766 | Mabbett v. White 46
v. Sprague 114 | MacCabe v. Blymyre 300

xxv
TABLE OF CASES.

Reference is to Sections.

McCaffrey v. Woodin 1438, 147, 164,

166, 173

M’ Calla v. Bullock 115
McCandless v. Moore 484
McCarthy v. Grace 189, 811
“McCartney v. Wilson 80, 436
M’Carty v. Blevins 149
v. Chalfant 94
McClelland v. Kemsen 352
McConeghy v. McCaw 561, 567
McConneli v. People 699, 709, 793,
812

». Seott 96, 356, 437, 700,

768, 795

McCord »v. Cooper : 64, 69, 262
McCormick v. Hadden 117, 819
McCourt v. Myers "106
McCrasly v. Hasslock 406

McCready v. Haslock 9

M’Cullough v. Sommerville 356
McCully v. Swackhamer 319
McCutchin v. Platt 104
McDonald v. Vinson 777
McDowell v. Stewart 202, 248, 815
Mace v. Heald 581
McEntee v. Scott 1380
McFadden »v, Turner 14
McGavran v. Haupt 812, 317
McGee »v. Fitzer 140, 156
M’Ginnis v. Hart 27
M’Gowen v. Young . 448
M’Gregor v. Hall 270, 556
McGriff v. Porter 9
McGuire v. Benoit 426, 480
Machette v. Wanless 81, 85, 86, 195,
237, 706

McIntire v. Norwich F. Ins. Co. 100,
732

M’Intyre v. Seott 541
McKee v. Garcelon 320
McKibbin v. Martin 319, 414
Mackie v. Cairns ' 350
McKinster v. Babcock 90
McKinstry v. Conly 23, 27, 469

McKnight v. Gordon 8, 15, 227, 485,

595
McLachlan v. Wright A401
McLarren v. Brewer 554

v. Thompson 264, 270, 835

McLemore v. Pinkston 649
McLeod v. Bernhold 440
v. Jones 428
McMonagle v. Nolan 537
McNeal v. Emerson 428, 815
Macomber v. Baker 583
v. Parker 825

v. Saxton 706

XXVi

 

McPartland v. Read 180°
McTaggart v. Rose 178, 237, ge
Macy v. Wheeler 541
Magee v. Carpenter 825, 369, 556
v. Catching 25, 27
Maguire v. Card 536, 537
Malcom v. Loveridge 116
Maleverer v. Redshaw 350
Maney »v. Killough 320, 327
Manly, in re 243, 403

Mann v. Flower 361, 362, 363, 395
Manning v. Monaghan 293, 449, 560,

562, 592
Manny v. Woods 479, 493
Manseau v. Mueller 857
Maple v. Burnside 387
Marks »v. Hill 354, 408
Marsden v. Cornell 221, 285, 286,
289, 484

Marsh v. Armstrong 317, 395
v. Kinney 94

v. Lawrence 14, 822, 325, 452,

555

v. Woodbury 278
Marshall v. Bryant 84
Marston v. Vultee 401
Martin v. Bayley 583
v. Hill 299

v. Maddox 397

“». Podger 320

v. Potter 301, 305

v. Rice 897
Martindale v. Booth 320, 322, 379
Marx v. Davis 1538, 777
Mary, The 528
Mary Ann, The 5382
Massey v. Hardin 806, 813
Masson v. Anderson 368
Masten v. Cummings 640
Mathews »v. Fisk 437
Matlock v. Straughn 314
Mattingly v. Darwin 64
Mattison v. Baucus 426, 556, 557
Mauldin v. Armistead 141
May v. Eastin 2
ov. Walter 320
Mayer v. Clark 320
Maynard v. Maynard 106
Means v. Worthington 745

Mech. Building & Loan Ass. v.

Conover 454
Meech v. Patchin 286, 292, 293, 312
Meixsell v. Williamson 335, 342
Mell v. Moony 723
Melody v. Chandler 391, 446, 555
Melvin v. Fellows 89, 590
Menzies v. Dodd
* Mercer v. Tinsley

TABLE OF CASES,

Reference is to Sections.

182, 187, 295
580

Merchants’ Nat. Bank of St. Paul

v. McLaughlin
Merrick v. Avery
Merrill v. Dawson

v. Parker
Merritt v. Niles
Mervine v. White
Metcalf v. McLaughlin

v. Scholey
Metcalfe v. Fosdick
Metzger, in re
Metzner v. Graham

59, 481, 699
527, 536, 539

103, 310, 313, 325,

342, 369, 786
119

470, 577, 648
12, 699, 706
463

555

1l

361

397

Mich. Cent. R. R. Co. v. Phillips

Mich. Ins.
Milburn v. Waugh
Millar v. Allen
Millard v. Hall
Miller v. Baker

v. Blinebury
. Bryan
. Donaldson
Finn
. Garman
. Henshaw
Jones

eeseses

. Lockwood
. Pancoast
. Shreve
. Smith
v. Whitson
Milliman v. Neher
Miln v. Spinola
Miltenberger v. Parker
Milton v. Mosher
Miner v. Phillips
Mitchell v. Beal

v. Black

v. West

vc. Winslow
Mitford v. Mitford
Mittnacht v. Kelly
Moak v. Bourne
Mobley v. Letts
Mogg v. Baker
Molineux v. Coburn
Monnot »v. Ibert

eees

Monroe v. Hamilton

Montany v. Rock

Montgomery v. Kerr
v. Wight

Co. v. Brown

319, 343
85

397
460, 462
320

16, 27
104

312

654

94

319

262

164, 242, 291, 367,

400, 411

401, 403
422, 426, 591
400

40

236, 270

148, 147

541

320

46, 102, 551
335

339

164, 237, 243
320

178, 241, 423
241

350, 401

633
706
171
110, 112, 583

387,

94, 96, 98, 443,

444
56, 64, 801,
304

 

Moody v. Ellerbe
v. Haselden
v. Wright
Moog v. Bonedicks
Moore v. Aylett
v. Byrum
v. Murdock

v. Quirk
v. Simonds
v. Young
Morgan v. Shinn
v. Spangler
Moriarty v. Gullickson
v. Lovejoy
Morrell v. Fisher
Morrill, in re
v. Keyes
v. Sanford
Morris v. Budlong
v. Devon
v. Grover
v. Tillson
Morrison v. Judge
Morrow v. Reed

v. Turney

Morse v. Powers
Morton v. Hodgdon

v. Ragan
Moseley v. Crocket
Moses v. Walker
Moss v. Green
Moulton v. Robinson
Mowry v. White
Moynahan v. Moore
Mulhall v. Quinn
Mumford v. Canty
Munsell v. Carew
Murch v. Wright
Murchinson v. White
Murphy v. Barefield
Murray v. Burtis

v. Erskine
Musgat v. Pumpelly

Myers v. Kinzie
v. Ladd
v. Willis

Napoleon, The
Nash v. Ely
v. Norment

xxvii

164,

501, 507
181, 699, 711
164, 173, 154
320

696

140, 149, 164
14, 446, 452,
699

5838

527

242, 816, 359
22, 529, 541
593

212

583

77

243, 411
583
236, 257
28

403

319
758, 776
706

91,

176, 178, 187,

236

2, 8, 26, 176, 696,

697
182, 299, 355
566

319

27

947, 443

28

141
483
637
144
373
148
319
229
33

325
699, 702, 767
14, 635, 636,
699°

335

64

541

155, 157,

299,

536
183
178
TABLE OF CASES.

Reference is to Sections.

National Bank of the Metropolis O’Neal v. Wilson 560
v. Sprague 44, 92, 186, 287, 292, Orton v. Orton 404
293,'294, 295, 346, 852, 356 | Osborne v. Tuller 319

National Ins. Co. v. Webster 22 | Osgood v. Pollard 696
National Mercantile Bank v. Ostrander v. Fay 401
Hampson 458 | Oswald v. Hayes 465, 486
Neele v. Berryhill 272 | Otis v. Sill 70, 188, 173, 295, 296,
Neidig v. Eifler 9 401
Nelson v. Drake 51 v. Wood 556, 592
v. Ferris 503, 556 | Owen v. Arvis 352

v. Neil 253 | Owens v. Thomas 849

v. Nelson 146 | Oxnard v. Blake 106, 109

. v. Wheelock 46, 426, 452, 706
New Albany Ins. Co. v. Wilcox-

son
Newby v. Hill
Newell v. Warner

v. Warren

Newman v. De Lorimer
v. Tymeson 50, 74, 292, 296,

Newsam v. Finch
Newsom v. Beard
Nichols v. Hampton
v. Mead
v. Perr

v. Webster 434, 699, 700, 702,

Nitchie v. Townsend
Nordman v. Wilkins
Norfolk & Union, The

North v. Crowell

v. Drayton
Norton v. Doolittle

v. Ladd

v. Simmes
Nunn v. Wilsmore
Nutter v. Harris
Nye v. Van Husan

oO.

Oakes v. Moore

O’Brien v. Chamberlain

Offutt v. Flage
Ogden p. Stewart

Ohio & Miss. R. R. Co. v. Kerr
Oleott v. Tioga R. R. Co.

Oliver v. Eaton
v. Town

Omaha Book Co. v. Sutherland 22,

XXviil

85, 94, 96, 325,

443 | Parks v. Hall
536 | Parr v. Brady
Parris v. Roberts
356 | Parrott v. Hughes
441 | Parshall v. Eggart
319 | Parsons v. Merrill

387 PB,
278

56, 57, 70, 287, | Packard v. Kingman 643, 644, 647,
289 648, 727, 776, 777
"286, 325 | Page v. Ordway 37, 86, 94, 590
727 | Paget v. Perchard 320
Paine v. Benton 81, 86
497, 500 v. Mason 212
556 v. Waite 645
10 | Palmer v. Forbes 376, 557
12, 35, 200, 249 v. Gurnsey 5
557 | Panama, The 530
581 | Parish v. Gates 22, 29
Parker v. Morrison 37
756 v. Staniland 145
286, 287) Parker Mills v. Jacot 527

22, 632, 633

320, 400, 816
32

783
7, 8, 9
583

779 | Parsons Saving’s Bank v. Sargent

350
356 | Partridge v. Swazey
320 v. White

418} Patch v. Wheatland
Patchin v. Pierce

Paterson v. Maughan
Patrick v. Meserve

56, 60
89, 108, 443
49, 62

46

79, 89, 426, 632,
633, 636, 685, 699, 707

46

323, 456, 465

149 | Patten v. Accessory TransitCo. 439

194 v. Moore
260, 299, 803
386, 459

v. Smith
Patterson v. Gillies
v. Taylor

117, 319 | Paul v. Hayford
773, 808,

809 | Pease v. Odenkirchen
327, 394, 419 | Pecker v. Silsby

164, 409 | Peiser v. Peticolas
Pennock v. Coe
398 v. McCormick

 

Payne v. Mayor of Mobile
260, 426, 448

312, 318
327, 330
290

466

7, 645
144

494
407
173
16, 21
TABLE OF CASES,

Reference is to Sections.

People v. Bristol 156, 172, 272, 394,

422, 427, 482

Perkins v. Barnes 842

v. Drye 24, 28

v. Emerson 523, 526

v. Mayfield 556

Perry v. Craig 687

v. Pettengill 148

v. Shenandoah Nat. Bank 408

v. Somerby 581

Perseverance, The 530

Petch v. Tutin 141, 161

Pettibone v. Perkins 806

v. Stevens 414, 758, 788

Pettis v. Kellogg 61, 87, 189

Phares v. Barbour 806

Phelps v. Kendrick 821

v. Murray 173, 406, 423

Philips v. Ledley 541

Phillips v. Frye 43

. v. Hawkins 566

v. Hunter 469

Phippen v. Durham 356

Pickard v. Low 426, 442

- Pierce v. Emery 128, 138

v. Faunce 501

v. George 125, 130

v. Hasbrouck 437

v. Henries 581

v. Parker 89

v. Stevens 825, 428

Pike v. Colvin 64, 202, 374, 429, 452,

577, 699

Pindell v. Grooms 114, 115

Piper v. Hilliard 5, 310, 324

Pitkin v. Fletcher 477

Place v. Grant 650

v. Langworthy . 409
Planters’ & Merchants’ Bank of

Mobile v. Willis 369

Platt v. Preston 241

v. Stewart

10, 255, 256, 289
Plummer »v. Shirley 33

Pogodzinski v. Kruger 340
Poindexter v. McCannon 27, 80, 33
Poland v. Lamoille Valley R. R.

Co. 467
Polhemus v. Trainer 19, 505
Polk v. Foster 11, 157
Pomeroy v. Smith 583
Pomroy v. Rice 643
Pond v. Clarke 648
Ponder v. Rhea 114
Pope v. Boyd 568
Porter v. Dement 202, 237, 248, 285,

; 315, 328

 

Porter v. Parmley 1, 181, 186, 294,
295, 297, 454, 556, 559, 592,

633, 699, 711

v. Warren 583
Portland Bank v. Stubbs 524
Potter v. Boston Locomotive Works 19

v. Cromwell 132
v. Holden 514
v. Irish 521
v. McDowell 340, 342
Potts v. Newell 59

ve N. J. Arms & Ordnance

Co. 134, 281

Powers v. Freeman 71, 154, 251
v. Green 319
Prather v. Parker 319
Pratt v. Harlow 237, 247

v. Maynard 456, 457, 465, 615

v. Stiles 685, 696, 712
Preble v. Conger (95, 97
Preston v. Leighton 392
Price v. Groom 161

v. Masterson 335

v. Mazange 383

v. State Bank 716

Prior v. White 81, 335, 342, 356, 429,

452, 577
Prout v. Root 555, 566
v. Vaughn 330
Provost v. Wilcox 474, 558
Pulcifer v. Page 148
Pulver ». Richardson 699, 808
Purcell v. Mather 140, 144
Purington v. Akhurst 32
Purnell v. Vaughan 780
Purviance v. Sutherland 46
Putnam v. Cushing 148, 583
v. Fitzgerald 244
v. Osgood 324, 399, 590
v. Rowe 16, 583
Pyle v. Warren 216, 325, 329, 345,
398
Q.
Quarles v. Kerr 368, 408
Quinn »v. Brittain 439
v. Schmidt 89, 442, 445
Quiriaque v. Dennis 141
Quirk v. Rodman 28, 29
R.
Rainbow v. Juggins 647
Randall v. Baker 37
v. Cook 556, 592

XXIx
TABLE OF CASES,

Reference is to Sections.

Randall v. Higbee 427
v. Parker 326

Ranlett v. Blodgett 154, 399
Rawson v. Taylor 762
Rea v. Alexander 320
Read v. Wilson 328, 375, 386
Recker v. Kilgore 706
Redd v. Burrus 148
Redman v. Hendricks 442
Reed v. Blades 320
v. Bradley 51

v. Eames 202, 828, 370, 371

v. Jewett 21, 325

v. Pelletier 397
Reeder v. The George’s Creek 536
Reese r. Mitchell 328, 370, 371
Reeve v. Whitmore 167, 172
Reggio v. Day 581
Reeli v. McClure 194
Reid v. Fairbanks 148
Reiner v. Schlitz 758

Rhines v. Phelps 154, 319, 328, 699
Rhode Island Central Bank »v.

Danforth 299, 583
Rice v. Cobb 541
v. Courtis 801, 305

v. Cribb 508
Rich v. Levy 356
v. Milk 432, 778

v. Roberts 257, 814
Richard Busteed, The 537
Richards v. Holmes 799
v. Spicer 788

v. Stephenson 528

v. Yoder 82
Richardson v. Alpena Lumber Co. 56
v. Copeland 131, 184

ce. Lester 46

v. Washington Bank 658

Richmond ». Curdup 368
Ricker v. Cross 323
Rickerson v. Raeder 661
Ricks v. Pinson 779
Rider v Powell 465
Riley v. Mallory 40
Rinchey v. Stryker 345
Rindskoff v. Lyman 579
Ring v. Franklin 541
v. Néale 499
Ripley v. Dolbier 428, 444
Robbins v. Oldham 319
v. Parker 393, 367

Roberts v. Crawford 465
v. Jackson 112

v. Norris 443

v. Wiggin 40

Xxx

 

Robertson v. Stark 85
v. Todd 361

Robinson v. Bliss 802
v. Campbell 426, 699, 707

v. Elliott 236, 341, 387,
407, 410

v. Ezzell 148, 145
v. Fitch 426, 501, 506
v. Hill 82
v. Holt ‘ 338, 488
v. Kruse 141, 477
v. Macdonnell 140
v. Mauldin 59, 60, 141, 173
v. Rice 525
v. Sprague 583
Robison v. Uhl 320

Robson v. Mich. Cent. R. R. Co. 156

Roden v. Jaco 653

Rodwell v. Phillips 145

Rogers v. Abbott 583

v. King 428

v. Traders’ Ins. Co. 632

v. Vaughan 22
Rogers Locomotive Works v. Lewis

9, 276

Romp, The 528

Rood v. Welch 85

Rose v. Bevan 188, 154, 392, 450,

451, 582, 787

v. Scott 64

Ross v. Norvell 23

v. Ross 14, 15, 28, 426

v. Wilson 173, 325, 390

v. Young 368

-Rothgerber v. Gough 337
Rowan v. Sharp’s Rifle Man. Co.

164, 414

Rowland v. Plummer 278

Rowley v. Bartholomew 55, 61, 64

v. Rice 164, 167, 827, 393,

583

Roy v. Goings 138, 164

Rozier v. Williams 319

Rugg v. Barnes . 499

Runyon v. Groshon 805, 325, 326,

400, 707

Rusden v. Pope 545

Rushforth, ex parte 658

Russell v. Butterfield 325, 429, 433,
442

v. Fillmore 176, 454

v. Winne 65, 76, 350, 397,

401

Rust v. Mansfield 335
v. Morse 332
Ryan v. Clanton 299

1
TABLE OF CASES.

Reference is to Sections.

S.

Sage v. Browning 202, 315
Sainsbury v. Matthews 145
St. Joseph, The 474
Sanders v. Knox 640

v. Pepoon 275
Sanderson v. Price 426
Sanger v. Eastwood 312

Sargeant v. Solberg 64, 104, 105, 267
Sargent v. Carr 555

v. Usher 472

Sarle v. Arnold 320
Satchell v. State 627
Satterwhite v. Kennedy 758
Saunders v. McCarthy 641
Savings Bank v. Downing 698
Sawyer v. Fisher 11
v. Gerrish 149

v. Mason 555

v. Pennell 282, 309, 314

v. Turpin 237, 248, 412

Saxton v. Williams 437, 556, 600,
685

Sayre v. Hewes 318
Scharfenburg v. Bishop 157, 173
Schroder v. Keller — 202

Schuchardt v. The Angelique 553
Schuelenburg v. Martin 94, 178, 639,

654

Scio, The A474
Scorell v. Boxall 145
Scott’s case 520, 539
Scott v. Alfred 407
v. Britton 29

v. Delahunt 474, 535

v. Henry 22, 24, 30, 691

v. Scholey 555

v. Whittemore 590
Scudder v. Worster 188
Seaman v. Eager 223, 286
Seaver v. Phelps 41
v. Spink 243
Seevers v. Delashmutt 317
Self v. Sanford 263
Selking v. Hebel 248, 814
Sellers v. Lester 141
Selz v. Evans 352
Sewall v. Henry 26, 27, 28, 33
Sewell v. Price 23, 32
Sexton v. Monks 587
Shaffer v. Pickrell 56
Sharpe v. Pearce 64, 71, 154
Shaw v. Levy 319
v. McCandless 525

v. Wilshire 11, 275, 277

v. Wood 306

 

Shearer v. Babson 615
Sheble v. Curdt 427
Shelburne v. Letsinger 2,3
Sheldon v. Conner 146, 314
v. Dodge 352

v, Edwards 182

v. Warner 184

Shell v. Haywood 124
Shepardson v. Whipple 88
Sheppard v. Earles 773, 819
Sheppards v. Turpin 408, 705
Sherman v. Clark 432
v. Fitch 51, 102, 113, 348
Sherrington v. Yates 241
Shinners v. Brill 440
Ship Warre, in re 174

Shirras v. Caig 96

Shiver v. Johnston 646
Shoenberger v. Mount 492
Shuart v. Taylor 47, 426
Shuler v. Boutwell 283, 312, 644

Shurtleff v. Willard 176, 325, 367,
868, 369, 379, 380

34, 262, 429, 681
Sillers v. Lester 173, 174
Simmons v. Jenkins 154, 155, 374,

386, 442, 446, 481, 577, 699

Sidener v. Bible

Simms v. McKee 299, 369
Simonds v. Parker 583
Simons v. Pierce 128, 134, 312
Simpson v. Mitchell 368
Sims v. Canfield 4, 632
Single v. Phelps 157, 165
Singleton v. Young 251
Sipe v. Earman 331, 368
Sirrine v. Briggs 502

Sisson v. Hibbard
Skiff v. Solace
Skinner v. Dayton

125, 127, 132
299, 801, 442
46

v. Maxwell 40
Skipper v. Stokes 140
Skowhegan Bank v. Farrar 64, 65,

581

Skylark, The 539
Sleeper v. Chapman 393
Small v. Oudley 356
Smalley v. Ellet 375
Smart v. Sanders 165
Smith v. Acker 237, 825, 329, 401,
426

ce. Andrews 45

v. Atkins 141

v. Beattie 22, 68, 352, 354

v. Benson 123

ev. Coolbaugh 115, 685, 691,

699

v. Hardy 357

Xxxi
TABLE OF CASES.

Reference is to Sections.

Smith v. Hines 319

- v. denks 69, 256
v. Kerr . 46
v. McLean 54, 55, 64, 260, 209,

389

v. Moore 237, 261, 380
v. Pearson 24
v. Phillips 448, 634, 636, 699
v. Post 188, 327, 335, 336, 481
v. Prince 6438, 648
vu. Putney 325, 327
v. Quartz Mining Co. 28, 683
v. Rice 47
v. Smith 827, 492, 555
v. Surman 145
v. Waggoner 124, 129, 130, 264,
274, 393

v. Worman 81, 472
v. Zurcher 809, 312
Smithurst ». Edmunds 173, 591

Snyder v. Hitt 825

Sommerville v. Horton 350, 367, 368
Southard v. Benner 401

v. Pinckney 361, 362, 401
Southwick v. Hapgood 732, 770
Southworth v. Isham 148
Sowden v. Craig 134

337, 356, 357
435, 437, 778
61, 64, 577
94, 96, 97
408

Sparks v. Mack
Spaulding v. Barnes
v. Mozier
Speer v. Skinner
Spence v. Bagwell

Spencer v. Pierce 84
Spooner v. Sandilands 165
Spriggs v. Camp 444, 460, 706
Spring v. Baker 583
Stafford v. Whitcomb 456, 465, 486,
615

Stamps v. Gilman 157
Stanley v. Bunce 397
v. Valentine 661

State v. Burns 625
v. D’Oench 851, 397

-y. Gustafson 613

v. Jacob 397

vu. Julien 613

v. Ladd 622

v. Pickens 625

v. Plaisted 40, 622

v. Tasker 851, 397
Stearns v. Gafford 2, 59, 140, 141

Stedman v. Perkins
v. Vickery

273
391, 581

Steel v. Brown 819
Steele ». Adams 312, 369
Stein v. Hermann : 96

v. Munch 395

XXxil

 

Steinart v. Deuster 409
Stephens v. Tucker 60, 64, 140, 142
Stephenson v. Browning 202, 237
Sterling v. Rogers 761
Stevens v. Blanchard 243

v. Buffalo & N. Y. City

R. R. Co. 318

v. Irwin 194
Stevenson v. Adams 660
Steward v. Lombe 320
Stewart v. Anderson 653
v. Beale 245, 279

v. Cockrell 358

v. Fry 140, 441

v. Hanson 426

v. Harr 539

v. Platt 237, 241, 249, 258,

257, 258

v. Slater 536

Stinson v. Minor 528, 526
Stockham v. Allard 286
Stoddard v. Butler 819
v. Denison 632, 684, 685,

687, 690, 707, 773, 801

Stokes v. Hollis 22
Stone v. Lane 96
v. Marvel 37

v. Willis 31
Stonebreaker v. Kerr 1038, 208
Stover v. Herrington 335
Stowe v. Meserve 311, 312
Stowell v. Bair 148, 144
v. Goodale 661
Strauss v. Kranert 92, 337
Strider v. Reid 33

Stringer v. Davis

121, 122, 706
Strohm v. Hayes 334

Stromberg v. Lindberg 797
Sturgis v. Warren 126, 130, 176
Sullivan v. Hadley 771, 779

v. Lamb 583
Summers v. Roos 396
Sumner v. Bachelder 638, 647

v. Dalton —-87, 49, 185, 310

v. Hamlet 148

v. McKee 378
Surget v. Boyd 357
Swan v. Stedman 46
Sweetzer v. Mead 46
Swett v. Brown 764
Swift v. Hall 269

v. Hart 287, 292, 827, 706
Symmons, ex parte 358
T.

Taber v. Hamlin 19, 210, 681, 732
TABLE OF CASES.

Reference is to Sections.

440

398, 690

699, 707, 709, 775
4, 556, 561, 685

Tallman v. Jones
Tallon v. Ellison
Talman v. Smith
Tannahbill v. Tuttle

Tapfield v. Hillman 160, 167
Tapley v. Butterfield 46, 102, 583
Tarbel v. Bradley 45
Taylor v. Boardman 299
v. Cheever 764
v. M’Keand 459
v. Richardson 319
Teal v. Auty 145
Tedford v. Wilson 157

Tennessee Nat. Bank v. Ebbert 406
Tenney v. State Bank of Wis. 545
Thayer v. Stark 106, 274
Theriot v. Prince 289
Thomas v. Sorrell 165
Thompson v. Blanchard 18, 320,
325, 457, 466

v. Cohen 163

v. Leach 104

v: Moore 692

v. Spittle 45, 480, 765

v. Thornton 556

v. Van Vechten 81, 245,

292, 293, 525, 633, 649

v. Wilhite 187, 319, 375

v. Yeck 328, 371, 375,

377

Thorn v. Hicks 541

Thornhill v. Gilmer 426, 555, 586, 669

Thornton v. Cochran 487, 705
v. Davenport 319, 328,

334, 356, 358, 371, 375

v. Tandy 320

v. Wood 566

Thorpe v. Cowles 149

Thorsen v. The J. B. Martin 537

Thrash v. Bennett 2, 140, 141
Thurber v. Jewett 642, 758
Thurman »v. Jenkins 142
Tibbetts v. Moore 132

Ticknor v. McClelland 187, 202,319,

375

v. Wiswall 383

Tiffany v. Warren 81, 246, 312, 318
Tifft v. Barton 79
__»v. Horton 125, 132
Tilson v. Terwilliger 320

Tison v. People’s Sav. & Loan

Ass. 96, 476, 503
Titus v. Mabee 154, 164
Todd v. Hardie 22, 29

Tomlinson v. Greenfield 143, 147
Torbert v. Hayden 812, 380, 389
Town v. Griffith 266

c

 

Train v. Wellington 180
Trask’ v. Bowers 320
v. Pennell 730
Trapnall v. State Bank 566
Travis v. Bishop 314
v. McCormick 370, 371

Treat v. Gilmore 494, 497,499, 691
Tremper v. Barton 238
Trenchard v. Warner 83
Trieber v. Andrews 22, 32
Triebert v. Burgess 392
Tripp v. Brownell 144
Trittipo v. Edwards 681, 726, 783
Troubadour, The 540
Troustine v. Lask 836
Troy v. Smith 356, 357, 452, 512
Truitt v. Caldwell : 858
Tucker v. Buffington 541
v. Tilton 312

v. Toomer 651
Tuesley v. Robinson 760
Tuite v. Stevens 366, 494
Tully v. Harloe 339
Turner v. Watkins 568
Two Ellens, The 535

Twyne’s case
Tyler v. Strang
v. Taylor

319, 333, 412,
4, 23, 188, 299,

U.

United States v. Hooe
v. 7 Barrels of Distilled
Oil
v. 896 Barrels of Dis-
tilled Spirits

Upton v. Craig 92, 845,

Vv.

Van Brunt v. Wakelee 685,
Van Buskirk v. Hartford F. Ins.
Co.

Van Evera v. Davis
Van Heusen v. Radcliff
Van Hoozer v. Cory
Van Husan v. Kanouse
Vanmeter v. Estill

v. McFaddin
Van Pelt v. Knight
Van Slyck v. Newton
Varney v. Hawes
Vaughan v. Thompson
Vaughn v. Bell
Veazie v. Somerby

XXXili

70, 74,

319, 390,

49, 88, 91,

76, 250, 522,

413
318
49

322
471

471
875

695

299

67
351
143
637
418
278
315

81
583
330
251
523
if TABLE OF CASES.

Reference is to Sections.

 

Vernon v. Morton 325 | Welsch v. Werschem 356
Volney Stamps v. Gilman 325, 446, | Welsh v. Bekey 828, 414
452, 699 v. Usher 530
Voorhees v. McGinnis 125, 129, 130, ) Wendell v. N. H. Bank 681
182) Wente v. Young 362
Voorhies v. Frisbie 362 | Wentworth v. Leonard 564
Voorhis v. Langsdorf 351, 397 v. People 452
Vose v. Stickney 353 | Werner, in re 242
Wescott v. Gunn 94, 96, 237, 643
West v. Crary : 633, 685

Ww. Western Union R. R. Co. »v.
Wagner 319
~ Wagner v. Jones 345, 401 | Weston v. Wright 541
v. Watts 64, 70, 188, 155| Wetherell v. Spencer 312
Waite v. Dennison 685, 793, 795, 796, | Wheelden v. Wilson 72, 338
806 | Wheeler v. Bacon 583
Wakeman v. Barrows 861, 363 v. McCorristen 342
Walker v. Clay 458 v. Miller 632
v. Snediker 94, 96 v. Nichols 49, 180, 183
v. Staples 4, 277] Wheelock v. Lee 362
v. Stone 659, 811 | Whisler v. Roberts 426
v. Vaughn 164, 247, 414 | Whitaker v. Sigler 793
Wallard v. Worthman 646 v. Sumner 16, 277
Wallis v. Long 444, 660 | White, ex parte 512
Walsh v. Whitman 165 v. Brown 69
Walter v. Wimer 397 v. Cole 4, 561
Ward v. Deering 22 v. Graves 214, 347, 397
v. Enders 345 v. Phelps 460, 466
v. Sumner 879 v. Thomas 140, 174
Ware v. Georgetown Cong. Soc. 491, White’s Bank v. Smith 521, 525
Warren v. Emerson 5 | White Mountain Bank v. West 622
v. Taylor 45 | Whitehead v. Pitcher 726
Washington v. Ryan 340 | Whitfield v. Cates 23
Waters v. Cox 116 | Whiting v. Eichelberger 7, 12, 18
Watkins v. Hill 643 | Whitman v. Conner 805
Watson v. James 22{ Whitney v. Farrar 565, 764
v. King 165 v. Heywood 99, 260, 661
v. Taylor 243 v. Lowell 7, 460
v. Williams 325 v. Willard 759
Weathersly ». Weathersly 26, 28| Whitwell v. Brigham 764
Weaver v. Reilly 184, 340 | Wildman v. Radenaker 121, 426
ce. The 8. G. Owens 536, 538 | Wiles v. Clapp 292, 293
Webb v. Mann 79 | Wiley v. Knight 383
v. Stone 85 | Wilhelmi v. Leonard 389, 643
,v. Walker 580 | Willard v. Rice 155, 481
Webber v, Emmerson 806 | Willey v. Snyder 53, 54
Weber v. Armstrong 397 William T. Graves, The 520, 536
v. Sampson 541 | Williams v. Allsup 474, 535
Weed »v. Covill 101, 759 ov. Briggs 138, 154, 164,170,
v. Standley 13 405
Weeden v. Hawes 339, 850, 351 v. Cheatham 81, 32
Weeks v. Maillardet 73 v. Evans 398
v. Mascomo Rake Co. 46 v. Hatch 800, 813
Welch v. Sackett 50, 104, 431, 433, v. Jones * 556
706 v. Merritt 64
v. Whittemore 447, 449 v. Nichols 277
Weld v. Cutler 181, 187, 188 v. Noland 787

XXXIV
TABLE OF CASES.

Reference is to Sections.

Williams v. Rorer 426

v. Stern 704

v. Winsor 173, 405

Williamson v. Berry 794
v. Hee Albany R. R.

Co. 438

v. N. J. Southern R.
R. Co. 126,173, 237,
278, 281, 293, 312,

318

v. Steele 56, 60, 142, 157

Willison rv. Desenberg 92, 339, 356
. Willner v. Morrell 426

Wilson v. Brannan 426, 685, 707, 708
v. Carver 22, 29

v. Leslie 228, 237, 270

v. Rountree 374, 429

v. Russell ' 852

v. Sullivan 399

v. Traer 249

v. Weston 15, 29

v. Wilson 138, 545, 546
Winchester v. Ball 688, 689, 692,
699, 730

v. Charter 342

Wing v. Bishop 583
Wingler v. Sibley 394
Winkley v. Hill 399
Winslow v. Merchants’ Ins.Co. 53,
74

v. Tarbox 19, 541

Winsor v. McLellan 237, 241, 278,
361, 524

Winter v. Landphere 54, 55, 149, 150

Wintermute v. Light 145
Wisser v. O’Brien 286, 556
Witham v. Butterfield 583

Wolfe v. Dorr
v. Dowell
Wolfley v. Rising

65, 555, 581
586
320, 426

Wood v. Dudley 4, 15, 699
e. Estes 581
v. Leadbitter 165, 166
v. Lester 148, 146, 156
v. Lowry 286, 329, 401, 414
v. Manly 166
v. Rowcliffe 77, 450

 

Wood v. Scott 92, 339
v. Stockwell 525, 541, 544
Woodburn v. Chamberlin 81
‘Woodman v. Chesley 15, 426
Woodruff v. Halsey 447
v. King 46, 503

v. Phillips 268, 269

Woods v. Bugbey 194, 319
v. Gilson 659

v. Russell 148
Woodside v. Adams 566, 591
Woodward v. Gates 176, 301
v. Marshall 854

v. Wilcox 681, 726, 784

Wooley v. Fry 92, 370, 371
Wooten v. Wheeler 597
Wordall v. Smith 319

Worthington v. Hanna 448, 452, 556,
557, 584

246, 292, 293, 347
7, 18, 138, 174,

Wray v. Fedderke
Wright v. Bircher

312

v. Bundy 81, 253

v. Grover 375

v. Hencock 339

v. Ross 4, 5, 699

v. Tetlow 118, 187
Wyatt v. Stewart 320
v. Watkins 141

Wylderv. Crane 370, 685, 693, 776,
785, 792, 793, 812

Wynne, in re 241, 242, 361

Y.
Yates v. Olmsted 401
Yeatman v. Savings Institution 241
Yeldell v. Stemmons 587
Ynogoso, Succession of 297
Young v. Booe 402
v. Bradley 319

Z.
Zaring v. Cox 173

XXXV
THE LAW OF MORTGAGES
OF PERSONAL PROPERTY.

 

CHAPTER I.

NATURE OF MORTGAGES OF PERSONAL PROPERTY.

I. A legal mortgage, 1-3. V. An absolute bill of sale at law and
II. Distinguished from a pledge, 4-7. in equity, 21-25.
III. A conditional transfer of title essen-| VI. A mortyage distinguished from a
tial, 8-18. conditional sale, 26-33.

IV. Bill of sale with separate defea-
sance, 19, 20.

I. A Legal Mortgage.

1. In General. — A formal mortgage of personal property is a
conditional sale of it as security for the payment of a debt or the
performance of some other obligation. The condition is that the
sale shall be void upon the performance of the condition named.
If the condition be not performed according to its terms, the thing
mortgaged is irredeemable at law, though there may be a redemp-
tion in equity, or by force of statute.

Such a mortgage is something more than a mere security. It
is a conditional sale of chattels, and operates to transfer the legal
title to the mortgagee, to be defeated only by a full performance
of the condition. Upon breach of the condition the mortgagee
may take possession of the property, and, so far as the legal rights
of the parties are concerned, he may thenceforth treat it as his
own; he may sell it or give it away ; squander it or destroy it.

In this respect a mortgage of personal property is like a mort-
gage of real estate under the old common law, but differs widely
from a mortgage of real estate, as the latter is viewed under the

1 Porter v. Parmly, 43 How. (N. Y.) Pr. 445, and 384 N. Y. Superior Ct. 398,
1 of.
§ 2.] | NATURE OF MORTGAGES OF PERSONAL PROPERTY.

latest doctrine which has been adopted in nearly half of the states
and territories of the United States; for while in these states such
a mortgage is regarded as conferring no legal title upon the mort-
gagee, but as being a mere lien or security, in these same states
almost without exception, and everywhere else, a mortgage of
personal property is regarded as not being a mere security, but
as passing the legal title which becomes absolute in the mortgagee
‘upon default.’

To constitute a legal or technical mortgage it is not essential
that the condition should be inserted in the bill of sale itself; it
may be written at the end of the instrument,? or indorsed upon it;
or it may be contained in a separate paper executed and delivered
simultaneously with the absolute bill of sale.

Any words which serve to transfer the property as security for
a debt or obligation of any kind are sufficient to constitute an in-
formal mortgage, which will still be a mortgage at law. Whatever
language may be used, if it shows that the parties intended a sale
of chattels as security, the instrument will be construed to bea
mortgage. .

2. At common law a valid mortgage of personalty may be
made without writing. This results from the established prin-
ciple that at common law a valid sale or transfer of personal prop-
erty need not be in writing; save only in case there is no delivery
of the property and the value of it is fifty dollars or more, there
must be a writing to satisfy the statute of frauds. Except so far
as a mortgage is required to be in writing, to satisfy the statute of
frauds, or a statute requiring the recording or filing of the mort-
gage, a verbal mortgage is still valid.2 But in almost every state
there are statutes requiring the recording or filing of a chattel
mortgage, in order to render it valid against creditors of the mort-
gagor, or his subsequent purchasers or mortgagees, unless the

1 See ch. xvi., and Jones on Mortgages, Loyd v. Currin, 3 Humph. (Tenn.) 462;

§§ 1-59. Alabama Warehouse Co. v. Lewis, 56 Ala.
2 Kent v. Allbritain, 4 How. (Miss.) 317; 514; Stearns v. Gafford, 56 Ala. 544;
and see Jones on Mortgages, § 69. * Brown v. Coats, 56 Ala. 439; Bank of

3 Morrow v. Turney, 35 Ala. 131; May Rochester v. Jones, 4N. Y. 497 ; Ferguson
v. Eastin, 2 Port. (Ala.) 422; Deshazov. v. Union Furnace Co. 9 Wend. (N. ¥.}
Lewis, 5 St. & P. (Ala.) 94; Brooks v. 345; Ackley v. Finch, 7 Cow. (N. Y.) 290;
Ruff, 37 Ala. 871; Shelburne v. Letsin- Ceas v. Bramley, 18 Hun (N. Y.), 187;
ger, 52 Ala. 96; Bickley v. Keenan, 60 Bardwell v. Roberts, 66 Barb. (N. ¥. ) 483;
Ala. 293; Thrash v. Bennett, 57 Ala. 156; Conchman »v. Wright, 8 Neb. 1.

2
DISTINGUISHED FROM A PLEDGE. [§§ 8, 4.

property be delivered to, and retained by, the mortgagee. In the
latter case, the delivery of the property being made without writ-
ing to a creditor for the purpose of securing a debt, the transac-
tion would ordinarily be a pledge. Therefore it is not often that
a verbal mortgage comes under consideration in court; and when
it does the contention is almost necessarily one between the parties
themselves.

The only distinction between a verbal mortgage and a pledge
is that in the one case title to the property passes to the creditor,
while in the other the title remains in the debtor, the creditor
having only a lien upon it. A delivery of property as security
constitutes a pledge ; but to constitute a mortgage there must be
a sale or transfer of the property upon condition.1

Thus under a verbal agreement between a debtor and his surety
upon a note given for a yoke of oxen, that the cattle should be
considered the property of the surety until the debtor should pay
his note, the oxen were delivered to the surety and retained in his
possession. The transaction was held to be a verbal mortgage.”

Delivery is not indispensable as between the parties under a
verbal mortgage, any more than it is under a written mortgage?

3. A parol agreement to give a mortgage, upon which money
has been advanced, may be enforced in equity as between the par-
ties and their representatives, on the principle that equity will
consider that as done which ought to be done.* But the party
seeking to establish such an agreement must prove its existence
by clear and convincing evidence. Casual and indefinite expres-
sions will not suffice. Of course such an agreement is of no va-
lidity as against creditors and bond fide purchasers without notice.°

II. Distinguished from a Pledge.

4. The chief distinction between a mortgage and a pledge
is that by a mortgage the general title is transferred to the mort-
gagee, subject to be revested by performance of the condition ;
while by a pledge, the pledgor retains the general title in himself,

1 Beeman v. Lawton, 37 Me. 543. ‘4 Morrow v. Turney, 35 Ala. 131; Coster
2 Bardwell v. Roberts, 66 Barb. (N. Y.) v. Bank of Ga, 24 Ala. 37, 60; Conchman
433. v. Wright, 8 Neb. 1; and see Jones on

3 Morrow v. Turmey, 35 Ala. 131. See, Mortgages, §§ 163-171.
however, Bardwell v. Roberts, 66 Barb. 5 Shelburne v. Letsinger, 52 Ala. 96.
(N. Y.) 433. 6 Conchman v. Wright, supra.
3
NATURE OF MORTGAGES OF PERSONAL PROPERTY.

§ 5.]

and parts with the possession for a special purpose.! By a mort-
gage the title is transferred ; by a pledge the possession. It often
happens that there is a union in the same transaction of both forms
of security ; that there is a mortgage by virtue of a transfer of the
title, and a pledge by virtue of a delivery of possession. Thus
when bills and notes are transferred to a creditor by way of col-
lateral security, his possession of them gives them the character
of a pledge. Their indorsement if payable to’order, or their de-
livery if payable to bearer, gives him the title also, which is some-
thing more than a pledge. And so it often happens that a con-

_ structive delivery of chattels cannot be effected without doing what

» parties?

amounts to a transfer of the property also. The assignment of a
bill of lading is of this kind. Such an assignment is necessary,
where a pledge is proposed, in order to give the constructive pos-
session required to constitute a pledge; and yet it formally trans-
fers the title also.2 In like manner an assignment of a mortgage,
of a policy of insurance, or of any chose in action, as security, may
be either a pledge or a mortgage according to the intent of the
Whether it be one or the other, the purpose of the in-
strument is the same —to secure the payment of money, or the per-
formance of some act by the maker of the instrument, or by some
one else, for whom he undertakes. The importance of determin-
ing whether the transaction be a pledge or a mortgage arises from
consequences resulting from the instrument being the one or the
other: the title to the property in the former case remaining in
the debtor both before and after breach of the condition; and in
the latter case the title being-all the while in the creditor, and
becoming absolute in him at law after the debtor’s default.

5. An assignment of a note and mortgage made essentially
in the form of a mortgage of such securities will be regarded

1 Walker v. Staples, 5 Allen (Mass.), 34,
per Chapman, J.; Wood v. Dudley, 8 Vt.
430, per Pheips, J.; Gifford v. Ford, 5 Vt.
532; Brown v. Bement, 8 Johns. (N. Y.)
96; White v. Cole, 24 Wend. (N. Y.) 116;
Barfield v. Cole, 4 Sneed (Tenn.), 465;
Wright v. Ross, 36 Cal. 414; Heyland v.
Badger, 35 Cal. 404; Tannahill v. Tuttle,
3 Mich. 110; Doak v. Bank of the State,
6 Ired. (N. C.) L. 309; Conner v. Car-
penter, 28 Vt. 237; Sims v. Canfield, 2

4

Ala. 555; Evans v. Darlington, 5 Blackf.
(Ind.) 320; Jordan v. Turner, 3 Ib. 309;
Eastman v. Avery, 23 Me. 248; Beeman
v. Lawton, 87 Me. 548; Day v. Swift, 48
Me. 368. :

2 Casey v. Cavaroc, 96 U.S. 467, 477,
per Bradley, J., substantially in his lan-
guage.

8 Wright v. Ross, 36 Cal. 414, 442, per
Crockett, J.; Tyler v. Strang, 21 Barb.
(N. Y.) 198.
DISTINGUISHED FROM A PLEDGE.

[§ 5.

as a mortgage rather than a pledge or a trust. Thus an assign-
ment which contains both an absolute grant or assignment of the
securities and a defeasance in the usual form is a mortgage of
them, and it is not made a pledge or assignment in trust by reason
of containing a provision immediately following the defeasance
that the instrument is “ made for the purpose of securing the pay-
ment of the sun of thirty thousand dollars, with interest as afore-
said, and for no other purpose whatever.” Whether it be con-
strued to be a pledge, a mortgage, or an assignment in trust, these
words would have equal significance, and would be equally true as
applied to the transaction. But without the aid of these words
the whole instrument establishes clearly that it was intended only
as a security, and for “no other purpose whatever.” !. This pro-
vision, therefore, can have no significance in determining the char-
acter of the instrument. A recital in a mortgage that it is in-
tended only as a security is not unusual, though it is superfluous
when there is either a formal or substantial defeasance.?
A transfer of a note and mortgage of real property to indem-
_nify a surety, he agreeing to retransfer them when indemnified,
has been regarded as a conveyance in trust, upon the supposition
that the only alternative was to regard it as a legal mortgage of a
chattel ; and it was objected that it could not be a legal technical
mortgage because it contained no condition, and was not accom-
panied by a separate defeasance by the force of which the title
would revest in the mortgagor upon the performance of the con-
dition.3

1 Wright v. Ross, 36 Cal. 414; Piper v.
Hilliard, 52 N. H. 209; S. C. 58N. If.198.
In this case the property was stock in a
corporation.

2 Wright v. Ross, supra, per Crockett, J.
In this case the court were also fortified
in the opinion that the iistrument was in-
tended as a mortgage by the fact that it
was so denominated by the parties, by pro-
viding that the premiums paid by the as-
signee for insurance “ shall be a lien upon
the said mortgaged premises, added to the
amount of said notes herein before men-
tioned and secured by these presents.”

* Warren v. Emerson, 1 Curtis, 239.
Quere, should not this transaction have
been regarded as a pledge? In Cooper v.

Whitney, 3 Hill (N. Y.), 101, a deed of land
with a covenant between the parties that
the grantee should sell the lands and pay
certain debts of the grantor, returning him
the surplus, but containing no reservation
ofa right to redeem, was held to be a trust.
The court, by Mr. Justice Bronson, said:
“Tt may be that without such a condition
the grantor could not redeem, and then
there is undoubtedly some difficulty in
holding that this was w technical mort-
gage. In Palmer v. Gurnsey, 7 Wend.
248, it was said that there was no right
to redeem, and still the conveyance was
held to be a mortgage. But as that doc-
trine is questioned by the demandant, I

will assume that this was not a mortgage.

5
§ 6.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

Generally a transfer of a note, or bill of lading, or mortgage, or
other chose in action, as collateral security for a debt, is now re-
garded as a pledge unless the form of the transfer be clearly
a mortgage in terms.}

6. Whether a transaction be a pledge or a mortgage depends
largely upon the intention of the parties in the inception of it.
If the transaction in its origin was intended to be a mortgage, and
the creditor took possession of the property as mortgagee, and
held it in that capacity alone, he cannot, upon the mortgage
proving void and of no effect, claim that he holds as pledgee, with-
out some new contract between the parties. If the transaction
was clearly a mortgage, and the mortgage title fails while the
mortgagee is in possession, he is then left with a bare naked pos-
session of the property, without title and without any lien; the
property belongs to the mortgagor, who may recover possession of
it; or his creditors may secure and enforce their claims upon it.
The whole character of the possession of the property cannot be
changed at once, and without any new act or contract of the par-
ties.2. “‘ The character of the possession is entirely different in the
two cases. The pledgee holds property that still belongs to the
pledgor ; he holds possession of it under a special contract, which
simply gives him the right thus to hold it, until his debt is paid.
In case of a mortgage, the right of property is conveyed to the
mortgagee by a perfect title, which title is liable to be defeated
by the payment of the mortgage debt, and if the mortgagee takes
possession of the property, he takes it as his own and not as the
mortgagor’s. The titles to the property are different in the two
cases, and the possession is different, held under an entirely dif
ferent contract. Neither a mortgage nor a pledge can exist with-
out a special contract ; and these contracts, being different in their
terms, cannot be substituted, the one for the other, unless the con-

tracting parties, in some way, make that substitution, or agree to
that change.” 8

What, then, was the nature of the trans- under our code.” See, also, Wright v. Ross,
action? It was not a case of purchase 36 Cal. 414, 430, per Currey, C. J.

and sale. The grantee did not take the 1 Haskins v. Kelly, 1 Rob. (N. Y.) 160;
land to his own use. He was to sell and 3S. C. 1 Abb. (N. Y.) Pr. (N. S.) 63.

pay three specified debts, and return the 2 Janvrin v. Fogg, 49 N. H. 340.
surplus money to the grantor. This was a 8 Janvrin v. Fogg, supra, 351, per Sar-
trust valid both at the common law and gent, J.

6
A CONDITIONAL TRANSFER OF TITLE ESSENTIAL. [§§ 7, 8.

7. There are other distinctions between a pledge and a
mortgage. One is that a delivery must always accompany the
former, while the latter may be valid without a delivery, and
without any record or filing of the deed, in the absence of any
statute requiring such delivery and record.!

As between a mortgage and a pledge there arise different rights
in the parties, both before default and afterwards; although the
chief distinction in their rights arises after default. Upon default
of a mortgage the absolute property vests in the mortgagee, and
he may legally deal with the property as his own; and a tender by
the debtor of the amount of the debt secured does not revest the
title in him, or give him any legal right to recover the property,
although he may have an equitable right of redemption. But in
the case of a pledge the absolute property does not vest in the cred-
itor upon default ; upon a tender of the debt he is entitled to the
property, and may recover it, or may have damages for its deten-
tion, in a suit at law. On account of these different consequences
arising from regarding the transaction a pledge or a mortgage,
courts have sometimes, in cases of doubt, leaned towards regarding
it a pledge rather than a mortgage. For this reason contracts,
not distinguishable in terms, have sometimes been construed as
mortgages and sometimes as pledges, according as the court has
deemed that the intention of the parties would be best effect-
uated, and the purposes of justice best subserved.?

An instrument which is in form a mortgage cannot be shown
by parol evidence to have been intended to constitute a mere
pledge.

A pledgee taking a mortgage of the same property waives his
rights as pledgee.*

IIL. A Conditional Transfer of Title Essential.

8. A decisive test of a legal mortgage of personal property
is the use of language which makes the instrument one of sale,
conveying the title of the property to the creditor conditionally,
so that the sale is defeated by the debtor’s performance of his
agreement ; or, as it is stated by some courts, so that by the mere

1 Barrow v. Paxton, 5 Johns. (N Y.) 2 Whiting v. Hichelberger, 16 Iowa,
258; Parshall v. Eggart, 52 Barb. (N. Y.) 422; Wright v. Bircher, 5 Mo. App. 322.
367. 8 Whitney v. Lowell, 33 Me. 318.

* Paul v. Hayford, 22 Me. 234.

T
§ 9.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

non-performance of the condition by the debtor, the title is trans-
ferred absolutely to the creditor. If there be no such transfer
upon a condition express or implied, the transaction is not a chattel
mortgage. Thus, a paper was signed by a merchant on applying
to his bankers for a discount, in the following terms: ‘“ Received
in store, for account of A. & B. (the bankers), the following named
property, as security to my note given this day.” It was held,
aside from the objection, that there was no delivery of the prop-
erty, that the instrument was not a mortgage, because it did not
transfer the property to the. bankers.?

The delivery of 4 chattel by a debtor, accompanied by a written
agreement that he would give up all claim to it if he should not
pay his debt by a certain time, constitutes a mortgage, inasmuch
as the legal title to the property passes conditionally.” \ Upon the
same principle a writing, stating the consideration for the delivery
of a slave to be a loan of money, and that if the loan should not
be repaid by a certain date the slave should be the absolute prop-
erty of the creditor, the debtor binding himself to give a bill of
sale when demanded, should be regarded as a mortgage.?

A bill of sale of slaves by a debtor to his surety, “for the full
and better securing the latter from all liability ” as surety, “ to
have and to hold the said negro fellows as his own right and title
until he should become relieved from all indebtedness,” was held
to be a mortgage, the circumstances of the transaction conforming
’ to this view of the transaction.*

9. A writing which does not convey the title to the mort-
gaged property is not a mortgage. Thus, a writing given by
a debtor to his creditor or surety, providing that upon default in
payment of the debt the latter may take possession of the debtor's
goods in the store occupied by him, and sell out of the same so
much as will pay the debt with a reasonable compensation for his
services, is not a mortgage, for it does not in any way purport to
change the title to the property. It is nothing but a naked power,

1 Parshall v. Eggart, 52 Barb. (N. Y.) court Jeft undecided. Similar instruments
367. were held to be conditional sales in Chap-
? Bunacleugh v. Poolman, 3 Daly (N. man v. Turner, 1 Call (Va.), 280 ; John-
Y.), 236; and see Fowler v. Stoneum, 11 son v. Clark, 5 Ark, 321,
Tex. 478. 4 McKnight v. Gordon, 18 Rich. (S. C.)
8’Hart v. Burton, 7 J. J. Marsh. (Ky.) Eq. 222,
322 Whether a mortgage or pledge the

8
A CONDITIONAL TRANSFER OF TITLE ESSENTIAL. [§ 9.

not coupled with an interest, and could never operate to give any
rights in the property itself, until reduced to possession.!. The
court is bound to look to the paper itself for the intent of the in-
strument, and not beyond it. Even in equity an instrument must
stand as written if deliberately adopted by the parties, although
they mistook its legal intent.

As not answering this requirement, the following words con-
tained in a note, given by two persons as part payment for a mare,
were held not to constitute a mortgage: ‘Said mare to be holden
to J. S. G. (one of the signers) for the amount he may pay for the
same.” The note was delivered to the payee, who had entire con-
trol of it; and the clause in question could only be considered as
indicating the relation of principal and surety between the signers
of the note. But it was not a mortgage by the principal to the
surety. The instrument was not given by the one to the other.”

At law a contract to buy machinery for a manufacturer, and
furnish him with raw cotton, and charge an agreed price per yard
for the cloth made by it, and credit him, towards payment for the
machinery, with a share of the profits from the sale of the cloth,
does not amount to a mortgage of the machinery by the manufact-
urer to the purchaser, because the manufacturer conveys to the
purchaser no title to the machinery. But if a further memoran-
dum be attached to such a contract to the effect that the machin-
ery is only holden by the purchaser as collateral security for the
advances made, and that it is to be given up to the manufacturer,
on his refunding such advances, the transaction may be considered
an equitable mortgage.®

An agreement by the owner of a stock of goods with a creditor
that a third person shall act as a receiver, take and hold possession
of the goods, keep the books, superintend the business, receive the
money, and pay to the creditor at the end of each week all the
moneys received until the obligation to him is cancelled, is not a
a mortgage because the title does not pass by it to the creditor ;
but upon the delivery of possession to the receiver under such agree-

1 Neidig v. Hifler, 18 Abb. (N. Y.) Pr. vendor recited that he retained a lien for
353; Parshall v. Eggart, 52 Barb. (N. Y.) unpaid purchase money. Also McGriff v.
367; Bonsey ». Amee, 8 Pick. (Mass.) 236; Porter, 5 Fla. 373.

Holmes v. Hall, 8 Mich. 66. To like ef- 2 Gushee v. Robinson, 40 Me. 412.
fect see Barnett v. Mason, 7 Ark. 253, 8 Almy v. Wilbur, 2 Woodb. & M. 371.
where, in a bill of sale of a steamboat, the

9
§ 10.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

ment the transaction is a pledge, and requires no registration for
its validity against creditors.

An instrument whereby title is to pass to a purchaser on condi-
tion of his paying for the property, although it be actually deliv-
ered to the purchaser, is a conditional sale and not a mortgage.”

10. An agreement to give a mortgage will not avail as
against creditors and subsequent purchasers. An agreement
in a lease to give a chattel mortgage as security for the accruing
rent, and to renew and extend it from time to time, and that
such mortgage “shall be a continuing lien and security for the
payment of such rent,” does not by itself create a lien in favor
of the lessor as against other creditors who are in a condition to
contest the claim. A defective mortgage executed in pursuance
of such agreement having been declared void as against creditors,
the lessor cannot fall back upon such agreement as giving him an
equity as against creditors who have obtained liens upon the prop-
erty. “In what respect can his equity be distinguished from that
of any prior mortgagee of a special chattel, whose mortgage or its
renewal is defective? A manufacturer sells a coach frém his shop
for $1,000, and takes a chattel mortgage to secure the payment
of the purchase price. His equity to have his money, and to have
it from the property sold, may be conceded. But he places his
security in a specific form of writing, as to which the statute de-
clares that it shall be void unless certain conditions are complied
with. If he fails to comply with them, bis legal and his equitable
security fail together. He has embodied his equity in the form
of a legal document, and he must stand upon the security thus
chosen. If his vendee gives another mortgage to a creditor who
complies with the statutory requirements, or if a creditor obtains
judgment against him, and levies his execution upon the coach re-
ferred to, no plea of a prior equity will avail the seller.” *

The owner of: certain chattels authorized his agent by letter to
mortgage them to any one who would advance a certain sum upon
them. The agent obtained the desired loan, but did not execute
any mortgage to the lender, nor did the latter take possession.

1 McCready v. Haslock,3 Tenn. Ch. 13. 8 Platt v. Stewart, 13 Blatchf. 481.
» Rogers Locomotive Works v. Lewis, 4 Platt v. Stewart, supra, 498, per
4 Dill. 158, Hun’, J.

10
A CONDITIONAL TRANSFER OF TITLE ESSENTIAL. [§ 11.

It was held that the facts were insufficient to constitute a mort-
gage?

ll, A reservation in a bill of sale or note of a lien for the
purchase money does not at law constitute a mortgage; for
no title passes from the debtor to the creditor.2 It is a lien by ex-
press contract, and nothing more. Consequently’ such an instru-
ment need not be filed as a chattel mortgage to be valid.

An instrument whereby an owner of a vessel then building
“ pledged ” it as security for advances, agreeing also that the cred-
itor might buy a part of the vessel at a certain rate, is not a
mortgage, for there is no transfer of title, and no delivery of
possession ; and besides the vessel not being in existence as such,
the instrument could only create an executory contract, and not
a sale either conditional or otherwise.®

A covenant in a lease whereby the lessees “ pledge and bind all
improvements and machinery which they may put on said prem-
ises, and the stock of goods which they may have on said prem-
ises, for the payment of the rent aforesaid,” is not a mortgage, and
does not purport to be one. There is no transfer of title or pos-
session. Neither is it a pledge, although the word pledge is used.
It is simply a contract for a lien whenever the rent is in arrear,
and would constitute a lien in equity.*

A stipulation in a lease giving the lessor a lien on the goods and
furniture which might be placed upon the leased premises for his
rent, and authorizing him to seize and sell the same in case 6f de-
fault, does not constitute a mortgage.®

An instrument in writing purporting to give a lien upon a crop
in accordance with a statute enacted to secure advances made for
agricultural purposes, containing at the close of it the words: “I
consider the above instrument of writing a mortgage of all my
personal property, such as wagons, horses, cattle,” &c., was de-
clared not to be a mortgage, because it contained no words of con-
veyance or transfer. It was a mere declaration in writing that
the maker considered an instrument executed for a different pur-

1 Newsom v. Beard, 45 Tex. 151. 8 Bonsey v. Amee, 8 Pick. (Mass.) 236,

2 Sawyer v. Fisher, 32 Me. 28; Gushee 4 Groton Manuf. Co. v. Gardiner, 11 R.
v. Robinson, 40 Me. 412; Shaw. Wil- I. 626. See, also, Polk v. Foster, 7 Bax.
shire, 65 Me. 485; Crane v. Pearson, 49 Me. (Tenn.) 98.

97; Metcalfe v. Fosdick, 23 Ohio St. 114. 5 Dalton v. Laudahn, 27 Mich. 529.
And see Goddard v. Coe, 55 Me. 385. ii
§ 12.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

pose also a mortgage of other property ; but his so considering it
was not alone sufficient to make it a mortgage.!

‘An agreement whereby a land-owner is to raise crops for the
benefit of a creditor to whom the same are transferred, with a res-
ervation of enough to pay the expenses of raising and harvesting
them, the creditor agreeing to apply the remainder of the proceeds
of the crops to the payment of certain debts, is not a chattel mort.
gage, but an agreement under which the land is to be worked for
the benefit of the creditor, and does not require to be filed to pre-
serve the rights of the parties under it.’

12. A court of equity will recognize and sustain a contract
creating a lien upon property as a mortgage, whenever it ap-
pears from the contract that the parties intended it to operate as
such.2 In many states all distinction between law and equity has
been abolished by statute, so that equitable principles are ‘applied
to proceedings which are in form actions at law.4 Some apparent
conflict of authority may be explained in this way; but there are
some decisions which cannot be so explained, for while made by
courts of law, they rest upon equitable views which are not gen-
erally admitted in courts of law. Thus, in Alabama an instrument
inartificially drawn, containing no words of conveyance, but show-
ing on its face that the relation of debtor and creditor existed be-
tween the parties, and declaring that the creditor “shall have a
lien” on certain property of the debtor until the debt is paid, has
sometimes been held to operate as a mortgage.® The statement
that the creditor shall have a lien upon the property until the debt
is paid is regarded as significant of the intention to charge the
property with the payment of the debt, as would be any technical |

1 Green v. Jacobs, 5 S. C. 280. Nevada,

2 Haynes v. Ledyard, 33 Mich. 319. Oregon,

* Whiting v. Lichelberger, 16 Iowa, 422. _ California,

# This distinction is abolished in Kentucky,
New York, North Carolina,
Ohio, South Carolina,
Indiana, Florida.
Wisconsin, See Jones on Mortgages, § 1318.
Iowa, 5 Ellington v. Charleston, 51 Ala. 166.
Minnesota, The words of the instrument were: “We
Missouri, give said E. a lien on one horse, Charley,
Kansas, to have and to hold, until” the debt shall
Nebraska, be paid.

12
A CONDITIONAL TRANSFER OF TITLE ESSENTIAL. [§ 13.

words which could be used. A valid mortgage may also be made
by the use of the word “ mortgage” without any other word of
conveyance, and without any power of sale, or authority to the
mortgagee to take possession of the property on default.

It may be that the word mortgage imports a grant and convey-
ance of the property; but the word Jen could hardly be consid-
ered as having this effect.

An instrument which recites an indebtedness by the maker and
declares that the creditor ‘‘shall have a lien”’ on a horse, the prop-
erty of the debtor, ‘‘ to have and to hold” until the debt is paid,
operates as a mortgage, although it contains no words of convey-
ance.? ;

In Georgia a mortgage conveys no title, and therefore a paper
providing for a lien on a “ bay mare,” and showing that the mare
was purchased by the mortgagor from the mortgagee, is a sufficient
mortgage of the property.®

13. The following cases were decided upon equitable
grounds, though not in every instance by courts with equitable
powers. :

An instrument whereby the vendor of personal property retains
a lien upon the property for the purchase price, possession being
delivered to the vendee, is a chattel mortgage;* and it does not
matter in such case that instead of the ordinary terms of a mort-
gage the words used are, ‘I hereby pledge and give a lien.” 5

A provision in a lease of a dairy farm that the lessor shall have
full title, with the privilege of taking possession of all the prod-
ucts of the farm, in payment for the rent, amounts to a mortgage
of such products; but of course it would not be effectual against
the lessee’s creditors unless filed or recorded as a chattel mortgage.®

A manufacturer having purchased wool, and paid for it by his
note indorsed by another for his accommodation, executed at the
time of such purchase a writing reciting that the note was in-
dorsed for the purpose of enabling him to purchase the wool, and
declaring that the wool and the cloth to be made therefrom should

1 Mervine v. White, 50 Ala. 388, # Dunning v. Stearns, 9 Barb. (N. Y.)

2 Ellington v. Charlestun, 51 Ala. 166. 630; Byrd v. Wilcox, 8 Bax. (Ténn.) 65.

8 Nichols v. Hampton, 46 Ga. 253. And 5 Langdon v. Buel, 9 Wend. (N. Y.) 80.

see Lee v. Clark, 60 Ga. 639, § Johnson v. Crofoot, 33 Barb. (N. Y.)
574; 8. C. 87 How. Pr. 59.

13
NATURE OF MORTGAGES OF PERSONAL PROPERTY.

§ 14]

belong to such indorser until the note should be paid. The instru-
ment was held to be a mortgage, which should be filed in order to
protect the property against a subsequent purchaser in good faith
from the manufacturer.}

A stipulation in a lease of a building to be used as a hotel, that
‘“‘all the fixtures and other improvements of the hotel shall be
bound for the rent and for the fulfilment of the other covenants
contained in the contract on the part of the lessees,’ was regarded
as a mortgage.2 Such was also held to be the effect of a stipula-'
tion in a lease of a hotel, the furniture of which the lessor at the
same time sold to the lessee, that the “lessor is to have a lien on
the same for the faithful performance of this obligation on the
part of the lessee.” 8

A stipulation in a lease that the amount due for rent shall be
paid before the crops are removed from the leased premises is re-
garded as a mortgage.*

A court of equity cannot, however, make a contract for parties
different from that which they have agreed upon. Thus where
they have deliberately agreed not to secure a debt by mortgage,
but to substitute a power of attorney authorizing the creditor to
sell certain personal property belonging to the debtor, and apply
its proceeds to the payment of the debt, and the power is annulled
by the death of the debtor, a court of equity will not direct a new
security to be given, nor fix a lien on the property as security for
the debt, although satisfied that the parties acted in ignorance of
that rule of law which makes the death of the constituent a revo-
cation of the power.®

14. But a bill of sale of chattels, declared to be made to se-
cure a debt, possession of them remaining with the vendor, is a
mortgage at law. And so an absolute bill of sale of goods, and a

1 Thompson v. Blanchard, 4 N. Y. 303. 660; Musgat v. Pumpelly, 46 Wis. 660;

2 Wright v. Bircher, 5 Mo. App. 322.

3 Whiting v. Eichelberger, 16 Iowa,
422,

* Weed v. Standley, 12 Fla. 166.

5 Hunt v. Rhodes, 1 Peters, 1; and see
Hunt v. Rousmanier, 8 Wheat. 174.

® Bissell v. Hopkins, 3 Cow. (N. Y.)
166 ; McFadden v. Turner, 3 Jones (N.C.)
L. 481; Ross v. Ross, 21 Ala. 322; Coo-
per v. Brock, 41 Mich. 488 ; 2 N. W. Rep.

14

Moore v. Murdock, 26 Cal. 514. In the
latter case a bill of sale in the usual form
contained this clause: ‘ This bill of sale
is given for the security of moneys ad-
vanced.” It was held to be a mortgage.
The court, by Marston, J., said : “ The mere
fact that an instrument does not contain
terms of defeasance cannot be at all deci-
sive in determining the question whether
it shall be considered a mortgage or not.
[§ 15.

stipulation by the vendee that the vendor shall remain in posses-
sion of the goods until the expiration of a certain time allowed
for the payment of a previous debt, is a mortgage! Such instru-
ments in terms fulfil in themselves the essential conditions of a
mortgage; for they make a transfer by way of security, and name
a contingency on which the transfer is to become void, namely,
the payment of the debt. .

A writing in the following words: “Turned out and delivered
to A. one white and red cow, which he may dispose of in fourteen
days to satisfy an execution,” the possession of the cow being left
with the debtor, was held to be a mortgage.? And such also was
the construction of a writing whereby a lessee “turns out his
black cow as security for said rent,” the cow remaining in the
possession of the lessee, and the creditor having the power to take
the cow in case the rent should not be paid as agreed.?

A strong reason in these last cases for declaring the transaction
to be a mortgage seems to have been that effect could be given
to the instrument in no other way, there being no delivery of the
property, a condition indispensable to a pledge.

A bill of sale whereby a debtor conveys property to his creditor
as security, and which provides that the property shall remain in
the debtor’s possession, and he shall have thirty days to redeem
by paying the debt, is a mortgage. And so is a bill of sale of
goods which declares the object of it to be to secure the vendee as
surety for the vendor, and provides that in case the vendee shall
become liable, he may turn the goods out on execution for the
debt, or may take them into his own possession and dispose of
them at private sale accounting to the vendor for the proceeds.®

A CONDITIONAL TRANSFER OF TITLE ESSENTIAL.

15. A writing reciting a sale and transfer of property to se-
cure a debt, and a delivery of it with authority to sell upon de-
fault, is for this reason a mortgage.® Such is the effect of a writing

If from the entire instrument, either stand-
ing alone or read in the light of the sur-
rounding circumstances, it appears to have
been given as a security, it must be con-
sidered as a mortgage, and the Jaw will
apply thereto the rules applicable to mort-
gages.”

1 Ford v. Ransom, 39 How. (N. Y.) Pr.
429; Gifford v. Ford, 5 Vt. 532; Blodgett

v. Blodgett, 48 Vt. 32; and see Joyner v.
Vincent, 4 D. & B. (N. C.) L. 512; Bar-
tels v. Harris, 4 Me. 146.

2 Atwater v. Mower, 10 Vt. 75.

3 Coty v. Barnes, 20 Vt. 78.

* Blodgett v. Blodgett, 48 Vt. 32.

5 Marsh v. Lawrence, 4 Cow. (N. Y.)
461.

§ Barfield v. Cole, 4 Sneed (Tenn.), 465.

16
§ 16.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

acknowledging the receipt of a sum of money, for the payment of
which, by a certain day, assignment is made of * the free and full
title to a negro girl”! A contract reciting a sale of a mare for a
certain sum, and that the condition of the sale is that the seller
may redeem the property within a specified time upon paying the
sum first mentioned, with the expense of keeping the mare, is a
mortgage in terms and effect, though not formal in language. The
general property is passed subject to redemption. It is a sale with
condition. Its terms are wholly inconsistent with a contract of
pledge? A proviso in a deed of sale that the vendor shall have
“the privilege of redeeming the property conveyed,” imports a
mortgage security, and not a sale.?

A writing upon a bill of sale of a cow in the form of a prom-
issory note by the vendor, with a stipulation that the cow shall
remain the property of the vendee until the note is fully paid,
makes the transaction a mortgage.*

A bill of sale of property by a debtor to his surety made for the
“ better securing him from all liability” as surety, ‘to have and
to hold the same as his own right and title until he shall become
relieved from all indebtedness’ as such surety, the property re-
maining in the possession of the debtor, is a mortgage.®

An instrument, after reciting that the maker was indebted in
a certain amount, for which he had given his note, conveyed to
the creditor certain personal property, specifying that it was in-
tended that the title should pass. It provided further, that if the
note should not be paid when due, the creditor should take pos-
session of the property, and after advertising should sell it and
apply the proceeds to the debt; but that if the note were paid
at maturity, he should reconvey the property by quitclaim deed.
The instrument was held to be a mortgage. It was intended to
be a security, and vested the title to the property in the creditor
for the purpose of authorizing him to sell in the event of the debt-
or’s default.®

16. Some courts, however, require a more definite state-
ment of the terms of the condition. Thus in Massachusetts a

1 Ross v. Ross, 21 Ala, 322. £ Woodman v. Chesley, 39 Me. 45.
2 Wood v. Dudley, 8 Vt. 430. 5 McKnight v. Gordon, 13 Rich. (8. C.)
8 Wilson v. Weston, 4 Jones (N.C.), Eq. 222.

349, § Frost v. Allen, 57 Ga, 326,

16
A CONDITIONAL TRANSFER OF TITLE ESSENTIAL. [§ 17.

deed of chattels absolute in form, but reciting an indebtedness by
note from the grantor to the grantee, is not regarded as necessarily
a mortgage. The implication that the instrument is a mortgage
because it does not in terms declare a satisfaction of the debt is
too remote.1 Since the law has definitely recognized mortgages
of personal property given under certain restrictions, provided for
aright of redemption, and made the property still liable by attach-
ment for the debts of the general owner, it is regarded as impor-
tant that the condition should not only be expressed, but that the
terms should be stated so definitely as to enable creditors to ascer-
tain with a good degree of certainty the true character of the con-
tract.2 A defeasance cannot be engrafted upon a conveyance of
personal property by parol.2 If a person borrow money on his
promissory note, and deliver to the lender a quantity of merchan-
dise with a receipted bill of parcels, the transaction is not a mort-
gage, but may be deemed a pledge, putting it on the same footing
as if no bill of sale had been executed.‘

17. A technical mortgage must contain a condition or defea-
sance making the instrument void upon performance of the condi-
tion, whether this be the payment of a sum of money, or the ful-
filment of some other duty or obligation. In a formal mortgage
the condition is formally expressed. But a formal expression of
it is not essential. The condition may be implied from a recital
that the sale was made to secure a debt. But if there are words
which negative any implication that the sale is to be void upon
payment, or if there be a provision that the creditor shall then
assign the property, the transaction may not be a mortgage.
Thus by an instrument signed by a debtor and creditor the former
conveyed to the latter certain timber as security for his debt, and
stipulated that if he should pay the debt according to its terms,
the latter would transfer the timber, and whatever proceeds thereof
he might receive, discharged of all claims; that if the indebtedness
should not be paid as stipulated, the creditor might “ sell and dis-
pose of so much of said timber as shall pay and reimburse him ;”’

-1 Miller v. Baker, 20 Pick. (Mass.) 285. 4 Whitaker v. Sumner, 20 Pick. (Mass.)
2 Per Shaw, C. J., in Miller v. Baker, 399. See, also, Putnam v. Rowe, 110
supra. Mass. 28.
8 Pennock v. McCormick, 120 Mass.
275,

.2 17
§§ 18, 19.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

that when paid by a sale of a portion of the timber, the creditor
should “transfer to the debtor all the timber undisposed of free
from all claims.” The instrument was held not to be a mortgage,
because it:was not to become void upon payment of the sum due!

And so where a debtor made a bill of sale of certain lumber to
his creditor, who gave a writing providing that he would sell and
dispose of the lumber, and apply the proceeds first to paying the
debt due him, together with the charges and expenses of sale, and
then would pay over to the debtor the remainder of the proceeds,
the transaction was declared not to be a mortgage, because no
property or right of redemption was reserved by the debtor ; but
whatever interest he had was not in the lumber, but in any sur-
plus of proceeds remaining after payment of the debt.”

18. Whether an instrument be in itself a mortgage is a
question of law, to be determined by the court; and therefore in
an action founded upon it, either the whole instrument, or those

provisions which are relied upon as giving it the character of a
mortgage, must be set forth in the declaration or complaint.®

If an instrument upon its face leaves it in doubt whether the
parties intended it as a mortgage or a conditional sale, the jury
may determine its character from the accompanying circumstances.!

IV. Bill of Sale with Separate Defeasance.

19. A conveyance of goods absolute in form, and an agree-
ment simultaneously executed by the assignee to reconvey them
upon payment of a loan made by him at the time to the assignor,
constitute a mortgage, as between the parties.® The two instri-
ments are construed together as part of the same transaction. But
to have this effect they must be executed at the same time, or, if
the defeasance be subsequently executed, it must be in pursuance
of an agreement to execute it as part of the original transaction.

.1 Goddard v. Coe, 55 Me, 385. 5 Carpenter v. Snelling, 97 Mass 452;

2 Camp v. Thompson, 25 Minn. 175, Taber v. Hamlin, 97 Mass. 489; Potter
181; followed in Butler v. White, 25 v. Boston Locomotive Works, 12 Gray
Minn. 482. See, however, Gage v. Chese- (Mass.), 154; Lobban v. Garnett, 9 Dana

bro (Wis. 1880), 5 N. W. Rep. 881. (Ky.), 389; Winslow v. Tarbox, 18 Me.
8 Fairbanks v. Bloomfield, 2 Duer (N. 132; Bartels v. Harris, 4 Me. 146; Davis
Y.), 349. v. Hubbard, 38 Ala. 185; Polhemus v.
* Gaither v. Teague, 7 Ired. (N. C.) L. Trainer, 30 Cal. 685. See, also, Jones on

460. Mortgages, §§ 241-255.
18 :
BILL OF SALE AT LAW AND IN EQuITy. [§§ 20, 21.

A subsequent defeasance, not executed in fulfilment of such an
agreement, is void in law unless it be made upon a new consider-
ation?

A bill of sale of chattels with a separate defeasance is as clearly
a mortgage as if the defeasance formed a part of the bill of sale.?
An agreement made by the vendee to reconvey upon certain
terms, although not in the form of a defeasance, will be considered
as in effect a defeasance, when shown to have been made at the
‘time of the making of the bill of sale, and as part of the same
transaction, and to have been intended only as a security for a
previous indebtedness, or for a loan made at the time.? A bill of
sale of an engine, boiler, and fixtures, and a lease made at the
same time by the vendee to the vendor, containing a clause where-
by the latter agrees to buy back the property at a fixed price, con-
stitute a mortgage.*

20. A defeasance subsequently executed will make the sale
a mortgage in equity. Thus, a writing was executed subse-
quently to an absolute bill of sale, reciting that it was agreed be-
tween the parties, at the time the deed of sale was executed, that
if the vendor should repay to the vendee by a specified day the
amount of the consideration expressed in the deed, then the latter
would reconvey the property. Although the recital was not re-
garded as sufficient by itself to show that the parties intended
the bill of sale to operate as a mortgage, yet, it was regarded
as evidence of the highest character against the party who exe-
cuted it; and it was declared that if the other evidence in the
cause showed that the intention of the parties was that the deed
should operate as a mortgage, or even rendered it doubtful
whether a conditional sale or mortgage was intended, a court of
equity would hold the transaction to be a mortgage.®

V. An Absolute Bill of Sale at Law and in Equity.

21. At law the terms of a deed cannot be varied by parol ;
and therefore a formal bill of sale absolute in its terms and under
seal, conveying personal property with covenants of warranty,
cannot, in an action at law between the parties, be shown by parol

1 Freeman v. Baldwin, 13 Ala. 246. 4 In re Gurney, 7 Biss. 414.
2 Brown v. Bement, 8 Johns. (N. Y.) 96. 5 Locke v. Palmer, 26 Ala. 312.
8 Barnes v. Holcomb, 12 Sm. & M. 19

(Miss.) 306.
NATURE OF MORTGAGES OF PERSONAL PROPERTY,

§ 21.]

evidence to have been intended as a mortgage; for this would be
altering or varying by parol evidence the legal effect of the instru-
ment.! But such evidence is admissible for the purpose of showing
that the bill of sale was a pretence and a fraud, intended merely
to deceive creditors, or those who might deal with the parties, as
to the goods, and not to express a real transaction.? Such evi-
dence is also admissible when introduced not to invalidate the
title conveyed by the absolute bill of sale, but to show the consid-
eration of it, and the mode in which the proceeds of a resale of the
property should be applied. Thus, an absolute bill of sale of
certain property was given by the maker of a promissory note
to the payee at the time of executing the note; and in an action
upon the note, it was held to be competent for the defendant to
show that it was agreed subsequently that this property should
be held for the payment of the note, and that, in pursuance of it,
the payee sold the property and assumed to apply the proceeds
upon it, but in fact so applied only a part of the proceeds.2 Such
evidence does not tend to alter or vary the absolute bill of sale
so far as it transferred the property, but to show the real char-
acter of the entire transaction as bearing upon the question how
far the note: could be enforced.”

The fact that a bill of sale of a vessel was intended only as col-
lateral security may be shown by parol for the purpose of nega-
tiving any authority of the master to procure supplies or repairs
on the credit of its holder. The purpose of such evidence is not
to vary or alter the legal effect of the bill of sale as between the
parties to it, or those claiming derivatively under it, but to show
the real nature of the transaction, as bearing upon another and
incidental question.!

The rule against the admission of parol evidence at law does not
apply to the case of a mere bill of parcels, but such evidence is
admissible to show that a mortgage was intended and not a sale.

' Harper v. Ross, 10 Allen (Mass.),
332; Hartshorn v, Williams, 31 Ala, 149;
Bryant v. Crosby, 36 Me. 562; Hogel v.
Lindell, 10 Mo. 483; Montany »v. Rock,
10 Mo. 506 ; and see Jones on Mortgages,
§ 282. Contra, admissible at law as well
as equity. Fuller v. Parrish, 3 Mich. 211.
Parol evidence to show that an absolute
bill of sale was intended_as a mortgage
was admitted at law in a case where both

20

parties concurred in offering such proof.
Reed v. Jewett, 5 Me. 96.

2 Pennock v. McCormick, 120 Mass.
275, per Devens, J.; Hartshorn v. Wil-
liams, 31 Ala. 149.

8 Creech v. Byron, 115 Mass. 824.

* Howard v. Odell, 1 Allen (Mass.), 85.

5 Caswell v. Keith, 12 Gray (Mass.),
351.
BILL OF SALE AT LAW AND IN EQUITY.

[§ 22.

Such a bill of parcels is an informal document, intended only to
specify the price, the articles purchased, the names of the buyer
and seller, and a receipt of payment. It is not used or designed to
embody and set out the terms and conditions of a contract of bar-
gain and sale. It is in the nature of a receipt, and is always open
_to evidence to show the real terms upon which the agreement of
sale was made between the parties.

22. In equity a bill of sale of chattels absolute in terms
becomes a mortgage, upon proof by parol that it was made to
secure a debt, such evidence being always admissible for this pur-
pose.”

It is the fact that there is a defeasance and not the evidence of
the fact that makes an absolute bill of sale a mortgage.? This
fact, must be established by clear and decisive testimony.*

A bill of sale absolute on its face, but accompanied by a verbal
defeasance, is a mortgage not only as between the parties to it,
but also as to third persons who have actual notice or such knowl-
edge of the facts as will charge them with notice; and a sale of
the chattels by the mortgagor to a third person, in payment of a
debt due from him to them, conveys no title.5 If, however, third
persons have in good faith placed trust and confidence in the ap-
parent absolute title of such a purchaser, and have been misled
by the form of the transfer to believe that it is indefeasible, they
have the right to insist that as to them the instrument shall be
what upon its face it purports to be.6

1 Hazard v. Loring, 10 Cush. (Mass.)
267.

331; Rogers v. Vaughan, 31 Ark. 62;
Carter v. Burris, 10 Sm. & M. (Miss.) 527 ;

2 Parks v. Hall, 2 Pick. (Mass.) 206,
per Wilde, J.; Despard v. Walbridge, 15
N. Y. 374; Hodges v. Tenn. Marine &
Fire Ins. Co. 8 N. Y. 416; Smith v. Beat-
tie, 81 N. Y. 542; Coe vo. Cassidy, 72
N. Y. 133; Farrell v. Bean, 10 Md. 217;
Ing v. Brown, 3 Md. Ch. 521 ; Dougherty
v. McColgan, 6 G. & J. (Md.) 275 ; Laeber
v. Langhor, 45 Md. 477; Stokes v. Hollis,
43 Ga. 262; Parish v. Gates, 29 Ala. 254;
Todd v. Hardie, 5 Ala. 698; Hudson v.
Isbell, 5 St. & P. (Ala.) 67; Watson o.
James, 15 La. Ann. 386; National Ins.
Co. v. Webster, 83 Ill. 470; Scott v. Henry,
13 Ark. 112; Johnson v. Clark, 5 Ark.

Humphries v. Bartee, Ib. 282; Ward cv.
Deering, 2 Mon. (Ky.) 9; Loyd v Cur-
rin, 3 Humph. (Tenn.) 462; Hickman v.
Cantrell, 9 Yerg. (Tenn.) 172 ; Wilson v.
Carver, 4 Hayw. (Tenn.) 90; Hurford v.
Harned, 6 Oreg. 862; Bartel v. Lope, Ib.
321; and see Jones on Mortgages, §§ 282-
323.

3 Rogers v. Vaughan, 31 Ark. 62, per
Williams, J.

4 Trieber v. Andrews, 31 Ark. 163.

5 Omaha Book Co. v. Sutherland (Neb.
1880), 6 N. W. Rep. 367.

6 Morgan v. Shinn, 15 Wall. 105, per
Strong, J.

21
§§ 23, 24.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

23. The ground upon which parol evidence is admitted
to prove an absolute deed of sale to be a mortgage is in several
states declared to be fraud, accident, or mistake ;1 and the ear-
liest cases both in England and America admitted such evidence
solely upon this ground.

In some cases it has been declared that it would be fraud upon
the part of the vendee to ‘claim to hold the property discharged
of the parol conditions or trusts which were attached to it with
his consent ; that it would be fraud to insist that the sale is abso-
lute, when in fact it was intended to be redeemable.*

But the better doctrine, and that more generally accepted in
this country, is, that the admission of parol evidence is not con-
fined to cases of distinct fraud, accident, or mistake; but that
such evidence is admissible upon the broad ground that the deed
of sale, though absolute in form, was intended merely as a security
in the nature of a mortgage; and that upon this ground alone
courts of equity may take jurisdiction and afford relief? The
fault with, the instrument in such case is inherent in the transac-
tion itself, and does not arise out of the subsequent conduct of
the vendee in attempting to retain the property as irredeemable.
Upon the same grounds it may be shown that an absolute assign-
ment of a contract for the sale of real estate, or of a policy of in-
surance, was intended to operate as a mortgage.*

24. ‘All the attendant circumstances may be considered for
the purpose of ascertaining the true intention of the parties to an
absolute bill of sale; such as the situation of the parties, their
acts and declarations, the existence of a previous debt from the
vendor to the vendee, the seeking of a loan by the vendor from

1 Alabama: Freeman v. Baldwin, 13
Ala, 246 ; McKinstry v. Conly, 12 Ala. 678;
Sewell v. Price, 32 Ala. 97.

North Carolina: Whitfield v. Cates, 6
Jones Eq. 136.

In Georgia it is provided by statute that
a bill of sale absolute on its face, and ac-
companied with possession of the prop-
erty, shall not be proved at the instance of
the parties, by parol evidence, to be a mort-
gage only, unless fraud in its procurement
is the issue to be tried. Code 1873, § 3809.

2 Sewell v. Price, 32 Ala. 97.

22

8 Arkansas: Johnson v. Clark, 5 Ark.
321. Michigan: Both at law and equity.
Fuller v. Parrish, 3 Mich. 211. New York:
Tyler v. Strang, 21 Barb. (N. Y.) 198.
Virginia: Ross v. Norvell, 1 Wash. 14.

The grounds for the admission of parol
evidence to show that a bill of sale of per-:
sonal property is really a mortgage are
the same as those upon which a deed of
real estate may be shown to be a mort-
gage of it. See Jones on Mortgages, §§
285-323.

* Tyler v. Strang, 21 Barb. (N. Y.) 198.
CONDITIONAL SALE. [§§ 25, 26.

the vendee, the value of the property and the price paid for it, the
continued possession of the vendor, or bis delay in asserting the
transaction to be a mortgage; in short, any and all circumstances
attending the transaction in its inception, its continuance, or its
close, tending to show the object of it, may be shown upon the
one side or the other.?

The question to be determined by the jury is whether the trans-
action was in substance a mortgage, notwithstanding the form the
parties have given to it; and this question is to be determined
upon the evidence, independently of the form of the instrument
and of the form of the transaction. The form may be an inten-
tional disguise of the real nature of the dealing between the par-
ties, and it is the latter that the jury is to find out.2 Evidence of
the declarations of the parties at the time of the transaction, that it
should be a mortgage or should be a sale, is of little or no account.

25. Where one purchases property at an execution or mort-
gage sale for the benefit of the debtor, and afterwards gives the
debtor a written agreement to reconvey the property whenever
the debtor shall pay him the amount paid for the property, the
contract is not a mortgage, because there was no debt due such
purchaser by the execution debtor. If the property should prove
not to be worth the sum paid for it, or should be wholly lost, the
purchaser could assert no claim against the former owner. The
contract is simply one for a repurchase of the property.*

VI. A Mortgage Distinguished from a Conditional Sale.

26. If an absolute sale be made without continuing or cre-
ating a debt on the part of the vendor, but he merely obtains the
privilege of repurchasing within a specified time, the transaction _
is a conditional sale.®

1 Scott v. Henry, 13 Ark. 112, per
Walker J.; Perkins v. Drye, 3 Dana
(Ky.), 170; Smith v. Pearson, 24 Ala. 355 ;
Desloge v. Ranger, 7 Mo. 827; Carter v.
Burris, 10 Sm. & M. (Miss.) 527; Cooper
v. Brock, 41 Mich. 488; Coe v. Cassidy,
72 N. Y. 133. See Jones on Mortgages,
§ 324.

2 Horne v. Puckett, 22 Tex. 201 ;, Hop-
king v. Thompson, 2 Port. (Ala.) 433.

3 Colvard v. Waugh, 3 Jones (N. C.)
Eq. 335; Blackwell v. Overby, 6 Ired. (N.
C.) Eq. 38. ‘

+ Mageé v. Catching, 33 Miss. 672. See
Jones on Mortgages, §§ 331, 332.

5 Sewall v. Henry, 9 Ala. 24; Eiland
v. Radford, 7 Ala. 724; Weathersly v.
Weathersly, 40 Miss. 462; Gomez v.
Kamping, 4 Daly (N. Y.), 77.

23
§ 26.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

Where upon the making of a bill of sale of certain property
the vendor received two hundred dollars, saying that he would
return it if he could, and otherwise that he would sell the prop-
erty to the vendee for one thousand dollars, and other payments
were made sufficient to make up that sum, it was held to be a
question for the jury to determine whether the transaction was a
mortgage or an absolute sale.}

A bill of sale which reserves to the vendor “ the right to redeem
the property ” by a specified day, and contains a stipulation on
his part, that, in the event of his failure to redeem, he would pay
a certain sum for the use of the property in the mean time, —is a
conditional sale, and not a mortgage. It will certainly be so re-
garded when it is shown that the consideration for the sale was
the payment by the vendee, at request of the vendor, of a debt
the latter owed to a third person, who held a mortgage upon the
same property, and that there was no great disparity between the
value of the property and the sum so paid.?

A contract for the purchase of a canal boat, stipulating that the
purchaser shall pay a certain price in instalments, shall have the
possession and use of the boat unless default be made in the pay-
ments agreed upon ; that on full payment a bill of sale shall be ex-
ecuted to him, but in case of default the vendor shall have the
right to take and sell the boat at public auction, on giving such
notice as is required on sales of personal property on execution,
and shall apply the proceeds to the payment of the debt remain-
ing unpaid, and pay the surplus to the purchaser; and providing
that the purchaser shall have no right in or title to the boat until
it shall be fully paid for, was construed to be a conditional sale
rather than a mortgage.2 Whatever doubt or obscurity there was
in the instrument arose from the provision regarding the vendor’s
right to sell in case of the vendee’s default. Except for this pro-
vision it would be clear that the parties intended simply to agree
for a sale of the boat, the title to vest upon payment being fully
made. But the provision for the sale of the boat upon default,
and the application of the proceeds, was thought not to be incon-
sistent with a conditional sale. It should require a striking and

1 Goodwin v. Kelly,42 Barb. (N. Y.) 8 Brewster v. Baker, 20 Barb. (N. Y.)
194, 864; and see Cadle v. McLean (Wis.
2 Logwood v. Hussey, 60 Ala. 417, See, 1880), 4 N. W. Rep. 275,
also, Morrow v. Turney, 35 Ala. 181.

24
CONDITIONAL SALE. [§ 27.

substantial inconsistency, say the court, to overcome the express
language of the concluding clause of the writing, — that nothing
in the writing should be so construed as to give the purchaser any
right in or title to the boat ‘until full payment.

In like manner an agreement for the sale of certain machines at
a stipulated price, payable within a limited time, providing also
that the owner shall lend the machines to the purchaser, and that
if the latter fails to pay, the former shall be ‘at liberty to take
the property away, to enable him to realize the amount and in-
terest,” was held to be a conditional sale, rather than an absolute
sale with a reconveyance by way of mortgage. There was noth-
ing in the transaction to pass the title to the property.?

27. Whether there is a debt between the parties is an im-
portant inquiry in determining the nature of the transaction. If
there was a previons debt, and this was not extinguished by the
sale, but remained as a subsisting obligation, the bill of sale,
when connected with the debt by proper evidence, will be re-
garded as a mortgage. But if the previous debt was extinguished
by the sale, and the vendor has the privilege of repurchasing
within a given time, the transaction is a conditional sale.2, When
the evidence of a previous debt is given up at the time of a sale
apparently absolute, nothing short of the clearest and most con-
vincing proof that a remedy still existed for the recovery of the
debt will suffice to convert the sale into a mortgage.? But al-
though the giving up of the evidence of a former debt is a very
strong circumstance to show that the relation of debtor and cred-
itor was destroyed, and that the property was taken in payment,
yet it is not altogether conclusive.!

If a preéxisting debt was extinguished by a bill of sale, a verbal
agreement by the creditor to resell on the debtor’s fulfilling cer-
tain conditions, makes the transaction a conditional sale and not a
mortgage. ,

1 Grant v. Skinner, 21 Barb. (N. Y.)
581.

2 Poindexter 'v. McCannon, 1 Dev.
(N. C.) Eq. 373 ; Sewall v. Henry, 9 Ala.
24, 31, per Collier, C. J.; M’Ginnis v.
Hart, 4 Bibb: (Ky.), 327 ; Harrison v. Lee,
1 Litt. (Ky.) 191; Bishop v. Rutledge, 7

J.J. Marsh. (Ky.) 217; Hart v. Burton,

Ib. 322; Eiland v. Radford, 7 Ala. 724 ;
Haynie v. Robertson, 58 Ala. 37; Hick-
man v. Cantrell, 9 Yerg. (Tenn.) 172;
Magee v. Catching, 33 Miss. 672. See
Jones on Mortgages, § 326.

8 McKinstry v. Conly, 12 Ala. 678.

4 Locke v. Palmer, 26 Ala. 312.

5 Coe v. Cassidy, 6 Daly (N. Y.), 242.
§ 28.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

If the previous debt was not discharged by the sale, its contin-
uance raises a strong presumption that the transaction was a
mortgage! If the debt was in fact extinguished by the sale, the
mere retention of the paid note for the purposes of the conditional
repurchase does not continue it as a legal obligation of any force
or effect, and does not make the transaction a mortgage.2 Thus,
where a debtor gave his creditor a bill of sale of certain goods for
the amount due the latter upon a note, and while retaining. pos-
session of the goods gave the creditor a storage receipt, acknowl-
edging that he held the goods for the latter, and it was verbally
agreed that the vendor might have the goods again by paying the
debt within a specified time, although the vendee in the mean
time held the note, the transaction was held to be a conditional
‘sale and not a mortgage.®

In a deed of chattels a recital of an existing debt of the grantor
to the grantee for a certain amount as the consideration is not a
sufficient implication that the deed is a mortgage to secure such a
debt, in the absence of any declaration. in it that the conveyance
is made for that purpose.4

28. If there was no previous debt, but one was created at
the time of the sale, and this was made merely as security for
‘the loan, there is a strong indication that the transaction was a
mortgage. It is an important element in the transaction that the
negotiation commenced by a proposition to borrow or lend money.
“ The intention which we are to investigate is whether the parties
designed a purchase and sale on the one hand, or a borrowing
and lending on the other; whether they were treating of an abso-
lute or conditional sale, or of the loan or procurement of money
on security, by the conveyance of property. If the transaction
show that it was designed to borrow money upon a security there-
for, nothing can divest it of the equity of redemption, for it is a
mortgage; and, if a mortgage, not even the agreement of the

1 Dabney v. Sadler, 4 H. & M. (Va.) * Miller v, Baker, 20 Pick. (Mass.) 285.
101; Moseley v. Crocket, 9 Rich. (S. C.) 5 Sewall v. Henry, 9 Ala. 24, 34, per

339 ; Folsom v. Fowler, 15 Ark. 280. Collier, C. J.; Smith v. Quartz Mining
2 Gomez v. Kamping, 4 Daly (N. Y.), Co. 14 Cal. 242; Perkins v. Drye, 3 Dana
77. (Ky.), 170; Locke v. Palmer, 26 Ala. 312;
* Gomez v. Kamping, supra, 82, Daly, Ross v. Ross, 21 Ala. 322; Weathersly v.
J., dissenting. Weathersly, 40 Miss. 462.

26
CONDITIONAL SALE. [§ 29.

parties that it shall be irredeemable would control or change the
rule in equity.” ?

Although the fact that the negotiation between the parties
commenced with a proposition for a loan is to be considered,
still it is to be recognized that the parties may have concluded |
upon a sale instead of a mortgage.2- A person being in want of
money applied to another for a loan, which the latter refused, but
agreed that if the former would convey to him a certain slave. he
would advance the money; and if it should be returned to him,
with interest, at Christmas, he would release the slave, but if not
returned, he would make up and pay the price fixed upon as the
value of the slave, whom he would keep. The parties requested a
scrivener to draw up a conditional bill of sale of the slave, which
was drawn accordingly, and executed by the owner. The latter
failing to make payment at the time specified, the vendee obtained
possession of the slave, insisting that the transaction was a con
ditional sale, which he could make absolute by paying the addi-
tional sum agreed upon to make up the price of the slave ; and such
the transaction was held to be. The real contract was a sale of
the slave, conditional until a certain time, and afterwards abso-
lute.®

An express promise to pay on the part of the alleged mort-
gagor is not absolutely essential to sustain the claim; and the
absence of such a promise, while it strongly tends to disprove the
claim, is not conclusive against it.*

29, Inadequacy of price is a circumstance which indicates
that the transaction is.a mortgage rather than a conditional sale.®
On the other hand, when a bill of sale is made for the full price of
the property, and no evidence of indebtedness is given, and there
is no covenant to repay, this fact indicates an absolute sale, or, if
there be an agreement to reconvey, a conditional sale.®

1 Weathersly v. Weathersly, supra,466, 7 Ala. 724; Hudson v. Isbell, 5 St. & P.

per Harris, J. (Ala.) 67; Wilson vo. Weston, 4 Jones
2 Quirk v. Rodman, 5 Duer (N. Y.), (N. C.) Eq. 349; Fountain v. Bryce, 12
285. . Rich. (S. C.) Eq. 234; Wilson v. Carver, 4
® Moss v..Green, 10 Leigh (Va.), 251. Hayw. (Tenn.) 90; Quirk v. Rodman, 5
4 Morris v. Budlong, 78 N. Y. 543. Duer (N. Y.), 285; Cooper v. Brock, 41

5 Knox v. Black, 1 A. K. Marsh. (Ky.) Mich. 488; Leblanc v, Bouchereau, 16 La,
298; Parish v. Gates, 29 Ala. 254; Todd Ann. 11. See Jones on Mortgages, § 329.
v. Hardie, 5 Ala, 698; Hiland v. Bradford, § Scott v. Britton, 2 Yerg. (Tenn.) 215.

27
§§ 30-32.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

30. The courts incline to construe an absolute sale and
simultaneous agreement for a resale to be a mortgage, rather
than a conditional sale, if there is anything to show that the trans-
action was intended as security for a debt, or the evidence leaves
the intention of the parties in doubt.?

31. A provision in regard to the loss or death of a slave or
animal, which is the subject of an absolute sale, with an agree-
ment for repurchase, is important in determining the character of
the transaction. If it be provided that such loss or death is at the
risk of the vendor, it is apparent that the transaction is a mort-
gage. And, on the other hand, if such loss or death is at the risk
of the vendee, or the privilege to repurchase is made conditional
upon the vendee’s having the slave or animal, or upon the contin-
ued life of the same, without any continning obligation upon the
vendor to pay the price, a conditional sale is indicated.?

A provision that the person who receives the property shall
hold it until a particular day, subject till that time to the risk of
the person from whom the property was received if it should be
destroyed or lost before that day ; but after that day to hold the
property free of any claim on the part of the person from whom
the property was received, and subject to the holder’s own ‘oss if
it should be destroyed or lost after that day, indicates a condi-
tional sale.?

32. A vendor who alleges that his absolute bill of sale was
intended only as a mortgage must make strict proof of the
fact. Having given the transaction this form, he should be
bound according to its terms until he shows by evidence clear and
convincing that both parties to it really intended it should have a
different effect, and that it does not express their real contract.*

1 Poindexter v. McCannon, 1 Dev.

217; Hart v. Burton, Ib. 322; Stone v.
(N. C.) Eq. 373; Barnes v. Holcomb, 12

Willis, 4 B. Mon. (Ky.) 496; Williams v.

S. & M. (Miss.) 306; Locke v. Palmer, 26
Ala. 312; Scott v. Henry, 13 Ark. 112;
Folsom v. Fowler, 15 Ark. 280; Desloge
v. Ranger, 7 Mo. 327 ; Fowler v. Stoneum,
11 Tex. 478, 511.

2 Harrison v. Lee, 1 Litt. (Ky.) 191;
Gray v. Prather, 2 Bibb (Ky.), 223; Berry
v. Glover, 1 Harper Eq. (S. C.) 153;
Bishop v. Rutledge, 7 J. J. Marsh. (Ky.)

28

Cheatham, 19 Ark. 278 ; Johnson ». Clark,
5 Ark. 321; Brown v. Bement, 8 Johns.
(N. Y.) 96.

8 Critcher v. Walker, 1 Murph. (N. C.)
488.

* Purington v. Akhurst, 74: Ill. 490;
Sewell v. Price, 32 Ala. 97; Brantly ».
West, 27 Ala. 542; Williams v. Cheatham,
19 Ark. 278 ; Trieber v. Andrews, 31 Ark.
163. See Jones on Mortgages, § 335.
CONDITIONAL SALE. [§ 82.

A promise under seal by a vendee to his vendor to pay a certain
sum of money for a horse, ‘‘and to secure him the horse stands
his own security,” was held to be a conditional sale and not a
mortgage! The court thought it quite apparent that the parties
intended the owner should retain the property, while possession
was transferred until the price should be paid, or, in other words,
that the title should remain in the seller as security for the price.
This was effected by, leaving the title in the seller until the con-
dition should be fulfilled. The writing declares that “‘ the horse
stands his own security,” by which is plainly meant that the prop-
erty in the horse should remain undisturbed in the vendor. A
like construction had previously been put upon similar instruments
by the same court. Thus, a note in these words, “ Five months
after date I promise to pay H. E. the sum of fifty dollars for a
horse, said horse to be said H. E.’s till paid for,” was held to be a
conditional sale.2 Again, a bond which recited that the obligor
had bargained for a filly which is ‘to stand as security until I
pay the vendor for her,” promising also to take good care of her,
was regarded as doubtful upon the face of the instrument, whether
a mortgage or a conditional sale; and at the trial it was left to
the jury to determine its character from the accompanying circum-
stances. ‘The jury found the instrument to be a conditional sale.
The court held that it was properly left to the jury to determine
the character of the instrument, as they might find the facts to be
whether it was given at the instance of the vendor or of the ven-
dee, and whether it was given before or after the sale had been
completed by delivery ; for if it was given before any title vested
in the purchaser, he could give no title to the property by mort-
gage, and the instrument must be a conditional sale.3

Again, these words at the foot of a promissory note, “It is.
agreed and understood that a sorrel mare, for which the above note
is given, is to remain the property of the payee until said note is
fully paid,’ were held to import a sale to take effect upon the
payment of the price, and not a mortgage to secure the price.*
The same construction was given to a writing which recited the

1 Clayton v. Hester, 80 N.C.275. In The latter case is criticised and disap-
Deal v. Palmer, 72 N.C. 582, w different proved in Clayton v. Hester, supra, 277.
construction was given to similar words 2 Ellison v. Jones, 4 Ired. (N. C.) 48.
used in a note given for the purchase 8 Gaither v. Teague, 7 Ired. (N. C.) 460.

money of a mule, namely : “The mule to * Ballew v. Sudderth, 10 Ired. (N. C.)
stand security for the price until paidfor.” 176. .
29
§ 33.] NATURE OF MORTGAGES OF PERSONAL PROPERTY.

purchase of a filly, which was to stand as the vendor’s own right
and property until paid for.

33. Whenever it appears that the parties intended a con-
ditional sale and not a mortgage, the instrument will be so con-
strued,? notwithstanding the leaning of the courts in favor of con-
struing an instrument which leaves the intention of the parties
in doubt to be a mortgage rather than a conditional sale.

There is no difference in point of law between a sale for a price
paid or to be paid, to become absolute on the happening of a par-
ticular event, and a purchase accompanied by an agreement to re-
sell upon certain agreed terms. In both cases the sale is to be
regarded as conditional, and if the condition which is to defeat it
be promptly performed, in the one case the title will not vest in
the vendee, and in the other it will be divested. If the condition
be performed at the stipulated time, not only the jus ad rem but
the jus zm re will vest in the party who is to become, by the con-
tract, the proprietor of the thing.?

Thus, upon the sale and delivery of property, the vendee gave
to the vendor a writing acknowledging -he had received the prop-
erty in trust, the ownership being exclusively vested in the ven-
dor, and stating that upon the payment of a certain sum, the
ownership should then vest in the vendee. The language used
was regarded as plainly indicating an intent that the sale and de-
livery should not divest the vendor’s title until the vendee should

perform the condition subsequent ; and therefore the transaction
was a conditional sale.*

And so where a debtor gave his creditor a bill of sale of a slave,
with an indorsement upon it that the former might have the slave
again by paying within a specified time the price for which the
sale was made, the circumstances were held to repel the ideéa of
a mortgage, or of a security redeemable at an indefinite period?
The old securities were given up, and no new securities were

1 Parris v. Roberts, 12 Ired. (N. C.) 4 Plummer ». Shirley, 16 Ind. 380.
268. 5 Poindexter v. McCannon, 1 Dev.

2 Chapman v. Turner, 1 Call (Va.), (N.C.) Eq. 377; and-see Berry v. Glover,
280; Strider v. Reid, 2 Gratt. (Va.) 88; 1 Harper Eq. (S. C.) 153; Murphy »
Forkner v. Stuart, 6 Ib. 197; Bracken v. Barefield, 27 Ala. 634; Freeman v. Bald-
Chaffin, 5 Humph. (Tenn.) 575, win, 13 Ala, 246,

3 Sewall v. Henry, 9 Ala. 24, 34, per
Collier, C. J.

380
CONDITIONAL SALE. [§ 83.

taken; the price paid was a full one; the purchaser himself was
necessitous, and obliged to part with the property to pay his own’
debts, on the day after that limited for the repurchase. Upon
such sale he only got his money back; he took immediate pos-
session of the property, while in the case of a mortgage the mort-
gagee is usually as unwilling to take possession as the mortgagor
is to part with it; and finally the seller brought suit to redeem
twelve years after the time limited for repurchase. The court
remark that if this cannot be considered a purchase, then there
can be none, unless it be absolute at the time of making it and
forever. :

A condition in a bill of sale of slaves that if the purchaser is
not satisfied with the negroes, or the negroes are not satisfied with
the purchaser, then the seller has the “‘ privilege and authority
to redeem the said negroes,” whenever he shall return the amount
of the purchase money, ‘or a negro girl to the satisfaction of
the purchaser,” does not make the instrument a mortgage, but a
conditional sale.1

} 1 Chambers v. Hise, 2 Dev. & B. (N. C.) Eq. 305.
31
CHAPTER II.

REQUISITES OF FORM AND EXECUTION.

IV. The debt secured, 79-98.
V. Special provisions, 99-101.
VI. Execution and delivery, 102-111.

I. The form of a chattel mortgage, 34—
39.
II. The parties, 40-52.
III. Description of the property, 53-78.

I. The Form of a Chattel Mortgage.

834. In general no particular words are required to constitute
a mortgage of personal property. All that is requisite in a for-
mal mortgage is that there should be a sale of property by the
mortgagor to the mortgagee as security for the payment of a debt
or the performance of some other duty or obligation, with a condi-
tion that the sale shall be void upon the payment of such debt, or
the performance of such duty or obligation. We have already
seen that the most informal instruments will be regarded in law
as mortgages, if they show that a sale was made as security; and
we have also seen that in equity any sale of chattels as security
for a debt is regarded as a mortgage, although the fact that such _
was the purpose of the sale be not expressed by the instrument of
sale, if it be proved by evidence aliunde. The form of the sale
is immaterial, if «in fact it was made as security ; only in law this
fact must appear upon the face of the instrument, while in equity
it need not so appear.1

‘1 The,following is a form of ¢mortgage
of personal property with a power of sale.
It is in common use in several states, and
is doubtless sufficient in all states in which
statutes have made no change of the com-
mon law doctrines respecting chattel mort-
gages : —

Know all men dy these presents that ,
in consideration of paid by , the
receipt whereof is hereby acknowledged,
do hereby grant, sell, transfer, and deliver
unto the said the following goods

32

and chattels, namely : To have arid
to hold all and singular the said goods
and chattels to the said and
executors, administrators, and assigns, to
their own use and behoof forever.

And I hereby covenant with the grantee +
that I am the lawful owner of the said
goods and chattels; that they are free
from all incumbrances , that
have good right to sell the same as afore-
said; and that will warrant and de-
THE FORM OF A CHATTEL MORTGAGE.

[§ 35.

A chattel mortgage, in the form prescribed by statute for a
mortgage of real estate, is valid and sufficient in respect to its
form to vest in the mortgagee an interest in the property, accord-
ing to the apparent intent of the parties.

35. In a few states there are statutory forms; but these
forms are not exclusive of other forms. They are only forms
that may be used. They have generally been enacted in the in-
terest of brevity and simplicity in conveyances, and are useful as

showing how brief and simple a form may be used.?
In Dakota? a mortgage of personal property must be signed

fend the same against the lawful claims
and demands of all persons.

Provided, nevertheless, that if , or

executors, administrators, or as-

signs, shall pay unto the grantee , or

executors, administrators, or assigns
the sum of in from th’s date,
with interest semi-annually at the rate of

per cent. per annum; and until such
payment shall not waste or destroy the
said goods and chattels, nor suffer them or
any part thereof to be attached on mesne
process; and shall not, except with the
consent in writing of the grantee or
representatives, attempt to sell or to re-
move from the same or any part
thereof,—then this deed, as also
note of even date herewith, signed by
whereby promise to pay to the grantee
or order the said sum and interest at the
times aforesaid, shall be void.

And it is agreed that until default in
the performance of the condition of this
deed, © and executors, administra-
tors, and assigns, may retain possession of
the above mortgaged property and may
use and enjoy the same.

In witness whereof hereunto set
hand and seal this day of in
the year one thousand eight hundred and
eighty-

1 Sidener v. Bible, 43 Ind. 280.

2In California (Civil Code, § 2957),
and Dakota Territory (Rev. Codes 1877;
§ 1742 of Civil Code), a mortgage of per-
sonal property may be made in substan-

tially the following form: This mortgage,
3

made the “day of , in the year
, by A. B. of , by occupation a
, mortgagor, to C. D. of , by
occupation a » Mortgagee, witness-
eth: That the mortgagor mortgages to the
mortgagee (here describe the property), as
security for the payment to him of
dollars, on (or before) the day of
, in the year » With interest
thereon (or, as security for the payment
of a note or obligation, describing it, &c.)
A.B.
In Maryland (Code 1878, art. 44, §§ 65
and 51), the following form, or a form to
like effect, is sufficient, and any covenant,
limitation, restriction, or proviso allowed
by law may be added, annexed to, or intro-
duced with the same: I » of
county, Maryland, being now indebted to
of county, in the sum of
dollars, with interest from , in consid-
eration thereof, do hereby bargain and sell
to the said , the following property
(here describe property). Provided, that
if I, the said , Shall pay to the said
the said sum of dollars, with the
interest thereon, on or before the day
of , then these presents shall be void.
Witness my hand and seal, this day
of , [Seal.]
A mortgage of personal property is
deemed to contain an implied covenant,
unless the contrary is therein expressed,
by the mortgagor to pay the debt and in-
terest specified in the mortgage.
3 Rev. Codes 1877; § 1749 of Civil Code.

33
§ 36.] REQUISITES OF FORM AND EXECUTION.

by the mortgagor in the presence of two persons, who must sign
the same as witnesses thereto, and no further proof or acknowledg-
ment is required to admit it to be filed.

In Georgia! no particular form is necessary to constitute a
mortgage. It must clearly indicate the creation of a lien, specify
the debt to secure which it is given, and, the property upon which
it is to take effect. It must be executed in the presence of, and
be attested by, or proved before, a notary public, or justice of any
court in this state, or a clerk of the Superior Court.?

36. In several states an affidavit verifying the essential
facts or recitals of the mortgage, or that the mortgage is given
in good faith, or that the consideration is truly stated, must be af-.
fixed to the instrument. :

Thus in Arizona Territory ?_and Idaho Territory? a chattel
mortgage has no legal force or effect except between the parties
thereto, unless the residence of the mortgagor and mortgagee,
their profession, trade, or occupation, the sum to be secured, the
rate of interest to be paid, when and where payable, are set out in
the mortgage ; and unless the mortgagor arid mortgagee make af-
fidavit that the mortgage is bond fide, and made without any de-
sign to defraud or delay creditors. ‘The affidavit must be at-
tached to such mortgage.

In California > a mortgage of personal property is void as against
creditors of the mortgagor and subsequent purchasers and incum-
brancers of the property in good faith and for value, unless it is
accompanied by the affidavit of all the parties thereto, that it is
made in good faith and without any design to hinder, delay, or
defraud creditors ; and unless it is acknowledged or proved, certi-
fied and recorded, in like manner as grants of real estate.®

In Delaware’ no mortgage is valid unless there be indorsed
upon or annexed to it, and recorded with it, an affidavit that the
said mortgage was made for the bond fide purpose of securing a
debt or making indemnity, as the case may be, and was not

1 Code 1873, § 1935. essary to state the profession, trade, or’ oc-

? It is not necessary that a notary pub- cupation of the parties.
lic shall affix his seal to the probate of a 5 Civil Code, § 2957.
deed by a subscribing witness. Nichols v. 6 The affidavit need not be signed by

Hampton, 46 Ga, 253. the party making it. Ede v. Johnson, 15
8 Compiled Laws, 1877, § 3644. Cal. 53.

* P. 661,§1. In Idaho T. it is not nec- 7 Laws 1877, ch. 477, § 3.
34
THE FORM OF A CHATTEL MORTGAGE. [§ 37.

made to cover the property of the mortgagor, or protect it from
his creditors, or to hinder or delay them in the collection of theit
debts. :

In Maryland! no bill of sale or mortgage of personal property
is valid, except as between the parties, unless the bargainee, or
vendee, or mortgagee, or some one of them, or the agent of some
one of them, shall make the affidavit required to be made by mort-
gagees of real estate. The affidavit so required is an oath or
affirmation of the mortgagee that the consideration in said mort-
gage is true and bond fide, as therein set forth; this affidavit may
be made at any time before the mortgage is recorded, before any
one authorized to take the acknowledgment of a mortgage, and
the affidavit shall be recorded with the mortgage.?

In Ohio? the mortgagee, his agent or attorney, shall, before the
instrument is filed, state thereon, under oath, the amount of the
claim, and that it is just and unpaid, if given to secure the pay-
ment of a sum of money only, and if given to indemnify the mort-
gagee against liability as surety for the mortgagor, such sworn
statement shall set forth such liability, and that the instrument
was taken in good faith to indemnify against loss that may result
therefrom. The omission of such statement renders the mortgage
void as against the creditors of the mortgagor. The form of the
affidavit is immaterial if it contain the requisite facts. It may re-
fer to matters contained in’ the mortgage, and the matters thus
referred to will be regarded as part of the affidavit. Where a
mortgage is given to secure the mortgagee against liability as
surety for the mortgagor, and also to secure a debt of a third
person, an affidavit which shows the nature and amount of the
liability of the mortgagee as surety, as well as the amount of the
other debt secured, and that the mortgage was executed in good
faith to secure both obligations, is sufficient.®

37. New Hampshire and Vermont.§— In the former state,
each mortgagor and mortgagee must make and subscribe an affi-
davit in substance as follows:’ “ We severally swear that the fore-

1 Rev. Code 1878, art. 44, § 54. 7 Inasmuch as the statute requires that
2 Rev. Code-1878, art. 44, § 35. the mortgagor and mortgagee shall sub-
3 R. 8. 1880, § 4154; 66 Ohio L. 345; scribe the affidavit, it is not a compliance
Act May 7, 1869. with the statute for them to write their
4 Hanes v. Tiffany, 25 Ohio St. 549. names in the body of the affidavit. Stone

5 Gardiner v. Parmalee, 31 Ohio, 551. v. Marvel, 45 N. H. 481.
6 G. S. 1878, ch. 137, §§ 1-18. 35
REQUISITES OF FORM AND EXECUTION.

§ 87.]

going mortgage is made for the purpose of securing the debt spec-

‘ified in the condition thereof, and for no other purpose whatever,
and that said debt was not created for the purpose of enabling
the mortgagor to execute said mortgage, but is a just debt, hon-
estly due, and owing from the mortgagor to the mortgagee.”
Where copartners are parties to mortgages of personal property,
the affidavit required may be made and subscribed by any partner
in behalf of the firm.1 Where a corporation is a party to such
mortgage the affidavit required may be made and subscribed by
any director thereof, or any person authorized on the part of such
corporation to make or receive such mortgage.”

If such mortgage is given to indemnify the mortgagee against
any liability assumed, or to secure the fulfilment of any agreement
other than for the payment of a debt due from the mortgagor to
the mortgagee, such liability or agreement shall be stated truly
and specifically in the condition of the mortgage, and the affidavit
shall be so far varied as to verify the validity, truth, and justice
of such liability or agreement.

Such affidavit, with the certificate of the justice who adminis.
tered the oath, must be made upon the mortgage and recorded
with it. ‘

Under this statute’a mortgage cannot be given to secure the
debt of a third person. If given to secure a debt, it must be a
debt due from the mortgagor to the mortgagee; if to secure a lia-
bility, it must be a liability incurred by the mortgagee for the
mortgagor; and if to secure any other agreement, it must be one
between the parties to the mortgage. The oath must conform to
the purpose of the mortgage, and must be varied to suit the obli-
gation secured. It must verify the truth, validity, and justice of
the debt, or of the liability, or of the agreement, as the case may
be.4 If the mortgage secure a debt to the mortgagee and also a
liability incurred by him, and the oath describe both obligations

1 An affidavit signed by one member of
the firm in the firm name is sufficient.
Randall v. Baker, 20 N. H. 335. If the
magistrate certify that A. & B. (the co-
partners) took the oath, he in effect certi-
fies that both the members of the firm so

designated took the oath; and it is not .

necessary to this construction that he
should certify that they were “ severally ”
sworn.

86

2 When a mortgage is taken by a town
to secure a debt due it, the affidavit on be-
half of the town may be made and sub-
scribed by one selectman, for he is one of
its agents intrusted with the management
of its financial affairs. Sumner v. Dalton,
58 N. H. 295.

8 Parker v. Morrison, 46 N. H. 280.

# Parker v. Morrison, supra.
THE FORM OF A CHATTEL MORTGAGE. [§ 37.

in the same way as debts due the mortgagee, the mortgage will
be valid to secure the debt, but void as against creditors, so far as
it was intended to secure the liability incurred.! If the affidavit
speak of the debt only, the mortgage will be good as to that, al-
though invalid as a security for the liability.?

The true character of the mortgage, as given to secure a debt,
or a contingent liability, or a special agreement, must be stated in
the condition and verified in the affidavit. Although a note for a
given sum may be valid as an indemnity for a contingent liability,
if it be secured by mortgage, the true character of the note as
an indemnity must be stated in the condition ;% and if not so stated
and verified by oath, the mortgage will be invalid against cred-
itors.4

The form of the oath prescribed for the execution of a chattel
mortgage precludes its being made to secure future claims.®

In Vermont the statute differs but slightly from that of New
Hampshire, on which it was based.6 Each mortgagor and mort-
gagee shall make and subscribe an affidavit in substance as fol-
lows: “ We severally swear that the foregoing mortgage is made
for the purpose of securing the debt specified in the conditions
thereof, and for no other purpose whatever, and that the same is
a just debt, honestly due and owing from the mortgagor to the
mortgagee.” This affidavit, with the certificate of the oath signed
by the authority administering the same, shall be made upon, or
appended to, such mortgage, and recorded therewith. When a
corporation is a party to such mortgage, the affidavit required
may be made and subscribed by any director, cashier, or treasurer
thereof, or by any person authorized on the part of such corpora-
tion to make or receive such mortgage. Ifsuch mortgage is given
to indemnify the mortgagee against any liability assumed, or to
secure the fulfilment of any agreement other than the payment
of a debt due from the mortgagor to the mortgagee, such liability
or agreement shall be stated truly and specifically in. the condi-
tion of the mortgage, and the affidavit shall be so far varied as to
verify the validity, truth, and justice of such liability or agree-
ment. All wilful falsehood committed in any such affidavit shall

1 Parker v. Morrison, supra; Belknap 8 Belknap v. Wendell, supra.

v. Wendell, 31 N. H. 92. 4 Belknap v. Wendell, supra.
2 Sumner v. Dalton, 58 N. H. 295. See » Page v. Ordway, 40 N. H. 253.
Belknap v. Wendell, 31 N. H. 92,101. - ® Laws 1878, p. 58, § 1, 3, 4, 5, 6, 7, 9.

3T
§§ 88-40.] | REQUISITES OF FORM AND EXECUTION.

be deemed perjury, and punished accordingly. No such mort.
gage shall be valid against any person except the mortgagor, his
executors and administrators, unless possession of property is de-
livered to the mortgagee, or the mortgage is sworn to and recorded
in the manner herein prescribed.

38. Possession by the mortgagee dispenses with the neces-
sity of an affidavit. The purpose of the statute in requiring
the affidavit is to guard against the making of fraudulent or fic-
titious mortgages, which would enable the mortgagor to retain
possession of the property and set his creditors at defiance.
Therefore, the omission of the affidavit does not invalidate the
mortgage as against a subsequent purchaser or mortgagee, or
an attaching creditor, provided the mortgagee has taken and re-
tained possession of the property. Such possession is notice of
the mortgagee’s interest.?

39. A statute forbidding the making of a second mortgage
of personal property, without a reference in it to the first, does
not make the second mortgage executed in violation of this stat-
ute void, for its object is to secure the rights of the second mort-
gagee, and this would be defeated by holding the mortgage void.
The parties do not stand in pari delicto. The mortgagee might
avoid the mortgage, if he was a sufferer, but it cannot be avoided
by the mortgagor. There is a statute to this effect in New
Hampshire. It provides that no mortgagor shall execute any
second or subsequent mortgage of personal property while the
same is subject to a previously existing mortgage or mortgages
given by such mortgagor, unless the fact of the existence of such
previous mortgage or mortgages is set forth in the subsequent
mortgage. There is a statute in the same terms in Vermont.*

II. The Parties.

40. An infant's mortgage is not void but voidable. It is
binding until it is avoided. Any act of his clearly showing his

1 Gooding v. Riley, 50 N. H. 400, per tum to the contrary in Janvrin v. Fogg,
Bellows, C. J. 49 N. H. 340,

2 Gooding v. Riley, supra; Clark v. 8 Leach v. Kimball, 34. N. H. 568; Gen.
Tarbell 57 N.H. 328; overruling dic- Laws, 1878, c. 187, § 14.

= Laws 1878, p. 59, § 9.
38
THE PARTIES. [§ 40.

intention not to be bound by the mortgage is a sufficient avoid-
ance of it. An unconditional sale of the mortgaged property is
such an act. He may avoid the mortgage before he is of age,
or afterwards; but he must disaffirm it within a reasonable time
after attaining his majority. What would be a reasonable time
would depend upon circumstances; and where there are various
circumstances to be passed upon as matters of fact, the question ©
is one for the jury to determine under the instructions of the
court.1

If the property be taken from the infant’s possession by virtue
of such a mortgage, he may disaffirm the contract and reclaim the
property.”

Moreover, an infant may disaffirm his mortgage without return-
ing the money borrowed upon it, the mortgage not having been
given for purchase money, or for the purchase of articles necessary
for his use. If he could not repudiate the transaction except upon
the condition of returning the loan, the privilege which the law
accords to infancy for its protection would be of little benefit.
** Under the operation of such a rule, money lenders would soon
become permanently possessed of the property of infant spend-
thrifts; for with them the temptation to borrow for immediate
gratification is generally too great to be resisted. Its adoption as
a rule would be in violation of the principle of protection that un-
derlies the whole doctrine‘ of the law pertaining to the dealings
and contracts of infants.” 3

Mr. Justice Cooley, in refutation of the same idea,‘ says if it be
correct, ‘‘ the privilege of infancy is absolutely without avail in

1 State v. Plaisted, 43 N. H. 413; Mil-
ler v. Smith (Minn. 1879), 2 N. W. Rep.
942; Chapin v. Shafer, 49 N. Y. 407,
per Peckham, J. “ By a rule of the com-
mon law it is declared that where the con-
tract or instrument is to the disadvantage
of the infant it is void; that no contracts of
infants are void except those in which it
would be better for the infant as a general
principle that they should be so held. It
is difficult to see how, as a general princi-
ple, it can be advantageous to an infant to
give a mortgage upon personal property
at a short date to secure an old debt,
which, as a general rule, puts a mortgagor
in embarrassed circumstances quite in the

power of the mortgagee, certainly in most
cases to sacrifice the property at a forced
sale. Giving a mortgage to secure the pur-
chase money of property is a different
thing. The end of the rule is the protec-
tion of the infant. But I do not rest the
case upon this ground, as the tendency of
modern authorities is to make nearly all
deeds or contracts of infants not void, but
voidable.”

2 Miller v. Smith, supra.

8 Miller v. Smith (Minn. 1879), 2 N. W.
Rep. 942; per Cornell, J.; Green v.
Green, 7 Hun (N. Y.), 492; and see Ri-
ley v. Mallory, 33 Conn. 201, 206.

* Corey v. Burton, 32 Mich. 30.

89
§ 40.] REQUISITES OF FORM AND EXECUTION.

every case of a voidable contract where the infant is not in posi-
tion to restore such consideration as he may have received for it.
If he borrows money and improvidently disposes of it, as the law
from his want of discretion presumes he may do, this very indis-
cretion, which the law endeavors to shield and protect, becomes
the means of fastening the imperfect obligation irrevocably upon
him, and his inability to refund what he has borrowed affirms his
contract to repay it with interest. It is needless to say that there
is no privilege and no protection in any such rule.”

An infant who has bought personal property, and given back a
mortgage fora part of the purchase money, may upon coming of.
age avoid the mortgage; but by so doing he annuls the sale to
himself, and cannot claim the property by virtue of it. The sale
and the mortgage amount in law to one transaction, and one part
of it cannot be disaffirmed without also disaffirming the other.
Thus, an infant having purchased a horse and paid part of the
consideration, and given a mortgage upon it for the balance, he
cannot maintain trespass against the mortgagee or his assignee for
taking the horse by virtue of the mortgage, on the ground that
the mortgage was given during his minority, and therefore void?
In seeking to avoid the mortgage in this way, he loses the benefit
of the payment he has made upon the purchase of the horse. If)
he would avoid the mortgage and recover the amount he bas paid
upon the purchase, he should repudiate the whole transaction,
both the sale and the mortgage, and demand the money paid; or
he should pay the mortgage and then make a tender of the horse,
and having done this he would be in a’situation to recover all
he had paid of the purchase money. But’ instead of fulfilling
his contract he cannot hold the horse and repudiate his mort-
gage?

Upon the same principle, a surety upon an infant’s notes for
purchase money of chattels, who has paid a judgment upon the
notes and received from the infant a note for the amount so paid,
‘secured by mortgage of the same chattels, is entitled to hold the
property as against a subsequent purchaser from the infant with

1 Heath v. West, 28 N. H. 101 ; Roberts 2 Bartholomew v. Finnemore, 17 Barb.
v. Wiggin, 1 N.H. 73; Curtiss vu. McDou- (N. Y.) 428.
gal, 26 Ohio St. 66; Skinner v. Maxwell, 8 Heath v. West, supra ; Carr v. Clough,
66 N.C. 45; Corey v. Burton, 32 Mich. 26N. H. 280.
34. See Jones on Mortgages, §§ 104, 105.
THE PARTIES. [§§ 41-48.

knowledge of the mortgage. The indebtedness so contracted
should be treated as a debt for a part of the purchase money ; for,
if regard be had to the essence of the transaction rather than the
form of it, this is really what it amounts to.t :

41. A mortgage made by an insane person is not binding upon
him in law or equity. The contract is voidable. Toa suit brought
to avoid such contract, it is no defence that the defendant, at the
time he took the mortgage, was not apprised of the plaintiffs in-
sanity, or had no reason to suspect it from his conduct or other-
wise, and did not overreach him, or practise any fraud or unfair-
ness in the transaction.?

42. In general it may be said that a married woman may
make a valid mortgage of chattels which are her separate
property.2. The common law disabilities of married women have
been in large part removed in this country by statutes which
enable them to take and hold property by gift or purchase, and to
contract with reference to such property as if sole.

A mortgage by a married woman of goods, of which she
avouches herself to be the lawful owner, but which really belong
to her husband, passes no title such as will enable the mortgagee
to replevy the goods from a third person, although the husband
‘has indorsed on the mortgage his formal sanction of it, with a
declaration that his wife acted as his agent. Such ratification
supplied whatever authority was necessary to give validity to the
execution of the instrument by the wife; but it did not change
the character of the instrument so as to give it an effect which its
own terms did not import. It did not purport to convey his
property at all, but her property. Therefore the mortgagee could
not replevy the goods from an officer who had attached them as
the property of the husband, for he must maintain his action on
the strength of his own title.4

43. Whether a husband may make a valid chattel mortgage

1 Knaggs v. Green (Wis. 1880), 4 N. to mortgages of their real property, see

W. Rep. 760. Jones on Mortgages, §§ 106-118. Much
2 Seaver v. Phelps, 11 Pick. (Mass) 304. that is there stated applies equally to
See Jones on Mortgages, § 103. mortgages of personal property by mar-

8 For a discussion of the rights and dis- ried women.
abilities of married women with reference * Lewis v. Buttrick, 102 Mass. 412.
§§ 44, 45.] | REQUISITES OF FORM AND EXECUTION.

to his wife, or a wife may make such a mortgage to her husband
of her separate estate, depends upon the statutes relating to mar-
ried women, and the interpretation of such statutes. Such a
mortgage is valid in Wisconsin.

But a husband may make a valid mortgage to a third person to
secure a loan made him by his wife of money which was her sole
and separate estate; and if such third person assign it to the wife
by an assignment in the usual form, but without indorsing the
mortgage note, the wife may maintain trover against an officer
who has attached the property on a writ against the husband.?
She could not, of course, foreclose the mortgage while her hus-
band continued to own the equity of redemption, because she
could not be a party to an action against him; but,.being the
legal and lawful holder of the mortgage, she could maintain any
action necessary to protect her title or possession against a third
person.? Such a mortgage would be without legal consideration
in case the money loaned by the wife were not, under the existing
laws, her separate property, but property which the husband had
the right to reduce to possession and use.*

44. A mortgage by partners upon partnership property to
secure an individual debt of one of the partners is valid. The
rule preferring partnership property for the payment of partner-
ship debts is for the benefit of the partners, and they may waive
it. The giving of such a mortgage is itself a waiver.6 The part-
ners, while the partnership property is still under their control,
have power to appropriate it to secure their individual debts.
The mere preference of individual debts by. mortgage to secure
them over partnership debts is not such a fraud upon partnership
creditors that a court of equity will set it aside.®

45, One member of a copartnership may mortgage his
interest in the firm to secure his own individual debt. Such a

’ Fenelon v. Hogoboom, 31 Wis. 172. 8 Degnan v. Farr, supra, per Gray,
2 Degnan v. Farr, 126 Mass. 297. If C.J.
the note had been indorsed so as to pass) +4 Phillips v. Frye, 14 Allen (Mass.),
the legal title in it to the wife, it might 36.
have been extinguished in law because of 5 In re Kahley, 2 Biss. 383; and see
her incapaeity to be a party to a contract Kirby v. Schoonmaker, 3 Barb. (N. Y.)
with, or to an action against, her husband. Ch. 46.
Chapman »v. Kellogg, 102 Mass. 246. 8 Nitional Bank of the Metropolis v.
49 Spr..gue, 20 N. J. Eq. 13.
é THE PARTIES. [§ 45.

mortgage is, of course, subject to the prior equities of the part-
nership creditors. Jf the partnership business after such a mort-
gage be closed, and a receiver of it appointed, in whose hands,
after settling the affairs of the firm, there remains a surplus to
the credit of the members of the firm, such surplus will belong
to the mortgagee in preference to the assignee in bankruptcy of
the mortgagor.

A mortgage by an individual partner, for his own purposes, of
all his right, title, and interest in and to’ its real estate and other
property of the firm, imposes no actual lien upon the property
itself, or upon any part of it. The corpus is joint property. The
interest of an individual partner consists only of his share in the
surplus remaining after the payment of the debts and settlement
of the accounts of the firm. It is not until that interest is ascer-
tained definitely, and set apart as the share of the mortgagor,
that his mortgage is available against any specific property.”

A debt incurred by a partnership for the accommodation of one
of the partners is a partnership debt; and, as against him, more-
over, the other members of the partnership would have a lien on
the partnership effects for the payment of such debt. Therefore,
where a partnership borrowed money for the accommodation of
one of the two partners, who executed to the other a mortgage on
his interest in the partnership property as security, and the latter
paid the debt, it was held that his lien on the partnership prop-
erty, for the sum so paid, was not dependent on the mortgage or
its registration, but was superior to the lien of a prior unre-
corded mortgage, of which he had no notice, given by his copart-
ner for his individual debt, and recorded before the mortgage to
the partner was recorded.?

A member of an unincorporated joint stock company represent-
ing an interest in real and personal property may mortgage his
equitable interest in the property. Such a mortgage would con-
vey the member’s proportion of the joint property, subject to the
debts of the association and to the equities of its other mem-
bers.*

1 Thompson v. Spittle, 102 Mass. 207. a chose in action, and not within the act.
See Monroe v. Hamilton, 60 Ala. 226; Bainbridge, In re, 8 Ch. D. 218.
Smith v. Andrews, 49 Ill. 28. Under the * Tarbel v. Bradley, 7 Abb. (N. Y.) N.
English Bills of Sale Act of 1854,a mort- C. 273.
gage by a partner of his share in a part- 8 Warren v Taylor, 60 Ala. 218.
nership was regarded as an assignment of * Durkee v. Stringham, 8 Wis. 1.

43
§ 46.]

46. One partner may execute a valid mortgage of partner-
ship goods to secure a partnership debt, by signing the firm
name, or the individual names of the members of the firm.! One
copartner having authority to pass a valid title to such property
by bill of sale may, as incident thereto, execute a transfer of it in
any form or mode by which such title could in any case be legally
transferred. It is immaterial whether he sign the name of each
copartner separately, or sign the firm name.? The addition of a
seal to the individual names does not invalidate the mortgage, be-
cause a seal is unnecessary.2 Therefore if one partner, being au-
thorized to execute a mortgage of personal property, affix his own
name and seal to a mortgage whose testatwm clause sets forth that
the firm by such partner, one of the firm, had thereto set their
hands and seals, the instrument may be regarded as the deed of
all the partners, upon proof of such partner’s prior authority, or
of the subsequent assent of the other partners.t It seems, more-
over, that the general authority a partner has to sell and dispose
of partnership goods, in the regular course of business, and the au-
thority he has to pay the debts of the firm, and to apply the prop-
erty of the firm for that purpose, is authority for his mortgaging
the partnership property, to raise money for that purpose At
any rate the acquiescence of the other parties in such an act would
place the validity of it beyond question, and it does not matter
whether the acquiescence be given at the time of the transaction:
or subsequently. But there are well considered decisions which

REQUISITES OF FORM AND EXECUTION.

Dill. 462.

’ Patch v. Wheatland, 8 Allen (Mass.),
102; Nelson v. Wheelock, 46 III. 25.

2 Johnson v, Nelson (Ohio Com. Pleas
1861), 3 West. L. M. 306; Mabbett v.
White, 12 N. Y. 442; Graser v. Stellwa-
gen, 25 N. Y. 315; Cooley v. Hobart, 8
Iowa, 358; Paterson v. Maughan, 39 U.
C. Q. B. 37; Halpenny v. Pennock, 33 U.
C. 229.

8 Milton v. Mosher, 7 Met. (Mass.) 244;
Tapley v. Butterfield, 1 Met. (Mass.) 515;
Lamb v. Durant, 12 Mass. 54; Hawkins
v. Hastings Bank, 1 Dill. 462; Purviance
v. Sutherland, 2 Ohio St. 478; Sweetzer
v. Mead, 5 Mich. 107 ; Woodruff v. King
(Wis. 1879), 2 N. W. Rep. 452; Hawkins
v. First National Bank of Hastings (U. 8.
Dist. Ct. Minn.), 2 N. Bank. Reg. 337; 1

44

See, however, Weeks v. Mas-
como Rake Co. 58 N. H. 101.

4 Gibson v. Warden, 14 Wall. 244;
Tapley v. Butterfield, 1 Met. (Mass.) 515.

5 Tapley v. Butterfield, 1 Met. (Mass.)
515; Fromme v. Jones, 13 Iowa, 474;
Nelson v. Wheelock, 46 Ill. 25; Richard-
son v. Lester, 83 Ill. 55. But the execu-
tion of a mortgage'of partnership property
by one partner in his individual name
passes no title. Clark v. Houghton, 12
Gray (Mass.), 38.

6 Skinner v. Dayton, 19 Johns. (N. Y.)
513; Smith v. Kerr,3 N. ¥. 144; Cady v.
Shepherd, 11 Pick. (Mass.) 400; Swan v.
Stedman, 4 Met. (Mass.) 548. And see
Richardson v. Lester, 83 Ill. 55.
THE PARTIES. [§§ 47-49.

go to the extent of holding that one partner has authority to trans-
fer all the partnership effects to a creditor of the firm in payment
of a debt, without the knowledge or consent of his copartner, al-
though the latter be at the place of business of the firm, and
might have been consulted, but was not;1 and that one partner
may do this, even against the protest of his copartner.? :

47. One tenant in common of personal property may mort-
gage his interest in it, and the mortgagee becomes a tenant in
common in place of the mortgagor, and consequently the mort-
gagee cannot take the property by replevin from the other joint
owner.3

48. Whether a mortgage executed by two persons jointly to
secure their several notes changes their liability upon the notes
to a joint liability is a question that has sometimes arisen. Thus
a mortgage upon a steamboat, executed by two persons to secure
a portion of the purchase money, reciting a condition to pay an
equal number of individual notes of each for like amounts amount-
ing, together, to the sum of $7,000, “and that said mortgagors
promise to pay the said sum of $7,000 as above,” was held not to
change the liabilities of the mortgagors as expressed by their
notes. The object and effect of the mortgage were merely to
secure the performance of the undertaking of the mortgagors
as expressed by their individual notes, without changing the terms
of their undertaking.*

49. A mortgage may be made to several persons jointly to
secure them severally as creditors of the mortgagor, or as indor-
sers for him upon several notes, and not as joint creditors or joint
indorsers upon one note.> The condition in such a mortgage, that
the mortgagor shall pay all notes upon which the mortgagees are
holden as sureties, secures them as indorsers for the mortgagor
of any notes, whether their names be upon the same notes or
not.®

If a mortgage be given to several persons, to secure the payment

1 Mabbett v. White, 12 N. Y. 442. 4 Kelley v, Maxwell, 7 Ohio St. 239.
2 Graser v. Stellwagen, 25 N. Y. 315. 5 Sumner v. Dalton, 58 N. H. 295.
8 Smith v. Rice, 56 Ala, 417; Shuart v. 6 Wheeler v. Nichols, 32 Me. 233.
Taylor, 7 How. (N. Y.) Pr. 251; Gaar v.
Hard, 92 Il. 315. ;
45
§ 50.] REQUISITES OF FORM AND EXECUTION.

of several debts owing by the mortgagor, and by the express terms
of the instrument the whole is to become forfeited by a single de-
fault, upon the happening of default in the payment of either of
the debts, the property becomes forfeited to the holders of the
mortgage, jointly, and they become tenants in common of the
whole property. Neither of the mortgagees has any sole and
several right to the mortgaged property which will authorize
him to appropriate it to his own use. Neither of them can sell
the entire property, but only his interest in it.

Where a mortgage has been given to secure two notes to dif-
ferent holders, and the mortgagees seek to reduce the property to
possession by replevin under a clause giving them this right when-
ever they should feel themselves insecure, they must sue jointly,
as they are joint owners.”

An absolute bill of sale made by an agent who was only au-
thorized to execute a mortgage is not binding upon the principal,
and if disaffirmed by him, it will be construed in favor of the
purchaser, as a mere security for so much of the purchase money
as was applied to the use of the principal.?

A mortgage may be made to an agent to secure a debt due his

_ principal, and the agent may enforce the mortgage in his own
name for the benefit of the principal.*

The act of an agent, in taking a mortgage in behalf of his
principal, is ratified by the latter’s bringing suit to recover the
value of the goods mortgaged, although the agent had no author-
ity to take the mortgage.®

50. If several mortgages of the same date be delivered
simultaneously, each providing that neither shall have precedence
of any other, but that all are equal securities, the several mort-
gagees take title as tenants in common, and may join in one ac-
tion fora conversion of the goods. It is the sameas if one mort-
gage had been made to the several mortgagees to secure each
his separate debt. If one of two mortgages of the same prop-
erty be executed and recorded after the other, though on the same

1 Tyler v. Taylor, 8 Barb. (N. Y.) 585. ® Howard v. Chase, 104 Mass. 250;

* Durfee v. Grinnell, 69 Ill. 371. Hubby v. Hubby, 5 Cush. (Mass.) 516;
3 Coppage v. Barnett, 34 Miss. 621. Burnett v Pratt, 22 Pick. (Mass.) 556;
4 Varney v. Hawes, 68 Me. 442. Welch v. Sackett, 12 Wis. 243.

5 Partridge v. White, 59 Me. 564.
46
THE PARTIES.

[§ 51.

day, the mortgagees are neither joint tenants nor tenants in com-
mon, but their interests are distinct, and for injuries to such
interests each must sue in his own name.!

51. The authority of the president and general manager of

‘a corporation to execute a mortgage of its personal property

need not be given bya formal vote. Such an act, with the knowl-

edge of all the members of the board of directors, except one who

is absent from the country, and with the concurrence, at the time,

of those who remain, or their long continued acquiescence after-
wards, may properly be regarded as the act of the corporation.?

An instrument purporting throughout to be a mortgage by a
corporation of personal property is not invalid because signed by
the president only with his own name and title, and sealed with
his individual seal. The seal may be disregarded, because it is
not necessary to the validity of such a mortgage; and disregarding
the seal the contract will operate as it was clearly intended to
operate.3

The seal of a corporation is primd facie evidence of its assent
to the contract to which it is affixed.*

Under a statute requiring that the written assent of stockhold-
ers owning at least two thirds of the capital stock of a corpora-
tion shall first be filed in the office of the clerk of the county, in
order to make a valid mortgage of its property, the execution of
a chattel mortgage by the president and secretary, who were at
the time dwners of two thirds of the stock, renders the filing of

arate written assent unnecessary.®

In the absence of any statutory limitation upon the power of
a corporation to mortgage its personal property, this power is
incident to its existence.6 The charter of a corporation granting
it “all the powers incident and useful to corporations” includes
the power to make a chattel mortgage.’

1 Newman v. Tymeson, 13 Wis. 172.

2 Sherman v. Fitch, 98 Mass. 59; and
see Lester v. Webb, 1 Allen (Mass.), 34;
Emerson v. Providence Hat Manufactur-
ing Co. 12 Mass. 237; Nelson v. Drake,
14 Hun (N. Y.), 465. For a case where a
mortgage executed by the president and
secretary of ‘a corporation were regarded
as acting under insufficient authority, see

Doyle v. Mizner (Mich. 1879),3 N. W.
Rep. 968, 973.

8 Sherman v. Fitch, 98 Mass. 59.

# Reed v. Bradley,.17 Ill. 321.

5 Amerman v. Wiles, 24 N. J. Eq. 13.

§ Jones on Railroad Securities, § 5.

7 Badger v. Batavia Paper Manuf. Co.
70 Ill. 302.

47
§§ 52, 53.] | REQUISITES OF FORM AND EXECUTION.

‘

52. An agent constituted such by parol may execute a
valid mortgage of his principal’s personal property, it not
being necessary that such a mortgage should be executed under
seal! Therefore, an instrument under seal, executed by one act-
ing as agent of a corporation, purporting to mortgage real and
personal estate of the corporation, although it be not a lawful
conveyance of the real estate, for want of authority in the agent
to execute a deed, may nevertheless avail as an unsealed instru-
ment, mortgaging the personal property, if the corporation has
given authority to make such a mortgage, or has subsequently rat-
‘ified it in a manner sufficient for that purpose; and the fact that
the money received upon such mortgage went to the use of the
corporation, and was retained by it, is evidence of a ratification
of the mortgage.?

III. Description of the Property.

53. It is not necessary that the property should be so de-
scribed as to be capable of being identified by the written re-
cital, or by the name used to designate it in the mortgage. Parol
evidence is admissible to show that a particular article is included
within the general words of a description. Thus, under a mort-
gage of all the stock, tools, and property belonging to the mort-
gagor in and about a wheelwright’s shop occupied by him, parol
evidence is admissible to show what articles were in and about
the shop when the mortgage was made.‘ It is obyiously impos-
sible in most cases to set forth on the face of the mortgage all the
articles embraced in it with such precision that any one, by a mere
inspection of the mortgage, without reference to any other source
of information, can identify them. Resort must generally be had
to parol evidence to identify the property mortgaged although it
be enumerated and described with the utmost minuteness. Such
evidence is no more requisite to identify property described as all
one’s household furniture, than it is when the number of chairs,
tables, and other articles, is given. “ Apparently it seems a more
bald description, to say ‘ All my household furniture,’ than to enu-

* Despatch Line of Packets v. Bellamy 4 Harding v. Coburn, 12 Met. (Mass.)

Manufacturing Co. 12 N. H. 205. 333 ; and see Winslow v. Merchants’ Ins.
? Despatch Line of Packets v. Bellamy Co. 4 Met. (Mass.) 306; Willey v. Snyder,
Manufacturing, Co. supra. 34 Mich. 60, :
3 Comins v. Newton, 10 Allen
(Mass.), 518.

48
DESCRIPTION OF THE PROPERTY. [$ 54.

merate the articles, and describe them as ‘ two dozen of chairs, five
tables,’ &c.; but in reality the latter will require extrinsic evi-
dence to identify the property as much as the former would. Or
take the case of a mortgage of live stock on a farm; the general
description would be, ‘All my stock on my farm.’ The particu-
lars are, ‘Ten cows, two yoke of oxen,’ &e.; but in both you must
rely upon other sources than the mortgage for the identity of the
property mortgaged.” 1 A mortgage of a certain number of horses
in the mortgagor’s possession requires evidence dehors the in-
strument to identify the property; but such evidence would be
equally necessary, had the horses been more particularly de-
scribed, as for instance had they been described as long-tailed
gray horses.?

54. The description need not be such as would enable a
stranger to select the property. A description which will ena-
ble third persons, aided by inquiries which the instrument itself
suggests, to identify the property, is sufficient.2 “If a stranger
is to be sent out to select property mortgaged, with no other
means of identification than such as are afforded by the written
description, and without being at liberty to supplement that in-
formation by such as can be gained in the mortgagor’s neighbor-
hood by inquiry of those who know what property the mortgagor
was possessed of which would answer the description in the in-
strument when it was given, and by possessing himself of such
other circumstances as persons usually avail themselves of in ap-
plying written descriptions to the things intended, it is much to
be feared that the stranger would be so often at fault that chattel
mortgages, if their validity depended upon his success in identi-
fying the property, would seldom be of much value as securities.
Written descriptions of property are to be interpreted in the light
of the facts known to and in the minds of the parties at the time.
They are not prepared for strangers, but for those they are to af-
fect, — the parties and their privies. A subsequent purchaser or
mortgagor is supposed to acquire a knowledge of all the facts so
far as may be needful to his protection, and he purchases in view

1 Harding v. Coburn, 12 Met. (Mass.) 8 Winter v. Landphere, 42 Iowa, 471,
333, per Dewey, J. per Beck, J.; Smith v. McLean, 24 Iowa,
2 Kiddy v. Caldwell, 7 Minn. 225 822; Lawrence v. Evarts, 7 Ohio St. 194.

4 49
§ 55.] REQUISITES OF FORM AND EXECUTION.

of that knowledge. If he purchases a bull known in the neigh-
borhood by a particular name, he is chargeable with notice of that
fact. A mortgage of a bull by that name, if duly filed, would be
as good against him as against the man who gave it. It would be
a singular defence to be set up by him to the mortgage, that being
a stranger, he discovered no such name on or about the bull, and
therefore could not in fairness be bound by a mortgage which un-
deértook to identify the animal by the name. Descriptions do not
identify of themselves ; they only furnish the means of identifica-
tion. They give us certain marks or characteristics, — perhaps
historical data or incidents, — by the aid of which we may single
out the thing identified from all others; not by the description
alone, but by that explained and applied. Even lands are identi-
fied by description until we place ourselves in the position of the
parties by whom the description has been prepared, and read it.
with the knowledge of the subject matter which they had at the
time.” ?

55. But the mortgage to be effectual must point out the
subject matter of it, so that a third person by its aid, together
with the aid of such inquiries as the instrument itself suggests,
may identify the property covered. Property which is in no man-
ner described, and in regard to which the instrument in no way
indicates any inquiries, is not affected by the mortgage. Thus,
the mortgage of a cow containing no reference to her increase
will not defeat a sale of her calf by the mortgagor in possession,
after the time has passed wheneit is necessary for the calf to fol-
low its dam for its nurture.?

A description of a mare as having four white legs, when in fact
she had but one foot white to the pastern joint, with a little white
on another foot, is not sufficient to make the recording of the
mortgage constructive notice ; for the description in this part is
essentially different from the mare in controversy, and tends to
prove that the mare described is not the one claimed. Therefore,
in such case, unless the mortgagee can show by evidence aliunde
that the mare in controversy is the one mortgaged, together with
such facts and circumstances as would tend to show the ability of

1 Willey v. Snyder, 34 Mich. 60, per 2 Winter v. Landphere, 42 Iowa, 471.
Chief Justice Covley.

50
DESCRIPTION OF THE PROPERTY. [§ 56.

the adverse claimant, aided by inquiries which the mortgage itself
indicated, to identify the mare, he will fail in his claim.

56. A mortgage of a specified number of articles out of a
larger number is void for uncertainty, when the particular articles
intended to be conveyed are not separated, or designated in any
way so that they can be separated from others of the same kind.?

A description of a certain number of feet of logs, board meas-
ure, situated in a stream and not designated in any way to dis-
tinguish the mortgaged logs, by fixing their location or otherwise,
from avery large mass of logs bearing the same mark, is in-
sufficient. Thus, a mortgage of “one hundred thousand feet of
white pine. saw logs, now on the North Branch, so called, of Thun-
der Bay River,” withont further description or identification to
distinguish or separate them from a very much larger mass of
logs belonging to the mortgagor in the same river, is void for
uncertainty. ‘“ As well might we undertake,” say the court,
through Marston, J., “to enforce a chattel mortgage given upon
a pile of lumber in a certain yard, containing fifty or a hundred
piles, or given upon twenty sheep in a flock of one hundred, or
upon ten head of cattle in a drove or herd of fifty. To sustain
such mortgages would, I think, enable parties to commit gross
frauds, and would also tend to prevent parties from afterwards
purchasing or acquiring interests in the property, a part of which
had been thus mortgaged, and thus tend to discourage trade.”

A mortgage by a carriage maker of “ ten new buggies” with-
out delivery of possession, and without any further description to
distinguish the mortgaged property from a lot of fifteen buggies of
the same kind, then owned by the mortgagor, is ineffectual to
pass title to the property, or to enable the mortgagee to recover
possession of the same. Such a mortgage does not constitute the
mortgagee a tenant in common with the mortgagor in the lot of
fifteen new buggies. A mortgage of “ one hundred and twenty-
four head of mules, now in the Territory of Kansas,” and “ one

1 Rowley v. Bartholomew, 37 Iowa, 277; Newell v. Warner, 44 Barb. (N. Y.)
374; and see Smith v. McLean, 24 Iowa, 258, 263; Fowler v. Hunt (Wis. ae 4
322. N. W. Rep. 481.

2 Croswell v. Allis 25 Conn. 301; and 8 Richardson v. Alpena Lumber Co. 40
see Bullock v. Williams, 16 Pick. (Mass.) Mich. 203; S. C. 8 Cent. L. J. 297.

33, per Shaw, C. J.; Kelly v. Reid, 57 4 Blakely v. Patrick, 67 N.C. 40.
Miss. 89; Draper v. Perkins, 57 Miss.

51
§ 56.] REQUISITES OF FORM AND EXECUTION.

pair of clay-bank horses,” without further description, was held
void for uncertainty, upon the ground that it did not distinguish
the property intended to be mortgaged from other similar prop-
erty, or enable third persons by inquiry to identify it.1 But the
same court, professing to keep within the rule of this decision,
held that a mortgage of a certain number of cattle described as
in the possession of the mortgagor, in a county named, was not
void for uncertainty. “It is not to be presumed in a case of
doubt, that the parties deliberately made an instrument which
was of no legal value whatever ; on the other hand, the presump-
tion must be indulged, unless the contrary appears from the
language employed, that the parties meant to make a legal and
binding contract.” ? +

A mortgage of so much of a growing crop of cotton as will
make two bales, each weighing not less than five hundred pounds,
the same to be gathered, prepared for market, and delivered by
the mortgagor by a certain date, passes no title to any of the cot-
ton as against a judgment creditor of the mortgagor who levies
an execution before the date specified on seed cotton, part of such
crop; and the mere intention of the mortgagor, not communi-
cated to the mortgagee or to the creditor before the levy, to gin,
bale, and deliver the particular cotton to the mortgagee, will not
avail to fasten the mortgage lien upon that part of the crop. The
mortgagee has no right in such case to select any particular part
of the cotton to the extent of two bales, and assert title thereto
as against the mortgagor’s creditors. If he could do so as to the
seed cotton levied on, he could equally select his two bales from
a part of the crop previously sold. ‘“ His right would be ambula-
tory to suit his convenience or his caprice. The selection is left
to the grantors, by whom the prescribed quantity is to be ‘ gath-
ered, prepared for market, and delivered.’ It is the fact that no
title passed, or could possibly pass, to any of the cotton until des-
ignated by the selection of the grantors. The contract embodied
in the instrument was legal, and a selection and setting apart
of the property for the grantee by the grantors, before levy, would
have perfected the grantee’s right in equity. The intention of

1 Golden v. Cockril, 1 Kans, 259; and ° Brown v. Holmes, 13 Kans. 482;
see Montgomery c. Wight, 8 Mich. 143; Shaffer v. Pickrell, 22 Kans. 619.

Parsons Savings Bank v. Sargent, 20 3 Kelly v. Reid, supra, per George, C. J.
Kans. 576 ; Kelly v. Reid, 57 Miss.$9. Williamson v. Steele, 3 Lea (‘Tenn.),

527.
52
1
DESCRIPTION OF THE PROPERTY. [§ 57.

the grantors to have the seed cotton, which was levied on, giuned,
and made into bales, and delivered, cannot supply the place of the
act. The will is not equivalent to the deed, where the rights of
third persons are concerned.” 4

But such a mortgage has been sustained as between the parties
to it on the ground that it gives the mortgagee the right to select
the number of articles mortgaged from the whole number belong-
ing to the mortgagor. Thus, if a mortgage specify a certain
number of articles of furniture in a house in which there are other
like articles belonging to the mortgagor, the mortgagee may se-
lect, from the whole enough to satisfy the terms of his mortgage.”

57. An exception of. such articles included in the descrfp-
tion as are exempt from attachment, or from levy and sale un-
der execution, may make the mortgage wholly void for uncertainty.
In a case where a mortgage of household furniture contained such
a clause, the court well said:8 “The articles attempted so to be
sold by the mortgagees are all articles capable of being identified
and distinguished by their physical attributes or characteristics.
But how many, and which of them, became the property of the
plaintiff upon the execution and delivery of the mortgage? The
instrument does not profess to convey all, but a part only. Which
part does it transfer, and which reserve? In respect to the com-
mon articles of household furniture, it would be exceedingly diffi-
cult, and it seems to me utterly impossible, for any one to desig-
nate which passed to the plaintiff, and which were reserved to the
mortgagor. ‘The mortgage does not specify nor furnish any means
of selection, and the statute of exemption affords no criterion by
which they could be distinguished. There has been no delivery
by the mortgagors, and nothing whatever done by either party to
the mortgage, by way of separation or identification, of what was
mortgaged or intended to be, and what was reserved from the
sale.”

For the same reasons a mortgage of a stock in trade and fixt-

1 Ib., per Cooper, J. twenty loads of hazel or twenty loads of
2 Call v. Gray, 37 N. H. 428. In Hay- maple, to be taken in his wood of D.,
ward’s case, 2 Coke, 38, it is said: “If I then the grantor shall have election, for
give you one of my horses in my stable, he ought to do the first act,7.c. to cut
then you shall have election, for youshall and take it.”
be the first agent by taking or seizure of 3 Newell v. Warmer, 44 Barb. (N. Y.)
one of them. Andif one grant to another 258, per Johnson, J.

53
§§ 58, 59.] REQUISITES OF FORM AND EXECUTION.

ures, consisting of clocks, watches, chains, show-cases, jewelry, and
the like, excepting certain enumerated articles, and stock in trade
to the amount of two hundred dollars, is void for uncertainty.
This exception leaves in the mortgagor an interest in each article
mortgaged, proportionate as $200 is to the whole value of the
property. This interest is uncertain and unsevered, and, more-
over, is inseverable and incomputable, except by some future act
of the parties; or the instrument leaves to the mortgagor a right
of future selection of any of the property of the value of $200,
the residue of which can be ascertained only by such selection;
and in either view such uncertainty of description renders the
mortgage void.?

58. But an exception of property exempt from execution
will not apply to articles specifically described, ‘when there is
property included in a general description to which it may apply.
Thus a description after enumerating certain articles of household
furniture specifically adds also, “‘ other personal property in and
about said house and premises,” excepting therefrom such per-
sonal property as is exempt from execution by the laws of the
state ; “‘also excepting household goods, furniture, and utensils
therein, of the value of two hundred and fifty dollars.” The
mortgagor had at the time in his house two hundred and fifty dol-
lars worth of goods, furniture, and utensils, besides the enumer-
ated articles and those exempt from execution. ,Construing the
mortgage in the light of these facts, the Supreme Court of Michi-
gan held that the exemption applied to the property described
generally, and that the specific articles were mortgaged uncon-
ditionally.’

59. But a mortgage of a specified number of articles is
valid, if it provides a way of separating them from a mass of
like property. Thus, a description of logs as the northerly
1,250,000 feet, lying in a certain creek, and marked with a cer-
tain mark, to be ascertained by commencing at the rear or north-
erly end of said logs, and counting along the stream until the
requisite number should be counted and set apart, is sufficiently
definite. A creditor of the mortgagor having seized the logs on

1 Fowler v. Hunt (Wis. 1880), 4 N. W. 2 Fowler v. Hunt, supra, per Orton, J.

Rep. 481. 8 Giddey v. Uhl, 27 Mich. 94.
54
DESCRIPTION OF THE PROPERTY.

[§ 59.

execution, the mortgagee was allowed to recover them, because
the mortgage described them with certainty enough to enable
creditors of the mortgagor to distinguish the property intended
to be mortgaged and to identify it.1 It is not necessary to meas-
ure or separate the logs by a boom, or other artificial boundary,
in order to make the mortgage valid; nor is it necessary to meas-
ure the logs before the mortgage could take effect. A surveyor,
or other person skilled in measuring logs, could ascertain accu-
rately the specific logs mortgaged ; and this is all that is required
to make the mortgage sufficiently definite and certain.

An agreement to pay a debt “ out of the first cotton that may
be gathered”’ is sufficiently definite and specific in the descrip-
tion of the property mortgaged.?

And so a mortgage of a specified number of articles described
as being in a certain building is valid, when it turns out that there
is in the building a less number of such articles than the mort-
gage calls for. The mortgage will pass all the articles answering
the description contained in the building, and beyond that it will
be inoperative.’

A mortgage of three bales of middling cotton which the mort--
gagor may raise the present year on a certain plantation, or else-
where, is admissible in evidence. But if it should appear that
the mortgagor raised ‘more than three bales on that plantation,
and that no particular three bales had been set apart by him and
accepted by the mortgagee before some other lien had attached
upon the mortgagor’s cotton, the mortgage would doubtless be
held void for uncertainty.*

A mortgage of an undivided part of certain personal property,
such, for instance, as a crop of wheat, to be set apart at the time
of threshing, will take effect and pass such portion of the prop-

* Merchants’ National Bank of St. Paul
v. M’'Laughlin (C. C. Dist. Minn., April,
1880), 2 Federal Reporter, 128.

2 Stearns v. Gafford, 56 Ala. 544; Rob-
inson v. Mauldin, 11 Ala. 977.

8 Croswell v. Allis, 25 Conn. 301; Kelly
v. Reid, 57 Miss. 89. The proper mode
of describing property such as a stock of
cattle, horses, and mules where it is in-
tended to convey all the property of that
kind owned by the mortgagor, would be
to say, ‘‘ All my stock of cattle, consisting

of about thirty head, and all my horses
and mules, consisting of two head of the
former and three head of the latter.” If
the description be merely so many head of
cattle and so many horses and mules, and
the mortgagor has in fact a greater num-
ber, and no intention is manifested to in-
clude the whole, there would be a failure
to identify the particular animals con-
veyed, and the deed would be void. Per
George, C. J., in Kelly v. Reid, supra.

* Draper v. Perkins, 57 Miss. 277.

55
§§ 60, 61.] REQUISITES OF FORM AND EXECUTION.

erty, when set apart, if it appear that this be the entire interest
of the mortgagor in the crop.

60. A defective description may be cured by a subsequent
actual delivery of the property to the mortgagee, as against per-
sons who have not acquired any right or interest before such
delivery.”

A provision in the mortgage for a delivery of the property may
serve asa means of separating it from other like property, and
thus identifying it. Thus, a mortgage of six bales of cotton de-
scribed as then growing on a certain plantation, such bales to
average five hundred pounds each, to be covered with bagging
and bound with iron ties, and delivered at a certain warehouse
by a specified time, contains a sufficiently specific description of
the property. If it be shown that six bales of the crop were de-
livered according to the terms of the mortgage, this is a sufficient
identification of the cotton described in the mortgage.?

61. A portion of a description which is false or inconsist-
ent with the rest of the description may be rejected, if the
remainder of the description is sufficient to pass the property.‘
Thus, where a mortgage described the property as “all the staves
I have in Monterey, the same I had of Moses Fargo,” while it
appeared in evidence that the mortgagor had no staves in Mon-
terey, but had a quantity in the adjoining town of Sandisfield,
near the boundary of Monterey, which he had of Moses Fargo, the
first part of the description was rejected as false, the remainder
being sufficient to pass the property.®

If the mortgaged chattel be correctly described, but the lot of
ground upon which it is situated be misdescribed, such misdescrip-
tion may be rejected as surplusage, it being wholly immaterial.
Thus, where a deed of trust was made of “a crop of cotton now
being cultivated and raised by the mortgagor upon certain lands
upon which he is now living, and rented by him from Newman ;”
and it appeared that at the time of the execution of the deed of

1 Potts v. Newell, 22 Minn. 561. * Dodge v. Potter, 18 Barb. (N. Y.)

2 Parsons Savings Bank v. Sargent, 20 193.
Kans. 576; Williamson v. Steele, 3 Lea © Pettis v, Kellogg, 7 Cush. (Mass.)
(Tenn.), 527, 530, per Cooper, J. 456.

8 Stephens v. Tucker, 13 N. J. L. 600. 6 Spaulding v. Mozier, 57 Tl. 148.
And see Robinson v. Mauldin, 11 Ala. 977.

56
DESCRIPTION OF THE PROPERTY. [§ 62.

trust the grantor resided upon and cultivated land rented from
Weatherly, but that he also cultivated land rented from Newman,
it was held that the deed of trust only covered the crop on the land
rented from Weatherly, upon which the mortgagor was living.?
The words “and rented from Newman ”’ were rejected as an erro-
neous addition, according to the maxim, Falsa demonstratio non
nocet. Parol evidence as to the intention of the parties in such
case is inadmissible, because such evidence would be used to sup-
ply an omission, or to reject a part of the description which was
true.

In a mortgage describing a yoke of oxen as four years old at
the date of the mortgage, a mistake in the age of the oxen,
when the mortgagor, at the time, and afterward, had only one
yoke of oxen, does not invalidate the mortgage.2 The intention
of the parties as to what oxen were to be covered by the mortgage
was made perfectly evident by showing that the mortgagor had
no other cattle which could by any possibility answer the descrip- .
tion.? And so a mortgage of “all the cattle, consisting of two
yoke, aged six and seven years, color, red, white, and blue, ....
and all other property now in our possession in or about said vil-
lage,” contains a sufficient description; and it does not matter
that the description, “red, white, and blue,” does not apply to
each of the oxen.

62. Property not fairly included in the terms of the descrip-
tion will not pass by the mortgage. The instrument must con-
trol unless there be a latent ambiguity, which opens the door for
parol evidence to show the intention of the parties. Such evi-
dence is not admissible to show that property not answering the
description was intended to be included in the mortgage.® There
can be no substitution of other property by agreement of the
parties, so that others will be bound by the agreement.®

A mortgage of crops “ now standing and growing” in a field
was held not to include grain, which had at the time been cut.’

1 Hunt v. Shackleford, 56 Miss. 397. 3 Harris v. Kennedy, supra, per Tay-
2 Harris v. Kennedy (Kans. 1880), 21 lor, J.
Albany L. J. 496; 4 N. W. Rep. 651; 4 Fordyce v. Neal, 40 Mich. 705.
and see Rowley v. Bartholomew, 37 Iowa, 5 Hutton v. Arnett, 51 Ill. 198.
374; Lawrence v. Evarts, 7 Ohio St. 194. 6 Hunt v. Bullock, 23 Ill. 320.
7 Ford v. Sutherlin, 2 Mon. 440.

oT

4
§§ 63, 64.] | REQUISITES OF FORM AND EXECUTION.

A mortgage by a merchant, of “goods in store,” does not include
asafe kept in his store, not for sale, but for his private use. What
the mortgage covers is a question of intent, and such a deserip-
tion cannot be understood to refer to anything but merchandise
kept on hand for sale.) A mortgage of “ the goods and chattels
now in” the mortgagor’s store in a certain town, “a schedule of
which is heretinto annexed,” covers only the goods then in the
store, and included in the schedule.2 A mortgage of a stock in
trade of a partnership does not cover debts due the firm.? There
is an essential distinction between stock and capital,* and stock
does not comprehend credits either in the legal or mercantile ac-
ceptation of the word.

63. A description which is wholly false may render a mort-
gage ineffectual. If the falsity of it be a mistake, this may be
cured by reforming the instrument in equity; but as against
.others acquiring interests in the property, such reformation is
ineffectual after their interests have attached. Thus, if a mort-
gage of growing crops describe them as being upon land in a cer-
tain section, township, and range, and the description is a mistake
in the number of the township and range, the mortgage is in-
valid as against a creditor who levies an execution on the crops
which the parties intended to embrace in the mortgage.> If the
proper y had been described as so many acres of growing wheat
and corn now upon the farm of the mortgagor, or in his posses-
sion, the identity of the property could have been fixed by rea-
sonable inquiry. But when the description definitely fixed the
location of the property, although it called for an impossible
township and range, the error was not such as to put a creditor
upon inquiry to ascertain if there had been some mistake, or to
ascertain to what property, if any, it did apply, so long as it did
not apply to the property upon which he levied his execution.
The positive and definite description should be allowed to pre-
vail.

64. Parol evidence is admissible to identify the chattels

1 Curtis v. Phillips, 5 Mich. 112. * Crawshay v. Collins, J. & W. 267,
2 Partridge v. White, 59 Me. 564. 278; 2 Russ. 339, per Lord Eldon.
3 Kemp v. Carnley, 3 Duer (N. Y.), 1. 5 Adams v. Commercial Nat. Bank of

58 , Dubuque (Iowa, 1880), 5 N. W. Rep. 619.
DESCRIPTION OF THE PROPERTY.

[s 64.

mortgaged.! It is not possible to describe personal property so
well as to preclude the necessity of such evidence to identify it.
Thus, if a mortgage be made of a pile of wood upon a certain lot
of land, upon which there are also other piles of wood, resort may
be had to extrinsic proof to determine which pile was intended.2
_ With the aid of evidence aliwnd: to identify the property, the

following descriptions in mortgages have been held sufficient :
two horses belonging to the mortgagor; eight horses now ina
certain stable, although at the time the mortgage was executed,
and for some time before and afterwards, other horses not belong-
ing to the mortgagor were boarded in the same stable; * ten horses
in the mortgagor’s possession ; ® one horse ; ® one dark bay mare ;7
five freight wagons and twenty-five yoke of cattle, being the train
now in my possession.®

A mortgage of “my entire crop of cotton and corn for the pres-
ent year,’? without any other descriptive words, is not void for
uncertainty or indefiniteness, but may be rendered sufficiently
certain and definite by extrinsic proof.®

Parol evidence in these and like cases serves to apply the de-
scription to the subject matter intended to be embraced in it.!

But parol evidence is not admissible to contradict the terms of
a mortgage, by showing that property covered by it was not in-
tended to be embraced in it.” Such evidence must be consistent
with the description.” It cannot be used to supply, what the par-

ties have omitted, or to reject a reference in the description which
is true.

1 Wagner v. Watts, 2Cranch C.C.169; 23 Ill. 618; Beach v. Derby, 19 Ii. 617;

Burns v. Harris, 66 Ind. 536; Ebberle v.
Mayer, 51 Ind. 235; Duke v. Strickland,
43 Ind. 494 ; overruling McCord v. Cooper,
30 Ind. 9, where it was held that a de-
scription of “three yoke of oxen” in a
mortgage was too indefinite and could not
be aided by parol evidence; Holmes v.
Hinkle, 63 Ind. 518; Elder v. Miller, 60
Me. 118; Chapin v. Cram, 40 Me. 561;
Skowhegan Bank v. Farrar, 46 Me. 293;
Brooks v. Aldrich, 17 N. H. 443; Smith
v. McLean, 24 Iowa, 322; Stephens v.
Tucker, 13 N. J. L. 600; Pike v. Colvin,
67 Ill 227; Spaulding v. Mozier, 57 Ill.
148; Myers v. Ladd, 26 Ill. 415; Bell v.
Prewitt, 62 Ill. 361; Williams v. Merritt,

Mattingly v. Darwin, 23 Il. 618.

2 Sargeant v. Solberg, 22 Wis. 132.

* Brooks v. Aldrich, 17 N. H. 443.

4 Elder v. Miller, 60 Me. 118.

5 Eddy v. Caldwell, 7 Minn. 225.

6 Sharpe v. Pearce, 74 N. C. 600.

7 Burns v. Harris, 66 Ind. 536.

8 Smith v. McLean, 24 Iowa, 322; and
see Rowley v. Bartholomew, 37 Iowa, 374.

® Ellis v. Martin, 60 Ala. 394.

10 Dodge v. Potter, 18 Barb. (N. Y.)
193.

1 Hurd v. Gallaher, 14 Iowa, 394.

12 Hutton v. Arnett, 51 Ill. 198.

38 Hunt v. Shackleford, 56 Miss. 397.

59
§ 65.] REQUISITES OF FORM AND EXECUTION.

Under a statute which requires that ‘a mortgage of chattels
shall contain such efficient and full description thereof that the
same may be readily and easily known and distinguished,” a mort-
gage of “one sorrel horse” was held void as to others than the
parties for want of a sufficient description.

65. A mortgage of all the property now in the shop occu-
pied by me in a town named is not void for uncertainty ; but
the property may be ascertained by testimony respecting the
goods contained in the shop at the time of the delivery of the
deed.2. And so a mortgage of all the stock, tools, and chattels
belonging to the mortgagor “in and about the wheelwright’s shop
occupied by” him is not void for uncertainty.2 The mention in
such a mortgage of a specific number of articles of a certain kind,
in and about a shop, does not prevent the passing of other articles
of the same kind, in and about the shop, under a general descrip-
tion. And so also a valid mortgage may be made of all the
effects and property whatsoever of the mortgagor without any
schedule or particular enumeration and valuation of the prop-
erty5

A description is sufficiently certain which specifies all the stock
of goods of whatever description, which the mortgagor has at An-
nona, Texas; also the stock of goods which he has at Dalby
Springs, Texas.®

A mortgage of all the capes ‘now in the shop occupied by
me,” though without date, is good, for the date of the delivery of
the mortgage may be shown by parol, and the shop referred to
may thus be determined.’ And so a mortgage is good which de- -
scribes the property as a “store (standing on land of another)
and all the goods, wares, and merchandise in and about the
same.” 8 So also a mortgage of “all the dry goods, boots and
shoes, millinery goods, and gentlemen’s furnishing goods and stock
in trade now in the store occupied by” the mortgagor is neither

1M ntgomery v. Wight, 8 Mich. 143; * Harding v. Coburn, supra.
Rose v. Scott, 17 Q. B. U. C. 385. 5 Brinley v. Spring, 7 Me. 241.
? Burditt v. Hunt, 25 Me. 419; Ebberle § Crow v. Red River Co. Bank, 52:Tex.
. Mayer, 51 Ind. 235; Russell v. Winne, 362.
37 NAY. 591; S.C. 4 Abb. Pr. (N. S.) 384. 7 Burditt v. Hunt, 25 Me. 419.
8 Harding v. Coburn, 12 Met. (Mass.) 8 Wolfe v. Dorr, 24 Me. 104.
333; and see Wolfe v. Dorr, 24 Me. 104;
Burditt v. Hunt, 25 Me. 419.

60
DESCRIPTION OF THE PROPERTY. [§ 66.

fraudulent on its face nor invalid by reason of the generality and
indefiniteness of the description.1

A mortgage of “all the articles of household furniture now con-
tained ”’ in a certain house is good.?

A mortgage of “all the desks, chairs, trunks, and office furni-
ture in’ a certain office, embraces as an article of furniture an
iron safe then used in the office.

Parol evidence is admissible to show that in a mortgage of a
stock of goods, together with the fixtures, furniture, and signs of
the store, a wooden statue of an elephant was included, inasmuch
as this was used as a sign in front of the store during the day,
and was taken in at night.*

The mortgage need not show where the property is situated at’
the time of making it, if the property be otherwise sufficiently
described.®

66. Parol evidence may also serve to fix the quantity of
goods intended to be covered by the mortgage, when such quan-
tity is left blank. Thus, if ashes in an ashery be the subject
matter of a mortgage, but the number of bushels be left blank,
this may, as between the parties, be fixed by parol evidence.
Even as against creditors, such a mortgage describing the ashes
as then being in the ashery of the mortgagor, it appearing that
he had no other ashes, is sufficient notice of the property intended
to be covered, although the number of bushels be not mentioned,
and therefore this omission may be supplied by parol evidence.®

Parol evidence is admissible to show-.that a description in a
mortgage of “‘one ton of brass wire” was intended to cover a
particular mass of brass wire, and not the precise amount of one
ton in weight to be separated and weighed out of a larger mass.
If it appears that the whole amount of the article exceeded one
ton only by a few hundred pounds; that the parties treated the
entire parcel as the ton of mortgaged wire, pointed it out as such,
made no arrangements for taking the weight, or setting apart
a portion of it as the wire mortgaged; these are circumstances

1 Conkling v. Shelley, 28 N. Y. 360; * Curtis v. Martz, 14 Mich. 506.
and see Gardner v, McEwen, 19 N. Y. 5 Adams v. Hill, 10 Kans. 627.

123. § Dunning v, Stearns, 9 Barb. (N. Y.)
2 Beach v. Derby, 19 Ill. 617. 630.
8 Skowhegan Bank v. Farrar, 46 Me.

293.

61
§§ 67, 68.] | REQUISITES OF FORM AND EXECUTION.

which may be properly considered where the language of the in-
strument is such as admits an explanation by parol. Such a
description being loose, giving no location or specification distin-
guishing it from other brass wire, resort must be had to parol
evidence to identify it Had it appeared that the mortgagor
owned several tons of such wire lying in one parcel, as the de-
scription would clearly indicate that the mortgagor could not have
intended to transfer so large a quantity, parol evidence would not
be admissible to explain or control the description.

67. Parol evidence is not admissible to show that property
not specifically included in it was intended to be embraced.
Thus, it cannot be shown, as against a creditor levying upon the
property, that a mortgage, in terms covering only a stock of
goods, was intended by the parties to embrace the fixtures of the
store in which the goods were kept. In such a case, the mort-
gagee having offered to prove that he and the mortgagor supposed
the words used in the mortgage had a meaning different from
their obvious and ordinary meaning and import, the testimony to
this effect was rejected as incompetent, the court saying :? “ Al-
though some of the authorities ‘cited contain the broad statement
that the rule inhibiting the production of parol evidence to vary
or contradict a valid written instrument does not apply to a con-
troversy between a party to the instrument and a stranger, and
that in such controversy either party may prove the real agree-
ment, yet none of these cases, we think, contain an adjudication
which would render competent the testimony offered in this case.
It would, indeed, be astartling doctrine if it should be held that
written instruments, deriving all their force and effect from a
record pursuant to the statute, could be explained and enlarged
by parol proof of the real, though unexpressed, contract, as against

one who became a purchaser, or acquired a lien, relying upon the
terms of the recorded instrument.” ,

68. Any change in the property mortgaged by repairing it,
or by completing the manufacture of it, will not divest the mort-
gagee of his property in it, so long as the nature of the article
is not changed, or its value materially increased. Thus, a rifle,
described in a mortgage of it as having a metallic skeleton stock

1 Barry v. Bennett, 7 Met. (Mass.) 354. 2 Van Evera v. Davis, 51 Iowa, 687.
DESCRIPTION OF THE PROPERTY. [§ 68.

and an under-action lock, is not so materially changed by having
a new wooden stock and an over-action lock substituted by way
of repairs, as to defeat the mortgagee’s lien! A mortgage of
leather, cut and prepared to be manufactured into shoes, covers
‘shoes subsequently made from such stock by the mortgagor. The
labor performed by the mortgagor upon the mortgaged stock is an
accession to it which passes to the mortgagee.

Even the adding of other articles to the mortgaged property
does not always make such a change in it as to invalidate the
mortgage. Thus, a mortgage of assorted pickles, which were at
the time in bulk and in salt, covers them as against attaching
creditors of the mortgagor after the manufacture has been com-
pleted, and they have been put into bottles and vinegar.?

A description of a planing-machine by name, and as being in
a certain place, is sufficient, although it be in an unfinished con-
dition. If it be in such a state that, from its appearance, per--
sons acquainted with like machines would know it by the desig-
nation given to it in the mortgage, the description is sufficient, al-
though other and material parts are necessary to be added to make
it complete.2 “The real question is, whether so much of the ma-
chine was put together as that it could be denominated a plan-
ing-machine in a mortgage or sale without misleading those who
know what a planing-machine is? A watch without a main-
spring or hands might very properly be described in a mortgage
as a watch; and it is clear that some of the material constitu-
ents of an article may be wanting, and yet the article be suffi-
ciently designated by its usual name. All that seems necessary
in such case of an unfinished or incomplete article is, that so much
of it is put together, or exists, as to make it capable of identity
as belonging to the description of the article designated. To
require more than this would unnecessarily defeat a mortgage
or other conveyance; less’ than this would mislead third per-
sons.” #

An agreement that a mortgagee of specific unfinished machinery,
or of goods in process of manufacture, shall proceed to complete
them for use and sale as security for the payment of the mort-

1 Comins v. Newton, 10 Allen (Mass.), 3 Lawrence v. Evarts, 7 Ohio St. 194.

518. 4 Lawrence v. Evarts, supra, per Swan
2 Crosby v. Baker, 6 Allen (Mass.), J.
295.

63
§§ 69, 70.]

gage debt, is not inconsistent with the rights and duties of a
mortgagee, and does not invalidate the mortgage.’

REQUISITES OF FORM AND EXECUTION.

69. Gathered crops may be identified as the same property
described in a mortgage as growing crops. Thus, wheat har-
vested, threshed, removed and sold in the market, may be identi-
fied as the same covered by a mortgage of ten acres of growing
wheat.? The mortgage vested the title of the growing wheat in
the mortgagee, and the recording of it created constructive notice
as against a subsequent purchaser. The change which it under-
went did not change the property so as to divest the title of the
mortgagee, or to prevent its identification. And so a mortgage of
six acres of grass growing on land occcupied by the mortgagor
as a tenant covers hay made from such grass, and stacked upon
other land occupied by the mortgagor; and a levy upon the hay
and a sale of it upon execution issued against the mortgagor is
void as against the mortgagee.2 Of course the hay could be iden-
tified as that covered by the mortgage only by parol evidence.

Upon the same principle a mortgage of logs intended for saw-
ing into boards binds the lumber made out of them, but the mort-
gagee must prove that the lumber was made out of the mort-
gaged logs.*

70. A mortgage of a stock of goods and any additions
thereto, which the mortgagor may make from time to time, is
not void for uncertainty, but at law it conveys only the stock on
hand at the date of the mortgage.® The fact that it is attempted
to embrace in the mortgage property which the mortgagor does

1 Smith v. Beattie, 31 N. Y. 542. mortgage. The oxen were sold four

2 Duke v. Strickland, 43 Ind. 494, over-
ruling McCord v. Cooper, 30 Ind. 9, where
it was held that a mortgage of “three
yoke of oxen,” without further descrip-
tion, did not impart constructive notice
of its contents when recorded; that it did
not contain a sufficient description to put
a purchaser upon inquiry. The oxen in
this case remained in the possession and
exclusive control of the mortgagor, who
sold them to two persons for a valuable
consideration, who had no actual notice
that the property was affected by the

64

times for a valuable consideration to bond
fide purchasers, and were finally sold to
the defendant for a valuable consideration,
and without actual notice to him of the
mortgage.

8 Smith v. Jenks, 1 Den. (N. Y.) 580.

4 White v. Brown, 12 U.C. Q, B. 477.

5 Wagner v. Watts, 2 Cranch C. C.
169; Green v. Rogers, 62 Ga. 166. In
Georgia a mortgage may by statute cover
future purchases of goods, Code 1873,
§ 1954,
DESCRIPTION OF THE PROPERTY. [§§ 71-73.

not possess at the time does not invalidate the conveyance of that
which he then owns and is entitled to mortgage.!

71. There can be no substitution of other property in place
of that described in the mortgage by agreement of the parties, so
as to make the mortgage a lien upon the substituted property as
against third persons having no actual notice of the agreement;
though, as between the parties to such agreement, the mortgage
may be a lien upon the substituted property.? The registration
of the mortgage is not constructive notice to third persons of a
lien upon the substituted property, although the description used
in the mortgage might apply as well to that property as to the
property originally intended. Thus, where a mortgage was made
of “one horse,” the mortgagor then owning a sorrel horse, which,
with the consent of the mortgagee, he exchanged for a bay horse,
the registry imparted notice of a lien upon the former and not
upon the latter; for upon inquiry outside the deed a person would
have found that the mortgagor then owned the former and not the
latter.®

72. The moving of mortgaged goods from the building in
which they were at the time of making the mortgage does not de-
stroy the mortgagee’s right to them, though it may render it more
difficult to identify them. The burden of proving the identity of
the goods is upon the mortgagee.*

73. A schedule forms part of a mortgage when the mort-
gage refers to it as annexed, and as containing a description of the
articles mortgaged ; and a failure to annex the schedule will in-
validate the mortgage, unless this contains a sufficient description
of the property without the schedule Ordinarily if such a mort-
gage be offered with the schedule annexed, this will primd facie
be taken to be the schedule referred to in the deed, and the bur-
den of showing that it was not annexed at the time of the ex-
ecution of the deed would lie with the party objecting to it.

1 Gardner v. McEwen, 19 N. Y. 128; 8 Sharpe v. Pearce, 74 N. C. 600.

Van Heusen v. Radcliff, 17 N. Y. 580; 4 Wheelden v. Wilson, 44 Me.1. And
Otis v. Sill, 8 Barb. (N. Y.) 102; Newell see Brown v. Thompson, 59 Me. 372.

v. Warner, 44 Barb. (N. Y.) 258. 5 Weeks v. Maillardet, 14 East, 568;
2 Powers v. Freeman, 2 Lans. (N.Y.) England v. Downs, 2 Beav. 522; Edgell
127, v. Hart, 9 N. Y. 213, 216.

5 65
§§ 74, 75.] REQUISITES OF FORM AND EXECUTION.

And so where a mortgage described “the following goods and
chattels,” and there followed a list of articles on a separate paper
attached to the mortgage by a wafer, it was held, in the absence
of any evidence to the contrary, that presumptively the list was
attached before the execution of the deed. The paper might have
been annexed to the deed after its execution ; but the mortgage
would be incomplete without a schedule, or description, of the
mortgaged property, and the schedule attached to it will be taken
to be that which completed the deed at the time of its execution.!

74. The omission to prepare and annex a schedule or in-
ventory referred to in a mortgage does not invalidate it if the
description is sufficient to pass the property without it.2 Thus
a mortgage made of all the furniture in a hotel, “an inventory
whereof is to be made and annexed,” is a good mortgage of the
property in the hotel, though no inventory be annexed. In this
‘case the instrument, by its terms, was intended to be operative
from the moment of execution. The making of the inventory
was an act to be subsequently performed. The omission to an-
nex a schedule may invalidate the mortgage as to some articles,
while it will be valid as to all the articles that can be identified
without the schedulet It is a sufficient description to refer to .
a schedule of the property attached to another mortgage of a
date mentioned, made by the same mortgagor to another person.
It need not be stated that the mortgage and schedule referred
to are on file or recorded ; but if they are recorded or filed, and
the subsequent mortgage is also properly recorded or filed in the
same office, it is notice to all the world.é

75. The scope of a mortgage is not enlarged by reference
to a schedule for further description by including therein things
not within the general terms of the mortgage. Thus a mortgage
of a foundry, with the engines, fixtures, machinery, tools, and
working plant thereon, described the chattels assigned as being
‘more particularly enumerated and specified in an inventory of
even date herewith, to be signed by the parties hereto and read

1 Belknap v. Wendell, 21 N. H. 175. * Winslow v. Merchants Ins, Co. 4 Met.
2 England v. Downs, 2 Beav. 522; (Mass.) 306.
Baker v. Richardson, 6 Weekly R. 663. 5 Newman v. Tymeson, 13 Wis. 172.

3 Van Heusen v. Radcliff, 17 N. Y. 580.
66
DESCRIPTION OF THE PROPERTY. [§ 76.

and construed as forming part of these presents. The deed con-
tained no mention of stock in trade. The inventory, which was
signed by the mortgagors on the same day, contained a detailed
description of the engines and other chattels which were men-
tioned under general heads in the deed. At the bottom of the
twentieth page was this clause: “ The stock in trade consists of
bolts, brass work, wrought and cast iron work, brass and other
work, both finished and in preparation. Also all cast and wrought
iron, steel, timber, and all other stock in trade, in and upon the
before mentioned foundry, workshops, and premises.” Then came
this clause: ** The contents of the twenty preceding sheets is a
complete and exact inventory of the fixtures, machinery, utensils
and things in, upon, or about the foundry mortgaged by us this
day.’ It was held that the stock in trade was not included in the
mortgage. Lord Justice James said: ‘“ The deed is as clear as a
deed can be, and shows no intention to include, but a plain inten-
tion to exclude, the stock in trade. The words in the witnessing
part are precise, and it has not been attempted to be argued that
they could, taken by themselves, include stock in trade. But it
is said that the words are enlarged by the inventory. The inven-
tory is not a part of the deed, but is made a part of it for the pur-
pose of giving a more detailed description of the articles included
in the deed. In my opinion, the reference in the inventory has
no such effect. If something clearly within the terms of the deed
had been omitted from the inventory, such omission would not,
have prevented its passing by the deed. So, on the other hand,
we cannot hold. the scope of the deed to be enlarged by a mere
reference to a detailed catalogue of the things which were in-
tended to be conveyed. Even if an express intention to include
articles not coming within the terms of the deed had been shown
by a separate writing, that could not have made the deed operate
in a way inconsistent with its plain terms, however it might lay
ground for rectifying it. But in the present case it is impossible
‘to conclude that the parties had any intention to include the stock
in trade.”

76. A general clause after an enumeration of particular ar-
ticles will extend the mortgage over the property embraced in
the general terms, if the language clearly indicates the purpose to

1 Jardine, ex parte, 10 L. R. Ch. App. 322. .
67
§ 77.] REQUISITES OF FORM AND EXECUTION.

do so! Thus, in a mortgage specifically describing furniture and
other articles used in connection with a hotel, a general clause,
“‘ Together with all other goods, effects, furniture, chattels, prop-
erty, things of every name and nature now used, attached, situate
and being in or about the hotel,” will embrace a schooner rigged
sail boat, then upon the water near the hotel, and which was used
in connection with it, although four other schooner rigged sail
boats are specially mentioned in the mortgage.? And so in a
mortgage specifically describing a chaise and sleigh and other per-
sonal property, a general clause, “ All the farming tools and other
personal property in and about the barn and premises at Herbert
Hall,”’ will pass a family carriage belonging to the mortgagor and
upon the premises at the time the mortgage was given ; and parol
evidence that the mortgagor immediately afterwards pointed out
this carriage as included in the mortgage is competent evidence
to identify it.?

77. General words used in connection with a special enu-
meration of particular articles, ordinarily refer to articles of the
same. general nature as those specifically named. Thus, where
one made a mortgage of 1,800 bushels of salt, and his entire fish-
ing material consisting of seine boats and fish stands at Long
Branch, and afterwards executed another mortgage conveying all
the fishing materials at Long Branch consisting of seine boats, fish
stands “barrels, 1,600 bushels of salt and kegs, subject to prior
liens,” it appearing that the 1,600 bushels of salt were purchased
after the giving of the prior mortgage and had been kept sepa-
rate from the salt mentioned in that; it was held that the first
mortgage was no lien upon the 1,600 bushels of salt conveyed in
the second; that the words “ entire fishing material ” did not in-
clude the barrels and kegs mentioned in the second ; and that the
words “subject to prior liens,” in the second mortgage, did not
add to the scope of the previous grant, and include in it anything
not included by its own terms.5

General words of description may be modified and restricted by
particular words following them. Thus, where a bill of sale was

1 Russell v. Winne, 37 N. Y. 591; S. C. 8 Goulding v. Swett, 13 Gray (Mass.),

4 Abb. Pr. 384. B17.
® Veazie v. Somerby, 5 Allen (Mass.), 4 Brainerd v. Peck, 34 Vt. 496.
280. 5 Dixon v. Coke, 77 N.C. 205.

68
THE DEBT SECURED. [8§ 78, 79.

made of “ all the household goods and furniture of every kind and
description whatsoever ” in a certain house, “ more particularly set
forth in an inventory or schedule of even date herewith,” and the
schedule did not specify all the household goods and furniture in
the house, it was held that no goods passed except those specified
in the inventory.

78. The construction of a mortgage, as regards the enue
matter of it, belongs to ‘the court. This is the case not only
when the construction is determined wholly by the terms of the
instrument but also when extrinsic evidence is admitted to show
the subject matter to which the instrument applies. When it be-
comes necessary to resort to extrinsic evidence to ascertain the
true meaning of the instrument, and the extrinsit facts are estab-
lished by special verdict or otherwise, it becomes the duty of the
court to construe the instrument in connection with, and in the
light of, such facts, in the same manner as if expressed upon their
face. When the facts have not been ascertained, and they are
to be ascertained and applied on the trial, it may become neces-
sary for the judge to charge the jury hypothetically, telling them
what would be the true construction of the instrument, upon the
different states of fact which might be found by them.?

IV. The Debt Secured.

79. The debt which the mortgage makes a charge upon the
property is that described in the condition of the deed. There-
fore, if there be a discrepancy between the consideration men-
tioned in the commencement of the deed and the debt described
in the condition, the latter will control, and the validity of the
mortgage will not be affected. The consideration first recited may
be more or less than the sum secured in the condition, without
making the mortgage fraudulent and void. The sum specified in

1 Wood v. Rowcliffe, 6 Exch. 407; fol- tinguished from it. The particular enu-
lowing Morrell v. Fisher, 4 Exch. 591; meration was held not to restrain the oper-
S. C. 19 L. J. Exch. 273; Barton v. ation of the general words of the descrip-
Dawes, 19 L. J. C. B. 302; and see tion. For a like decision see also Cort v.
Kingston v. Chapman, 9 U.C.C. P.130; Sagar, 3 H. & N. 370; S. C. 27 L. J. Ex.
Gunn v. Ruttan, 7 U. C. C. P. 516. 3878.

See Baker v. Richardson, 6 Weekly R. 2 Curtis v. Martz, 14 Mich. 506.

663, for a description quite similar to the 8 Kaysing v. Hughes, 64 III. 123.
above in Wood v. Roweliffe, but yet dis- | Upon the general subject of The debt

‘
§§ 80, 81.] | REQUISITES OF FORM AND EXECUTION.

the condition of the mortgage cannot be varied or contradicted by
parol evidence. If this sum be larger than the debt actually due,
the debtor can obtain remedy only in a court of equity.?

As against attaching creditors a mortgage is not valid unless
there be a distinct and specific condition that can be clearly stated,
on performance of which the property would be released. It must
be such a demand or claim as can be stated under the require-
ments of statute so definitely that the sum to be paid by the at-
taching officer is fixed and certain.” ,

It is not necessary that the mortgage should secure the payment
of a definite sum of money, or that it should secure any money
payment whatever. It may secure the performance of any agree-
ment; and in order to render the mortgage operative against
third persons it is not necessary that the agreement should be filed
or recorded with the mortgage. Such an agreement is no more a
part of the record than a promissory note secured by a mortgage
is part of it.§

It is not necessary for a mortgagee to show a consideration be-
yond the recital in the mortgage in a suit against the mortgagor
or his representatives, involving simply the title to the property.
But in a suit by a mortgagee against a creditor of the mortgagor
who has sold the mortgaged property under an execution, the
property having been left in the mortgagor’s possession, so that
the mortgage was primd facie fraudulent as to creditors, it is in-
cumbent upon the mortgagee to do away with that evidence, by
showing a good and valuable consideration.®

80. There must be a legal and valid consideration. A mort-
gage given to a sheriff or jail-keeper to secure the payment of
costs in a criminal proceeding, by a person committed to jail until
the same should be paid, is without consideration and void, be-
cause the officer has no authority to take such a mortgagé, or to
release the prisoner.®

81. A preéxisting debt is a valuable consideration for a

secured, see Jones on Mortgages, §§ 343- ° Fairfield Bridge Co. v. Nye, 60 Me.
363. The rules upon the subject are the 372.
same whether the debt be secured by a 8 Byram v. Gordon, 11 Mich. 531.
mortgage of real.or of personal property. 4 Webb v. Mann, 3 Mich. 139.

1 Patchin v. Pierce, 12 Wend. (N. Y.) 5 Tifft v. Barton, 4 Den. (N. Y.) 171.
61. ® McCartney v. Wilson, 17 Kans. 294.

70
THE DEBT SECURED. [§ 82.

mortgage, and protects the mortgagee to the same extent that he
would be protected if he had paid a new consideration at the time
of the mortgage.!

The giving of a note for a preéxisting debt after the execution
of the mortgage, so as to correspond with the description given in
the mortgage, does not vitiate the transaction, though it may be
a circumstance tending to show fraud. If the mortgage and notes
were really given to secure a bond fide preéxisting debt, they
should be upbeld and enforced.?

In New York, and perhaps in one or two other states, a pre-
existing debt is not a sufficient consideration to support a mort-
gage of personal property against the true owner of the property,
one, for instance, from whom the mortgagor obtained the prop-
erty by fraud. Such a consideration does not constitute the mort-
gagee 2 purchaser for value in good faith. The existing demand
may be properly called a valuable consideration ; but a convey-
ance on such consideration is not one made in good faith when it
comes in conflict with the title of the true owner, or in conflict
with his prior conveyance given for value.*

A subsequent mortgage given for the consideration of a prece-
dent debt only is not entitled to preference over a prior unfiled
mortgage of the same property, although taken without notice of
such prior mortgage.®

82. A contingent liability is a sufficient consideration for a
mortgage, and the ratio of the consideration to the value of the
property pledged is of no consequence so far as concerns the va-
lidity of the transaction.®

A mortgage, which appears upon its face to secure an absolute
debt, is not fraudulent as to the mortgagor’s creditors because it
was in fact given to secure a contingent liability as surety. The
mortgage is good for whatever the mortgagee, may be required to
pay upon the debt for which he has bound himself as surety.”

1 Kranert v. Simon, 65 Ill. 344; Butters 27 N. Y. 568; Van Slyck v. Newton, 10
v. Haughwout, 42 Til. 18; Prior v. White, Hun (N. Y.), 554, See Jones on Mort-
12 Ill. 261; Wright v. Bundy, 11 Ind. gages, §§ 347, 458. :

398; Machette v. Wanless, 1 Colo. 225; 4 Tiffany v. Warren, 37 Barb. (N. Y.)
Smith v. Worman, 19 Ohio St.145; Paine 571; S. C. 24 How. Pr. 293.
v. Benton, 32 Wis. 491. 6 Tiffany v. Warren, supra.
2 Prior v. White, 12 Tl. 261. 6 Jewett v. Warren, 12 Mass. 300.
8 Woodburn v. Chamberlin, 17 Barb. 7 Goodheart v. Johnson, 88 Il. 58.
(N. ¥.) 446; Thompson v. Van Vechten, 71
§§ 88, 84.] REQUISITES OF FORM AND EXECUTION.

A condition to save the mortgagee harmless, and to indemnity
him from all costs, trouble, and expense, in consequence of sign-
ing a bond for the mortgagor, entitles the mortgagee, after being
compelled by suit to pay the bond, to recover compensation for
the trouble and expense thus incurred. ‘The costs, trouble, and
expense in such case are not merely those incurred in the suit
upon the bond, but also those incurred in resorting to the mort-
gaged property for indemnity.’

A mortgage to a surety conditioned to pay the debt for which
the surety is liable, and to save him harmless therefrom, creates a
trust and an equitable lien in favor of the creditor ; and the surety
holds the property subject to such trust and lien even ‘after the
property has become absolute in him by foreclosure.? It is imma-
terial that the principal creditor did not act upon. the faith of
such security, or even did not know of its existence?

83. A mortgage lien may be made contingent upon the
insufficiency of a prior security upon other property to satisfy
the same debt or undertaking; and in such case the insufficiency
of the prior lien must be shown before’ the second becomes spe-
cific and absolute.*

84. A mortgage may be made to secure debts to others
besides the mortgagee. If a mortgage be made to a person
to secure a debt due to him, and also a debt due to another per-
son, it will be inferred, in the absence of any agreement to the
contrary, that the security is given for the benefit of both parties,
pro rata to their respective demands.®

A condition in a mortgage by a calico printer to pay all sums
due to the mortgagee, and to all other persons for labor or ser-
vices in operating the print works, and in any business connected.
with said print works, whether there or elsewhere, includes the
services of one employed under a sealed contract for a stipulated
percentage on the gross amount of all sales of prints made at the
works, to aid in getting up the styles of the prints, and in super-
intending that branch of his business, in Providence and New

1 Robinson v. Hill, 15 N. H. 477. * Trenchard v. Warner, 18 Ill. 142.

2 Hastman v. Foster, 8 Met. (Mass.) 19. © Jones on Mortgages, § 185. Marshall

8 Curtis v. Tyler, 9 Paige (N. Y.) Ch. v. Bryant, 12 Mass. 321, is not to be re-

432; Richards v. Yoder (Neb. 1880), 6 garded as an authority on the general
N. W. Rep. 629. 72 principle stated.
1

THE DEBT SECURED. [§ 85.

York, and in making sales of prints; but does not include fees
due to attorneys at law in defending suits against the mortgagor,
and in giving him advice in matters of law relating to his busi-
ness.!

85. It is not necessary that the condition of the mortgage -
should set forth all the particulars of a note, to secure which
the mortgage was given. It is sufficient that the note be so far
described that it appears with reasonable certainty to be the note
intended to be secured. Thus, a variance of the note offered in
connection with the mortgage from the description in the con-
dition, in that the note is payable with interest annually, whereas
the mortgage describes the notes as payable with interest, is not
a material one2 Itis no objection toa note offered in evidence,
as the note secured by a mortgage, that it contains further par-
ticulars, as, for instance, that it is to be paid in teaming at prices
specified ;* and it is no objection to a note that it is signed by
other persons than the mortgagor, while the mortgage does not
mention such other persons. If the note produced agrees with the
general description of it contained in the mortgage, it is primd
facie the note secured, although the mortgage omits some of the
particulars of the note. A series of notes intended to be secured
by a chattel mortgage, but described simply by giving the date,
amount, and maturity of each without naming the payee or maker,
may be further identified by parol evidence.6 The condition of a
mortgage to secure the payment “ of fifty dollars in sixty days
from the date hereof, meaning and intending the legal claims and
demands the mortgagee has against me,” is not void for uncer-
tainty; the true construction of it being that it secures the pay-
ment of the sum due, not exceeding that amount.”

In Connecticut an exceptional rule prevails requiring a state-
ment in the mortgage of all the essential particulars of the-debt or
duty intended to be secured in order to make the mortgage oper-
ative as against attaching creditors and subsequent purchasers.
There is a long line of decisions to this effect in regard to mort-

1 Spencer v. Pierce, 5 R. I. 63. 5 Robertson v. Stark, supra.

,% Robertson v. Stark, 15 N. H. 109; § Holmes v. Hinkle, 63 Ind. 518.
Colby v. Everett, 10 N. H. 429; Jones on 7 North v. Crowell, 11 N. H. 251; and

Mortgages, § 350. see Machette v. Wanless, 1 Colo. 225;
8 Webb »v. Stone, 24 N. H. 282. Mich. Insurance Co. v. Brown, 11. Mich.
* Robertson v. Stark, supra. 266.

73
§ 86.] REQUISITES OF FORM AND EXECUTION.

gages of real estate; and this same rule applies to mortgages of
personal property.!_ Thus, a mortgage in which the obligation se-
cured was described as a liability incurred by the mortgagee for
the mortgagor, by indorsing at bis request “certain promissory
notes given to sundry persons,” was held to be void because of the
uncertainty of the condition ; for it gave no information in regard
to the dates, amounts, payees, or holders of the notes indorsed, nor’
any limit to their number, and no clue by which an inquirer could
arrive at any safe or satisfactory conclusion as to these matters.

86. When the description of the debt is sufficient to direct
a person to the proper source for information as to the amount
of the incumbrance, the mortgage will not be held void on the
aground of uncertainty in the description of the demand or liabil-
ity intended to be included.? Thus a mortgage to certain cred-
itors in proportion to their several demands against and liabilties
for the mortgagor sufficiently describes the demands and liabilities
intended to be secured.? A condition to secure ‘all and any notes
the said grantees may hold against me” is sufficient. A mort-
gage given to secure all past indebtedness due and owing from
the mortgagor to the mortgagee contains a sufficient description of
the indebtedness.§

A mortgage which recognizes a note as an obligation due the
mortgagee from the mortgagor will be upheld both in law and
equity, although the note was originally made by the mortgagee,
if it appears that the payment of it was assumed by the mort-
gagor, who failed to pay it, and it was thereupon paid by the
maker. If property be transferred subject to defeasance in case
the note declared to be held and owned by the mortgagee shall
be paid by the mortgagor within a year, the mortgagor thereby
recognizes the note as that which was unpaid and held by the
mortgagee, and which he was bound by agreement to pay; and
there is no reason why a mortgage based upon such a recognition
of a note: made by the mortgagee, and taken up by him after it
had really become the debt of the mortgagor, should not be up-
held. ®

1 Rood v. Welch, 28 Conn. 157. * Page v. Ordway, 40 N. H. 253.
2 Paine v. Benton, 32 Wis. 491. 5 Machette v. Wanless, 1 Colo. 225.
8 Henshaw v. Sumner, 23 Pick. (Mass.) * Lonsdale v. Fairbrother, 10 R. I. 327.

446.
. 74
THE DEBT SECURED. " [8§ 87, 88.

87. The omission of a time for the performance of a mort-
gage does not vitiate it. Thus if a mortgage secure an obliga-
tion for the performance of which no time is fixed either by the
mortgagor or by separate agreement, the law steps in and requires
performance within a reasonable time. ©

If the day of payment named in the mortgage be a day earlier
than the date of the mortgage, it is in legal effect payable imme-
diately, and as between the parties it is not competent to contra-
dict the express terms of the instrument by the admission of
parol evidence that an error in the day of payment was made
through a mistake of the draftsman?

A condition to pay “ according to its tenor” a promissory note
payable at a day certain, which has passed, is not impossible. The
condition must be understood to be for the payment of the note
in its then existing state.?

88. A mortgage which gives a totally false description of
the note intended to be secured cannot be relied upon in an ac-
tion at law. The mortgagee should first proceed in equity to re-

form the mortgage. Although the mortgage be made wrong by—

mistake, the parties are bound by it unless they take some appro-
priate means of correcting the mistake. The proper way is not
to prove the mistake in an action at law, and have the same ben-
efit that might be had of a reformed instrument ; but to bring an
action to reform the mortgage so that it can have its proper legal
effect.*

A mortgage conditioned to indemnify the mortgagee against
liability, on account of his having become surety for the mortgagor
on a bond to dissolve an attachment of goods, does not secure the
mortgagee for his, liability upon a receipt given to the officer for
the goods. The bond would be for the dissolution of the attach-
ment, and the receipt is for a different purpose.®

A mortgage conditioned to secure two notes particularly de-
scribed by their amounts and dates does not secure the payment
of two notes of the mortgagor, held by the mortgagee for wholly
different sums and with different dates. Yet if the note pro-

1 Byram v. Gordon, 11 Mich. 531. 5 Shepardson v. Whipple, 107 Mass.
2 Fuller ». Acker, 1 Hill (N. Y.), 478. 279.
8 Pettis v. Kellogg, 7 Cush. (Mass.) 456. 6 Jewett v. Preston, 27 Me. 400.
4 Follett v. Heath, 15 Wis. 601.
75

t
§ 89.] REQUISITES OF FORM AND EXECUTION.

duced be clearly shown to be a renewal of the note described in
the mortgage, the variance thus explained does not invalidate the
security .t j

But a mortgage intended to indemnify the mortgagee as surety
upon the mortgagor’s debt to a third person is not void because
it describes the debt as due from the mortgagor to the mort-

gagee.?

89. Parol evidence is admissible to identify a note in-
tended to be secured by a mortgage.’ Thus, if a mortgage recite
an indebtedness in a certain sum, being the amount of two prom-
issory notes made by the mortgagor, and indorsed by the mort-
gagee, and taken up and paid by him, it may be shown by
extrinsic evidence that a third note made by the mortgagor and
discounted by the mortgagee was computed and embraced in the
indebtedness specified in the mortgage, although such note was
not indorsed by the mortgagee. The paper upon which the com-
putation of the indebtedness was made may be put in evidence
as serving to identify the note. Under a mortgage conditioned
to secure two notes of one hundred and fifty dollars each, it is
competent to show that one of the notes secured was for two
hundred dollars.§

Parol evidence is admissible to show that a note materially
different from that described in the mortgage is a renewal of such
note, and in fact secured by the mortgage. Such evidence is
admissible to show that the date of a mortgage which purports to
secure a note of the same date is erroneous; and that the mort-
gage and the note produced were executed at the same time, but
by mistake the mortgage was dated a year previous.? The record
of such a mortgage, notwithstanding the error, is constructive
notice of the lien to third parties.

But parol evidence that the sum expressed in the considera-

1 Barrows v. Turner, 50 Me. 127, * Dodge v. Potter, 18 Barb. (N. Y.)
2 Blincoe v. Lee, 12 Bush (Ky.), 358; 193.
Varney v. Hawes, 68 Me. 442. 5 Cushman v. Luther, 53 N. H. 562.

8 Clark v. Houghton, 12 Gray (Mass.), ® Barrows v. Turner, 50 Me. 127; Clark
38; Johns v. Church, 12 Pick. (Mass.) v. Houghton, 12 Gray (Mass.), 38.
557; Pierce v. Parker, 4 Met. (Mass.) 80; 7 Partridge v. Swazey, 46 Me. 414;
Melvin v. Fellows, 33 N. H. 401; Cush- Quinn v. Schmidt, 91 Ill. 84; Clark »v.
man v. Luther, 53 N. H. 562. Honghton, supra.

76

> Partridge v. Swazey, supra.
THE DEBT SECURED. [§§ 90, 91.

tion of the mortgage exceeds the amount justly due is inadmis-
sible, if there be no ambiguity in the instrument, and no fraud
be shown.

90. Parol evidence is admissible to show the purpose for
which a mortgage was executed. Thus it may be shown that
a mortgage given to a second indorser of a note, to secure its
payment, was intended to secure the first indorser as well, and
that the mortgagee held the security not only in his own right but
also as trustee for the prior indorser. Such evidence does not
contradict or vary the terms or legal effect of the mortgage ; it is
not inconsistent with its terms.?- And so it may be shown that
a mortgage for a fixed sum of one thousand dollars was not made
to secure a debt due from the mortgagor to the mortgagee, but
was made to secure the latter as an accommodation indorser for
the mortgagor; that upon the failure of the mortgagor to raise
money upon a note for one thousand dollars first indorsed, two
notes of five hundred dollars each were substituted in place of
that note, and indorsed by the mortgagee; and that it was the
‘purpose of the parties that the mortgage should secure the mort-

gagee’s liability upon the substituted notes.®

91. A mortgage securing a debt of a fixed amount cannot
be extended so as to become a lien for another and different in-

1 Patchin v. Pierce, 12 Wend. (N. Y.)
61.

° Bainbridge v. Richmond, 17 Hun (N.
Y.), 891, per Smith, J.: “The most that
the defendant can claim is, that as the
mortgage did not express the true intent
and purpose of the parties, it was liable to
suspicion, and the variance was a circum-
stance to be considered in determining the
question of fraud.”

8 McKinster v. Babcock, 26 N. Y. 378;
per Marvin, J.: “ The plaintiff had a valid
mortgage, as to the mortgagor. He would
not have been permitted to impeach it
by showing that the consideration was not
money advanced to him, and then shutting
out evidence of the true consideration. As
to the creditors of the mortgagor, the
question was whether the mortgage was
made without intent to hinder, delay, or

defraud them, and this involved the ques-
tion of consideration. It is undoubtedly al-
ways advisable to state, fairly and plainly,
the true consideration, and when this is
not done, the instrument may be open to
suspicion, and the question may be fairly
raised whether, in stating an untrue, in-
stead of the true, consideration, there was
not a design to mislead and deceive the
creditors of the mortgagor, or judgment
debtor, and to hinder, delay, or defraud
them. Our system touching the filing of
chattel mortgages, and thus giving notice,
may also be taken into account upon the
question of intent to defraud. In this case
the ‘referee passed upon this question as
one of fact, and found that the mortgage
was executed in good faith and for a valu-
able consideration, without any intent to
defraud the creditors of the mortgagor.”

TT
§ 92.] REQUISITES OF FORM AND EXECUTION.

debtedness not expressed.! Neither can either party, by parol
evidence, substitute a different condition for that expressed in the
mortgage.2 Thus, where a debtor gave to one of three sureties
upon his note a mortgage conditioned to save him harmless on
account of such liability, it was held that the debtor could not
control the legal import and effect of the instrument by parol
evidence that it was his intention to secure the mortgagee only
to the amount of one third of the note, under the belief that such
security would be a full and perfect indemnity to him for his lia-
bility on the note; and the consideration of the mortgage was
accordingly expressed in a sum equal to one third of the amount ,
of the note.2 The property being expressly conveyed to save the
thortgagee harmless from his whole liability, which was for the
whole note, the consideration expressed can have no influence in
limiting the effect of the instrument, nor can the testimony of the
mortgagor be admitted to show an intention different from that
expressed.*

In Maryland® it is provided by statute that no mortgage, or
deed in the nature of a mortgage, shall be a lien or charge on
any estate or property for any other or different principal sum or
sums of money than the principal sum or sums that shall appear
on the face of such mortgage, and be specified and recited therein,
and particularly mentioned or expressed to be secured thereby at
the time of executing the same. This statute does not apply to
mortgages to indemnify the mortgagee against loss from being
indorser or security.®

92. The fact that a mortgage was given for a larger sum
than was actually due is not conclusive of fraud. It may have
been so given by mistake; and it is for the jury to decide whether
it was done in fraud of creditors or in good faith.? Such an over-
statement of the debt merely indicates fraud, and it is a question

1 Morris v. Tillson, 81 Ill. 607. Rep. 465; Kalk v. Fielding (Wis. 1880),
2 Varney v. Hawes, 68 Me, 442, per 7 N. W. Rep. 296; Wooley v. Fry, 30 Ill.
Barrows, J. 158; Strauss v. Kranert, 56 Ill. 254; Bar-

8 Baker v. Buel, 5 Cush. (Mass.) 519. kow v. Sanger (Wis. 1879), 3 N. W. Rep.
* Baker v. Buel, supra, per Fletcher, J. 16; Butts v. Peacock, 23 Wis. 359 ; Blakes-

5 Code 1878, art. 66, § 43. lee v. Rossman, 43 Wis. 116, 123. And see
6 Fora statute in New Hampshire bear- Upton »v. Craig, 57 Ill. 257; Willison v.
ing upon this general subject, see § 37. Desenberg, 41 Mich. 156.

7 Wood v. Scott (Iowa, 1880), 7 N. W.
78
THE DEBT SECURED.

[$ 98.

for the jury to determine whether the mortgage was so made in
order to hinder and delay creditors,+

If a mortgage be given by an insolvent debtor to secure bonds
to a large amount which are given to numerous creditors, those
holding bonds for sums larger than the debts due them can en-
force their claims in equity only for the amounts really due.?

The validity of a mortgage is not affected by the fact that the
consideration is stated at a sum much larger than the debt actu-
ally secured, if the amount of‘ the debt can be ascertained from
the face of the mortgage.?

93. A condition in a power of sale mortgage must be one
for the breach of which the damages are liquidated. The
mortgagee in such a mortgage takes the law into his own hands
in executing the power of sale. And if the damages are unliqui-
dated he cannot sell the property upon a breach, because he will
not be allowed to be his own judge, and assess his own damages,
and then sell the property to satisfy them. The damages may
be merely nominal, and may therefore give him no right to sell at
all.t

A condition may be too vague and indefinite to constitute the
basis of a mortgage lien enforcible by power of sale, even if it be
not too vague and uncertain to be the basis of a mortgage en-
forcible in equity. Such is a condition that in a mortgage upon
@ newspaper establishment, given upon a purchase of it, not to
use the columns of the paper, or permit them to be used, to
publish matter detrimental to the mortgagee, his reputation or
business, which is unlimited in point of time, and designed to
accompany the property into the hands of, any one who may be-
come a purchaser of the property.®

1 Bell v. Prewitt, 62 Ill. 361; Kaysing render it intolerable, and under which

v. Hughes, supra; Kalk v. Fielding (Wis.
1880), 7 N. W. Rep. 296.

2 National Bank of the Metropolis v.
Sprague, 20 N. J. Eq. 13.

% Kaysing v. Hughes, 64 Ill, 123.

* Fowler v. Hoffman, 31 Mich. 215, per
Cooley, J.

5 Fowler v. Hoffman, 31 Mich. 215.
Cooley, J., giving the opinion, said: “If
effect can be given to it at all, it would
only be on a@ construction which would

the publisher could only protect himself
against inadvertent violations, by putting
some one who well understood the mort-
gagee in all his pecuniary, business, and
social relations in position of censor over
the columns of his paper, lest something
should creep in that in some unexpected
manner might be injurious. We are not
disposed to assume that such a result was
within the contemplation of the parties ;
but if their agreement falls short of this, it

79
§§ 94, 95.] REQUISITES OF. FORM AND EXECUTION.

94. A mortgage made to secure future advances is valid.
The earlier cases started with the proposition that a mortgage of
personal chattels made to secure an existing debt was not invali-
dated by a further provision intended to cover future advances.”
While this proposition is true, the broader proposition, that a
mortgage may be made to secure a debt which is wholly future
is also true, and has general recognition.®

If the amount of the advances be defined,.and there be a fixed
obligation to make them, or the mortgage show upon its face
that it was given as a continuing security for advances to a certain
amount, it is valid to that amount not only between the parties,
but also as against creditors.t To give effect to such a mortgage
as against a bond fide purchaser, or a judgment creditor, it is neces-
sary for the mortgagee to establish by competent evidence the
fact that he has made the contemplated advance or incurred the
liability mentioned in the condition, and that the debt or liability
is still outstanding.®

95. It does not matter that the amount of the intended ad-
vances is not stated, if the purpose for which they are to be made
is described. Even a limitation of the amount of such advances
may be controlled by statements of the purposes for which the ad-
vances are to be made, so that in equity the mortgage will as be-
tween the parties protect advances in excess of the sum stated in
the mortgage asa limit. Of course the mortgage would not se-
cure a larger sum than that expressed as the limit, as against

is, in our opinion, too vague, uncertain,
and indefinite, to constitute the basis of a
mortgage and lien enforcible by power of
sale.”

1 Jones v. Guaranty and Indemnity Co.
101 U. S. 622; Barnard v. Moore, 8 Allen
(Mass.), 273; McCarty v. Chalfant, 14
W. Va. 531; Ex parte Ames, 1 Lowell,
561; Brown v. Kiefer, 71 N. Y. 610; Craig
v. Tappin, 2 Sandf. (N. Y.) Ch. 78; Mon-
not v. Ibert, 33 Barb. (N. Y.) 24; Bank
of Utica v. Finch, 3 Barb. (N. Y.) Ch. 293 ;
Walker v. Snediker, 1 Hoff. (N. Y.) Ch.
145; Speer v. Skinner, 35 Ill. 282°; Hen-
drix v. Gore, 8 Oregon, 406; Miller v.
Finn, 1 Neb. 254, 287; Jarratt ». McDan-
iel, 32 Ark. 598,

80

® Lawrence v. Tucker, ‘23 How. 14;
Badlam v. Tucker, 1 Pick. (Mass.) 389;
Holbrook v. Baker, 5 Me. 309; Googins
v. Gilmore, 47 Me. 9; Westcott v. Gunn,
4 Duer (N. Y.), 107; Fairbanks v. Bloom-
field, 5 Duer (N. Y.), 434; Carpenter «
Blote, 1 E. D. Smith (N. Y.), 491; Page
v. Ordway, 40 N. H. 253; North v. Crow-
ell, 11 N. H. 251.

8 Schuelenburg v. Martin (Circuit Ct.
Dist. Kans. 1880), 10 Rep. 230.

See Jones on Mortgages, §§ 364-378.

4 Brown v. Kiefer, 71 N. Y. 610.

5 Marsh v. Kinney (N. Y¥. Supreme Ct.
Nov. 1880), N. Y. Weekly Dig. 144.

6 Jarratt v. McDaniel, 32 Ark. 598.
THE DEBT SECURED.

[§ 96.

an intervening mortgagee ; although such mortgagee might waive
and postpone his lien until the additional advances under the prior
mortgage are satisfied; and he would be regarded as impliedly
making such a waiver by verbally assenting to such additional ad-
vances.}

A mortgagee who has become guarantor of the mortgagor to
third parties for the building of a hotel according to contract, and
taken a chattel mortgage to indemnify and secure himself in the
payment of whatever sum might be due him on the completion of
the contract by reason of advances and payments in discharge of
his guaranty, has a right to make on the strength of the mortgage
such advances and payments as may be necessary for his discharge
from the guaranty, as well after notice of the sale of the mort-
gaged property as before.?

96. A mortgage need not show upon its face that it was
given to secure future advances. It is only necessary that
the deht secured be described with such: certainty as to enable
subsequent creditors. to ascertain, either from the condition of
the mortgage or by inquiry aliunde, the extent of the incum-
brance.’

Such a mortgage may be in the form of a security for the pay-
ment of a sum certain, leaving the true nature of the transaction
to be shown by parol proof. The extent of the security is thus
limited to the amount specified in the condition, and of which the
registry gives notice. But if no advances be made under such a

1 Bell v. Radcliff, 32 Ark. 645.

2 Preble v. Conger, 66 Ill. 370.

8 Lawrence v. Tucker, 23 How. 14;
Shirras v. Caig, 7 Cranch, 34; Craig v.
Tappin, 2 Sandf. (N. Y.) Ch. 78; Bank of
Utica v. Finch, 3 Barb. (N. Y.) Ch. 293;
Speer v. Skinner, 35 Ill. 282; McCon-
nell v. Scott, 67 Ill. 274; Collins vo. Car-
lile, 18 Ill. 254; North v. Crowell, 11 N.
H. 251; Tison v. People’s Saving and
Loan Association, 57 Ala. 323. And see
Stone v. Lane, 10 Allen (Mass.), 74. See,
however, Butts v. Peacock, 23 Wis. 359;
Stein v. Hermann, 23 Wis. 132.

* Monnot ». Ibert, 33 Barb. (N. Y.) 24;
Speer v. Skinner, 35 Ill. 282. See Bodley

6

v. Anderson, 2 Bradw. (Ill.) 450. There
are, however, some earlier authorities
which hold that the intention to secure
future advances must be expressed on the
face of the instrument, and that a mort-
gage expressed to be for the security of a
present debt cannot be made to cover fut-
ure advances on the strength of a mere
parol agreement. Divver v. McLaughlin,
2 Wend. (N. Y.) 596; James v. Morey, 2
Cow. (N. Y.) 246, 293; Walker v. Snedi-
ker, 1 Hoff.(N. Y.) Ch.145. The question
was raised but not decided in Wescott
Gunn, 4 Duer (N. Y.), 107. It is con-
ceived that the prevailing authority sup-
ports the statement in the text.

81
§ 97.] REQUISITES OF FORM AND EXECUTION.

mortgage, it cannot of course be enforced by the mortgagee ; nor
can it be enforced by his assignee unless it was given to secure
negotiable paper, and was assigned before maturity without
knowledge on the part of the assignee of preéxisting equities.’

97. Advances made by a mortgagee after he has actual no-
tice that others have acquired rights in the property will be
postponed to the rights acquired by such other persons, unless the

mortgagee be under a binding contract to make the advances, or
it be essential to his own security to complete the advances con-
templated by the mortgage.? The general rule is, that a prior
mortgagee is affected only by actual notice of a subsequent incum-
brance, and not by constructive notice of it;% but there are nu-
merous authorities which hold that if the mortgagee has the option
to make the advances or not, as he chooses, the mortgage, as to each
advance made upon it, is to be regarded as a fresh mortgage, and
is subject to the lien of any incumbrance which has been duly re-
corded at the time the advance is made, whether the mortgagee
has actual notice of it or not.*

A mortgage for future advances is not a valid security as against
a judgment creditor of the mortgagor for claims arising after the
property has been attached and the mortgagee summoned as trus-
tee of the mortgagor. The mortgagee cannot add a new and in-
dependent indebtedness arising after the attachment, either by
moneys advanced, services rendered, or liabilities assumed, to de-
feat the lien by attachment in such case, or to have priority to
that lien under the mortgage.® It is even held that the mortgagee
cannot, after being thus summoned as trustee, legally give notice
and proceed to fore lose the mortgage, to the prejudice of the at-
taching creditor ; © fur if he could do this, he might completely de-
feat the process duly commenced, and the rights acquired under
it, and thus render the statute authorizing an attachment in this
way wholly nugatory.

1 Judge v. Vogel, 38 Mich. 568. 3 Jones on Mortgages, § 372.

2 Speer v. Skinner, 35 Ill. 282; Preble * Jones on Mortgages, § 372; Ackerman
v. Conger, 66 Ill. 370; Divver-v. McLaugh- y. Hunsicker, 21 Hun (N. Y.), 53.
lin, 2 Wend. (N. Y.) 596; Brinkerhoff v. 5 Barnard v. Moore, 8 Allen (Mass.),:
Marvin, 5 Johns. (N. Y.) Ch. 320, 326; 273.
Carpenter v. Blote, 1 E. D. Smith (N. ® Hobart v. Jouvett, 6 Cush. (Mass.)
Y.), 491. 105.

82
SPECIAL PROVISIONS. [§$§ 98, 99.

98. Such a mortgage cannot be extended to cover advances
not contemplated at the time of its execution. Thus, a mort-
gage given by a partnership to secure future advances is not ef-
fectual to protect advances made, or liabilities incurred, after the
dissolution of the firm by the retirement of one of the partners.
Whether the mortgage was intended to secure a general balance
or particular advances and liabilities, it must be confined to trans-
actions between the original mortgagors and the mortgagee. If
the debts and liabilities of the mortgagors, or the balance of ac-
count against them, secured by the mortgage, be at any time paid,
such payment satisfies and extinguishes the mortgage, and it can-
not receive fresh sustenance from dealings between the mortgagee
and the firm which succeeds the mortgagors.!

V. Special Provisions.

99. A provision that the mortgagee shall release such part
of the mortgaged property as the mortgagor may sell, upon receipt
of a stipulated price therefor, or upon the payment of a propor-
tionate part of the mortgage debt, is not infrequently inserted in
mortgages. Such a provision is not an authority to sell generally,
but is a conditional authority, the condition being the payment of
the money agreed upon, and this condition is to be fully performed
before the title of the mortgagee is divested.2. This would be the
construction of the provision not only as between the parties, but
as against one claiming as a purchaser from the mortgagor, if the
provision were recorded as part of the mortgage.

A mortgage of farming stock and tools made to secure the pay-
ment of several notes of eight hundred dollars each, provided that
the mortgagee should have a lien upon the crops upon the farm
until the sum of eight hundred dollars should be paid; that when
said sum should be paid the mortgagee should release all security
upon the live stock; and when the further sum of two hundred
dollars should be paid he should release all security upon the
tools upon the farm. The construction of the mortgage was held
to be that upon the payment of the first eight hundred dollars
with interest thereon, the lien upon the live stock should be dis-
charged.®

1 Monnot v. Ibert, 38 Barb. (N. Y.) 24. 8 Brigham v. Avery, 48 Vt. 602,
2 Whitney v. Heywood, 6 Cush. (Mass.)
82.

83
§ 100.] REQUISITES OF FORM AND EXECUTION.

100. It is usual for a mortgage to contain an insurance
clause whereby the mortgagor covenants with the mortgagee to
keep the property insured for his benefit. The law applicable
to this clause as used in'mortgages of personal property does not
differ materially from that applicable to a similar clause used in
mortgages of real property. For this reason no extended state-
ment of the law will be made here!’ The mortgagor has an in-
surable interest in the property to the full value of the goods in-
sured ; and the mortgagee has an insurable interest measured by
the amount for which he holds the mortgage as security.2 Each
acting independently may insure his own interest ; but the more
usual course is for the mortgagor to obtain a policy of insurance
payable to the mortgagee in case of loss, in pursuance of a cove-
nant to insure for his benefit.

A stipulation to insure property “ for the full amount due”
the mortgage contemplates an insurance to the extent of the
amount secured by the mortgage and remaining unpaid, and not
merely the amount that has already become payable.?

Upon breach of a covenant to.insure the mortgagee may very
properly insure; and he can add the premium, if fair and reason-
able, to the debt secured.* :

An executory contract by a mortgagee to assign his mortgage
does not deprive him of his right to insure, nor does a partial
payment under such oe limit his recovery to the amount of
the unpaid purchase money.

The nature of the title of a mortgagee of personal property is
different from that which, in some states, a mortgagee of real
property has; for, while in some states a mortgagee of real prop-
erty is regarded as holding only a lien upon the realty without
having any legal title to it, the rule, almost without exception, is
that a mortgagee of personal property has a legal title to the
mortgaged chattels, even before the debt is due, and may take
immediate possession of them, unless restrained by express stipu-
lations in the mortgage. Therefore it is held that under a policy
which provides that “if any change takes place in the title or

1 Reference may be had to the chapter 8 Fowler v. Hoffman, 31 Mich. 215.
upon Insurance in the author’s work upon * Leland v. Collver, 34 Mich. 418,
Mortgages, §§ 396-427. 5 Haley v. Manufacturers’ F. & M.

2 Appleton Iron Co, v. British Am. Ass. Ins. Co. 120 Mass. 292; Davis v. Quincy
Co. 46 Wis. 23; S. C. 8 Ins. L. J. 177. Mut. F. Ins. Co. 10 Allen (Mass.), 113.

84
EXECUTION AND DELIVERY. [§§ 101, 102.

possession, whether by legal process or judicial decree, said policy
shall be void,” an adjudication of the mortgagor as a bankrupt,
and an assignment of his property under an order of court toa
trustee or assignee, does not avoid the policy; for the title re-
mains in the mortgagee as it was before the assignment.?

Under a policy conditioned to become void if the property shall
be encumbered by mortgage, a chattel mortgage of part of the
property insured makes the policy void as to the articles mort-
gaged.”

Notice of intention to foreclose a mortgage avoids a policy of
insurance upon the property conditioned to be void if the title to
the property be transferred or changed, and providing that the
“entry of a foreclosure of a mortgage shall be deemed an aliena-
tion of the property.” There would be no occasion to declare
the contract void upon foreclosure of a mortgage, inasmuch as
the law would say that. The meaning of the provision is that
something short of an actual and complete foreclosure shall be
considered, for the purposes of the contract, as a transfer or
change of title, and that any act which of itself, and without any
further formality or process on the part of the mortgagee, will
deprive the assured of all right and title in the property, unless
he pay the debt, shall be deemed sufficient to terminate the
risk.?

101. A covenant in a chattel mortgage that the mortgagor
will warrant and defend the property is merely a warranty of
title. It is not broken by his using up or disposing of the prop-
erty. He does not thereby undertake to forever keep the prop-
erty, or to protect it.*

VI. Execution and Delivery.

102. It is not necessary that a mortgage of personalty
should be executed under seal.5 Though the mortgage be in
1 Appleton Iron Co. v. British Am. Ass. * Weed v. Covill, 14 Barb. (N. Y.) 242.

Co. 46 Wis. 23; S.C. 8 Ins. L. J. 177; 5 Despatch Line of Packets v. Bellamy
and see Bragg v. N. E. Mut. F. Ins. Co. Manufacturing Co. 12 N. H. 205; Gerrey

25 N. H. 289. v. White, 47 Me. 504; Tapley v. Butter-
® Dacey v. Agricultural Ins. Co. 21 field, 1 Met. (Mass.) 515; Milton v.
Hun (N. Y.), 83. Mosher, 7 Ib. 244; and see Sherman v.

8 McIntire v. Norwich F. Ins. Co. 102 Fitch, 98 Mass. 59, 64.
Mass. 230.
85
§§ 103, 104.] | REQUISITES OF FORM AND EXECUTION.

the form of a deed, and purport to be sealed, the omission of the

seal does not invalidate it.1 A chattel mortgage is only a bill of

sale with a defeasance; and a sale of personal property is never

required to be by deed. It is not unusual to execute chattel

mortgages as deeds, and the forms given in the books, and even

those prescribed by statute,? may sometimes include a seal. But.
the term mortgage, used in a statute relating to personal property,

does not import or imply that a seal is necessary.®

103. Parol evidence is admissible to show when a mort-
gage deed without date was executed and delivered. The
admission of such evidence is not in violation of the rule which
excludes testimony that tends to vary or contradict the terms of
a deed. And so when it is material to determine the date of
the execution of an instrument with reference to the validity of
a record of it under a statute requiring the recording of it within
a limited time after its execution, it may be shown by parol evi-
dence that a mistake was made in the date of the mortgage; its
date being only primd facie evidence of the time of its execu-
tion.

If a mortgage be dated, it is presumed, until it is proved other-
wise, that it was executed and delivered at its date.6 The date
of an acknowledgment, or the time of its record, will serve to fix
the date of execution as not later than such time.’

The date of a mortgage not under seal may be shown by parol
evidence to be erroneous. Thus it may be shown ‘that a mort-
gage was by mistake dated a year prior to the date of the note,
they in fact having been made and delivered at the same time.®

A mistake in the date of the certificate of acknowledgment is
immaterial, when it appears that the mortgage was recorded on
the day of its execution, for no injury could result from the error
to creditors or purchasers.®

104. A delivery and acceptance of the mortgage are essen-

1 Gibson v. Warden, 14 Wall. 244; ® Stonebréaker v. Kerr, 40 Ind. 186.
Gerrey v. White, 47 Me. 504. & Foster v. Perkins, 42 Me. 168.
2 As in Maryland, see § 35. ™ Merrill v. Dawson, Hemp. 563.
8 Gibson v. Warden, supra, per Swayne, « Partridge v. Swazey, 48 Me. 414;
: Clark v. Houghton, 12 Gray (Mass.), 38.
4 Burditt v. Hunt, 25 Me. 419. ® Durfee v. Grinnell, 69 Ill. 371.

86

J
EXECUTION AND DELIVERY. [§ 104.

tial to its validity.1 Without these there is no mortgage, but
only an attempt at one, or a proposition to make one. It is true,
however, that although there may be no valid delivery of a mort-
gage at the time of its execution, a subsequent delivery will avail
against those who have not in the mean time acquired rights to
the property or interests in it.

A mortgage executed byfa debtor to his creditor without the
knowledge of the latter, and without authority from him, and de-
livered to a stranger or to the mortgagor’s attorney for his use,
does not vest the title to the property in the mortgagee as of the
time of such delivery, as between him and a creditor of the mort-
gagor who has acquired an interest in it by attachment or levy
of execution between the time of such delivery and the mort-
gagee’s acceptance of the mortgage after receiving notice of it.?
Such a case is to be distinguished from one where the mortgagor
has received previous authority or direction from the mortgagee to
execute the mortgage, or has received general authority to act as

1 Jewett v. Preston, 27 Me. 400; Foster
v. Perkins, 42 Me. 168.

2 Miller v. Blinebury, 21 Wis. 676;
Welch v. Sackett, 12 Wis. 243. Dixon,
C. J., delivered an elaborate opinion in
the latter case, saying: “The idea that
acontract could be thus made, and that
title to property could pass into a party
without his knowledge or consent, and
out of him without any motion or act of
his signifying his willingness, but merely
by his refusal to receive it at all, had its
origin at a period in the history of the
common law when the legal mind, instead
of being governed in its conclusions by a
steady application of the clear and ra-
tional principles of the law to plain mat-
ter of fact, and by arguments to be drawn
therefrom, was too frequently influenced
by a mysterious and fanciful logic, that
depended for its support upon artfully de-
vised fictions and falsehoods, which for the
most part were as repugnant to reason as
they were unnecessary to the proper ad-
ministration of justice. The discovery
that such things could be done is, I be-
lieve, attributable to the inventive skill of
Justice Ventris, as exhibited in the case

of Thompson v. Leach, 2 Vent. 198, de-
cided about the year 1690; at least sev-
eral courts and judges since that time,
with many complaints, have agreed in
giving him the credit of having proved
something on this subject which none of
them could understand. The substance
of his proposition is, that a deed of lands
made to a party, without his knowledge
or consent, and placed in the hands of a
third person for his use, isa medium for
the transmission of the title to the grantee,
and takes effect so as to vest it in him the
instant the deed is parted with by the
grantor, and if the grantee, upon receiv-
ing knowledge of it, rejects it, such rejec-
tion has the effect of revesting the title in
the grantor by, a species of remitter.”
The learned judge, after examining this
argument at length, concludes that it is
not founded in reason, and is not entitled
to be regarded as giving any foundation
to the doctrine announced. And see Mc-
Cutchin v. Platt, 22 Wis. 561, where the
deed was sent by mail, and the property
was attached after the deed was deposited
in the post-office, but before it reached the
creditor.

87
§§ 105, 106.] REQUISITES OF FORM AND EXECUTION.

his agent to loan money and to take any security for its payment
at his discretion.1

105. An authorized agent may accept a delivery for his
principal; and it has been held that he may do this even when
he was himself the mortgagor. Thus, an agent to whom money
was sent to be invested at his discretion applied it to his own use,
and executed to his principal a chattel mortgage as security. He
delivered the mortgage to another, who was not however author-
ized to act for the principal, and he also caused the mortgage
to be filed for record. He wrote informing the principal of the
use he had made of the money, and of the security he had given;
but the principal never received this letter. The mortgaged prop-
erty having been taken under execution upon a judgment against
the agent, the principal was allowed to recover it, upon the ground
that the agent was authorized to act for the principal in accepting
a delivery of the mortgage.? “But could the agent apply the
money to his own use, and execute and file the mortgage for the
use of the principal? It is assumed that he could not do this, and
that it was a clear violation of his duty thus to appropriate the
money. However the rule might be if the principal were dissat-
isfied with the use which had been made of his money, and were
endeavoring to repudiate the transaction, clearly the mortgage is
only void at his election. If he choose to ratify what has been
done by his agent, and treat the mortgage as valid, upon what
principle of law or public policy can strangers interfere and claim
that the mortgage is void because the agent made an unauthorized
use of the money? Here the mortgagee is satisfied with the secu-
rity, has fully ratified and approved the use made of his money,
and seeks to have the benefit of the security. It seems to us that
if the principal is satisfied with the loan and security, others have
no right to complain. They cannot avoid the chattel mortgage
made by the agent for the benefit of the principal, even if it be
conceded that, under the circumstances, the principal might have
treated the transaction as unauthorized.’’§

106. The delivery of a mortgage to the recorder, or the filing

it in the proper office by the mortgagor, is not in itself such a
1 Sargeant v. Solberg, 22 Wis. 132. 8 Per Cole, J., delivering the judgment
2 Sargeant v. Solberg, supra. in Sargeant v. Solberg, supra.

88
EXECUTION AND DELIVERY. [§ 107.

delivery as will operate to give the mortgagee any title under it,
prior to his actual acceptance of the security,! except in case there
be a prior agreement of the parties, that the mortgage shall be ex-
ecuted and so delivered for record or filing.? “It is well settled,
that under an agreement between the parties that one shall make
a deed to the other, and deliver the same to the register of deeds
for registry, and for the benefit or use of the grantee, the making
of such deed and leaving the same with the register, for such pur-
poses, constitute a good delivery of the deed to the grantee, with-
out any further act.” But it is not necessary that the evidence
should go so far as to constitute the register an agent of the mort-
gagee to receive the mortgage. It is sufficient if it be shown that
at the time the debt was created the mortgagor agreed to secure
it by mortgage, and accordingly made and left the mortgage for
record, and the mortgagee soon afterwards took possession of the
property, and later obtained from the recorder a copy of the mort-
gage. The fact that. the original mortgage in such case after it
was recorded was lost or stolen from the recorder’s office, or was
accidentally destroyed while there, so that it never actually came
into the hands of the mortgagee, is not sufficient to defeat its
operation as a valid subsisting mortgage.t

But a delivery of a mortgage to the recorder for record without
the knowledge of the mortgagee, more than a year after the mort-
gagor agreed to secure the mortgagee by such a mortgage, is not
necessarily a valid delivery of the mortgage, but only evidence of
such delivery to be submitted to the jury. And it has even been
held that an antecedent agreement to give a mortgage, if the
agreement be to give a mortgage upon property not defined by
the parties, will not make a delivery of the instrument for record
effectual against a levy of attachment or execution upon the
property before an actual delivery to the mortgagee.®

107: But the mortgagor's delivery of a mortgage of specific

1 Cobb v. Chase (Iowa, 1880),6 N. W. 8 Thayer v. Stark, 6 Cush. (Mass.) 11,
Rep. 300; Day v. Griffith, 15 Iowa, per Dewey, J., 13.
104; McCourt v. Myers, 8 Wis. 236 ; Ox- * Thayer v. Stark, 6 Cush. (Mass.) 11.
nard v. Blake, 45 Me. 602; Dole v. Bod- 5 Jordan v. Farnsworth, 15 Gray
man, 8 Met. (Mass.) 139; Maynard v. (Mass.), 517.
Maynard, 10 Mass. 456. 6 Cobb v. Chase (Iowa, 1880), 6 N. W.
2 Cooper v. Jackson, 4 Wis. 537; Har- Rep. 300 ; Day v. Griffith, 15 Iowa, 104.
rington v. Brittan, 23 Wis. 541; Jordan
v. Farnsworth, 15 Gray (Mass.), 517. 89
§ 108.] REQUISITES OF FORM AND EXECUTION.

property to the recorder, in pursuance of an agreement to do
so, is effectual. Thus, a resident of Iowa having borrowed a sum
of money of a resident of Ohio, under an agreement that the
payment of the same should be secured by a mortgage of per-
sonal property belonging to the debtor in Iowa, and that he
should take it to the recorder’s office and leave it for record and
pay the recorder’s fee, and having executed and delivered the
mortgage for record as agreed, such delivery was held to be com-
plete and effectual against a creditor, who, on the same day, at-
tached the property! on a writ against the mortgagor. Although
the specific property upon which security was to be given was
not agreed upon by the parties, it was fairly to be inferred that
the debtor should select the property to be included in the mort-
gage, because the creditor’s residence was hundreds of miles from
the property, and it was not contemplated that he should be pres-
ent at the execution of the mortgage. The creditor had never
seen the property, and, so far as it appeared, he never expected to
see it. The jury found from the contract of the parties and the
surrounding circumstances that the creditor authorized the debtor
to select property to be included in the mortgage, and the court
declared that it was competent for the creditor to invest the debtor
with this authority.

108. Mere knowledge on the part of the mortgagee of the
existence of the mortgage is not sufficient without an acceptance
of it, or a ratification of it. Not only is the mere execution and
filing of a mortgage insufficient to constitute an acceptance,? but
knowledge on the part of the mortgagee, before other rights have
intervened, that a mortgage of property not definitely agreed upon

* Everett v. Whitney (Iowa, Dec. 1880),
7N. W. Rep. 487. The court refer to the
cases of Day v. Griffith, 15 Iowa, 104, and
Cobb v. Chase (Iowa, 1880), 6 N. W. Rep.
300 (see § 108), saying: ‘In the former
case there was an agreement that the debt
should be secured, but no specific property
nor character of security was referred to.
The debtor, without the knowledge of his
creditor, executed and filed for record a
chattel mortgage. It was held that there
was no delivery as against an intervening
attaching creditor. In the latter case it

90

was agreed that the debtor should execute
a chattel mortgage upon some cows and
other stock, but the animals were not
specially pointed out nor agreed upon.
Afterwards the debtor, in the absence of
the creditor, and without his knowledge,
executed a mortgage upon certain cattle,
and filed it for record. It was held that
this was not a delivery as against an at-
taching creditor.” The present case dif
fers from those in the important partic-
ulars mentioned in the text.
2 Day v. Griffith, 15 Iowa, 104.
EXECUTION AND DELIVERY. [§ 109.

has been made to him, is also insufficient for this purpose. Thus
where there was an agreement between a debtor and his creditor
‘that a mortgage should be given upon a certain kind of property
to secure the debt, but the specific property was not pointed out
or agreed upon, it was held that the making and filing of a mort-
gage upon the class of property specified was not sufficient to
give such mortgage priority over an attachment levied thereon
prior to the actual delivery of the mortgage, although the mort-
gagee was informed by the recorder, before the levy was made,
that such a mortgage to him had been filed for record.?

109. A delivery to one mortgagee of a mortgage made to
several to secure a several debt to each is a sufficient delivery
to all. It is not competent for the mortgagor to restrain the
operation of the mortgage, by the use of words, so as to give it
effect as his deed to one of the grantees, and prevent it from
having that effect as to the others, for the operation of the mort-
gage deed must be ascertained from its terms, and cannot be
varied by parol evidence? ‘‘ [t makes no difference, in our opin-
ion,” said Chief Justice Shaw, “that the grant was defeasible
upon the payment of several sums to the several mortgagees.
That might affect the right of redemption, and the mode of ob-
taining a discharge of the mortgage. But the question here is
as to the effect of the deed, before redemption, upon the right of
property; and we have no doubt that it vested a right of prop-
erty in all the mortgagees, either as joint tenants or tenants in
common, and, for the, purpose of this defence, it is immaterial
which.”

If several mortgages are made by a debtor at one time, to se-
cure several creditors, the refusal of one of them, on being in-
formed of the mortgage, to accept it does not impair the mort-
gages accepted by the other creditors.2 On the contrary, the
mortgage which is first ratified will take precedence; and the
others will become operative and take precedence in the order of

1 Cobb v. Chase (Iowa, June, 1880), 6 for record, there is much reason for hold-
N. W. Rep. 300. Adams, C. J., remarked ing that such mortgage is to be deemed
that where a person agrees with another accepted by the mortgagee.
to mortgage to him specific property, and 2 Hubby v.,Hubby, 5 Cush. (Mass.) 516.
in pursuance of the agreement executes a 3 Brown »v. Platt, 8 Bosw. (N. Y.) 324.
mortgage upon the property and files it

91
§§ 110-118.] REQUISITES OF FORM AND EXECUTION.

their ratification ;1 but such a mortgage which is not ratified will
never take effect.

110. Proof of the delivery of the mortgage by the mort-
gagor for record, and its subsequent possession by the mort-
gagee, is sufficient, in the absence of other proof, to authorize a
jury to find its delivery to him.2 A delivery of a mortgage by a
debtor to his own attorney for record, without the authority of the
creditor, may be ratified by the creditor subsequently ;* but in
such case the mortgage becomes a valid security only from the
time of such ratification, and not from the original delivery.

Ill. The fact of the possession of the mortgage note by the
mortgagor at the time of his death affords a presumption either
that the note had been paid and delivered up, or that it had never
been delivered to the mortgagee ; and where the death occurred
shortly after the making of the mortgage, the finding of the note
in his possession was regarded as a strong circumstance against
the good faith and honesty of the mortgage transaction.+*

112. The question of delivery is always a question of fact
-for the jury. It is always competent to show by parol evidence
that a mortgage was never delivered, and that it therefore never
took effect. And such eyidence is admissible to show that it was
delivered as an escrow, or that the mortgagee obtained possession
of it by fraud, or in any unwarrantable manner.®
The question whether a mortgage is properly executed and ac-
knowledged is one of law, to be passed upon by the court.”

113. A subsequent ratification by the mortgagee may make
an undelivered mortgage valid. When the validity of a mortgage
depends upon a subsequent ratification of its execution, no new
record of the mortgage is necessary. The ratification relates back
to the original execution of the mortgage.®

A mortgage made without the creditor’s knowledge cannot be

1 Oxnard v. Blake, 45 Me. 602. 124; Jordan v. Farnsworth, 15 Gray
2 Molineux v. Coburn, 6 Gray (Mass.), (Mass.), 517.

124; Foster v. Perkins, 42 Me. 168. 8 Roberts v. Jackson, 1 Wend. (N. Y.)
8 Brown v. Platt, 8 Bosw. (N. Y.) 324. 478.
# Bullock v. Narrott, 49 Ill. 62. 7 Bullock v. Narrott, 49 Ill. 62.

5 Molineux v. Coburn, 6 Gray (Mass.), 8 Sherman v. Fitch, 98Mass. 59.
EXECUTION AND DELIVERY. [§ 118.

ratified and made effectual by him after an assignment in bank-
ruptcy or insolvency of the debtor’s proper y. A'though the
recording of a mortgage is equivalent to an actual delivery, the
record is of no effect until the mortgage is delivered.! The debtor
cannot appoint an agent to act in behalf of his creditor and make
an effectual delivery to him.

1 Dole v. Bodman, 3 Met. (Mass.) 139.
CHAPTER III.

SUBJECT MATTER OF CHATTEL MORTGAGES.

I. What present interests are subject] II. Statutory limitations of the subject
to mortgage, 114-120. matter of mortgages, 121-122., ‘
II. Mortgages of fixtures, 123-137.

I. What Present Interests are sub, ect to Mortgage.

114, In general any property which is capable of absolute sale
may be mortgaged.’ All claims growing out of and adhering to
property, rights of action for damages ex contractu, and interests
in actions pending and undetermined, may be the subject of a
mortgage.2 It does not matter that the property is exempt from
attachment and from levy and sale upon execution, for such ex-
emption is merely a privilege which the law confers upon a
debtor, and not a limitation imposed upon his power. to dispose
of his own property as he may choose.

It is not necessary that the mortgagor shall have the absolute
and entire title to property which is the subject matter of his
mortgage. A limited or special interest in property is sufficient
to support a mortgage of it. One occupying and cultivating land
under an agreement that he shall have part of the crops produced
has an interest in the crops which he may mortgage; but if there
be an agreement that the crops shall belong to.the owner of the
land, and that the tenant, after paying him for certain advances,
should have a certain undivided portion of the crop, the tenant
has no interest which he can sell or mortgage.2 And so one oc-
cupying land of another, under an agreement that the grass should
belong to the person in occupation, may make a valid transfer of
the growing grass by way of a personal mortgage.‘

1 Dorsey v. Hall, 7 Neb. 460. 8 Ponder v. Rhea, 32 Ark. 435; Leland
2 Pindell v. Grooms, 18 B. Mon. (Ky.) v. Sprague, 28 Vt. 746.
501. * Jencks v. Smith, 1 N. Y. 90; S.C.

1 Denio, 580. |

94
WHAT PRESENT INTERESTS SUBJECT TO MORTGAGE. [§§ 115, 116.

115. The owner of a chattel not in possession may make a
valid mortgage of it if the person in possession professedly holds
under him, and has only a special property in the thing, such, for
instance, as that conferred by a pledge? or a lien.2 Thus, a horse
which had been taken from the mortgagor in a replevin suit may
be mortgaged by him before final judgment, and while the prop-
erty is subject to restitution. If the mortgagor obtains’a judg-
ment, not for the return of the horse, but for the value of it, the
benefit of such judgment passes to the mortgagee. The mort-
gagee’s equitable title is, moreover, paramount, to any lien or
claim upon the property arising subsequently to the mortgage.*

The owner of a chattel has a mortgageable interest in it after
default of a prior mortgage of the same, until foreclosure is com-
pleted. The junior mortgagee has, until that time, a right to
redeem.!

116. Mere possession of personal property of another, when
no title or interest accompanies the possession, confers no power
to mortgage the property, even in favor of one taking the mort-
gage for a valuable consideration without notice.®

Yet a mortgagee for value and in good faith, of goods in posses-
sion of one who has obtained them by false pretences, will hold
them against the first vendor, provided the latter voluntarily
parted with the possession, and intended to part with the title.6
It is true as a general rule that no one can transfer a better title
than he himself has; and it is true also as a general rule that
fraud vitiates any contract. But these general propositions are
subject to qualifications or exceptions; and one of these is that a
vendor, by voluntarily putting a vendee in possession of goods,
though induced to do so by fraud, puts it in the power of his
vendee to treat the goods as his own in dealing with others, and
virtually gives him authority to pass the title to others. The
vendor has trusted the vendee, and should suffer loss if loss is to
fall upon him or upon a purchaser or mortgagee, who, on the credit
of the property, has parted with value to the person in possession.

1 M’Calla v. Bullock, 2 Bibb (Ky.), 288, 5 Glaze v. Blake, 56 Ala. 379; Waters
2 Pindell v. Grooms, 18 B. Mon. (Ky.) ». Cox, 2 Bradw. (Ill.) 129.

501. 6 Malcom v. Loveridge, 13 Barb. (N. Y.)
8 Pindell v..Grooms, supra. 372,

£ Smith v. Coolbaugh, 21 Wis. 427.
95
§§ 117, 118.] SUBJECT MATTER OF CHATTEL MORTGAGES.

117. An interest in property, which one may perfect by ful-
filling an executory contract, may in equity be the subject of a
mortgage. Thus there may be such a mortgage of one’s interest
in a herd of cattle, which by contract he is to feed for a year,
and at the end of that time is to have half of the herd for his
trouble and expense.!

One who is in possession of chattels under a lease, by the terms
of which he is to pay for them by instalments until the entire
price is paid, when the claim of the lessor is to cease, the lessor in
the mean time having the right, upon failure in the payment of
any instalment, to take possession and terminate the lease, has
such a right of property in them that he can convey a good title
in the mortgage, as against an officer who attaches them as the
property of the lessee, although there has been a failure by the
lessee to pay an instalment due, provided the lessor has not taken
possession.” .

So also one in possession of property under a conditional sale
may mortgage his interest such as it is, and on payment of the
price the mortgage will become valid. Of course the mortgagee’s
title may be defeated by the prior incumbrance, or by the failure
of the mortgagor to fulfil the condition of his purchase.!

An agreement between a vendor and vendee that the title to
the property shall not pass until it is paid for is valid and binding
between the parties themselves, though possession be delivered to
the vendee; but as to purchasers and creditors of the vendee such
agreement is fraudulent and void, and as to them the property
must be considered as belonging to the vendee in possession; and
therefore he can make a valid mortgage of it.

But a vendee under such a conditional sale, who has not taken
possession of the property, has no interest in it which he can
transfer by sale or mortgage.®

118. On the other hand a vendor who has sold chattels con-

1 Forman v. Proctor, 9 B. Mon. (Ky.) and see Day v. Bassett, 102 Mass. 445;
124, Everett v. Hall, 67 Me. 497.

2 Chase v. Ingalls, 122 Mass. 381; Har- * Holman v. Lock, 51 Ala. 287.
ington v. King, 121 Mass. 269; Currier 5 McCormick v. Hadden, 37 Ill. 370;
v. Knapp, 117 Mass. 324. 0. & M. R. R. Co. v. Kerr, 49 Ill. 458;

8 Crompton v. Pratt, 105 Mass. 255; Ketchum v. Watson, 24 Ill. 591; Ib. 592.

& Doyle v. Mizner, 40 Mich. 160.
96
WHAT PRESENT INTERESTS ARE SUBJECT: TO. [§ 119.

ditionally may mortgage his interest. Thus if he has deliv-
ered them upon condition that the title shall not pass to the pur-
chaser until paid for, he may at any time before the price is
wholly paid mortgage them to another person, and the mortgagee
will acquire a title superior to that of the conditional vendee.. It
is not material that payments have been made towards a title be-
fore the recording of the mortgage, so long as the payments are
not in full; and it matters not how near the purchaser comes to
acquiring a title, so long as he falls short of it. “Jt is a gen-
eral rule that when a man hath a thing he may condition with it
as he will; for the maxim is cujus est dare ejus est disponere.” 2
The purchaser has no title, so long as the condition remains un-
performed. He might, under some circumstances, have a lien in
equity for advances made before the recording of the mortgage,
but a court of law could take no account of such a lien.3

Under a contract for building a ship or making any other chat-
tel, not subsisting at the time in specie, no property vests in the
purchaser during the progress of the work, nor until the vessel or
other chattel is finished and ready for delivery. In the mean
time the builder or maker may make a valid mortgage of the
property in its unfinished state, or a lien may attach to it for labor
and materials used in its construction. This is true even when
the purchaser has advanced money on account from time to time
during the progress of the work under a contract stipulating that
he should have a lien on the chattel and on all the materials pro-
vided for its construction. Such a contract does not transfer the
property to the purchaser, or deprive the builder of the power to
mortgage it.4

119. A mortgage of property to which the mortgagor has
no title may be ratified and made valid by the subsequent acts
or declarations of the owner. Thus, a husband having mortgaged
property belonging to his wife to secure a debt of his own, the
mortgagee afterwards threatened to foreclose, and demanded more
security, whereupon the wife said to him that he had a mortgage
on all the personal property already. The jury were authorized
to infer from this not only that she knew of the mortgage, but

1 Everett v. Hall, 67 Me. 497. 4 Wright v.. Tetlow, 99 Mass. 397;
2 Shepard’s Touchstone, 118. Briggs v. A Light Boat, 7 Allen (Mass.),
3 Everett v. Hall, supra, per Peters, J. 287.

7 97

=
§§ 120, 121.] sSuBsECT MATTER OF CHATTEL MORTGAGES.

that she meant the mortgagee to understand that it was a valid
security. The wife could not maintain replevin for the property
against the mortgagee.!

120. A mortgage of property, the sale of which is forbidden
by statute, passes the title to it. Thus, a mortgage of spiritu-
ous liquors, the sale of which is prohibited, passes a title which will
sustain an action against one taking them without authority; for
spirituous liquors are still property, and although the seller com-
mits an offence for which he is punishable, he does not retain the
property. The purchaser commits no offence whether he take an
absolute title or a defeasible one. Neither is a mortgage of such
property invalidated by a provision in it that the proceeds of any
sale of the property made by the mortgagor shall be applied to
the purchase of articles of the same kind, to be held subject to the
mortgage. Such a provision neither expressly, nor by just impli-
cation, authorizes the mortgagee to make any sale of the mort-
gaged property in violation of the law. Even if the mortgage
had contained an express authority to the mortgagor to sell the
liquors illegally, and thus had made the mortgagee a participator
in the illegal act of keeping liquors for sale, he would not be pre-
cluded from maintaining an action against one who had wrong-
fully converted his property, though he might become liable to
the penalties of the statute.? :

A mortgage of intoxicating liquors though it be a contract made
void by statute, when carried into effect by a delivery of posses-
sion to the mortgagee, passes the title to the property, and is good
not only against the mortgagor, but also as against his creditors.’

Il. Statutory Limitations of the Subject Matter of Mortgages.

121. In a few states there are statutes which restrict the
giving of chattel mortgages to specific articles or classes of per-
sonal property. Thus in California,t mortgages may be made

_) Merrill v. Parker, 112 Mass. 250. be mortgaged under this provision. Gass-
2 Cobb v. Farr, 16 Gray (Mass), 597. ner v. Patterson, 23 Cal. 299.
8 Bagg v. Jerome, 7 Mich. 145, To render a mortgage of furniture and

4 1 Codes & Stats. 1876, and Supplement upholstery in a hotel or boarding-house
1880, §§ 7955-7958 ; Amendments 1877-8, valid, it must appear that it was actually
p. 88; Civil Code, §§ 2955-2958. used for such purpose. Stringer v. Davis,

The furniture and fixtures of a saloon 30 Cal. 318.

are not among the property which may A mortgage of property which cannot
STATUTORY LIMITATIONS. [§ 121.

upon locomotives, engines, and other rolling-stock of a railroad ;
steamboat machinery, and machinery used by machinists, foundry-
men, and mechanics; steam-engines and boilers ; mining machin-
ary $ printing-presses and material ; professional libraries ; instru-
ments of a surgeon, physician, or dentist ; upholstery and furni-
ture used in hotels, lodging or boarding-houses, when mortgaged
to secure the purchase money of. the articles mortgaged ; growing
crops ; vessels of more than five tons’ burden ; instruments, nega-
tives, furniture and fixtures of a photograph gallery ; the machin-
ery, casks, pipes, tubs, and utensils used in the manufacture of
wine, fruit brandy, and fruit syrup, or sugar.

In Arizona? chattel mortgages may be made of the following
property: Upholstery and furniture used in hotels and public
boarding-houses, when mortgaged to secure the purchase money
of the identical articles mortgaged, and not otherwise; saw-mill,
grist-mill, and steamboat machinery; tools and machinery used
by machinists, foundrymen, and other mechanics ; steam-boilers,
steam-engines, locomotives, engines, and the rolling-stock of rail-
roads ; printing-presses and other printing material ; instruments
and chests of a surgeon, physician, or dentist ; libraries of all per-
sons; machinery and apparatus for mining purposes; growing
crops, grain in store or field; teams or implements pertaining to
a farm ; stock of all kinds on a farm.

In Idaho Territory chattel mortgages may be made of any prop-
erty, goods or chattels, not defined by statute to be real estate.?

In New Hampshire? personal property and crops of every de-
scription, whether the same have or have not come to maturity,
are subject to mortgage.

In Michigan‘ no chattel mortgage or other incumbrance upon
the library of any corporation formed for literary or scientific
purposes is valid. No mortgage of personal property exempt
from levy and sale under execution save tools, implements, ma-
terials, and other things used by the debtor to carry on his trade
or profession, is valid ae it be signed by the wife of a
mortgagor, if he have any.6

be mortgaged under the provisions of this 2 Rev. Laws 1875, 661, § 1.

act is governed by the rules of the com- 3G. S. 1878, ch. 187, § 1.

mon law. Wildman »v. Radenaker, 20Cal. 4 Laws 1877, No 155.

615. 5 Compiled Laws 1871, § 6101.
1 Compiled Laws 1877, § 3644.

99
§ 122.] SUBJECT MATTER OF CHATTEL MORTGAGES.

_ In Connecticut ? it is provided that if any manufacturing or me-
chanical establishment, together with the machinery, engines, or
implements situated and used therein; or any printing, publish-
ing, or engraving establishment, together with the machinery,
engines, implements, cases, types, cuts, or plates, situated and
used therein; or any dwelling-house, together with the household
furniture belonging to its owner, and used therein by him in
housekeeping; or any building containing hay, together with
such hay; or any hotel, with the furniture, fixtures, and other
personal chattels contained and used in such hotels or employed
in connection herewith ;? or any of the personal property above
mentioned, without the real estate in which the same is situated
or used, shall be mortgaged by a deed containing a condition of
defeasance, and a particular description of such personal prop-
erty, executed, acknowledged, and recorded, as mortgages of lands,
the retention by the mortgagor of the possession of such personal
property shall not impair the title of the mortgagee.’

122. Where a chattel mortgage can be made only upon cer-
tain classes of property specifically mentioned by statute, to
render a mortgage valid it must be shown that it embraces prop-
erty specified by the statute. Thus, under a statute of the State
of California authorizing mortgages of upholstery and furniture
used in hotels, lodging or boarding-houses, to secure the purchase
money, the mortgagee must allege and prove that the furniture
and upholstery were actually used in a hotel, lodging or boarding-
house.

1 G. S. 1875, p. 359, § 7.
2 Acts 1878, ch. 90.

fraud, but would probably fall shrtt of
making even a prima facie case of it.

3 A mortgage of movable machinery
left in possession of the mortgagor is void
against his attaching creditors, unless the
statute requirement that’ the mortgage
shall contain a particular description of
such machinery be complied with. Gaylor
v. Harding, 37 Conn. 508. But neither
the statute nor the common law requires
such particular description of machinery
mortgaged with the mill in which it is
situated and used, when actually delivered
with the mill into the possession of, and
held by, the mortgagee. The want of it
might perhaps afford some evidence of

100

Howe v. Keeler, 27 Conn. 538.

Under a former statute of Vermont it
was provided that machinery attached to
or used in any shop, mill, printing-office,
or factory, might be mortgaged by deed,
executed, acknowledged, and recorded in
the same manner as deeds of real estate;
and when so executed, acknowledged, and
recorded, shall have the same effect. G.
S. 1862, ch. 108, § 5. But under the pres-
ent statute there is no limitation as to the
subject matter of chattel mortgages. Laws
1878, p 58.

* Stringer v. Davis, 30 Cal. 318.
MORTGAGES OF FIXTURES. [§§ 128,

‘

Under the statute of Connecticut authorizing the mortgaging
of a dwelling-house, together with the household furniture belong-
ing to its owner, and used therein by him in housekeeping, a
mortgage of such furniture is valid, when shown to be so used by
the mortgagor, although it also constitutes the furniture of a hotel
kept by him.!

III. Mortgages of Fixtures.

123. A building erected by one person on the land of an-
other may be mortgaged as personal property, if it was so
erected under an understanding or agreement that it might be
removed at any time.? Primdé facie such a building would be a
fixture, and would not be removable. The legal effect of putting
it on another’s land is to make it part of the freehold; and to sus-
tain a mortgage of it as personal property, an agreement of the
parties controlling the legal effect of the transaction must be
proved. If the mortgagor, after mortgaging such a building,
remove it to other land which he subsequently purchases, and
then mortgages the land to another with the buildings and fixt-
ures thereon, but the latter mortgagee has full knowledge of the
prior chattel mortgage, this will have priority over the mortgage
of the land.’ If the owner of the land purchase such building
after it has been mortgaged, the lien is not thereupon extin-
guished.* .

Buildings erected under an agreement with the owner of land
to convey it to the builder upon his paying a certain sum within
a limited time, are not strictly personal property; but they are
fixtures and constitute a part of the realty. The builder has an
equitable interest in the realty, and not a pure ownership of the
buildings as chattels; and therefore a mortgage by him of the
buildings should be recorded as a mortgage of real estate and not
as a chattel mortgage.®

124. Fixtures may become chattels by agreement of parties
as between themselves. Many things ordinarily considered fixt-

1 Croswell v. Allis, 25 Conn. 301. Upon the general subject of Fixtures,
2 Smith v. Benson, 1 Hill (N. ¥.), 176; see Jones on Mortgages, §§ 428-455.
Lanphere v. Lowe, 3 Neb. 131, 134, 137; 8 Simons v. Pierce, 16 Ohio St. 215.
Denham »v. Sankey, 38 Iowa, 269; Good- * Denham v. Sankey, 38 Iowa, 269.
enow v. Allen, 68 Me. 308. 5 Kastman v. Foster, 8 Met. (Mass.) 19.
101

a
19:

Lil
§ 125.] SUBJECT MATTER OF CHATTEL MORTGAGES.

ures to the realty may become to all intents and purposes per-
sonal property, by agreement of all parties interested in both
the realty and fixtures.!. The owner of machinery or other things
in the nature of fixtures may treat them as personal property, and
by executing a chattel mortgage of them is estopped from assert-
ing, as against such mortgagee, that they are part of the real
estate? The holder of a subsequent chattel mortgage of such fixt-
ures, after taking possession of them as personal property, and
removing them, is estopped to deny that they are personal prop-
erty, as against one who claims them under a prior chattel mort-
gage.®

There is a limitation upon the right of parties to change the
status of property by agreement, arising from the essential char-
acter of the property itself, and the mode of its annexation to the
realty.4 “It will readily be conceded that the ordinary distinction

between real estate and chattels exists in the nature of the sub-
" ject, and cannot in general be changed by the convention of the
parties. Thus, it would not be competent for parties to create a
personal chattel interest in a part of the separate bricks, beams,
or other materials of which the walls of a house are composed.
Rights by way of license might be created in such a subject, but
it could not be made alienable as chattels, or subjected to the
general rules by which the succession of that species of property
is regulated. But it is otherwise with things which, being orig-
inally personal in their nature, are attached to the realty in such
a manner that they may be detached without being destroyed
or materially injured, and without the destruction of, or mate-
rial injury to, the things real with which they are connected;
though their connection with the land or other real estate is such
that in the absence of an agreement or of any special relation
between the parties in interest, they would be a part of the real
estate.” 5

125. A chattel mortgage executed in view that the chattels

1 Smith v. Waggoner (Wis. 1880), 6 N. 2 Corcoran v. Webster (Wis, 1880), 6
W. Rep. 568; Ford v. Cobb, 20 N. Y.344; N. W. Rep. 513.
* Godard v. Gould, 14 Barb. (N. Y.) 662; 8 Smith v. Waggoner (Wis. 1880), 6
Shell v, Haywood, 16 Pa. St. 523. And N, W. Rep. 568.
see Hensley v. Brodie, 16 Ark. 511; Good- £ Fortman v. Goepper, 14 Ohio St, 558.
ing v. Riley,50 N. H. 400. , 5 Ford v. Cobb, 20 N. Y. 344, 348, per

Denio, J.
102 :
MORTGAGES OF FIXTURES. [§ 125.

are about to be annexed to the realty is regarded as sufficient
evidence of the intention and agreement of the parties that they
are to retain their character as personal property.1 An express
agreement in the mortgage between the owner of the land and
the owner of the chattels, that the character of the latter shall
not be changed by annexation, but that the mortgagee in case
of default might enter and remove them,? may make the inten-
tion of the parties more emphatic, but apparently it is not re-
garded as essential, or as having any legal effect which the fact
of the mortgage alone would not have. A provision that the
mortgagee may enter and take possession of the mortgaged chat-
tels in case of a default, also manifests an intention that the
property should retain its character of personalty after its annex-
ation and use as part of the realty ; but doubtless the mortgage,
without such provision, would sufficiently manifest such inten-
tion.3

But if machinery or other articles annexed to the freehold in
a permanent manner be peculiarly adapted to use in connection
with it, and be intended as a permanent accession to the realty,
the fact that the property is already subject to a chattel mortgage
is not sufficient to preserve its personal character, either as against
an existing or subsequent mortgagee of the realty. ‘It comes to
this: A man employs a carpenter and mason to build a brick
house for him upon his lot, and pays them in full the price agreed
upon. The mason puts his brick in the walls. The carpenter
places his joists and timbers in the proper places in the house.
The house is finished and is occupied by the owner. It then ap-
pears that the maker of the brick held a chattel mortgage upon
them, executed by the mason, and that the sawyer of the timber
held a chattel mortgage upon it, executed by the carpenter. Are
these articles, now a part of the house, still held upon the chattel
mortgages, so that the creditors can despoil the house to obtain
their possession, or compel the owner to pay their value? I take
it they are not. Their character as personal property is ended.
They have become a part of the house; they are real estate; will

1 Ford v. Cobb, 20 N. Y. 344; Sisson v. 2 Tifft v. Horton, 53 N. Y¥. 377.
Hibbard, 10 Hun (N. Y.), 420; S. C. 75 8 As in Ford v. Cobb, supra, and Sisson
N. Y. 542; Kinsey v. Bailey, 9 Hun (N. vc. Hibbard, supra; Eaves v. Estes, supra.
Y.), 452; Eaves v. Estes, 10 Kans. 314;

S. C.15 Am. Rep. 345. ,
103
§§ 126, 127.] SUBJECT MATTER OF CHATTEL MORTGAGES.

pass under a deed of the land; may be subjected by a mortgage
of the land, or may be held by the owner of the house.” ?

126. One who has sold fixtures by bill of sale may be es-
topped to claim afterwards that they are parcel of the realty.
Thus the owner of a brewery in selling it conveyed the real estate
by deed, and the stock in trade and fixtures by bill of sale, and
took back a mortgage of the real estate to secure the payment
of a portion of the purchase money. The purchaser afterwards
executed a chattel mortgage of the fixtures. In a controversy be-
tween the mortgagee of the realty and the mortgagee of the fixt-
ures, it was held, that inasmuch as the deed, bill of sale, and
mortgage of the realty, were executed at the same time, and were
parts of the same transaction, each should be held to have been de-
signed by the parties to perform its appropriate office in consum-
mating the sale, and that, as between the former and the latter,
the property included in the bill of sale should be regarded as
personalty.?

But the fact that property, personal in its nature and not incor-
porated with the realty, has, in transmission of title to the mort-
gagor, passed by a deed of the land, and that there has been a
long existing localization of such property, does not destroy its
character as personal property.? Of course an effectual mortgage
of such property can only be made by a delivery of it or by a
chattel mortgage duly recorded.*

127. An agreement of parties will avail to make fixtures
personal property as against creditors of the mortgagor, when
it avails for this purpose between the parties themselves ; for cred-
itors levying upon the property, and others purchasing it upon ex-
ecution sale, stand in a different position from bond fide purchasers
without notice: they acquire only the rights which the judgment
debtor had. Therefore where the makers of an engine and boiler
sold them toa manufacturer of stoves, to be set up in a cheap
board building upon land belonging to the latter, and for the pur-

1 Voorhees v. McGinnis, 48 N. Y. 278, * Keeler v. Keeler, 31 N. J. Eq. 181;
287, per Hunt, J.; and see Pierce v. George, ‘Williamson v. N. J. Southern R. R. Co.

108 Mass. 78. 29 N.J. Eq. 311, 328,
2 Fortman v. Goepper, 14 Ohio St. # Sturgis v. Warren, 11 Vt. 433.

» 558.

104
MORTGAGES OF FIXTURES. (§§ 128, 129.

chase money received a chattel mortgage, it being understood be-
tween the parties that the mortgage should be valid notwith-
standing any annexation of the chattels to the realty, the mort-
gage was held good against a purchaser of the land upon execu-
tion issued upon a judgment recovered against the mortgagor. As
between the mortgagor and mortgagees the former would clearly
not be permitted to set up that the machinery had become real
estate ; and the purchaser of the premises upon execution could
acquire no greater rights. The rights and equities of the mort-
gagees existed before the recovery of the judgment against the
mortgagor, and are superior to those acquired under the levy of
the execution. The annexation of the chattels to the realty is
deemed to have been made by the mortgagor in pursuance of and
subject to his agreement with the mortgagees, and not as a per-
manent accession to the freehold.?

128. Whether as against subsequent purchasers without
notice the character of property can be changed by such agree-
ment from realty to personalty is a different question ; and while
the authorities are not in entire harmony, the better opinion is
that such purchasers are not bound unless they have notice of the
agreement before acquiring title. Ordinarily they are entitled to
claim and hold everything which appears to be, and by its ordi-
nary nature is, a part of the realty. To hold otherwise would
contravene the policy of the laws requiring conveyances of inter-
ests in real estate tebe reeorded. It would seriously endanger
the rights of purchasers, afford opportunities for frauds, and in-
troduce uncertainty and confusion into land titles.

129. It is not competent for an owner of real estate to

1 Sisson v. Hibbard, 75 N. Y. 542.

2 Hunt v. Bay State Iron Co, 97 Mass.
279, per Foster, J., in substantially his
language. In this case iron rails were
sold to a railroad company under an agree-
ment that they should be laid down on a
specified part of the road, but should re-
main the vendor’s property until paid for ;
and it was held that while the rails con-
tinued to be personal property as between
the vendor and the company, and also be-
tween the vendor and subsequent incum-

brancers and purchasers of the railroad,
having notice of the agreement when they
acquired title; they did not remain per-
sonalty as between the vendor and prior
mortgagees of the railroad or owners of
the land over which the railroad was lo-
cated, and the iron was laid, who remain
entitled to possession of such land as se-
curity for their damages, unless they have
consented to such agreement. See Pierce
v. Emery, 32 N. H. 484; and Haven v.
Emery, 33 N. H. 66, for similar cases.

105
§ 130.] SUBJECT MATTER OF CHATTEL MORTGAGES.

bind existing mortgagees by any arrangement to treat as per-
sonalty annexations to the freehold. The legal character of such
annexations is determined by the law to be real estate. Mort-
gagees, as well as other parties in interest, are entitled to the
benefit of this rule of law, which can be taken from them only
by their own waiver! Thus, a prior mortgage of real estate,
which in terms, or as a matter of Jaw, embraces articles of ma-
chinery or other fixtures, is not affected by a subsequent mort
gage of such articles as chattels.?

130. Personal property which is incorporated with the
realty does not pass by a chattel mortgage as against a subse-
quent purchaser or mortgagee of the realty. Thus as betweena
mortgagee of the machinery of a cotton-mill permanently attached,
to the realty and used with it, and a subsequent mortgagee of the
realty, the title of the latter will prevail. Such permanent fixt-
ures include the machinery for furnishing the motive power of
the mill; the steam-engine securely set in its foundation, and its
adjuncts, the boilers, together with the shafting, belting, coup-
lings and pulleys to communicate the power; also the water-
wheels, and water-wheel governor. They include also the ap-
paratus for furnishing light and warmth to the buildings; the
gas-generator, the gas-pump, and the gas-pipes ; and also the gas-
burners, when adapted expressly to the mill: also the steam-
heating pipes, though laid upon hooks, and capable of being re-
moved without disturbing the building, or the hooks holding
them; and other heating pipes resting upon the floor without
being attached to it. They are all part of the system of piping
adapted to the building and used with it.

If such things as an engine and boilers, shafting and gearing,
are, actually and permanently annexed to the freehold, and are
peculiarly adapted to the positions in which they are placed, it
does not matter, as regards the question of the legal effect of the
annexation, that the owner had no special intent to make these

1 Hunt v. Bay State Iron Co. 97 Mass. 8 Smith v. Waggoner (Wis. 1880), 6 N.
279; Burnside v. Twitchell, 43 N. H.390; W. Rep. 568; Pierce v. George, 108 Mass.
and see Voorhees v. McGinnis, 48 N.Y. 78; S. C.11 Am. Rep. 310, 314.

278. * Keeler v. Keeler, 31 N. J. Eq. 181;

2 Smith v. Waggoner (Wis. 1880),6N. S. C.8 Am. L. Rec. 670.

W. Rep. 568; Frankland v. Moulton, 5
Wis. 1.

106
MORTGAGES OF FIXTURES. [§§ 181, 182.

things a part of the freehold. “A man who builds a mill ora
house for his own use and occupation, with everything useful and
convenient for the purpose, seldom has any special intent that the
creation shall be a part of the freehold, or that its auxiliaries shall
constitute a part of the freehold. He builds ashe wishes, having
no reflection as to the legal character of the structure, thinking
nothing, and generally knowing nothing, and therefore having no
special intent on the subject.” +

But machinery of a cotton-mill merely fastened to the floor by
nails or screws, or held in position by cleats, to keep it in posi-
tion, is not part of the realty, and would pass by a chattel mort-
gage in preference to a subsequent mortgage of the realty. It
does not matter that in putting down a new floor it was laid
down around the feet and standards of the machines.

131. A mortgage of machinery as personal property made
after it has been set up, and so affixed to the realty as to be-
come a part of it, although made to the manufacturer contem-
poraneously with the bill of sale from him to the owner of the
land, passes no title to the machinery as against a subsequent
purchaser of the real estate, although he purchase with actual
knowledge of the mortgage. Evidence of a general usage and
custom between manufacturers and purchasers of such property to
regard it as personal property is incompetent. The annexation
of the machinery to the freehold, de facto, renders it part of the
realty ; and although the annexation be consented to by the man-
ufacturer under an agreement with the owner of the realty that he
would give the former a mortgage of the machinery as personal
property, such agreement is inoperative and void as against any
one who afterwards acquires title to the realty in fee.

132. If personal property, such as machinery, already sub-
ject to a chattel mortgage, be affixed to the realty, with the
assent of the mortgagee, it becomes a question whether the mort-

_gage lien is lost as against an existing mortgagee of the realty, or

1 Voorhees v. McGinnis, 48 N. Y. 278, Gould, 14 Barb. (N. Y.) 662; McEntee
286, per Hunt, J. v. Scott, 2 Thomp. & C. (N. Y.) 284.
2 Keeler v. Keeler, 31 N. J. Eq. 181; 8 Richardson v. Copeland, 6 Gray
and see Gale v. Ward, 14 Mass. 352; (Mass.), 536.
Sturgis v. Warren, 11 Vt. 433; Godard v. 4 Richardson v. Copeland, supra; Kee-
ler v. Keeler, 31 N. J. Eq. 181.

107
§ 132.] SUBJECT MATTER OF CHATTEL MORTGAGES.

as against subsequent purchasers, mortgagees of the realty, or
creditors who subsequently obtain liens upon it. The intention
and agreement of the parties has much to do with the determina-
tion of the question whether chattels annexed to the realty retain
their character as personal property.! . But such intention and
agreement are subject in a considerable degree to the essential
character of the chattels themselves, and to the manner in which
they are annexed to the realty. To make effectual an intention
that the chattels shall retain their character of personalty, it is
essential that they be so annexed that they can be removed with-
out serious damage to the freehold, and without substantially
destroying their own qualities or value.2 The nature of the
articles annexed may be such, or the mode of their annexation
may be such, that they lose the essential attributes of personal
property by annexation itself. ‘Thus, a house or other building,
which, from its size, or the materials of which it was constructed,
or the manner in which it was affixed to the land, could not be
removed without practically destroying it, would not, I conceive,
become a mere chattel by means of any agreement which could
be made concerning it. So of the separate materials of a build-
ing, and things fixed into the wall, so as to be essential to its
support, it is impossible that they should by any arrangement be-
tween the owners become chattels.” ®

An engine and boiler mortgaged to the maker were set up on a
foundation, and an engine-house was built over them. The land
was already subject to a mortgage. It was held that the mort-
gagee of the land acquired no title to the engine and boiler as
against the mortgagee of these chattels, although it appeared that
they could not be removed without some injury to the walls built
up about them; for within the limitation before mentioned the
chattels could be removed without taking away or destroying that
which was essential to the support of the main building, or other
part of the real estate to which they were attached, and without
destroying or of necessity injuring the chattels themselves.*

1 Jones on Mortgages, § 429; Tifft v. 10 Hun(N. Y.),420; S.C. 75 N. Y. 542;
Horton, 53 N. Y. 377; Potter v. Crom- Kinsey v. Bailey, 9 Hun (N. Y.), 452.
well, 40 N. Y. 287; Sheldon v, Edwards, 8 Ford v. Cobb, 20 N. Y. 344, 351,
35 N. Y. 279. per Denio, J.

2 Ford v. Cobb, 20 N. Y. 344; Tifft v. 4 Tifft v. Horton, 53 N. Y. 377. For
Horton, 53 N. Y. 377; Sisson v. Hibbard, similar cases and a similar decision see

108
MORTGAGES OF FIXTURES. [§ 183.

Salt-kettles, which were mortgaged to the seller as personalty at
the time of the purchase, were taken by the purchaser to his salt-
works and embedded in brick arches in such a way that they could
be removed without injury by displacing a portion of the brick
work at an inconsiderable expense ; and the course of the manu-
facture required them to be so removed and reset annually. There
was no evidence of an agreement that they should remain person-
alty, except such as was furnished by the mortgage itself and the
circumstances attending its execution. The mortgage was held
good as against a subsequent purchaser of the salt-works, who had
no notice of the facts other than that derived from the filing of
the chattel mortgage.!

133. The purpose of the annexation as well as the mode of
it determines the character of the property annexed.? ** The same
mode may exist, and yet the property be personal in the one case
and real in the other. For example: trees growing in a nursery
are annexed to the soil in the same way as trees growing in an
orchard. But in the former case they are cultivated for the pur-
pose of trade, in the latter as a permanent accession to the land.
The general principle to be kept in view, underlying all questions
of this kind, is the distinction between the business which is carried
on upon the premises and the premises themselves, or locus in quo.
The former is personal in its nature; and articles that are merely
accessory to the business, and have been put on the premises for
this purpose, and not as accessions to the real estate, retain the
personal character of the principal to which they appropriately
belong and are subservient. But articles which have been an-
nexed to the premises as accessory to it, whatever business may
be carried on upon it, and not peculiarly for the benefit of a pres-
ent business, which may be of a temporary duration, become sub-
servient to the realty, and acquire and retain its legal character.
As, however, the combined use or operation of both the real and
personal property is necessary for the business, the difficulty in any
given case consists in determining on which side of the dividing
Sisson v. Hibbard, 10 Hun, N. Y. 420; and as having been intended as such by
Tibbetts v. Moore, 23 Cal. 208. See, how- the owner who annexed them.
ever, Frankland v. Moulton, 5 Wis. 1; 1 Ford v. Cobb, 20 N. Y. 344.
Voorhees v. McGinnis, 48 N. Y. 278; 2 Fortman vu. Goepper, 14 Ohio St.

where the things annexed were regarded 567.
as permanent improvements of the land, <

109
§ 134.], SUBJECT MATTER OF CHATTEL MORTGAGES.

line to assign the particular article in question. This must ina
great degree be determined by the circumstances of each particular
case.” 2

134. Notice of prior chattel mortgage. — As regards subse-
quent purchasers and mortgagees and creditors subsequently ob-
taining liens upon the realty, it is clear that if they acquire such
title or lien with actual knowledge of the mortgage claim upon
the fixtures, their title or lien is subject to such mortgage? But
whether the record of the chattel mortgage is effectual to protect
the mortgagee as against such subsequent purchasers, mortgagees,
and creditors, is a question of more difficulty, and one upon which
there is some conflict of authority. On the one hand, it is said
that the constructive notice imparted by the record of such mort-
gage before the chattels were affixed is as effectual to protect the
mortgagee as actual notice would be.? On the other hand, it is
declared that when personal chattels become affixed to the realty
with the mortgagee’s consent and codperation, they become at
once de facto, by operation of law, part and parcel of the land,
and necessarily lose their chattel character, so that they could not
be replevied as chattels, but would pass to a purchaser of the land
of which they visibly constituted a part. The mortgagee having
consented to the conversion of this personal property into real
property, his right to claim it under his mortgage ceased at the
precise moment of time when by his consent it ceased to be
chattels and became realty. The record then ceased to be con-
structive notice of the mortgage lien.4 CAnd the better opinion is,
that a purchaser of the realty is bound only to take notice of the
record title of the realty, and is not in any way bound to examine
the records for chattel mortgages, for he is not affected by the
record of a chattel mortgage upon fixtures of such realty.)

A mortgage of real estate including factories and shops together
with the engines, machinery, and other personal chattels which are
fixtures when attached to the realty, need not be registered as a
chattel mortgage when it is the intention of the parties, as shown

1 Fortman v. Goepper, supra, per per Dillon, C. J., dissenting from the deci-

White, J. sion of the court.
2 Simons v. Pierce, 16 Ohio St. 215. 5 Richardson v. Copeland, 6 Gray
3 Sowden v. Craig, 26 Iowa, 156. (Mass.), 536; Bringholff v. Munzenmaier,

* Sowden v. Craig, 26 Iowa, 156,165, 20 Iowa, 513.
110
MORTGAGES OF FIXTURES. [§§ 185, 186.

by the terms of the instrument, that such chattels should pass with
the freehold as part and parcel of it.

135. Actual severance of fixtures from the land, or actual
notice of a binding agreement to sever, is necessary to render
a prior mortgage of the fixtures valid against a subsequent pur-
chaser of the realty. Thus, where a mortgage was made of the
boilers, engines, saws and gearing of a steam saw-mill before these
articles were annexed to the realty, with power in the mortgagee
to take possession of them upon default, whether they should have
been attached to the realty, and should have become a part of
it or not, and subsequently a mortgage was made of the realty
to one who had no actual notice of this agreement, it was held
that the chattel mortgage, though duly recorded, was inopera-
tiye as against the mortgage of the realty.2 The court say:
“ The right given to the plaintiffs by the mortgage, to enter upon
- the premises and sever the property, would doubtless have been
effectual as between the parties. But the defendants were pur-
chasers without notice of this'agreement. The filing of chattel
mortgages is made constructive notice only of incumbrances upon
goods and chattels. The defendants purchased and took a con-
veyance of real estate, of which the property now in question was
in law a part; and, in our opinion, it devolved upon the plain-
tiffs, who sought to change the legal character of the property
and create incumbrances upon it, either to pursue the mode pre-
scribed by law for incumbering the kind of estate to which it
appeared to the world to belong, and for giving notice of such
incumbrance, or otherwise take the risk of its loss in case it should
be sold and conveyed as part of the real estate to a purchaser
without notice.” /

136. Appurtenances. — Under a chattel mortgage of “ one
frame grain elevator warehouse, with all the appurtenances there-
to belonging,” the mortgagee claimed title to an engine-house sit-
uated more than fifty feet distant from the warehouse, together
with the engine and boiler therein, and also claimed an office

1 Potts v. N. J. Arms & Ordnance Co. 446; and see Fortman v. Goepper, 14 Ohio

17 N. J. Eq. 395. St. 558, 565,
2 Brennan v. Whitaker, 15 Ohio St. 8 Brennan v. Whitaker, supra, per
: White, J.

111

.
§ 187.] SUBJECT MATTER OF CHATTEL MORTGAGES.

building, still farther away, with a stationary Fairbanks’ scale.
It was held as a matter of law that the property in question could
not be regarded as appurtenant to the warehouse, nor did it pass
under the general term of “appurtenances.” ‘This term is com-
monly understood in law to include only hereditaments which are
purely incorporeal, and which are usually annexed to lands or
houses. The word may be used in a more comprehensive sense,
and when the proof shows that it was so used effect should be
given to the intent of the parties. But if there be no ambiguity
in the description, parol evidence is not admissible to show what
was in fact conveyed.!

137. Mortgage of fixtures as against mortgagor’s assignee
in bankruptcy.— A mortgage of machinery or like fixtures cre-
ates a valid lien as against the mortgagor’s assignee in bank-
ruptcy, although as against a prior mortgagee of the realty the
fixtures would be real estate. If there be a prior mortgage of the
land and the prior mortgagee make no claim to the fixtures, or
his mortgage be fully satisfied out of the land without resorting
to the fixtures, the mortgagee of the fixtures has a valid security
upon them.2 Judge Lowell, delivering a decision to this effect,
said: “ It is argued on behalf of the assignees, that a contract to
treat fixtures as chattels, whether it be express or implied, must
be made before they are actually affixed to the realty. And for
this some remarks of Dewey, J., delivering the opinion of the court
in Gibbs v. Esty,? are quoted. But those remarks appear to be
intended only for parol agreements concerning buildings and fixt-
‘ures annexed by a stranger, and to mean that such a parol agree-
ment or license cannot change real into personal estate after its
character has been once established. So, if the question here were
between the petitioner and the savings bank (the mortgagee of
the land), no mere oral license of the latter, given after the en-
gines were set up, could be shown. Growing wood or crops may
be sold by parol, with a parol license to sever them; and I am
much inclined to think that trade fixtures might be. At all*
events there can be no doubt that the owner can in writing, and
for a valuable consideration, convey severable chattels in such a

way as to bind himself and his assignee in bankruptcy by estop-
pel at least.”

1 Frey v. Drahos, 6 Neb 1. 2 Ex parte Ames, 1 Lowell, 561, 567.
112 * 15 Gray (Mass.), 587.
CHAPTER IV.

MORTGAGES OF FUTURE PERSONAL PROPERTY.

I. At law, 138-157.
II. Ratification by new intervening act,
158-169.

III. In equity, 170-175.

I. At Law.

138. At common law, a mortgage can operate only on
property actually in existence at the time of giving the mort-
gage, and then actually belonging to the mortgagor, or potentially
belonging to him as an incident of other property then in exist-

ence and belonging to him.

A mortgage of goods which the mortgagor does not own at the
time of making the mortgage, though he may afterwards acquire
them, is void in respect to such goods as against subsequent pur-

chasers or attaching creditors.1

1 Jones v. Richardson, 10 Met. (Mass.)
481, a leading case on this point; Cod-
man v. Freeman, 3 Cush. (Mass.) 306;
Chesley v. Josselyn, 7 Gray (Mass.), 489;
Bonsey v. Amee, 8 Pick. (Mass.) 236;
Wagner v. Watts, 2 Cranch C. C. 169;
Letourno v. Ringgold, 3 Cranch C. C.
103 ; Gardner v. MeEiwen, 19 N. Y. 123;
Otis v. Sill, 8 Barb. (N. Y.) 102; Chapin
z. Cram, 40 Me. 561; Pierce v. Emery, 32
N. H. 484, 505; Hunt v. Bullock, 23 Ill.
320; Roy v. Goings, 6 Bradw. (Ill.) 162;
Looker v. Peckwell, 88 N. J. L. 253;
Wilson v. Wilson, 37 Md. 1; Hamilton v.
Rogers, 8 Md. 301; Rose v. Bevan, 10
Md. 466; Hunter v. Bosworth, 43 Wis.
583; Comstock v. Scales, 7 Wis. 159;
Chapman v. Weimer, 4 Ohio St. 481;
Williams v. Briggs, 11 R. I. 476; Cook
v. Corthell, Ib. 482. In Georgia it is pro-
vided by statute that a mortgage may
cover a stock of goods or other things in

8 F

Thus, if a mortgage be made of

bulk, but changing in specifics; in which
case the lien is lost on all articles dis-
posed of by the mortgagor up to the time
of foreclosure, and attaches on purchases
made to supply their place. Code, 1878,
sect. 1954. But such a mortgage can only
cover an amount of goods equal to that on
hand at the time the mortgage was made.
Chisolm v. Chittenden, 45 Ga. 213. To
that extent the subsequent purchases are
covered, although these be made on credit
and remain unpaid for; but of course it
does not cover goods brought into the
stock already subject to some other lien,
or owned by another person; and it does
not cover goods added to their stock by a
new firm which has purchased the original
stock, although the mortgagor remains a
member of that firm. Anderson v. How-
ard, 49 Ga. 313; Goodrich v. Williams,
50 Ga. 425; Johnson v. Patterson, 2
Woods, 443.

113.
§§ 189, 140.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

a stock in trade, it will not at law cover additions afterwards made
to the stock, though it be expressly framed to cover additions to
the stock intended to be made to replace such as should be sold.t
This is everywhere conceded to be the general rule at law.2 But
even when void as against creditors and subsequent purchasers,
such a mortgage is valid as between the parties thereto.®

139. This rule holds good even where a mortgage is made
to secure the purchase money of goods, a part of which the
mortgagee has not at the time delivered to the mortgagor. The
property does not vest in the mortgagor till it is delivered to him,
and the mortgage is not rendered valid, as respects the property
not then delivered, by the subsequent completion of the delivery,
as against attachments made still later by the creditors of the
purchaser. As regards such after-acquired property, the mort-
gage is no better than any mortgage of property afterwards ac-
quired by the mortgagor.*

140. One may make a valid mortgage of a thing in which
he has a potential interest at the time. Thus, to use illustra-
tions familiar since the time of Chief Justice Hobart,® “ Land is
the mother and root of all fruits. Therefore he that hath it may
grant all fruits that may arise upon it after, and the property
shall pass as soon as the fruits are extant. A person may grant
all the tithe-wool that he shall have in such a year, yet perhaps
he shall have none; but a man cannot grant all the wool that he
shall grow upon his sheep that he shall buy hereafter, for there
he hath it neither actually nor potentially.” If he owns land, he
may mortgage the crops to grow upon it;® or if he owns sheep,
he may mortgage the wool to grow upon them. Having a pres-
ent ownership of the land and the sheep, he has a present vested
_ Tight to the product, growth, or increase of the property when-

1 Barnard v. Eaton, 2 Cush. (Mass.) § Cayce v. Stovall, 50 Miss. 396; White

294. v. Thomas, 52 Miss. 49; Thrash v. Ben-
7 Wright v. Bircher, 5 Mo. App. 322, nett, 57 Ala. 156; Stearns v. Gafford, 56

327. Ala, 544; Jones v. Webster, 48 Ala. 109;
* Ludwig v. Kipp, 20 Hun (N. Y.), Butler v. Hill, 1 Bax. (Tenn.) 375; Ste

265. phens v. Tucker, 55 Ga. 543; 58 Ga. 391;
* Pettis v. Kellogg, 7 Cush. (Mass.) Cook v Steel, 42 Texas, 53; McGee v.

456. Fitzer, 37 Texas, 27; Moore v. Byrum,
5 Grantham v. Hawley, Hob. 132. 10 8S. C, 452.

114
AT LAW. [§ 141.

ever it shall come into existence. He may, therefore, sell or
mortgage the natural and expected product, growth, or increase
of his own property ; but he cannot sell or mortgage the crops to
grow upon the land of another, or the wool to grow upon an-
other’s sheep, or upon sheep that he may buy thereafter.1 And
so the owner or lessee of a chattel, such as a steamboat, may
mortgage the profits or income expected to arise out of the use of
it.2 But a mere possibility or expectancy of acquiring property,
without any present interest in it, is not the subject of a sale or
mortgage.2> A mortgage of future crops to be grown on rented
lands of which the mortgagor has not, at the time of giving it,
acquired possession under his lease, is invalid at law unless rat-
ified by some act on the part of the mortgagor after acquiring
possession, though such a mortgage may be good in equity. A
fisherman may expect to catch fish, but while they are in the sea
uncaught he cannot make a valid sale or mortgage of them. The
fact that he owns a fishing schooner, and is about to proceed upon
a fishing voyage, gives him no potential interest in the fish he may
possibly catch. He has no actual or potential interest in the fish,
and his sale or mortgage of them passes no interest in such fish as
he may afterwards catch.5 An assignment of the freight, earnings,
and profits of a ship fitted out for the whale-fishery gives no claim
at law to the oil obtained in a subsequent voyage of the ship, —
the produce of whales taken in such voyage.® Lord Ellenborough,
C. J., said: ‘* The oil had no existence, actual or potential, at the
time this deed was made. Here, at the time of this assignment,
the assignors had no property, actual or potential, in this oil; it
was altogether matter of chance whether any of it would have
been obtained ; and even the voyage in which it was obtained does
not appear to have been in contemplation.” 7

141. A lessee of land has a sufficient interest in it to ena-
ble him to execute a valid mortgage of the crops to be grown

1 Grantham-v. Hawley, Hob. 132. 5 Low v. Pew, 108 Mass. 347. See, how-
2 Stewart v. Fry,3 Ala. 573. See, also, ever, Jones v. Webster, 48 Ala. 109, 112,
Floyd v. Morrow, 26 Ala. 353. per Saffold, J.
8 Skipper v. Stokes, 42 Ala. 255; Pur- § Robinson v. Macdonell,5 Mau. & Sel.
cell v. Mather, 35 Ala. 570, 228. And see Curtis v. Auber, 1 Jac. &
* Booker v. Jones, 55 Ala. 266 ; Kirksey W. 231.
v. Means, 42 Ala. 426. 7 But otherwise in equity. See infra.

115
§ 142.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

upon the land during the whole term of the lease. Such a
mortgage, duly recorded, is superior to a mortgage of a crop
grown upon such land within the term of the lease, though exe-
cuted after the crop had been gathered.? Such a mortgage is also
superior to a mortgage of crops made by a sublessee of a portion
of such land. Thus, the owner of a plantation having leased it,
and taken a mortgage from the lessee upon a cotton crop to be
raised upon the land, the latter leased a portion of it for four
bales of cotton, and the sublessee mortgaged for supplies the
crop to beraised by him. It was held that the entire plantation
was subject to the burden of the rent secured by the lessee’s mort-
gage, and that the sublessee took his lease of a portion of the
plantation subject to the burden of a proportional part of the rent
and no more.’ It is to be observed, however, that some of the
cases in which it is held that a lessor may effectually reserve a lien
upon the crops to be raised by the lessee during the term are de-
cided upon the ground that the contract takes effect by way of
reservation, and that the crops thus reserved remain the property
of the landlord,‘ and that upon this principle a mortgage made by
the lessee to the lessor at the time of the lease, of the crops to be
raised during the term, may be considered, together with the lease,
as part of one instrument, operating as a ‘lease and reserva-
tion.” >

142. A valid mortgage may be made of part of a growing
crop, if such part be so described as to be capable of identification.
Thus, a mortgage made in May of six bales of cotton to be pro-
duced on a designated plantation cultivated by the mortgagor,

1 Petch v. Tutin, 15 Mee. & W. 110; 15
L. J. Exch. 280; Smith v. Atkins, 18 Vt.
461,465; Arques v. Wasson, 51 Cal. 620;
Quiriaque v. Dennis, 24 Cal. 154 ; Ever-
man v. Robb, 52 Miss. 653; Sellers v.
Lester, 48 Miss. 513 ; Booker v. Jones, 55
Ala. 266; Jones v. Webster, 48 Ala. 109;
Thrash v. Bennett, 57 Ala. 156; Stearns
v. Gafford, 56 Ala. 544; Brown v. Coats,
Ib. 439; Adams v. Tanner, 5 Ala. 740;
Robinson v. Mauldin, 11 Ala. 977; Maul-
din v. Armistead, 14 Ala. 702; S. C. 18
Ala. 500; Robinson v. Kruse, 29 Ark.
575; Headrick v. Brattain, 63 Ind. 438;
Wyatt v. Watkins (Tenn.), 4 L. & Eq.

116

240. In the later English cases, however,
no distinction in principle seems to have
been observed between mortgages of after-
grown crops and other after-acquired prop-
erty. See Gale v. Burwell, 7 Q. B. 850;
Hope v. Hayley, 5 El. & Bl. 830; Con-
greve v. Evetts, 10 Exch. 298.

° Everman v. Robb, supra.

8 Harris v. Frank, 52 Miss. 155; and
see Jones v. Webster, 48 Ala. 109.

* Smith v. Atkins, supra; Bellows v.
Wells, 36 Vt. 599; Moulton v. Robinson,
27 N. H. 550; Lewis v. Lyman, 22 Pick.
(Mass.) 437.

5 Booker v. Jones, 55 Ala 266.
AT LAW. [§ 148.

such bales to be of a certain weight, to be covered with bagging
secured with iron ties, and delivered at a certain warehouse on or
before the fifteenth day of October following, is sufficiently spe-
cific in the description of the property, and the mortgagee may
prove that the mortgagor severed such cotton from the rest of the
crop and delivered it at, the warehouse according to his promise.!
But an instrument purporting to be a mortgage, whereby a planter
binds himself to deliver at maturity of his cotton-crop so much of
it as will be necessary to pay a certain sum advanced, is merely
an executory agreement to deliver enough cotton to pay the debt ;
but no particular cotton being described, it does not create a lien
upon any part of the crop, but only affords a remedy in damages
for failure to deliver the cotton.2? And so a mortgage of so much
cotton as will make two bales, each of a certain weight, is void,
because no definite part of the crop is mortgaged.®

143. Even a mortgage of an unplanted crop, or of future
products of a farm, made by-one in possession of land as
owner or lessee, is generally regarded as valid at law. Thus, the
owner of a dairy-farm, who had leased it, with the cows, for a

1 Stephens v. Tucker, 55 Ga. 5438. “If
aman have five horses in his stable, and
he giveth unto me one of his horses in his
stable, now I shall take which of the horses
I will.” Perkins’s Profitable Book, pl. 74.

2 Thurman v. Jenkins, 2 Bax. (Tenn.)
426. ; ;

8 Williamson v. Steele, 3 Lea (Tenn.),
527.

* Van Hoozer v. Cory, 34 Barb. (N. Y.)
9,12; Conderman v. Smith, 41 Barb. (N.
Y.) 404; Wood v, Lester, 29 Barb. (N. Y.)
145; Arques v. Wasson, 51 Cal. 620; Rob-
inson v. Ezzell, 72 N. C. 231. See, in this
connection, McCaffrey, v. Woodin, 65 N.
Y. 459, holding a lessee’s mortgage of
future crops good in equity, and Cressey
v, Sabre, 17 Hun (N. Y.), 120, holding a
mortgage upon a crop not planted invalid
at law against a purchaser of the crop af-
ter it was gathered. The justice delivering
the decision in the latter case attempted to
distinguish cases arising upon covenants
in leases, that the lessor shall have the
crops to be grown upon rented lands as
security for unpaid rent, as not really be-

ing mortgages. But see McCaffrey v.
Woodin, supra, to the contrary.

In Arkansas a mortgage of an unplanted
crop was formerly considered invalid at
law though good in equity. Tomlinson v.
Greenfield, 31 Ark. 557; Apperson v.
Moore, 30 Ark. 56. But since the passage
of the Act of Feb. 11, 1875 (Acts 1874-75,
p. 149), such a mortgage is good at law.
That act provides that mortgages of crops
planted or to be planted shall have the
same force and effect as mortgages of prop-
erty already in being.

In New Mexico Territory a mortgage
of growing crops before the same are ma-
tured and gathered is declared to be null
and void and of no effect. Gen. Laws
1880, p. 63.

In California the lien of a mortgage on
growing crops continues after severance,
whether remaining in its original state or
converted into another product, so long
as the same remains on the land of the
mortgagor. Codes and Stats., Supp. 1880,

§ 7972.
117
§ 144.] | MORTGAGES OF FUTURE PERSONAL PROPERTY.

term of two years, reserving a lien upon the products of the farm
as security for the rent, in an action at law against an officer who
had levied upon cheese, the product of the farm during the second
year of the lease, was held entitled to recover, because the cheese
which the lessee expected to make from the cows was properly
the subject of a grant, potentially in existence and within the
power of the grantor as much as the wool that might be grown on
the grantor’s sheep, or the future young of his animals, or the
wine that might be made- from his vineyard, or the corn that
might grow upon his land.!_ Cases in which there is no absolute
grant of future crops, but only a right to enter and hold the crops
for the rent of the land, are to be carefully distinguished from the
above.? In the latter class of cases, the contract gives the lessor
no rights against subsequent purchasers and creditors of the lessee
until the former takes possession. Until delivery of the crops to
the lessor, or possession taken by him, in payment of the rent,
they remain the property of the lessee. Such a clause is an exec-
utory contract or license to dispose of the crops, and not a sale or
mortgage of them.®

144. At law there can be no valid assignment of future
wages or earnings, except the assignor has a potential interest
therein by virtue of a present contract whereby such wages or
earnings are to accrue to him. Without such a contract the fut-
ure wages are a mere possibility, coupled with no present interest
in the assignor ; while if the assignor has such a contract, the pos-
sibility of obtaining such future earnings, though contingent and
liable to be defeated, is coupled with an interest, and is a vested

right. And so a seaman who is

1 There are various decisions and dicta
in earlier cases, to the effect that a chattel
mortgage can only operate on property in
actual existence at the time of its execu-
tion, and cannot cover future products of
the land if given a single day before they
come into existence; but these decisions
may be considered as now superseded by
the general adoption \of the principles
above stated. As in Redd v. Burrus, 58
Ga. 574; Comstock v. Scales, 7 Wig. 159;
Bank of Lansingburgh v. Crary, 1 Barb.
(N. Y.) 542, 551, per Paige, J.; Milliman

118

entitled under shipping articles

v, Neher, 20 Barb. (N. Y.) 87; Stowell v.
Bair, 5 Bradw. (Ill.) 104. A crop cannot
be mortgaged before it is sown. Hutchin-
son v. Ford, 9 Bush (Ky.), 318.

2 Butterfield vu. Baker, 5 Pick. (Mass.)
522; Munsell v. Carew, 2 Cush. (Mass.)
50. And see Lewis v. Lyman, 22 Pick.
(Mass.) 487.

3 Munsell v. Carew, supra; Milliman v.
Neher, 20 Barb. (N. Y.} 37, per Bockes,
J.; Buskirk v. Cleveland, 41 Barb. (N. Y.)
610.

# Mulhall v. Quinn, 1 Gray (Mass.),
AT LAW. [§ 145.

to a lay or share in the profits of a whaling voyage, in lieu of
wages, may make a valid assignment thereof. The thing assigned
is not, however, any part of the oil to be made, but is the debt
which will become due to him at the end of the voyage! But he
could not make a valid assignment of earnings of a voyage not be-
gun or contemplated, or in any way defined by contract.?

145. Whether a valid chattel mortgage can be made of
growing trees, fruit, and grass, is a question which involves an-
other consideration which is not raised by a mortgage of crops,
which are the annual product of labor and of the cultivation of the
earth. Growing trees, fruit, and grass, which are the natural
product of the earth, growing spontaneously and without cultiva-
tion, are parcel of the land, and, as part of it, descend with it to
the heir. Until severed from the land, growing trees, fruit, and
grass cannot be seized as chattels upon execution. They are
within the Statute of Frauds, and cannot be sold or conveyed by
parol; nor can any valid agreement for their sale be made, except
by an agreement in writing. On the other hand, annual prod-
ucts of the earth, such as crops of grain and vegetables, which
are the result of yearly labor and cultivation, are chattels while
still growing, and as such go to the executor rather than the heir.
They may be seized on execution as chattels, and may be sold or
bargained by parol. In other words, crops which grow only by
yearly cultivation are chattels, in contemplation of law, though
not severed from the land; but trees and grass, and all other nat-
ural products of the earth, are parcel of the land until actually
severed from it, or until so severed in contemplation of law, —as
where the owner of the fee of the land, by a conveyance in writ-

105; Hartley v. Tapley, 2 Gray (Mass.),
565; Low v. Pew, 108 Mass. 347, per
Morton, J.; Payne v. Mayor of Mobile,
4 Ala. 833; Purcell c. Mather, 35 Ala.
570; Stowell v. Bair, 5 Bradw. (Ill.) 104.

1 Gardner v. Hoeg, 18 Pick. (Mass.)
168; Tripp v. Brownell, 12 Cush. (Mass.)
876; Low v. Pew, 108 Mass. 347, per Mor-
ton, J.

2 Cooper v. Douglass, 44 Barb. (N. Y.)
409.

3 Crosby v. Wadsworth, 6 East, 602;
Carrington v. Roots, 2 Mee. & W. 248;

Scorell v. Boxall,1 You. & Jer. 396; Teal
v. Auty, 2 Brod. & B. 99; 4 J. B. Moo.
542; Rodwell v. Phillips, 9 Mee. & W.
501,505; Green v. Armstrong, 1 Den. (N.
Y.) 550; Wintermute v. Light, 46 Barb.
(N. Y.) 278.

* Evans v. Roberts, 5 Barn. & Cress.
829; Parker v. Staniland, 11 East, 362;
Graves v. Weld, 5 Barn. & Adol. 105;
Sainsbury v. Matthews, 4 Mee. & W. 343 ;
Jones v. Flint, 10 Ad. & E. 753; Robinson
v. Hazell, 72 N. C. 281.

119
§ 146.] | MORTGAGES OF FUTURE PERSONAL PROPERTY.

ing, sells these products to be taken from the land, or sells the
land, reserving the trees or grass to be cut and removed by him-
self.

146. Whether a chattel mortgage of growing trees or grass,
by the owner of the land, can be considered a severance, in
law, of such products from the land, so as to change them from
real to personal property, is @ question attended with some diffi-
culties. On the one hand, it is said that such a mortgage does
not work a severance, in law, of the trees or grass from the land
until the mortgage becomes absolute by the non-performance of
the conditions of the mortgage. Until such time, the legal owner
of the land is also the legal owner of the growing trees or grass,
and has the right of possession of these and an interest therein.
The legal ownership of both the land and these products being in
the same person, the latter are part and parcel of the inheritance,
and are real property.2- But after the forfeiture of the condition
of the mortgage, as the mortgagee, by the failure of the mort-
gagor to perform the condition, acquires by the mortgage an ab-
solute title to the mortgaged property, there would be a severance,
in contemplation of law, of the trees or grass from the land, and
it would then become personal property belonging to the mort-
gagee. The owner of a farm, in the spring of the year, gave a
chattel mortgage of all the produce of it, consisting in large part
of meadow land. Subsequently, while the grass and the crops
were growing, a creditor levied an execution upon the property
specified in the mortgage. After the hay had been cut, another
execution was levied upon the hay. The question therefore arose
whether the mortgage, the first execution, or the second execution
was the /prior lien upon the proceeds of the hay. As to the mort-
gage the question was avoided, because the other property, aside
from the hay, was more than sufficient to satisfy it, and therefore,
on equitable principles, was so applied in exoneration of this part
of the property included in it, which was the only property upon
which the second execution could be levied. The levy of the first
execution was held to be a nullity, because the grass was then a

1 Smith v. Surman, 9 Barn. & Cress. worth v. Scott, 41 N. H. 456, 463. Other-
561, 573. wise if the mortgagor be not the owner of
2 Bank of Lansingburgh v. Crary, 1 the land. Jencks v. Smith, 1 N. Y. 90.

Barb. (N. Y.) 542, 547. And see Cud-

120
~

AT LAW, ' [§ 147.

part of the realty ; and the levy of the second execution upon the
hay was held to be good, inasmuch as it was then personal prop-
erty.}

A mortgage of trees to be cut and severed from the freehold is
a mortgage of personal property, and is to be recorded as a per-
sonal mortgage. A mortgage of growing wood and timber, made
by one who has purchased the same to be cut and removed from
the freehold, is a mortgage of personal property, to take effect, as
such, when the wood and timber shall be severed from the free-
hold; and it will avail the mortgagee, if it be duly recorded as a
chattel mortgage.3

The objection that growing grass is parcel of the realty does
not avail against a mortgage of it as personal property when it is
owned by one who does not own the land.*

147. The doctrine of potential possession has sometimes
been much restricted. Thus, in a case in New Hampshire, a
farmer made a mortgage, in January, of ‘‘all the hay and grain,
of every kind, that grows on the farm on which I now live, the
present year.” It appeared that part of the grain crop consisted
of rye sown the preceding autumn, and part of rye, wheat, and
oats sown in the spring after the making of the mortgage. In
October, after the hay and grain had been gathered, they were
attached as the property of the mortgagor by a creditor of his.
In an action by the mortgagee against the sheriff, it was held that
the former was entitled under his mortgage to hold the hay and
the winter rye, as being in esse at the time of the execution of the
mortgage, but was not entitled to hold any part of the grain crop
sown after the making of the mortgage.6 ‘If we confine the
terms of the grant,” say the court, “to the actual grass or rye
then in the’soil of the grantor at the time of the execution of the
deed, it may be inferred that the parties must have had knowl-
edge that the grantor’s farm had then, in actual or potential exist-

1 Bank of Lansingburgh v. Crary, 1 3 Claflin v. Carpenter, 4 Met. (Mass.)
Barb. (N. Y.) 542. 580; and see Sheldon v. Conner, 48 Me.

2 Cook v. Stearns, 11 Mass. 533; Nel- 584.
son v. Nelson, 6 Gray (Mass.), 385; Doug- 4 Smith v. Jencks, 1 Denio (N. Y.), 580;
Jas v. Shumway, 18 Gray (Mass.), 498; S.C. 1 N. Y. 90; Green v. Armstrong, 1
Erskine v. Plummer, 7 Me. 447; Cud- Den. (N. Y.) 550.
worth v. Scott, 41 N. H. 456, 462; Wood 5 Cudworth v. Scott, 41 N. H. 456.
v. Lester, 29 Barb, (N. Y.) 145.

121
§ 147.] MORTGAGES OF FUTURE PEESONAL PROPERTY.

ence, the living agencies that do'grow or produce both grain and
hay. Here were then the living roots of the winter rye and grass
then abiding in the soil, that formed the just basis for a crop of
like kind, according to the invariable laws of vegetable growth,
and, of course, a just foundation of the contract into which the
parties chose to enter. It may not be unreasonable to limit the
application of the deed to the product of such hay and grain as
might grow from the rye that had been sown, and from the grass-
roots, to the exclusion of any subsequent spring crop.” And so,

“in New York, a mortgage of a field of potatoes before these are
planted has been held to give no title to potatoes which are the
product of such planting, as against .a purchaser of them.) In
Wisconsin, a mortgage of a crop of grain given by a lessee of land
in possession at the time of planting it, or before it is up and has
the appearance of a growing crop, is invalid.? In Illinois, also,
a lien by way of mortgage cannot be created upon a crop of corn
in the spring of the year, before it is planted. The crop, when
gathered, is liable to execution against the mortgagor, unless the
mortgagee has previously taken possession of it. In Arkansas,
too, a mortgage of an unplanted crop was void in law, prior to a
recent statute* making such a mortgage valid.6 To like effect it
was held in a Kentucky case ® that a mortgage by a lessee, to se-
cure the rent of a farm, of a crop to be raised on the farm, passed
no title to a crop not sown when the mortgage was executed. The
court said: ‘It was at the option of the lessee whether he would
sow wheat or other grain upon the premises ; or, if he saw proper,
he might have declined to cultivate the farm at all; and the fact
that he had the right to the possession of the land for one year, by
reason of his lease, gave neither actual nor potential existence to
crops that had not been sown upon it; and although he may have
expected to sow and reap, and may have held the fee simple title
to the land upon which the grain might have been produced, still
the crop had no existence until its growth was developed in some
form.”

1 Cressey v. Sabre, 17 Hun (N. Y.), 120. * Actsi1874-5, p. 149.
It would seem that this case is not in ac- 5 Tomlinson v. Greenfield, 31 Ark. 557.
cordance with McCaffrey v. Woodin, 65 6 Hutchinson v. Ford, 9 Bush (Ky.),
N. Y. 459, aside from its being a case at 318, citing a similar case (Milliman v.

law, while the latter is in equity. Neher, 20 Barb. (N. Y.) 37) so decided,
2 Comstock v. Scales, 7 Wis. 159. but in effect overruled by later decisions
8 Gittings v. Nelson, 86 Ill, 591. in that state.

122
AT LAW. [§ 148.

148. Accessions to mortgaged chattels made by the mort-
gagor in good faith become subject to the mortgage lien. Thus,
if a mortgage covers unfinished articles of manufacture, and the
mortgagor afterwards adds labor and material to them, the mort-
gage covers the finished articles, both as against the mortgagor
and his creditors! As between the mortgagee and mortgagor, it
matters not how much the article may be increased in value or
changed in form, the mortgage attaches to the additions to the
article mortgaged, as accessions made to the chattel as it was when
mortgaged, which is regarded as the principal thing. ‘In case
materials were mortgaged by a particular description, and with
the assent of the mortgagee were manufactured into articles not
answering to that description, and so changed that with reason-
able diligence a creditor could not know that they were the same,
if he should, without actual notice of the claim under the mort-
gage, attach them for a debt of the mortgagor, it would deserve
serious attention whether, under our statute requiring mortgages
of personal property to be registered, the mortgagee could hold
against the attaching creditor.”2 But, as against an attaching
creditor, a mortgage of leather cut and prepared for the manufact-
ure of shoes covers shoes subsequently made from it by the mort-
gagor.? A mortgage of cucumbers which were at the time in bulk
and in salt, remains good against a creditor who has attached them
after they have been “ greened ” and put into bottles and vinegar,
which were not included in the mortgage.* A rifle described in a
mortgage as being in the form of a pistol stock, with a metallic
skeleton stock and an under-action lock, is not so substantially
changed by having a new wooden stock and a new over-action lock
substituted in their place, as to authorize an attaching creditor to
hold the weapon as against the mortgagee, provided it is capable
of identification by parol evidence as the article originally included

1 Reid v. Fairbanks, 1 C. L. R. 787;
Woods v. Russell, 5 B. & Ald. 942; Hard-
ing v. Coburn, 12 Met. (Mass.) 333; Perry
v. Pettingill, 38 N. H. 483; Jenckes v.
Goffe, 1 R. I 511; Ea parte Ames, 1
Lowell, 561. And see Dunning v. Stearns,
9 Barb. (N. Y.) 630; Frost v. Willard, 9
Barb. (N. Y.) 440; Gregg v. Sanford, 24
Il. 17; Sumner v. Hamlet, 12 Pick.

(Mass.) 76; Glover v. Austin, 6 Pick.
(Mass.) 209; Pulcifer v. Page, 32 Me.
404.

2 Perry v. Pettengill, 33 N. H. 433, per
Perley, C. J.

8 Putnam v. Cushing 10 Gray (Mass.),
334,

4 Crosby v. Baker, 6 Allen (Mass.),
295,

123
§§ 149, 150.] | MORTGAGES OF FUTURE PERSONAL PROPERTY.

in the mortgage.! Upon the same principle, a mortgage of a ves-
sel covers new sails substituted for the old sails.?

A mortgage of an unfinished locomotive covers the additions
thereafter made to it by the mortgagor, by way of accretion, al-
though the materials added be not included in the mortgage.?
Whether a mortgage of materials would hold new articles manu-
factured from those materials would depend very much upon the
particular circumstances of the case ; but it would seem in general
that such a mortgage would not cover a manufactured article, not
described at all in the terms of the mortgage.*

149. Under the rule that the incident follows the principal,
a mortgage of domestic animals covers the increase of such
animals,> and it is not incumbent upon the mortgagee to take and
hold the property as against a purchaser of such increase. Thus,
the owner of a cow or a mare may before gestation effectually sell
or mortgage the future offspring, the possession of which, or the
right of possession, will vest whenever such offspring shall be
born. But it seems probable that a mortgage of a cow, for in-
stance, would not cover her calf beyond the time during which it
is necessary for the latter to follow the cow for nurture.

An agreement in writing by the owner of a mare to pay the.
owner of a stallion twenty dollars in twelve months if his mare
proved to be with foal by the stallion, — ‘colt holden for pay-
ment,” — was held to create a contract lien in the nature of a
mortgage. Such a case is within the principle of a mortgage of
property having a potential existence.’

150. But when a mortgage of animals does not in terms
cover the increase, or indicate that it was intended to cover such
increase, and the animals are left in the possession of the mort-

1 Comins v. Newton, 10 Allen (Mass.), Gundy v. Biteler, 6 Bradw. (Ill.) 510; 12

518. Chicago, L, N. 385; Hughes ». Graves,
? Southworth v. Isham, 3 Sandf.(N.Y.) 1 Litt. (Ky.) 317.

448, 6 Winter v, Landphere, 42 Iowa, 471,
3 Ex parte Ames, 1 Lowell, 561. per Beck, J. See Fowler v. Merrill, 11

* Ex parte Ames, supra, per Lowell, J. How. 375; Thorpe v. Cowles (Iowa, 1880),

® Forman »v. Proctor, 9 B. Mon. (Ky.) 7N. W. Rep. 649. 4
124; Evans v. Merriken, 8 Gill & J. 39; 7 Sawyer v. Gerrish, 70 Me, 254; Oakes

M’Carty ». Blevins, 5 Yerg. (Tenn.) 195; v. Moore, 24 Me, 214, 220; Moon v. Byrum, -
Fonville v. Casey, 1 Murph. (N. C.) 389; 10 S.C, 452; S.C. 30 Am. R. 58 and
124 note, 63; Farrar v, Smith, 64 Me. 74, 77.
AT LAW. [§$ 151, 152.

gagor, it seems that a purchaser of the increase, without actual
notice of the mortgagee’s claim to the same, would acquire a good
title. Thus, a mortgage of cows which does not refer to the in-
crease of them will not defeat a sale of such increase by the mort-
gagor in possession to one who has no actual notice of the mort-
gage. “The property in question,” say the court,! “is in no
manner described in the mortgage, nor are any inquiries indicated
therein which would enable a purchaser to ascertain that it was
intended to be covered. In truth, the mortgage itself would tend
to restrain inquiries, for it simply covers two cows, and nothing
more. A purchaser would infer that nothing else was intended
to be covered by the instrument. It cannot, therefore, be fairly
claimed that the mortgage and the record thereof imparted notice
of plaintiff’s claim to the property. Whatever may be the rule in
regard to the property in the increase of animals which are the
subjects of transfers of this kind, it is very plain that if such in-
crease follows the dam in ownership, a conveyance by the mort-
gagor having possession thereof to a purchaser without notice, act-
ual or constructive, will be valid.”

151. Upon the principle of accession, plants and shrubs,
the growth of cuttings from plants and shrubs mortgaged,
pass to the mortgagee.? The portions severed were before sev-
erance subject to the mortgage, and they are none the less so
after severance. The mortgagee loses no right because, after
severance, the cuttings remain in the same green-house in which
the mortgaged plants were, in a condition for further growth
and development.

152. Moreover, by the right of accession? it has sometimes
been held that substituted articles become subject to the
mortgage. In such case it is, of course, immaterial that the mort-
gage does not specifically cover future property. Thus, a mort-
gage of a printing-press with all its appurtenances was held by
the Supreme Court of Connecticut to cover type and materials
afterwards procured for the purpose of replenishing the estab-
lishment and supplying the place of lost and worn-out articles ;
for such articles became attached to, and a part of the establish-

1 Winter v. Landphere, supra. 3 “Omne principale trahit ad se acces-
2 Bryant v. Pennell, 61 Me. 108. sorium,”

125
§ 153.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

ment mortgaged.!_ They were declared to form an incident to,
and follow the title of, the printing establishment to which they
were attached, and which was the principal thing; ‘“‘as if the
borrower of a watch should replace its crystal, or of a musical
instrument one of its strings, keys, or pipes, which had been lost,
destroyed, or become useless whilst in his service, in which cases
they would belong to the lender.” A mortgage of a printing
establishment will cover, by way of accession, new printing ma-
terial purchased after the giving of the mortgage, to supply the
wear, decay, and destruction of the old, when the new has been
so commingled with the old as not to be readily distinguished ;
but such material would not be included in the mortgage in case
it be kept separate, so as to be readily distinguishable.?

153. There are, however, some exceptional cases in which
it has been held at law that a mortgage may cover property after-
wards acquired. Thus, in Abbott v. Goodwin,® a mortgage was
given effect as to goods subsequently obtained by the mortgagor
in exchange for some of the mortgaged goods. The mortgage was
upon a stock of goods in the mortgagor’s possession, and con-
tained a stipulation that the mortgagor should retain possession
of the goods, and pay over and account for the proceeds of all
sales of goods, to the mortgagee. In an action of trespass for
taking away four hundred casks of lime obtained by the mort-
gagor in exchange for goods, or the proceeds of goods, mortgaged,
the court held that the lime must be considered as substituted
for the mortgaged goods by the mortgagor, acting as the agent of
the mortgagee. |

In a recent Mississippi case,t a deed of trust was made of an
iron-gray horse, and all other live stock which the grantor might

1 Holly v. Brown, 14 Conn. 255.
” Fowler v. Hoffman, 31 Mich. 215.

while an attaching creditor would not be
affected by the matter of estoppel. The

3 20 Me. 408. The principle announced
in this case, that “all persons coming in
under the mortgagor stand by substitution
in his place, equally affected by the con-
tract whether notified of its existence or
not,” is considered in Jones v. Richardson,
10 Met. (Mass.) 481, 487, by Wilde, J., as
wholly wrong as applied by the court ; for
amortgagor might be estopped in various
ways to show that a mortgage was void,

126

argument, also, that inasmuch as the pro-
ceeds of sales of mortgaged goods belong
to the mortgagor, if new goods are pur-
chased with such proceeds, these would
belong to the mortgagee also, is regarded
as fallacious.

* Davis v. Marx, 55 Miss. 376; Marx
v. Davis, 56 Miss.745. And see Harman
v. Hoskins, 56 Miss. 142, 149, per Sim-
rall, C. J.
AT LAW. [§ 154.

own during the year. Within this time he exchanged the iron-
gray horse for a bay horse, and subsequently traded the latter for
a strawberry-roan horse, giving his note for $118, as the differ-
ence in the value of the horses, and securing it by a deed of trust
on the roan, the creditors secured having notice at the time of
the prior mortgage. The court say that, within proper limita-
tions, it is legitimate to mortgage property not in esse at the
time, or not in the ownership of the debtor; and that on the
same principle upon which a mortgage covers renewals of ma-
chinery and rolling-stock of a railroad, or renewals of farm-stock,
the bay horse obtained in exchange for the iron-gray by even
exchange would be covered by the first mortgage; and that this
mortgage would also cover the strawberry-roan obtained by the
second exchange, if that animal had been a mere exchange for
the bay; and they held that the first mortgagee had a lien upon
the strawberry-roan to the value of the bay horse; and accord-
ingly ordered that the roan horse should be sold, and the proceeds
to that extent applied to the satisfaction of the first mortgage,
and the balance to the second.

154. The fact that the new goods were acquired by way of
renewal of the goods on hand, or in substitution for them, or
were paid for out of proceeds of the old, has seemed in a few
cases to be the ground upon which the mortgage has been sus-
tained as a lien upon the new goods; yet this ground has been
so often declared ineffectual to give the mortgage any validity as
to goods subsequently acquired, that no exception to the general
rule prevailing at law regarding such mortgages can be sus-
tained.t. A mortgage of goods in a store, and “all renewals and
substitutions for the same, the object being to include not only
the articles then in the store, but whatever may be at any time
therein in the course of the mortgagor’s business,’ does not con-
vey subsequently acquired goods, so as to give the mortgagee a
right of action at law against a creditor seizing them.2 Where
a mortgage of the furniture of a coffee-house contained a stipu-

1 Williams v. Briggs, 11 R. I. 476; Gilm. (Ill.) 455; Sharpe v. Pearce, 74 N.
Hamilton v. Rogers, 8 Md. 301; Rose v. C. 600; Chapin v. Cram, 40 Me. 561; St.
Bevan, 10 Md. 466; Jones v. Richardson, Louis Drug Co. v. Dart, 7 Mo. App. 590.
10 Met. (Mass.) 481; Moody v. Wright, 2 Hamilton v. Rogers, 8 Md. 301. And

13 Met. (Mass.) 17; Barnard v. Eaton, 2 see Dutcher v. Swartwood, 15 Hun (N.
Cush. (Mass.) 294; Rhines v. Phelps, 3 Y.), 31.

127
§ 155.] | MORTGAGES OF FUTURE PERSONAL PROPERTY.

lation that if any of the property should be sold, and other fur-
niture purchased in its place, the latter should stand as security
in the same manner, and that the mortgagor should execute a
new mortgage, this stipulation was held not to bind the after-
acquired property. There could be no legal lien upon this until
anew mortgage was actually executed.!

As against third persons there can be no substitution or ex-
change of property by the parties to a mortgage, so that the lien
will attach to the substituted goods, unless the mortgagee take
the latter into actual possession before the rights of such third
parties intervene.” ;

But as between the mortgagor and mortgagee, other property
may be substituted for that included in the mortgage. Such
property, however, is not then held by virtue of the mortgage,
but by virtue of the agreement of the parties whereby an equi-
table lien, cognizable only in 4 court of equity, arises in favor of
the mortgagee?

155. When subsequently acquired goods have been com-
mingled with a mortgaged stock, the burden is upon the mort-
gagee, in a suit at law to recover the mortgaged goods or their
value, to show that the goods he claims were on the premises, or
belonged to the mortgagor at the date of the mortgage.* More-
over, if the mortgage in terms covers goods afterwards to be
acquired, the commingling of the mortgaged property with that
subsequently acquired is presumed to have occurred with the
mortgagee’s permission ; and if they have been so intermixed as
to prevent their separation or identification, the rights of third
parties purchasing or levying upon the goods cannot be affected.®
A mortgage valid as to existing property, but invalid as to other
property intended to be embraced in it, because not then existing,
does not become a valid lien upon the latter by reason of its be-
ing intermixed by the mortgagor with the former. It is only a
wilful intermixture of goods of another with one’s own which

1 Codman v. Freeman, 3 Cush. (Mass.) II. 479, 488; Powers v. Freeman, 2 Lans.
806. (N. Y.) 127; Ranlett v. Blodgett, 17 N.
2 Rhines v. Phelps, 3 Gilm. (Ill) 455, H. 298,
465; Hunt v. Bullock, 23 Ill. 320, 326; 8 Bell v. Shrieve, 14 Ill. 462, 464; Sim-
Davis v. Ransom, 18 Ill. 396; Bell ». mons». Jenkins, 76 Ill. 479, 483.
Shrieve, 14 Ill. 462, 464; Titus v. Mabee, £ Hamilton v. Rogers, 8 Md. 301.
25 Ill. 257, 260; Simmons v. Jenkins, 76 ® Ibid.

128
AT LAW. [§ 156.

entitles such other person to hold the whole! Thus, under a
niortgage of logs cut and to be cut by the mortgagor during the
season, in a controversy between the mortgagee and a creditor of
the mortgagor, who had attached all the logs, as well those cov-
ered by the mortgage as those cut after its execution, it appearing
that they had been intermixed with the assent of the mortgagee,
it was held that the mortgage was valid only as to such part of
the logs as were cut before the execution of the mortgage, and the
attachment was valid as to the part cut afterwards; and it ap-
pearing that the logs were alike in quality and value, the claim-
ants were allowed to share ratably in proportion to the quantities
cut before and after the mortgagee acquired his lien.2 Where
the identity of the mortgaged goods is destroyed by the mort-
gagor’s carrying on a retail business with the same for his own
benefit, the mortgagee cannot hold the substituted goods unless
they pass into his hands before other liens attach ; but if such
business be carried on with his consent, and new goods be added
to the stock, the mortgage will be either wholly unavailing against
a judgment creditor of the mortgagor, who has levied execution
upon such stock,? or good in part only. But if the mortgagor
purposely or negligently commingle the mortgaged goods with
other like goods of his own, without the consent of the mortgagee,
the latter may hold the whole under his mortgage.*

156. Notice of a mortgage of future chattels. — A chattel
mortgage upon after-acquired goods is valid against a bond fide
purchaser with notice, for he can have no better title than his
vendor, and such a mortgage is valid between the parties. In
a mortgage of a farm to secure the purchase money, it was pro-
vided that the mortgagor might cut the growing timber into
wood, and that the mortgagee should have a lien upon the wood,
and, upon demand, should have delivered to him such chattel
mortgage or mortgages as might be necessary to perfect the lien.

1 Ibid.; Wagner v. Watts, 2 Cranch C. 5 Robson v. Michigan Central R. R. Co.
C. 169. : 37 Mich. 70; American Cigar Co. v. Fos-
2 Mowry v. White, 21 Wis. 417; and ter, 36 Mich. 368; People v. Bristol, 35
see Dunning v. Stearns, 9 Barb. (N. Y.) Mich. 28; Cadwell v. Pray, 41 Mich. 307;
630. S.C.9 Cent. L. J. 199; McGee v. Fitzer,
3 Simmons v. Jenkins, 76 Ill. 479. 87 Tex. 27.
4 Willard v. Rice, 11 Met. (Mass.) 493 ;
Dunning v. Stearns, 9 Barb. (N. Y.) 630.

3 129
§ 157.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

It was held,! that although this agreement was not in itself a
chattel mortgage, yet it was a valid agreement for such a mort-
gage, and would attach to the wood as it might be cut and sev-
ered from the freehold, and might be enforced against the mort-
gagor, and all persons claiming through him with notice of such
lien ; and a creditor of the mortgagor, levying execution upon the
wood with notice of the prospective lien of the mortgagee, was
not a bond fide purchaser, but took the wood subject to the prior
equitable rights of the mortgagee.

157. But the record of a mortgage has been held to be not
sufficient notice of a legal incumbrance upon after-acquired
property, “ because by law no such property could be sold or con-
veyed thereby ; and it would furnish no notice that any property
would be afterward purchased, or, if purchased, that any act would
be done to ratify the grant in that respect. As to such prop-
erty, therefore, the mortgage could not be valid, except as be-
tween the parties thereto, unless such goods were delivered by the
mortgagor to the mortgagee with the intention to ratify the
mortgage.”? The Supreme Court of Wisconsin, quoting the
language used above, say: ‘‘ We are of opinion that this is a cor-
rect statement of the law, and that, in the absence of any actual
fraudulent intent on his part, the purchaser from the mortgagor
in possession is entitled to hold the property as against the mort-
gagee, he not having taken and retained the possession.” They
held, further, that although the instrument be so ratified by the
mortgagor after he has acquired the property, and before his sale
of it, as to make it binding as against himself, this does not
change the terms of the recorded instrument, or transform it into
a valid mortgage on its face. It speaks the same language still,
and informs the purchaser, not that the intended mortgagee has a
lien upon such property, but that he has none. Even knowledge
by the purchaser of the existence of such mortgage does not, in
the absence of any fraudulent intent, prevent his holding’ the
property as against the mortgagee not in possession.*

A registered mortgage of a growing crop is good against a prior

1 Wood ». Lester, 29 Barb. (N. Y.) 145. 8 Single v. Phelps, 20 Wis. 398.

2 Jones v. Richardson, 10 Met. (Mass.) 4 Single v. Phelps, supra; Mowry v.
481, 493, per Wilde, J.; and see Frost v. White, 21 Wis, 417.
Willard, 9 Barb. (N. Y.) 440.

130
AT LAW. [§ 157.

verbal agreement for a lien upon it. Thus, a person who has
verbally agreed to cultivate the land of another upon shares, and
that the prospective crops should stand as security for any pro-
visions advanced by the land-owner, becomes a tenant in common
with the latter, and may make a mortgage of the crop, which,
when duly registered, will prevail over the secret verbal lien in
favor of the land-owner.!

While a growing crop may be sold or mortgaged, and the reg-
istration of the mortgage makes it effectual,? a future crop cannot
be mortgaged, at least in such way as to make the registration of
it effectual as against creditors or subsequent purchasers without
notice. But such a contract is valid and binding as between the
parties, and as against creditors or purchasers with notice even
without registration. ;

But in equity a mortgage of after-acquired chattels may be en-
forced against all persons having actual or constructive notice of
itt A farmer having mortgaged a ten-acre field of growing wheat,
without the consent or knowledge of the mortgagee, harvested,
threshed, removed, and sold the wheat to one who, in the ordinary
course of trade, purchased without actual knowledge of the fraud.
It was held, however, that the record of the mortgage was con-
structive notice to the purchaser; and that the mortgagee, having
the title to the wheat, could recover the value of the wheat of the
purchaser after he had converted it to his own use by mixing it
with other wheat. The mortgagee was held to be entitled to
identify the wheat so purchased as the wheat that was mortgaged,
and for that purpose to use parol evidence. He was only required
to trace the wheat into the hands of the purchaser, who, having
mixed this wheat with other wheat of his own, could not complain
that the wheat could not afterwards be identified. The change
which the’wheat underwent after the mortgage did not change
the property so as to divest the title of the mortgagee.5

1 Jones v. Chamberlin, 5 Heisk.(Tenn.) Allen, 35 Iowa, 306; Hart v. Farmers’ &

210; and see Stamps v. Gilman, 43 Miss. Mechanics’ Bank, 33 Vt. 252.

456. 5 Duke v. Strickland, 43 Ind. 494. A
2 Butler v. Hill, 1 Bax. (Tenn.) 375; similar decision was made in Butler v.

Williamson v. Steele, 3 Lea (Tenn.), 527. Hill, 1 Bax. (Tenn.) 375, respecting a
8 Tedford v. Wilson, 8 Head (Tenn.), mortgage of a cotton crop. It is to be ob-

311; Polk v. Foster, 7 Bax. (Tenn.), 98, .served that while in Indiana the suit was

per Nicholson, C. J. in effect one at equity, all distinction be-
* Gregg v. Sanford, 24 Ill. 17; Scharf tween actions at law and in equity being

enburg v. Bishop, 35 Iowa, 60; Brown v. abolished, that in Tennessee was at law.

1381
§$ 158, 159.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

Il. Ratification by New Act of the Mortgagor.

158. The maxim of Lord Bacon,! that although a disposition
of after-acquired property is altogether inoperative, yet such dis-
position may be considered as a declaration precedent, which de-
rives its effect from some new act of the party after the property
is acquired, holds an important place in the discussion of one
branch of this subject. Its application is in law, not in equity.
“The law,” says Lord Bacon, “doth. not allow of grants except
there be a foundation of an interest in the grantor; for the law,
that will not accept of grants of titles or of things in action, which
are imperfect interests, much less will it allow a man to grant or
encumber that which is no interest at all, but merely future. But
of declarations precedent before any interest vested, the law doth
allow; but with this difference: so that there be some new act or
conveyance to give life and vigor to the declaration precedent.
Now, the best rule of distinction between grants and declarations
is, that grants are never countermandable, — not in respect of the
nature of the conveyance or instrument, though sometimes in re-

‘spect of the interest granted they are; whereas, declarations are
evermore countermandable in their natures.” The first part of
the rule— that the grant of a future interest is invalid —is a
general proposition which has never been effectually disputed in
courts of law. The second part of the rule—that the declara-
tion precedent may be made to take effect on the intervention of
some new act—has also become an established proposition, but
there has been much discussion regarding the new acts which may
have this effect. In general, it may be said that new acts, to
have this effect, must be done by the grantor in furtherance of the
original grant, after he has acquired the property, and the acts
must indicate his intention that the a shall pass by the
grant already made.?

159. But the mere bringing of after-acquired goods onto
the premises by the mortgagor is not a sufficient new act by him
within the rule. Thus, a bill of sale, made by way of security,

1“ Licet dispositio de interesse futuro Thornton, 1C. B. 379. Same construc-
sit inutilis, tamen potest fieri declaratio tion adopted in Jones v. Richardson, 10
pracedens, que sortiatur effectum, interveni- Met. (Mass.) 481; Head v. Goodwin, 37
ente novo actu.” Bac. Max. Reg. 14. Me. 181.

2 Broom’s Leg. Max. .502; Lunn »,

182
RATIFICATION BY NEW ACT OF THE MORTGAGOR. ([§ 160.

by a meal-man of his furniture and stock in trade “ then remain-
ing and being, or which should at any time thereafter remain and
be in, upon, or about his dwelling-house,” was held not to author-
ize the grantee to seize goods not in the grantor’s possession at
the time of the execution of the bill of sale, but acquired after-
wards.! In an action of trover by the grantor to recover such
goods, Chief Justice Tindal, delivering the judgment of the court,
said: “ The principal contention on the part of the defendant [the
grantee] was that the facts of this case brought it within the
exception in Lord Bacon’s rule; that the bringing of these goods
onto the premises of the plaintiff [the grantor], where they were
seized, at a time subsequent to the execution of the bill of sale,
was the new act done by the plaintiff which gave the declaration
contained in the previous bill of sale its effect. But to this it ap-
pears to us to be an answer, that the evidence at the trial is alto-
gether silent upon the circumstances which accompanied the bring-
ing of the goods on the premises; so that it is impossible to say
whether it was the act of the plaintiff or not. And further, the
new act which Bacon relies upon appears, in all the instances
which he puts, to be an act done by the grantor for the avowed
object and with the view of carrying the former grant or disposi-
tion into effect. Lord Bacon’s language is, ‘there must be some
new act or conveyance, to give life and vigor to the declaration
precedent ;’ which evidently imports more than ‘the simple acqui-
sition of the property at a subsequent time, which, if sufficient,
would render the rule itself’ altogether inoperative; but points at
some new act to be done by the grantor in furtherance of the
original disposition.” In conclusion, it was adjudged that, there
being no new act done by the grantor indicating his intention
that the after-acquired goods should pass under the former bill of
sale, the case fell under the general rule, and no property in such
goods passed to the grantee.

160. A power given to a mortgagee to seize after-ac-
quired property, when acted upon, may give effect to a. mort-
gage of such property, not only as between the parties, but also
as against third persons claiming under the mortgagor. A dictum
by Tindal, C. J., in Tapfield v. Hillman,? to this effect, has since

1 Lunn v. Thornton, 1 C. B. 379; 9 26 Man. & G. 245.

Jur. 350; 14 L. J. (C. P.) 161. And see,
also, Gale v. Burrell, 7 Q. B. 850. 133
§ 160.] - MORTGAGES OF FUTURE PERSONAL PROPERTY.

been confirmed in numerous cases in England, and the doctrine
fully established. An assignment by way of mortgage was made
by a lessee to his lessor of furniture and stock in trade belong-
ing to an inn, with a power to the lessor, upon default of the
lessee in paying the rent, to enter upon the leased premises, and
“to take, possess, hold, and enjoy all the goods, chattels, effects,
and premises” mentioned in the assignment. Before the expira-
tion of the term, the lessor entered upon the premises and seized
the stock in trade, and other property which was not on the
premises at the date of the deed. In an action of trespass, the
court were of opinion that the language of the deed only covered
the property upon the premises at the time of its date, and there-
fore that it was not necessary to decide whether, at law, goods
subsequently acquired could be made subject to the assignment
by any form of words. Chief Justice Tindal, however, said that
“if the intention of the ‘parties was that the security should ex-
tend to subsequently acquired property, that intention ought to
have been clearly expressed ;”’ and farther, “that it would have
been very easy to have so framed the power of entry as to make
it extend to all effects upon the premises at the time that such
power should be enforced, had such been the intention. of the
parties.” The same learned judge, in a subsequent case, in which
the assignment in terms covered property not in existence but gave
no power to seize such property, held that it only covered property
in existence at the time of its execution. “ The goods in dispute,”
he said, “ were not goods ‘ remaining and being on the premises’ at
the time of the execution of the deed of bargain and sale, but were
goods which had become the property of the plaintiff, and had also
been brought upon the premises, subsequently to the execution of
that instrument, and were remaining thereon at the time of the
seizure under the bill of sale. Under these circumstances, it was
contended by the defendant’s counsel that the bill of sale covered
these goods, as being goods remaining and being in or upon the
dwelling-house at the time of the seizure; and the question is,
whether the property in these goods passed under this bill of sale.
It is not a question whether a deed might not have been so framed
as to have given the defendant a power of seizing the future per-
sonal goods of the plaintiff as they should be acquired by him and
brought on the premises, in satisfaction of the debt, but the ques-

1 Lunn v. Thornton, 1 C. B. 379.
184
RATIFICATION BY NEW ACT OF THE MorTGAGOR. [§ 161.

tion before us arose on a plea which puts in issue the property in
the goods, and nothing else ; and it amounts to this: whether, by
law, a deed of bargain and sale of goods can pass the property in
goods which are not in existence, or, at all events, which are not
belonging to the grantor at the time of executing the deed.”
This question he decides in the negative, unless the grantor has
done some new act, other than the acquisition of the property,
with the avowed purpose of carrying the declaration contained in
his previous bill of sale into effect.

161. The doctrine founded upon the dictum of Tindal, was
fully established in Congreve v. Evetts.1 <A farmer assigned,
by way of mortgage, the crops of grain upon his farm, agreeing
also that the mortgagee might seize and take possession of the
crops assigned, or all such crops as might from time to time be
found upon the farm. A year or more afterwards, the mortgagee
took possession of the crops then growing upon his farm. Shortly
afterwards, a creditor of the mortgagor levied an execution upon
the crops and sold them, and the mortgagor himself subsequently
became insolvent. In a trial at law by the mortgagee for the
value of such property, it was held that he was entitled to recover.
It was conceded on both sides that although the then growing
crops passed on the execution of the deed, yet the future crops
did not; but the plaintiff contended that, having taken possession
of the growing crops, he was entitled to them. Baron Parke, de-
livering the judgment of the court, said: “If the authority given
by the debtor by the bill of sale had not been executed, it would
have been of no avail against the execution. It gave no legal
title, nor even equitable title, to any specific goods; but when
executed, — not fully and entirely, but only to the extent of tak-
ing possession of the growing crops, —it is the same, in our judg-
ment, as if the debtor himself had put the plaintiff in actual
possession of those crops. Whether the debtor give the possession
of a chattel by delivery with his own hands, or point it out and
direct, the creditor to take it, or tell him to take anything he
pleases for the payment of his debt by the sale of it, the effect,
after actual possession by the creditor, is the same.”

110 Exch. 298. Followed in Hope v. Tutin, 15 Mee. & W.110; Baker v. Gray,
Hayley, 5 El. & Bl. 830; Carry. Allatt, 17 C. B. 462, 481; Brown v. Bateman, L.

8 Hurl. & N. 964; Chidell v. Galsworthy, R.2C. P. 272; Price v. Groom, 2 Exch.
6 C. B. (N. 8.) 471. And see Petch v. 542; Gale v. Burnell, 7 Q. B. 850.

135
§ 162.] | MORTGAGES OF FUTURE PERSONAL PROPERTY.

162. This doctrine has been confirmed in England in all
subsequent cases where it was applicable. In Hope v. Hayley,
an assignment by way of mortgage covered goods in possession,
and such as might afterwards be added to or substituted for them,
with power, upon default, to enter and take possession of the
mortgaged property. The mortgagor remained in possession a
year or more, carried on the business, and, in the ordinary course
thereof, used up and consumed certain of the consumable effects
and substituted others. The mortgagee then entered and took
possession, and the mortgagor subsequently became a bankrupt ;
and ina suit at law by the assignee in bankruptcy against the
mortgagee, it was claimed that the mortgage was ineffectual for
the purpose of passing the substituted property, but it was held
otherwise. Lord Campbell, C. J., said: ‘* Were, then, these sub-
stituted goods the property of the assignees under the bank-
ruptcy? I am clearly of opinion that they were not. The
intention of the contracting parties was that the present and fut-
ure property should pass by the deed. ‘That could not be carried
into effect by a mere transfer; but the debt contained a license
to the grantee to enter upon the property, and that license, when
acted on, took effect independently of the transfer.”

A tenant, by way of security, assigned all the crops standing or
growing upon the farm occupied by him, or upon any other farm
which he might occupy during the continuance of the security,
and all the farming stock and other rights he might be entitled
to on quitting his present or any other farm; and he further
authorized his creditor to seize and convert this property to the
purposes of the security. A year or two after this transaction,
the tenant took an adjoining farm and acquired additional farm-
ing stock ; and some time after this, the creditor entered and took
possession of the crops and effects, — both those upon the original
land and on the additional land. The tenant shortly afterwards
made an assignment for the benefit of his creditors; and the as-
signee having entered and ejected the creditor, the latter brought
a suit at law for conversion of his security, and recovered.? Chief

15 El. & Bl. 830, 845. In this case, competent for the mortgagor to say that
Crompton, J., seemed disposed to gofur- the trusts should not be executed. Perhaps
ther than the common law rule would he meant only that the license was coupled
allow, in holding that the after-acquired with an interest, and irrevocable.

goods were made subject to the trusts of 2 Carr v. Allatt, 3 Hurl. & N. 964.
the deed, and that it would not have been

136
RATIFICATION BY NEW ACT OF THE MORTGAGOR. [§§ 163, 164.

Baron Pollock, and Barons Martin, Bramwell, and Watson, de-
livered separate and concurring opinions, placing the creditor’s
right to recover upon the ground that the assignment was intended
to operate as a continuing security, and in terms applied to prop-
erty afterwards acquired, and contained a power to seize such
property, which power was actually exercised. ‘ There is no dis-
pute,” said the last-named baron, “that a mere assignment will
not pass after-acquired property ; but for that very reason, here a
power is inserted in the deed, which extends to such property.”

163. But a power to seize after-acquired property cannot be
exercised by a seizure of property acquired after the mort-
gagor has obtained a discharge in bankruptcy from the debt
secured. The general principle, that a mortgage security is not
taken away by the mortgagor’s bankruptcy, does not apply in
such case ; for here no right or title to such property has vested
in the mortgagee prior to the bankruptcy. There is simply a
license to seize after-acquired goods for the purpose of selling them
and discharging the debt; and the debt being gone before the
license is used, and even before the property to which the license
relates is acquired, the collateral license is gone also.!

Moreover, a conveyance by the mortgagor to trustees for the
benefit of creditors operates as a revocation of a license, not then
exercised, to seize after-acquired property.2 A power to take
possession of after-acquired property must be executed according
to its terms; and therefore a power, in case the sum due should not
be paid upon demand, to enter and take possession of the goods,
cannot be effectually exercised without previously making a proper
demand for payment.3

There is no distiction between substituted and after-acquired
goods, when the instrument gives the authority as to both.*

164. The same doctrine prevails in the American courts.®

1 Thompson v. Cohen, L. R. 7 Q. B. Met. 383; Moody v. Wright, 13 Met. 17,
527; Lyde v. Mynn, 4 Sim. 505; S. C. 1 82; Mitchell v. Black, 6 Gray (Mass.),
Myl. & K., distinguished. 100; Butterfield v. Baker, 5 Pick. (Mass.)

2 Carr v. Acraman, 11 Exch. 566. 522; Carrington v. Smith, 8 Ib. 419.

3 Belding v. Read, 3 Hurl. & Colt. 955. Rhode Island: Cook v. Corthell, 11 R. I.

* Chidell v. Galsworthy, 6 C.B.(N.S.) 482; Williams v. Briggs, 11 R. I. 476.
471. New York: McCaffrey v. Woodin, 65

5 Massachusetts: Rowley v. $Rice, 11 N. Y.[459, per Dwight, C.

187,
§ 164.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

Possession taken by a mortgagee of after-acquired property, under
authority given in the mortgage, before rights had been acquired
by others, makes it a valid lien upon such property. “A stipulation
that future-acquired property shall be holden as security for some
present engagement is an executory agreement of such a charac-
ter that the creditor with whom it is made may, under it, take
the property into his possession when it comes into existence, and
is the subject of transfer by his debtor, and hold it for his secu-
rity ; and whenever he does so take it into possession, before any
attachment has been made of the same, or any alienation thereof,
such creditor, under his executory agreement, may hold the same ;
but until such an act be done, by him, he has no title to the same ;
and being done, and the possession thus acquired, the executory
agreement of the debtor authorizing it, it will then become holden
by virtue of a valid lien or pledge. The executory agreement of
the owner, in such case, is a continuing agreement ; so that when
the creditor does take possession under it, he acts lawfully under
the agreement of one then having the disposing power, and this
makes the lien good. If, however, before taking possession, or
doing such acts as are necessary to give vitality to the mortgage
as to the subsequently acquired property, an attachment or as-
signment for the benefit of creditors takes place, the opportunity
for completing the lien is lost; and the mortgage or pledge not
being perfected, the property passes to the assignee, and must be
held by him for the benefit of the creditors generally.” In a
recent case in Rhode Island, the court say:? ‘If the grantor
delivers the property, when acquired, to the grantee, in fulfil-
ment of the conveyance, or allows him to take possession under
the conveyance, the property thereupon passes and vests accord-

Illinois: Titus v. Mabee, 25 Ill. 257; Alabama: Booker v. Jones, 55 Ala. 266,
Gregg v. Sariford, 24 Ill. 17; Hunt »v. per Brickell, C. J.
Bullock, 23 Ill. 320; Roy v. Goings, 6 United States Courts: Miller 7. Jones

Bradw. (Ill.) 162. (Cir. Ct. for N. J.), 15 N. Bank Reg. 150,
Ohio: Brown v. Webb, 20 Ohio, 389; 160.
Chapman v. Weimer, 4 Ohio St. 481. 1 Moody v. Wright, 13 Met. (Mass.) 17,

Wisconsin: Chynoweth v. Tenney, 10 82, per Dewey, J. (cited with approval in
Wis. 397; Farmers’ Loan, &c. Co. v. Com- McCaffrey.v. Woodin, 65 N. Y. 459, 463;
mercial Bank, 11 Wis. 207; Oliver v. [in Gregg v. Sanford, 24 Ill. 17, and in
Town, 28 Wis. 328 ; Morrow v. Reed, 30 Moore v. Byrum, 10 S. C. 452, 462.) ]
Wis. 81. 2 Cook v. Corthell, 11 R. I. 482. And

South Carolina: Moore v. Byrum, 10S. see Williams v. Briggs, 11 R. I. 476.

C. 452, 462; 7 Rep. 696.

138
RATIFICATION BY NEW ACT OF THE MORTGAGOR.  [§ 165.

ing to the terms of the conveyance both at law and in equity.
There is no need of any new conveyance or bill of sale; for the
property, being personal, passes by delivery. And there is no
need of the intervention of a court of equity to treat the convey-
ance as an executory contract, and decree its specific performance ;
for, looking at it in that light, the contract is specifically performed
by the parties themselves.” In Connecticut, it is held that a
mortgage of personal property not yet acquired by the mortgagor
will take effect as against the mortgagor, and others claiming
under him, on the vesting of the title to such property in the
mortgagor, and the mortgagee’s taking possession of it. Thus,
if a mortgage of a factory embrace such machinery and stock as
may afterwards be purchased and placed upon the premises, it
becomes operative upon such subsequently acquired property upon
possession being taken by the mortgagee.?

165. A mere license to enter and hold under a mortgage
after-acquired property is revocable, and cannot be exercised
against the mortgagor’s will.2 Thus, under a mortgage of a stock
of merchandise now on hand, and such as should be added to it,
with a power of seizure upon default, a seizure by the mortgagee
by force, and against the grantor’s will, does not make the mort-
gage operative upon such property.*| The Supreme Court of Wis-
consin, in Chynoweth v. Tenney, after citing the English cases,
deduced from the principles thereby established the conclusion,
“that an authority like the one in question is a revocable license ;
that, if unrevoked, it justifies the grantee in taking possession ac-
cording to its terms, and that when he has so taken possession he
has done it with the consent of the grantor, and his mortgage be-
comes good ; but before it is executed the grantor may revoke it by
forbidding the grantee to take possession, and that then it becomes
wholly inoperative and void. We have arrived at this conclusion
by the following process: 1. The various cases establish beyond

1 Walker v. Vaughn, 33 Conn. 577; * Chynoweth v. Tenney, 10 Wis. 397;
Calkins.v. Lockwood, 16 Conn. 276. Single v. Phelps, 20 Wis. 398; In re El-

2 Rowan v. Sharp’s Rifle Man. Co. 29 dridge (U.S. Cir. Ct. for Wis.), 3 Ch. Leg.
Conn. 282. It is to be observed that both N.177. It would seem that the license in
these cases were in equity. Chynoweth v. Tenney, supra, was, upon

8 Thomas v. Sorrell, Vaugh. 330, 351; the authority of the cases cited in the next
Wood v. Leadbitter, 13 Mee. & W. 838, following section, one coupled with an in-
844. terest, and therefore irrevocable.

‘ 139
-§ 166.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

question the proposition that such an instrument cannot operate as
a transfer. 2. They also establish that it may operate as a license.
And by applying to these two propositions the law fixing the
nature and character of a license, the conclusion follows that it is
revocable.”

The revocation may be made indirectly, —as, for instance, by
an assignment of the mortgagor’s property in bankruptcy ; or by
some direct act on his part, such as refusing to allow the mort-
gagee to enter his premises. A covenant on his part not to re-
voke such license would be of little avail in case of the mortgagor’s
insolvency, though otherwise it would be the foundation of an
action in which damages could be recovered,! and perhaps might
afford a remedy in equity.

166. But a license to enter and take after-acquired prop-
erty, when coupled with an interest, is irrevocable ; and such
is the case when the mortgage deed comprises existing property,
or existing and future property, with a power to seize the latter.
There can be no grant, at law, of future property, and therefore a
license connected with such a grant is a mere license. If, how-
ever, present, or present and future property, are comprised in a
mortgage deed, a license to enter may be regarded as irrevocable,
—as being one coupled with an interest. This distinction, that
while a mere license to enter and take possession is revocable, an
instrument which also operates as a grant of future property is not
revocable, seems to be recognized in New York. An instrument
giving a lien upon goods and stock to be acquired, with power to
take possession of such property and sell it on default, seems to
have been regarded as constituting a grant, and not merely a li-

1 Carr v. Acraman, 11 Exch. 566. See mortgaged property is not revocable in

Smart v. Sanders, 5 C. B. 895, 917, and
note, per Wilde, C. J.

2 There is some authority holding that
an irrevocable power of attorney might be
given to the mortgagee, authorizing him
to do all acts necessary to the transfer
of after-acquired property. See dicta in
Smart v. Sanders, supra; Walsh v. Whit-
comb, 2 Esp. 565; Gaussen v. Morton, 10
Barn. & Cress. 731,734. But whether such
a power could be effectually given at law
or not, a power to deal with after-acquired

140 ,

equity. Lepard v. Vernon, 2 Ves. & Bea.
51; Bromley v. Holland, 7 Ves. 3, 28, per
Lord Eldon. And in equity such a power
would not be revoked by the mortgagor's
death (Spooner v. Sandilands, 1 You. &
Coll. 390), although it would in that case
be revoked at law. Watson v. King, 4
Camp. 272; Campanari v. Woodburn, 15
C. B. 400.

8 Wood v. Leadbitter, 13 Mee. & W.
838 ; Wood v. Manly, 11 Ad. & HE. 34. ,
RATIFICATION BY NEW ACT OF THE MORTGAGOR. [§§ 167, 168.

cense, by reason of the additional right given the mortgagee to
sell the property and appropriate the proceeds.1

167. The taking possession of after-acquired property by
the mortgagee does not avail to give him any title to it, un-
less it is embraced in the mortgage.?_ The intention of the par-
ties, that the mortgage shall take effect. upon after-acquired prop-
erty, must be expressed by the instrument itself, and cannot be
shown by outside evidence. But inasmuch as the grant in the
mortgage does not at law take effect upon the future property,
the only connection between the original transaction and the
transaction as subsequently completed by the mortgagee’s taking
possession of the after-acquired property, aside from the license to
take possession of that, is the consideration for which the mort-
gage is made; and it is this connection which makes the delivery
of possession by the mortgagor a ratification of the original mort-
gage, and not a new mortgage or pledge of the property so de-
livered.*

168. An agreement to subject after-acquired property to a
seizure and sale by a mortgagee is valid and operative accord-
ing to its terms, as against the mortgagor and all others who ac-
quire interests in it with notice. Or, in other words, the mort-
gagor is bound by his agreement, and.cannot refuse to deliver up
the goods accordingly. This is the view taken by the Supreme
Court of Michigan. In the recent case of Leland v. Collver,® it
appeared that a mortgage was made of a stock of goods on hand
and all the stock the mortgagor might have from time to time in
trade, he having the privilege of selling the goods in the usual
course of trade, and applying the proceeds of the sales to buying
other goods to keep up the stock and to support his family. The

1 McCaffrey v. Woodin, 65 N. Y. 459.

2 Tapfield v. Hillman, 6 Man. & G. 245,
See S. C. supra; Farmers’ Loan & Trust
Co. v. Commercial Bank, 11 Wis. 207.
And see Reeve v. Whitmore, 33 L. J.
(Ch.) 63; Brainerd v. Peck, 34 Vt. 496.

3 Farmers’ Loan & Trust Co. v. The
Commercial Bank of Racine, 15 Wis. 424.
The mortgage in this case, which was the
same passed upon in 11 Wis. 207, was of
a railroad and its appurtenances, and the

case is fully examined in Jones on Rail-
road Securities, 133.

* See Rowley v. Rice, 10 Met. (Mass.)
7. The transaction was spoken of as
being possibly only a new mortgage or
pledge of the property.

5 34 Mich. 418; 4 Cent. L. J. 7. And
see, in confirmation, American Cigar Co.
v. Foster, 36 Mich. 368; Cadwell v. Pray,
41 Mich. 307.

141
§ 168.] | MORTGAGES OF FUTURE PERSONAL PROPERTY.

mortgagor, moreover, covenanted to keep up a stock of like goods,
to a certain value, and agreed that the mortgagee might enter if
the stock should not be kept up to that amount. The mortgagor
continued the business for a year or more, and then sold his busi-
ness to one who shortly afterwards sold to another, subject to this
mortgage. The last purchaser took in partners, and continued
the business for several months, in the mean time selling a large
amount of goods and adding new goods of much less value to the
stock, until the mortgagees seized the stock under their mortgage.
The question presented was, whether the mortgagees could hold
goods not on hand at the time the mortgage was given, but added
to the stock afterwards by the mortgagor and other subsequent
purchasers. The mortgagees, being sued in trover for a conver-
sion of the goods, did not claim that the mortgage became opera-
tive in law as a present conveyance upon each successive addition
to the stock subsequently purchased, but that it gave them author-
ity to seize and subject such’ property to sale, unless prevented by
the paramount right of some person intervening with a valid claim
or title created prior to such seizure. The court sustained this
claim, Campbell, J., delivering the opinion, saying: ‘It was held
in Holmes v. Hall! that an agreement whereby a creditor was
authorized, in a future contingency, to take possession of a stock
of goods and sell them, but which contained no terms of transfer
or hypothecation, was not a mortgage, but was only a beneficial
power, which could not fix any rights in the property before seiz-
ure. A similar doctrine was held in Dalton v. Laudahn,? where
the power was contained in a lease. But it was further held, in
the latter case, that the agreement was valid and operative accord-
ing to its terms; and no good reason occurs to us, and we think
there is no satisfactory authority, why it should not be. Parties
can, if they choose, make contracts of agency, bailment, or other
authority, as broadly as they choose, where no legal policy and no
paramount right intervenes before their enforcement. And if
these agreements contain a license or permission to take possession
and sell, no court can deny the validity of the possession and sale
if the parties are capable of contracting, and no other rights inter-
vene. Cases are not rare in which tenants of lands have been
compelled to perform their stipulations to leave certain live stock,
or other property, on the estate at the end of their leases. And

1 8 Mich. 66. 2 27 Mich. 529.
142
RATIFICATION BY NEW ACT OF THE MORTGAGOR.  [§ 169.

trusts in personal property are of every day occurrence in which
the specific property is constantly changing, while the fund re-
mains subject to the duties and burdens of the trust. Partnership
operations are notable instances of this kind.

“‘In the present case the parties have seen fit to stipulate ex-
pressly that the body of the fund may be changed without losing
its identity, and that the mortgagee may deal with it as if un-
changed ; the various purchasers have made their purchases sub-
ject to this arrangement, and are estopped from denying it. The
mortgagees, in taking the property, did only what the mortgagor
agreed they might do, and what the several purchasers also un-
derstood they were authorized to do. A purchase of property
subject to such a power would certainly be regarded in equity as
liable to be subjected to a disposition in furtherance of the trust.
Every one taking it on those terms becomes in equity a trustee of
the fund. And where the contract itself points out the way for
the enforcement of rights by act of the party, and he has only
done what it was agreed he might do, it would be unjust and ab-
surd to hold him responsible as a wrong-doer as against those who
were bound by the terms of their own holdings to allow him to
do it.”

169. Another form of ratification is by an indorsement
upon the original mortgage, extending its operation over subse-
quently acquired property. Thus, a mortgage being made in
January of all the stock of goods in the store then occupied by
the mortgagor, and “also any and all additions that may from time
to time be made to said stock” by the mortgagor, in the following
May, the stock, with the additions to it then remaining unsold,
was removed to another store by the mortgagor, who then in-
dorsed upon the mortgage a writing, which was duly recorded,
agreeing that the “‘ mortgage, with this indorsement thereon, shall
cover the portion of said stock removed, the same as though it
had remained in the former store ; and that it shall hold and cover
any and all additions that have been or may be made to the same
as though the stock had remained and been put into the former
store.” In a suit by the mortgagee against an officer for attach-
ing the goods as the property of the mortgagor, it was held the
mortgage, with the indorsement upon it, gave the plaintiff title to

148
§§ 170, 171.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

the stock as it existed in the second store at the time of the in-
dorsement.!

Tl. In Equity.

170. In General. — In the preceding sections it has been shown
that a mortgage of future property is void, at law, as against
others acquiring an interest in it, except in case the mortgagee
takes possession of such property before any adverse. interests have
been acquired. A different rule, however, prevails in equity.
There, while such mortgage itself does not pass the title to such
property, it creates in the mortgagee an equitable interest in it,
which will prevail against judgment creditors and others, although
the mortgagee has not taken possession of thé property, and the
mortgagor has done no new act to confirm the mortgage. The
ground of the doctrine is, that the mortgage, though inoperative
as a conveyance, is operative as an executory agreement, which
attaches to the property when acquired, and in equity transfers
the beneficial interest to the mortgagee, the mortgagor being re-
garded as a trustee for him, in accordance with the familiar
maxim, that equity considers that done which ought to be done.?

171. The well known leading case of Holroyd v. Marshall,’
which has settled the policy of the law upon this subject in
England, arose upon a mortgage of certain machinery and imple-
ments described in a schedule, and all other machinery and imple-
ments which should, during the continuance of the security, be
fixed or placed on the premises in addition to or substitution for
that specified in the schedule. Upon a bill in equity by the mort-
gagee against a judgment creditor of the mortgagor, who had
levied an execution upon the after-acquired property, Lord Chan-
cellor Campbell held that the latter had the better title to it,
because the mortgagee had acquired by the mortgage only an

1 Brown v. Thompson, 59 Me. 372.

2 Williams v. Briggs, 11 R. I. 476, per
Durfee, C. J.

8 10 H. L. Cas. 191 (1862). The doc-
trine here established has been partly
stated in the earlier case of Langton v.
Horton, 1 Hare, 549 (1842), where a mort-
gage was held to pass title to future prop-
erty as between the parties, but as against

144
\

the mortgagor’s creditors it was regarded
as necessary that the equitable title should
be perfected by the mortgagee’s taking
possession.

By the civil law, a mortgage may cover
the future property of the mortgagor.
Domat’s Civil Law, bk, 3, pt. 1, § 1, arts.
5, 7.
IN EQUITY. [§ 171.

equity in such property, which must give way to the legal right
of a creditor, unless such equity has been perfected by possession
before the levy of the execution.! In the House of Lords, this
decision, after two arguments, was reversed. Lord Westbury,
then lord chancellor, delivered an opinion which not only con-
vinced his colleague, Lord Wensleydale, who had upon the first
argument come to a different conclusion,” but has ever since been
regarded as conclusive in its reasoning and as settling the law.
“« The question may be easily decided,” he said, “ by the applica-
tion of a few elementary principles long settled in courts of equity.
In equity it is not necessary, for the alienation of property, that

there should be a formal deed
valuable consideration, by which

12DeG., F. & J. 596,603. In deliver-
ing judgment, the lord chancellor said:
“My judgment rests upon Lord Bacon’s
maxim. [See § 158.] Before any sub-
sequent act is done, the assignment gives
an equitable interest as between assignee
and assignor; but a legal interest, sub-
sequently bond jide acquired before pos-
session taken by the equitable assignee,
shall prevail. I must further observe that,
although the term ‘ equitable assignee’
is here used, he cannot be considered the
assignee in equity of particular, specific
goods, so as to make the assignor the
bailee of these goods, or holder of them as
trustee for the supposed assignee. A bill
of sale in this form, as far as non-existing
goods are concerned, is only executory,
and only gives the supposed assignee an
equitable right to have the after-acquired
goods assigned to him.

“Tf the rights of the equitable assignee
who has not taken possession were such as
Mr. Malins contends for, it does seem
strange that, till now, we have no instance
of an equitable assignee filing a bill to re-
strain the sheriff from selling under a fieri
facias; and we have, as yet, no instance
of an equitable assignee bringing an action
for money had and received, to recover
from the execution creditor the proceeds
of the execution which he has received
from the sheriff.”

Lord Chelmsford, referring, in the

10

of conveyance. A contract for
it is agreed to make a present

House of Lords, to this part of the chan-
cellor’s decision, said: “ The judgment of
Lord Campbell, resting, as he states, upon
Lord Bacon’s maxim, determines that
some subsequent act is necessary to enable
‘the equitable interest to prevail against a
legal interest subsequently bond fide ac-
quired.’ It is agreed that this maxim re-
lates only to the acquisition of a legal title
to future property, It can be extended to
equitable rights and interests (if at all)
merely by analogy; but in thus proposing
to enlarge the sphere of the rule, it. ap-
pears to me that sufficient attention has
not been paid to the different effect and
operation of agreements relating to future
property, at law and in equity. At law,
property now existing, but to be acquired
at a future time, is not assignable; in
equity, it isso. At law (as we have seen),
although a power is given in the deed of
assignment to take possession of after-ac-
quired property, no interest is transferred,
even as between the parties themselves,
unless possession is actually taken; in
equity, it is not disputed that the moment
the property comes into existence, the
agreement operates upon it.”

2 And who, as Baron Parke, had in
Mogg v. Baker, 3 Mee. & W. 195, 198,
said (a dictum) that no equitable title to
after-acquired property passed without a
new intervening act.

145
§ 171.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

transfer of property, passes at once the beneficial interest, pro-
vided the contract is one of which a court of equity will decree
specific performance. In the language of Lord Hardwicke, the
vendor becomes a trustee for the vendee; subject, of course, to the
contract being one to be specifically performed. And this is true
not only of contracts relating to real estate, but also of contracts
relating to personal property, provided that the latter are such
as a court of equity would direct to be specifically performed.

‘But it is alleged that this is not the effect of the contract, be-
cause it relates to machinery not existing at the time, but to be
acquired and fixed and placed in the mill at a future time. It is
quite true that a deed which professes to convey property which
is not in existence at the time of a conveyance is void at law,
simply because there is nothing to convey. So, in equity, a con-
tract which engages to transfer property not in existence cannot
operate as an immediate alienation, merely because there is noth-
ing to transfer. But if a vendor or mortgagor agrees to sell or
mortgage property, real or personal, of which he is not possessed
at the time, and he receives the consideration for the contract,
and afterwards becomes possessed of property answering the de-
scription in the contract, there is no doubt that a court of equity
would compel him to perform the contract, and that the contract
would, in equity, transfer the beneficial interest to the mortgagee
or purchaser immediately on the property being acquired. This,
of course, assumes that the supposed contract is one of that class
of which a court of equity would decree the specific performance.
If it be so, then, immediately upon the acquisition of the property
described, the vendor or mortgagor would hold it in trust for the
purchaser or mortgagee, according to the terms of the contract ;
for if a contract be in other respects good and fit to be performed,
and the consideration has been received, incapacity to perform
it at the time of its execution will be no answer when the means
of doing so are afterwards obtained. Apply these familiar prin-
ciples to the present case: it follows that immediately on the new
machinery and effects being fixed or placed in the mill, they be-
came subject to the operation of the contract, and passed in equity
to the mortgagees, to whom the mortgagor was bound to make
a legal conveyance, and for whom he, in the mean time, was a
trustee of the property in question.

‘There is another criterion to prove that the mortgagee ac-

146
IN EQUITY. [§ 172.

quired an estate or interest in the added machinery as soon as it
was brought into the mill. If afterwards the mortgagor had
attempted to remove any part of such machinery, except for the
purpose of substitution, the mortgagee would have been entitled
to an injunction to restrain such removal, and that because of his
estate in the specific property.”

172. Authority to the mortgagee to enter and seize after-
acquired chattels, is not an equitable mortgage of such after-
acquired chattels, though coupled with an assignment of existing
property by way of mortgage, nor does it create in the mortgagee
any present equitable interest in them.! Lord Westbury, lord
chancellor, said: “If there had been, either upon the face of
the deed expressly, or there could have been collected from the
provisions of the deed by necessary implication, a contract or
agreement between the parties that the mortgagee should have a
security attaching immediately upon the future chattels to be
brought on the premises, the mortgagee would have had a present
interest in all those materials, whether manufactured or raw,
which after the date of the security might have been brought on
the brick-field. . . . . I think there was no contract that imme-
diately on the execution of the security the mortgagee should have
such right, title, and interest with respect to such future property.
Had there been in fact such a contract, it would have been an as-
signment, and would have fallen within the principles explained
by the House of Lords in Holroyd v. Marshall.” ?

Even under a mortgage which does not in terms provide for a
lien upon the acquisitions, but simply binds a stock of goods on
hand, a strong equity is raised in favor of the mortgagee as against
the future additions or substituted goods, the result of the same
business; and although that equity would not prevail against an
attachment or levy made while it was no more than a general
equity, yet where, by valid and formal agreement or otherwise,
such equity becomes actually attached to the goods before any
other lien intervenes, then it would prevail.?

1 Reeve v. Whitmore, 4 DeG.,J.& 8.1. (Exch.) 212; Holmes v. Hall, 8 Mich. 66;
This wasa mortgage of the stock and ap- Dalton v. Laudahn, 27 Mich. 529.
purtenances of a brick-field. And see Beld- 210 H. L. Cas. 191.
ing v. Read, 8 Hurl. & Colt. 955; 34 L. J. 8 Per Campbell, J., in The People »,

Bristol, 35 Mich. 28.

147
§ 173.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

173. Judge Story had announced the same doctrine in the
leading American case of Mitchell v. Winslow, fifteen years
prior to the decision of Holroyd v. Marshall. In that case a mort-
gage of all the tools and machinery in a cutler’s shop, together
with all that might be manufactured or purchased within four
years, was held to be a good equitable lien, and protected as such
under the Bankrupt Act. “It seems to me,” said the eminent
judge, “a clear result of all the authorities, that wherever the
parties, by their contract, intend to create a positive lien or charge
either upon real or upon personal property, whether then owned
by the assignor or contractor or not, or, if personal property,
whether it is then im esse or not, it attaches in equity as a lien or
charge upon the particular property as soon as the assignor or con-
tractor acquires a title thereto, against the latter and all persons
asserting a claim thereto under him, either voluntarily, or with
notice, or in bankruptcy.” This may be regarded as the settled
American doctrine.1_ In New Jersey this doctrine was applied, in

1 2 Story, 630, 644; Beale v. White, 94
U. 8. 382; Butt v. Ellett,19 Wall. 544;
S.C. 1 Woods, 214; Pennock v. Coe, 23
How. 117; Brett v. Carter, 2 Low. 458 ;
Apperson v. Moore, 30 Ark. 56; Schulen-
burg v. Martin (C. C. for Kans. June,
1880), 2 Fed. Rep. 747; 10 Rep. 230;
Robinson v. Mauldin, 11 Ala. 977; Floyd
v. Morrow, 26 Ala. 353; Gregg v. San-
ford, 24 Ill. 17; Scharfenburg v. Bishop,
35 Iowa, 60; Phelps v. Murray, 2 Tenn.
Ch. 746, per Cooper, C.; Sillers v. Lester,
48 Miss. 518; Cook v. Corthell;} 11 R. L
482; Williams v. Winsor, 12 R.1.9; Gro-
ton Manuf. Co. v. Gardiner, 11 R. I. 626.
“The doctrine is too well settled to be
now questioned,” per Woods, J., in Ellett
v. Butt, 1 Woods, 214. In Beall v. White,
supra, Mr. Justice Clifford said that in
certain cases courts of equity “ will per-
mit the grant or conveyance to take ef-
fect upon the property when it is brought
into existence and belongs to the grantor,
in fulfilment of an express agreement, if
founded on a good consideration, and it
appears that no rule of law is infringed
and the rights of third persons are not
prejudiced.” He adds: “ Were it neces-
sary to reconcile the decisions upon this

148

subject, the effort would be involved in
difficulty.” And sce Pennock o. Coe,
23 How. 117. But in Massachusetts it
was held, in Moody v. Wright, 13 Met.
(Mass.) 17, 30, that a mortgage is inef-
fectual, even in equity, to charge after-ac-
quired property, without some further act
by the parties after the property comes
into existence. ‘Such act,” say the court,
‘*we deem to have been necessary to per-
fect the title of the petitioner, whether his
rights of property in such after-acquired
articles are sought to be enforced in equity
or at law. We are fully aware that a dif-
ferent view of this question was taken by
Mr. Justice Story in the case of Mitchell
o. Winslow, 2 Story, 630, and that the
result to which he came differs from ours
as to the effect to be given to such mort-
gages in a court of equity.” And see
Barnard v. Eaton, 2 Cush. (Mass.) 294.
In Wisconsin, also, it is held that a chattel
mortgage of after-acquired property creates
no lien, legal or equitable, by force of the
mortgage. Hunter v. Bosworth, 43 Wis.
583; Chynoweth v. Tenney, 10 Wis. 397.
In the recent case of Brett v. Carter, 2
Low. 458, in the District Court of the
United States for Massachusetts, Judge
IN EQUITY. [§ 178.

the same year of the decision of Holroyd v. Marshall in the House
of Lords, to a mortgage, by the lessee of a hotel, of after-acquired
furniture! This property having been seized upon execution by a
creditor of the mortgagor, — who was about to sell it to satisfy
the execution, — upon a bill in equity by the mortgagee, who had
not taken possession of the property under his mortgage,’ the sale
was restrained by injunction, the chancellor adopting the princi-
ples announced by Judge Story in Mitchell v. Winslow. In New
York this doctrine is fully adopted. In a late case it was applied
to a clause in a lease of a farm giving the lessor “a lien, as secu-
rity for the payment of the rent aforesaid, on all goods, imple-
ments, stock, fixtures, tools, and other personal property which
may be put on said premises, such lien to be enforced, on the non-
payment of the rent aforesaid, by the taking and sale of such
property in the same manner as in cases of chattel mortgages.”
The mortgagee having taken possession of certain crops raised
upon the farm, in an action of trover by the lessee to recover
them it was held that the mortgagee in equity (he having the
right under the Code? to urge an equitable defence) acquired the
beneficial interest and title t» the property immediately upon its
coming into existence, or upon the mortgagor’s acquiring the
property.®

Lowell, remarking upon the decision in
Moody v. Wright, said: “ Considering the
decision by Judge Story in this circuit,
and the reasons given by the court of Mas-
sachusetts for not following it, and the
entire consistency of all the recent deci-
sions with Judge Story’s views, and the
disappearance of Baron Parke’s dictum, I
am not prepared to say that if the Su-
preme Judicial Court were now asked to
review their decision in Moody v. Wright,
it is at all certain they would not reverse it ;
and under the circumstances I do not feel
bound to hold that that case furnishes a
settled rule of property which I must follow.
So far from that, I believe that the law of
Massachusetts in equity is that a mortgage
of after-acquired chattels is valid.”

See Article 15 Am. Law Rev. 121.

1 Smithurst v. Edmunds, 14 N. J. Eq.
408 (1862). And see Gevers v. Wright,
18 N. J. Eq. 330; Williamson v. New Jer-
sey Southern R. Co, 29 N. J. Eq. 311.

2 Code N. Y. § 150.

3 McCaffrey v. Woodin, 65 N. Y. 459
(overruling S. C. 62 Barb. 316). Dwight,
C., after referring to the principle estab-
lished in Holroyd v. Marshall and Mitchell
v. Winslow, &c., said: “There. appears
to be no well-considered decision in the
equity reports to the contrary. There are
several dicta by judges sitting in courts of
law in opposition to those views, but they
find no support in the equity tribunals.”
As in Otis v. Sill, 8 Barb. (N. Y.) 102.
See Cressey v. Sabre, 17 Hun (N. Y.),
120, which was a case at law, inasmuch as
the action was originally brought in a jus-
tice’s court, which has no equitable juris-
diction; “no equities of the parties can
therefore be regarded or protected.” Levy
uv. Welsh, 2 Edw. (N. Y.) Ch. 438 (1835),
was a case in equity of a mortgage of pres-
ent and future stock in trade, which was
held good for such of the stock as was on

149
§ 174.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

The rule is also adopted in Virginia. Thus, a covenant duly
recorded made by an owner of a cotton factory, for the purpose of
securing advancements for the purchase of cotton and for other
expenditures connected with the manufacture of cotton goods, to
deliver to the lender all the goods manufactured, is in effect a
mortgage and is valid in equity.1_ The covenant having been duly
recorded is notice to all persons claiming under the manufacturer.
The right of the mortgagee to not only the manufactured goods,
but to the raw cotton, and cotton yarn on hand, is preferable to
the right of an execution creditor of the manufacturer, under an
execution issued since the covenant was executed.

In Kentucky it was declared in one case that if a mortgage of

property to be acquired in futuro can be upheld in equity, it can
only be enforced as a right under the contract, and not as a trust
attached to the property.”
" A mortgage or lien upon a stock of merchandise and upon addi-
tions made thereto, is good in the absence of fraud, against ante-
cedent creditors of the debtor, both as to the stock on hand at the
time of the sale and as to that subsequently purchased.®

174. All kinds of future chattels and chattel interests may,
in equity, be mortgaged. There may be a good equitable mort-
gage of the earnings of a vessel for a voyage not yet undertaken ; 4
and it is not necessary to specify any particular voyage, but only
to include, in general, the freight to be earned.® So, also, the fut-
ure cargo of a ship may be mortgaged. Thus, a mortgage of a
whale-ship, her tackle and appurtenances, “and all the oil and
head-matter, and other cargo which might be caught and brought
home in the ship, on and from her then present voyage,” was sus-
tained against a judgment creditor of the mortgagor. ‘It is im-
possible to doubt,” said Wigram, V. C.,® ‘for some purposes at

hand at the time of the mortgage, and
such as was afterwards purchased and paid
Sor out o the proceeds of that stock, and no
further.

1 First National Bank of Alexandria v.
Turnbull, 32 Gratt. (Va.) 695; S. C. 22
Alb. L. J. 96; Borst v. Nalle, 28 Gratt.
(Va.) 428; Brockenbrough v. Brocken-
brough, 31 Gratt. (Va.) 580.

2 Ross v. Wilson, 7 Bush, 29.

8 Zaring v. Cox (Kt. June 28, 1880), 1

150

Kt. Law Rep. 161; Davenport v. Foulke,
Ind. Cent. L. J. May, 28, p. 427.

4 Curtis v. Auber,1 Jac. & W. 526;
Langton v. Horton, 1 Hare, 549; In re
Ship Warre, 8 Price, 256, 269.

5 Douglass v. Russell, 4 Sim. 524; 1
My1. & K. 488 ; Leslie v. Guthrie, 1 Bing.
N. C. 697, 708; Lindsay v. Gibbs, 22 Beav.
522, «

8 Langton v. Horton, supra.
IN EQUITY. [§ 175.

least, that, by contract, an interest in a thing not in existence at
the time of the contract may, in equity, become the property of a
‘purchaser for value.” A mortgage by a lessee of a plantation, of
all the mules then upon the premises, or that might be put upon
them during the year, was held to cover mules afterwards pur-
chased and put upon the plantation within the year, in preference
to another mortgage of them made after the mortgagor had pur-
chased the animals.1_ A lease of a large hotel affords a sufficient
basis for a reservation of a lien by the lessor, in the nature of a
mortgage upon the furniture afterwards to be put into the build-
ing. A hotel must necessarily be furnished, in order to adapt it
to the uses for which it was intended. The furniture may be re-
garded as an incident to the hotel, in the same way that rolling-
stock is regarded as an incident to a railroad.2, A mortgage may
be made of an unplanted crop, and the lien attaches, in equity, as
soon as the crop is gathered, and may be enforced against pur-
chasers with record-notice.? A statute of Mississippi,‘ providing
that it should be lawful to mortgage any crop of cotton to be pro-
duced within fifteen months from the date of such mortgage, was
merely declaratory of what the law was before its passage, with a
limitation that the crop must be produced within a given time.
A mortgage made before such statute, of a crop to be produced in
the future, was valid in that state.5

Of course, it is essential that the after-acquired chattels in-
tended to be covered by the mortgage should be definitely pointed
out, so that they may be distinguished from other chattels of the
same kind; but it is sufficient that the ship, mill, or place into
which they are to be brought, or the farm or land upon which the
future crops are to be raised, is described.®

175. Mortgages of railroad companies very generally in
terms cover personal property which they may thereafter own and
use in connection with their roads. But such mortgages, in equity,
create a valid lien upon such after-acquired property, although at

1-Sillers v. Lester, 48 Miss. 513.
Wright v. Bircher, 5 Mo. App. 322.

8 Butt v. Ellett, 19 Wall. 544; Apper-
son v. Moore, 30 Ark. 56; Jarratt v. Mc-
Daniel, 32 Ark. 598; Booker v. Jones, 55
Ala. 266, per Brickell, C. J.; White v.
Thomas, 52 Miss. 49.

* Of February 18, 1867.

5 Ellett v. Butt, 1 Woods, 214 (affirmed
19 Wall. 544); White v. Thomas, 52
Miss 49. And see Betts v. Ratliff, 50
Miss. 561.

5 Brett v. Carter, 2 Low. 458, 461, per
Lowell, J.

151
§ 175.] MORTGAGES OF FUTURE PERSONAL PROPERTY.

law they do not operate at all upon property not then in exist-
ence! While the decisions are nearly uniform that mortgages of
the road-bed of a railroad, with the rolling-stock, and other articles
essential to the exercise of the franchise of a railroad company, will
be enforced in equity, although made to cover future additions
and incomes to be earned, the decisions are not quite uniform in
the reasons assigned for them. In general, it may be said that
such mortgages are sustained upon the ground that in equity they
transfer the beneficial interest in the after-acquired property, and
attach to it immediately on its being acquired, coming within the
class of contracts of which a court of equity will decree a specific
performance. The further reason applies, that the public interest
is involved in the enforcement of such mortgages, and there is,
therefore, an additional equity beyond that applicable to an ordi-
nary mortgage of after-acquired property.

1 Henshaw v. Bank of Bellows Falls, examined in Jones on Railroad Securities,
10 Gray (Mass.), 568. Cases of railroad §§ 121-145. And see 4 South. Law. Rev.
mortgages covering future property are 198.
not cited here, because the subject is fully

152
CHAPTER V.
DELIVERY AND POSSESSION OF MORTGAGED CHATTELS.

176. At common law a mortgage valid against creditors
could only be made by a delivery of the property. It was
essential that the custody and possession of the goods should be
delivered to and retained by the mortgagee.! The intent of the
statutes providing for the recording of mortgages of personal
property was to do away with the necessity of any delivery of
the property, and to enable mortgagors to hold possession until
default. For this purpose registration is required as giving, per-
haps, even greater notoriety to the transaction than delivery and
retention of possession. Registration thus becomes a substitute,
as well for delivery as for retaining possession of the property.
No formal, symbolical, or constructive delivery of the mortgaged
property is necessary; where the execution, delivery, and reg-
istration of the instrument of conveyance are duly proved, and
where good faith in the transaction, adequate consideration, and
other requisites of a valid mortgage, are shown.? It is to be un-
derstood, however, that the articles mortgaged must be of such
a nature and so situated as to be capable of being specifically
designated and identified by written description. If they require
to be weighed, measured, counted off, or otherwise separated from
other and larger parcels or quantities, such requisites are not to
be considered as dispensed with by registration.$

As between the parties, delivery and possession, while essential
to constitute a pledge, are not necessary to the validity of a mort-
gage. In this respect the common law rule has not been changed
by statute. But at common law, a mortgage might under some

1 Russell v. Fillmore, 15 Vt. 180; v. Willard, 19 Ib, 202; Frank v. Miner,
Woodward v. Gates, 9 Vt. 358; Sturgis v. 50 Ill. 444.
Warren, 11 Vt. 433. ® Per Shaw, C. J., in Bullock v. Wil-
® Bullock v. Williams, 16 Pick. (Mass.) liams, supra.
33 ; Forbes v. Parker, Ib. 462; Shurtleff
153
§§ 177, 178.] DELIVERY AND POSSESSION

circumstances, be valid as against third persons without immedi-
ate delivery and possession,! just as a sale might be valid without
such delivery and possession.?, The statutes, however, relating to
the recording or filing of mortgages, make them void as to third
persons, unless they be accompanied by delivery and possession,
or they be recorded or filed in the manner prescribed.

Under the recording acts generally in force, if there be a change
of possession of the mortgaged property, there is no need of re-
cording the mortgage or the bill of sale to make it valid against
third persons. Possession by the mortgagee or vendee is equiva-
lent to notice by registration.’

177. A mortgagee’s title under a mortgage not recorded
is incomplete until he takes possession. He is entitled to
possession as against the mortgagor, and also against any subse-
quent purchaser or mortgagee of the property, so long as such
purchaser or mortgagee has not completed his title by taking
possession ;+ and the prior mortgagee may take possession of the
property, althongh it be in the joint possession of the mortgagor
and a creditor of his to whom he has given a bill of sale, for the
title of the latter remains incomplete.®

' 178. If a mortgagee take possession of the mortgaged
chattels before any other right or lien attaches, his title under
the mortgage is good against everybody, although it be not ac-
knowledged and recorded, or the record be ineffectual by reason
of any irregularity.6 The subsequent delivery cures all such
defects; and it also cures any defect there may be through an
insufficient description of the property. The taking of possession
is an identification and appropriation of the specific property to
the mortgage.” If there be two mortgages of the same property,
and both be void as to creditors and purchasers, by reason of not

1 Homes v. Crane, 2 Pick. (Mass.) 607; 5 Coty v. Barnes, 20 Vt. 78.
Haven v. Low, 2 N. H. 13; Morrow v. _® Chipron v. Feikert, 68 Ill. 284; Frank*
Turney, 35 Ala. 131, v. Miner, 50 Ill. 444; McTaggart v. Rose,
2 See chapter ix. 14 Ind. 230; Brown v, Webb, 20 Ohio,
8 Morrow »v. Reed, 30 Wis. 81; Janvrin 389.
v. Fogg, 49 N. H. 340; Humphries v. 7 Morrow v. Reed, 30 Wis. 81, 84, per
Bartee, 10 Sm, & M. (Miss.) 282. Cole, J.
* Coble v. Nonemaker, 78 Pa. St

501.
154
OF MORTGAGED CHATTELS, [§§ 179, 180.

being acknowledged before the proper officer, if the junior mort-
gagee first obtains possession, he will hold it as against the prior
mortgagee ;1 and in some states the fact that he had notice of the
prior mortgage would make no difference, while in others actual
notice would be equivalent to constructive notice by record.?

Delivery of possession under a mortgage, before rights have
been acquired by others, will cure any invalidity there may be in
the instrument, whether arising from an insufficient execution of
it, the omission to record it, or from its containing a provision
which makes it void except as between the parties.®

I79. A change of possession of part of the property in-
cluded in a mortgage, not filed as required by a statute declar-
ing a mortgage void unless duly filed or accompanied by a change
of possession of the mortgaged property, does not make the mort-
gage valid as to such part of the property. A change of pos-
session as to part of the property is not a change of possession
of the things mortgaged within the meaning of the statute. The
statute does not avoid the mortgage merely as to so much of the
"property as remains in the possession of the mortgagor; but it de-
clares the mortgage itself void, if it be not filed as required by the
act, when it is not accompanied by an immediate delivery and
followed by an actual and continued change of possession of the
things mortgaged.

180. Mortgaged property may be delivered to and kept by
an agent of the mortgagee; for delivery to and possession by an
agent are in effect delivery to and possession by the principal.®
A delivery to a third person for the mortgagee’s use is sufficient.
A sufficient delivery of furniture is made by putting it in one
room of the house occupied by the mortgagor as a tenant, locking
the door, and delivering the key to the owner of the house, to
hold until the payment of the mortgaged debt.’

No particular mode of taking or retaining possession is requi-

1 Frank v. Miner, 50 III. 444. 5 McPartland v. Read, 11 Allen (Mass.)
2 See ch. vi. 231; Wheeler v. Nichols, 32 Me. 233.
® Nash v. Norment, 5 Mo. App. 545. 6 Jones v. Swayze (Sup. Ct. N. J.
The mortgage in this case was void from 1880), 3 N. J. Law J. 206.
a power reserved to the mortgagor to sell. 7 McPartland v. Read, supra.
4 Benedict v. Smith, 10 Paige (N. Y.),

126.
155
§ 181.] DELIVERY AND POSSESSION

site. No ceremony or formality in order to render the transaction
public or notorious is required. It is not necessary that the prop-
erty be delivered to the mortgagee in person. ‘Delivery to his
agent is equally effectual. No removal of the property from the
mortgagor’s premises is essential if the mortgagee has actual con-
trol of it there. Delivery and possession may in this way be
consummated at the mortgagor’s place of residence while the
property is in use by the mortgagor and his family. Thus, three
days before the insolvency of the mortgagor, the mortgagee sent
his agent to take possession of the property; the mortgagor pointed
it out and declared that he gave possession of it to the agent in
behalf of the mortgagee; and the agent continued in charge of it,
upon the premises, uninterruptedly, except on one occasion when
he was absent for several hours, until it was seized on a writ of
replevin brought against the mortgagee by the assignee in insol-
vency of the mortgagor. The keeper, by arrangement with the
mortgagor, concealed from the family the purpose for which he
was present, and permitted them and the mortgagor to use the
property as before. Such delivery and possession were held to
be legally operative and effectual. The mortgagee’s agent had
substantial control of the. property, and was at all times in such
situation that he could maintain the right of his principal to its.
permanent custody.”

181. Under some circumstances a mortgagee may employ
the mortgagor as his agent, to take care of the mortgaged prop-
erty after he has taken possession of it. Thus, a bank to which
a nursery stock was mortgaged took possession of the property,
removed it to another place, and employed the mortgagor as its
agent to look after and attend to the property; and it was held
that this employment of the mortgagor did not oust the mortgagee
"of possession.2 But a mortgagee’s possession would not be suffi-
cient in case he should merely take a nominal or symbolical de-
livery of the property from the mortgagor, and should, without
doing more, leave it in the mortgagor’s charge to hold as his
agent ; and it would be equally ineffectual if the mortgagee should

1 McPartland v. Read, 11 Allen (Mass.), 8 Dayton v. People’s Savings Bank, 23
231. Kans. 421.

2 Carpenter v. Snelling, 97 Mass. 452.
See Train v. Wellington, 12 Mass. 495.

156
OF MORTGAGED CHATTELS. [§ 182.

leave the property in charge of a servant of the mortgagor, and
should allow the latter to continue in the apparent possession and
enjoyment of the property. Thus, where the mortgaged prop-
erty, consisting of two billiard tables, kept by the mortgagor for
the use of his customers, was permitted to remain in the mort-
gagor’s possession and use, although nominally placed in the
charge of his bar-tender, it was held that there was no actual and
continued change of ‘possession which would protect the mort-
gagee in his title.t

But itis not generally competent for the mortgagee to make °
the mortgagor his agent to hold possession of the mortgaged prop-
erty.2 Even the appointment of the clerk of the mortgagor as
agent of the mortgagee, for the purpose of taking care of and
selling a stock of mortgaged goods, where there is no announce-
ment of a change in the business, no change of books, and no
' change whatever, so far as acts of ownership and possession are
concerned, does not constitute a change of possession sufficient to
protect the mortgagee’s lien.2 Where the mortgaged property is
in the use of a partnership of which the mortgagor is a member,
an agreement that his partner shall remain in possession for the
mortgagee, followed by a continuance of the partnership in the
use of the property, does not amount to an actual change of pos-
session.*

If a mortgagee, after taking possession, allows the property to
go back into the hands of the mortgagor, the possession of the
former is at an end, and the property is liable for the debts of the
mortgagor. In South Carolina, where the mortgagor may give
a forthcoming bond for the property and hold possession of it, the
legal possession is after giving such bond regarded as being in the
mortgagee, the mortgagor holding only as his bailee.5

182. What constitutes a change of possession depends
much upon the situation of the property. If it be in the pos-
session or charge of a third person, a substantial change of pos-
session may be made by the mortgagor’s pointing out the property,
and the mortgagee’s constituting such third person his agent, to

1 Brunswick v. McClay, 7 Neb. 137. ® Doyle v. Stevens, 4 Mich. 87.

2 Camp v. Camp, 2 Hill (N. Y.), 628. 4 Porter v. Parmley, 52 N. Y. 185, over-
See, however, Weld v. Cutler, 2 Gray ruling S. C.13 Abb. Pr. N. S. 104.
(Mass.), 195. 5 Moody v. Haselden, 1 S. C. 129.

157
§ 183.] DELIVERY AND POSSESSION

hold it for him. In such case there is a change of possession
without a change of locality. ‘If property which is not within
the actual possession of the owner be sold and delivered to the
vendee, leaving it in the place where it was situated is not leav-
ing it in the possession of the vendor, and creditors should not
be misled because it remains in the same locality. The very fact
that the property is not in the possession of the debtor leads to
the inquiry how it is held, and who is the owner; and the fact
that the debtor was the owner, and left it at the place where it
is found, leads to no legitimate inference that it continues to be
his property, when he has not the possession and exercises no acts
of ownership over it. To presume, without inquiry, that it re-
mains his, is an unwarrantable presumption.” ! Thus, where a
mortgage was made of a lot of boards then at the mill-yard of a
third person, and the mortgagor’s agent went with the mortgagee
and pointed them out, and declared that he put the mortgagee in
possession, and the latter at the same time told the mill-owner that
he would pay for the use of the mill from that time, and did so,
it was held that there was an effectual delivery and retention of
possession. Another portion of the boards embraced in this mort-
gage was ata public landing-place, where the mortgagor’s agent
in the same manner pointed them out to the mortgagee, and the
latter requested the keeper of the landing-place to take charge of
them for him; but the keeper refused to do this, although the
mortgagee offered to pay for the use of the landing; yet the
delivery and retention of possession were both held sufficient as
against a creditor of the mortgagor who attached the property the
following day.?

183. If the property be in the possession of a third per-
son, an immediate delivery is not necessary.2 If such third
person consent to hold the property as the agent of the mort-
gagee, the necessity of any delivery to and possession by him is
superseded.*

A mortgagee of an undivided two thirds of a portable engine,
which, the owner of the other third interest had taken to a foun-

1 Morse v. Powers, 17 N. H. 286, per 8. C. 3T.& C. 647 ; Goodwin wv. Kelly,

Parker, C. J. 42 Barb. (N. Y.) 194; Nash v. Ely, 19
2 Morse v. Powers, 17 N. H. 286. But Wend. (N. Y.) 523; Doak v. Brubaker, 1
see Menzies v. Dodd, 19 Wis. 343. Ney. 218.

8 Smith v. Post, 1 Hun (N. Y.), 516; * Wheeler v. Nichols, 32 Me. 233.
158
OF MORTGAGED CHATTELS. [§§ 184, 185.

dry for the purpose of repairs, requested the owner of the foundry
to look after it for him, and the latter agreed to do so and to re-
tain it for such mortgagee. It was held in view of the ponderous
nature of the property, and its being upon the premises of a third
person who claimed no interest in it, that the mortgagee’s posses-
sion was sufficient.1 The engine having been attached by a cred-
itor of the other part owner, and taken away, it was not essential
to the preservation of the mortgagee’s rights under his mortgage
that he should directly pursue and reclaim the property.?

184. There must be some authority conferred upon a third
person in possession, or some notice given him to make his pos-
session the possession of the mortgagee. The fact that the prop-
erty is in the possession of a third person does not always render a
change of possession or a delivery unnecessary, and enable the
mortgagee to hold it against third persons under a mortgage not
recorded or filed. Thus, if a mortgage be made of logs which are
in the possession of a boom company and the mortgagee neither
files his mortgage nor receives a delivery of them in any form, nor
attempts to obtain possession or control of them, he cannot assert
any title to them against a third person who in good faith, and
for value paid, first obtains possession of them. The possession of
the boom company was really the possession of the mortgagor,
and not adverse to him or independent of him. Something of a
public nature in the way of a change of possession was necessary,
and the mortgagee was not excused, from taking such possession
as the case permitted.?

There is a change of possession whenever the mortgagee or ven-
dee assumes control of the property, although there be no removal
of the property from the place it has before occupied. Thus, if a
mortgagee of a stock of goods receives a delivery of them and puts
a third person in charge, who carries on the business and accounts
to the mortgagee for the money received, there is an actual change
of possession of the goods.*

185. A concurrent possession by the mortgagor and mort-
gagee is insufficient.2 The change of possession must be appar-

1 Gaar v. Hurd, 92 Ill. 315. £ Weaver v. Reilly (N. Y. Supreme Ct.
2 Gaar v. Hurd, supra. June, 1880), 10 N. Y. Weekly Dig. 241.
8 Sheldon v. Warner, 26 Mich. 403. 5 Sumner v. Dalton, 58 N. H. 295.

159
§ 186, 187.] DELIVERY AND POSSESSION

ent to those who have occasion to observe it. Where a farmer
conveyed his farm and certain personal property, including a pair
of oxen, and took a bond from the grantee conditioned for the
support of himself and wife during life and a mortgage on the
farm to secure the bond, and the grantor continued to live upon
the farm with the grantee, and the personal property, including
the oxen, remained upon the farm, and there was no change in the
management of the personal property after the conveyance, it was
held that there was no change of possession of such property as
would protect it from a levy of execution against the mortgagor.
There was no substantial change of possession.

186. Constructive possession under a chattel mortgage is
ineffectual. The right to possession is by virtue of the contract,
and not, as in an execution, by virtue of the law. Possession
must be taken in fact; it cannot be taken by words and inspec-
tion?

A mortgage of hotel furniture contained a provision that the
mortgagor should retain possession until default in payment, or
until the property should be seized upon execution or attachment.
The mortgagee, upon learning that an execution had been levied
upon it, went to the hotel and demanded possession of the mort-
gagor, who gave him the keys, and went with him through the
hotel, opened the doors of the various rooms, and exhibited the
furniture. It was arranged between them that the property
should be considered as stored for the mortgagee, who took away
a napkin as a symbol of the delivery of the whole. It was held
that this did not amount to an actual and continued change of
possession.3

187. A delivery of ponderous or bulky property by words
only is of no effect. There must be some clear, unequivocal, and
exclusive change of possession. The delivery should be such that

1 Flagg v. Pierce, 58 N. H. 348.

2 Crandall o. Brown, 18 Hun (N. Y.),
461. And see Ceas v. Bramley, 18 Hun
(N. Y.), 187; Fraser v. Gilbert, 11 Hun
(N. Y.), 634.

8 National Bank of the Metropolis v.
Sprague, 20 N. J. Eq. 18; and see Por-
ter v. Parmley, 52 N. Y. 185.

4 Anderson v. Brenneman (Mich. 1880),

160

6 N. W. Rep. 222; Doak v. Brubaker, 1
Nev. 218; Menzies v. Dodd, 19 Wis. 343.
The mortgage, in the latter case, was of
several stacks of wheat, which were deliv-
ered by pointing them out to the mort-
gagee. This case seems to be substan-
tially overruled by Morrow v. Reed, 30
Wis. 81. See Weld v. Cutler, 2 Gray
(Mass.), 195.
OF MORTGAGED CHATTELS. [§ 188.

creditors and subsequent purchasers will not be misled, or left in
doubt as to the nature of the transaction. ,

What is a sufficient change of possession of such articles is a
question for the jury. When the property is of a bulky nature,
so that only a symbolical delivery can be made, and it is permitted
to remain in a place where the possession may be equivgcal, and
doubts exist as to the sufficiency of the possession, it is said they
should be solved in favor of the purchaser or creditor, and against
the mortgagee, because he had the power to protect himself by fil-
ing or recording his mortgage and neglected to do so.’

A delivery of such articles sufficient to render an unrecorded
mortgage of them valid against third persons is such a delivery
as would be necessary as against third persons in case of an abso-
lute sale of those chattels.2 The nature of the delivery and sub-
sequent possession must depend upon the bulk and character of
the property. A delivery and possession of such property as un-
finished steam-engines sufficient to protect the mortgagee would
be quite insufficient in case the property were not of great bulk
and could be readily taken up and removed.?

It has been held to be a sufficient delivery of a large quantity
of logs for the mortgagor to go with the mortgagee to the place
where they lie, and point them out as the property included in
the mortgage, and declare that he thereby transfers them to the
mortgagee’s possession.*

When the property mortgaged consisted of growing crops, the
possession was considered to be in the mortgagee until the time of
harvesting them, and until then the mortgagee was not required
to take manual possession of them.®

188. A delivery is not complete so long as anything re-

1 Anderson v. Brenneman (Mich. 1880),
6 N. W. Rep. 222

2 Wright v. Tetlow, 99 Mass. 397.

8 See Wright v. Tetlow, supra, for cir-
cumstances under which a clerk of the
mortgagor received and retained posses-
sion of such property for the mortgagee.

4 Morrow v. Reed, 30 Wis. 81. See,
however, Menzies v. Dodd, 19 Wis. 343.

5 Ticknor v. McClelland, 84 Ill. 471;
Bull v. Griswold, 19 Ill. 631 ; Thompson

11

v. Wilhite, 81 Il]. 356. But in the later
case of Gittings v. Nelson, 86 Ill. 591, it
was held that an agreement made in the
spring, before the existence of a crop, to
give a lien upon it when raised, to secure
advances, could not operate upon the crop
after being raised as a transfer by way of
pledge or mortgage, until the creditor
should take possession ; and that previous
to such possession the crop would be liable
to execution against the debtor.

161
§ 188.] DELIVERY AND POSSESSION

mains to be done as a condition precedent to the passing of the
title, such as the measurement of a certain quantity of lumber out
of a larger quantity piled together. But no such measurement is
necessary if the lumber transferred be piled by itself, and posses-
sion of the whole be delivered.1 And so if a mortgage be made
of four hundred tons of coal, part of a larger pile on the mort-
gagor’s wharf, and the mortgagee take possession of the whole
with the assent of the mortgagor and sell a part of it, the delivery
is sufficient to vest the title in the mortgagee, who may hold the
whole pile against the assignee in insolvency of the mortgagor,
until the mortgagee has had sufficient time and opportunity to sep-
arate and remove the quantity mortgaged.? Mr. Justice Bigelow,
delivering the judgment of the court in this case, said: “The-prop-*
erty in the part mortgaged passed, it being left to the mortgagee
to select and separate it from the whole, which was placed in his
possession and control for that purpose. Under such circum-
stances, it is very clear that neither the mortgagor, nor those
claiming under him, could dispute the right of the plaintiff to hold
the entire property, until the object for which its possession was
delivered to him should have been accomplished. ‘The right of
possession of the entire bulk had become legally vested in the
mortgagee for a lawful purpose; neither the mortgagor nor his
assigns had the possession or the right to the immediate possession
of it ; neither of them, therefore, could maintain trespass or trover
against the mortgagee ; nor could a creditor of the mortgagor, by
attachment on mesne process, or seizure on execution, disturb a
possession thus acquired. The power to hold the whole property
by the mortgagee was coupled with an interest in him, which
neither the mortgagor nor his creditors could defeat. The right
of all persons claiming title under the mortgagor, to the property
not included in the mortgage, must be taken to be subordinate to
the right, previously acquired by the mortgagee, of holding the
whole in his possession, until, by the use of due and reasonable

1 Tyler v. Strang, 21 Barb. (N. Y.) 198. was left to the vendee to make his own se-
In Crofoot v. Bennett, 2 N. Y. 258, it was lection. And see Bullock v. Williams, 16
held that a delivery of a brick-yard,upon Pick. (Mass.) 33.

a sale of a portion of the bricks by the 2 Weld v. Cutler, 2 Gray (Mass.), 195,
thousand, not counted or marked, passed distinguished from Scudder v. Worster,
the property in those sold; and that it 11 Cush. (Mass.) 573.

162
OF MORTGAGED CHATTELS. [§ 189.

diligence, he had separated and taken out the portion mortgaged
to him.”

189. The burden to prove a delivery or change of posses-
sion is upon the person who claims to hold the property by virtue.
of an unrecorded mortgage.

1 McCarthy v. Grace, 23 Minn. 182.
163
CHAPTER VI.

STATUTORY PROVISIONS RELATING TO RECORDING, FILING,
‘ AND REFILING.

190. In almost all the states and territories of the United
States, statutes have been enacted for the purpose of enabling
mortgagors to retain possession of the mortgaged chattels, and at
the same time to give mortgages which shall secure their creditors
as effectually as if the latter had received and retained actual
possession of the property. This purpose is accomplished by
substituting a record or filing of mortgages in place of a delivery
of possession of the mortgaged property. The statutes in effect
make a recording or filing of the instrument equivalent to a
change of possession of the property.

But while the statutes agree in the object to be attained, they
differ widely in their mode of accomplishing it. In some states
it is provided that the instrument shall be recorded at length,
while in others, the instrument is placed upon file with an in-
dorsement thereon of the time when it was received, without any
record being made other than an index of the names of the par-
ties, and, perhaps, a note of the time of filing.

Inasmuch as personal property is movable and has no fixed
and permanent location, but is for most purposes considered as
following the person of the owner, the statutes have generally pro-
vided that a mortgage of such property shall be recorded in the
town or county of the mortgagor’s residence. In many states it
is provided that in case the mortgagor be a non-resident of the
state the mortgage shall be recorded in the county or town in
which the property may be at the time the mortgage is executed.

1 The only states in which there is no 2 Such is the case in

general system of recording or filing mort- Illinois, New Hampshire,
gages of personal property are Pennsylva- Kansas, New Jersey,
nia, Louisiana, and Nevada. In a few Maine, New York,
other states, as has already been noticed, Massachusetts, North Carolina,
chattel mortgages can be given of only Michigan, Ohio,

certain specified articles. See § 121. Nebraska, Rhode Island,

164
STATUTORY PROVISIONS, ETC. [§ 191.

In several states it is provided that a mortgage of personal property
shall be recorded not only in the county in which the mortgagor
resides but also in that in which the property is located.1 But in
other states such mortgage need be recorded only in the county
in which the property is situated at the time the mortgage is
made.”

In additior to the record so provided for either at the place of
residence of the mortgagor or where the property is situated, in a
few states it is further provided that in case the property be
afterwards removed to another county the mortgage shall also be
recorded in that county.’

In some states a record ceases to be of any effect after a lim-
ited period from the original filing of the mortgage.* But pro-
vision is made in several states for a refiling of the mortgage.6

There are other differences in the provisions of the statutes of
the several states. In short, the statutes are so different in de-
tails that no adequate statement of their provisions can be made
except by giving in full the statute of each state and terri-
tory; and inasmuch as these statutes lie at the foundation of
the whole superstructure of the modern law of chattel mortgages,
a full and accurate statement of their provisions is regarded as not
less important than a statement of the decisions of the court.

191. Alabama.’ — Conveyances of personal property to secure

South Carolina, Wisconsin, and * In Colorado and Minnesota this period

Tennessee, Vermont, is two years; inj Montana Territory, one
Texas, year ; and in Nebraska, five years. In Wy-
1 Such is the case in oming Territory the period is two months
Alabama, Georgia, after the term for which the mortgage
Arizona T. Idaho Territory, was given. In Illinois a mortgage is good
California, Minnesota. only till the maturity of the debt, not ex-
2 Such is the case in ceeding two years from the filing.
Colorado, New Mexico, 5 Asin
Connecticut, Virginia, Arkansas, New Mexico,
Dakota T. ° West Virginia, Kansas, New York,
Delaware, Washington Ter- Michigan, . Ohio, and
Florida, ritory, and New Jersey, Oregon,
Kentucky, Wyoming Terri- at the expiration of one year; in Wis-
Mississippi, tory. consin at the expiration of two years; and
8 Such is the case in in Dakota Territory at the expiration of
Alabama, Wyoming Terri- ‘three years.
California, tory. » Code 1876, §§ 2147, 2158, 2162-2165,

Mississippi, and

2170-2174.
165
§ 192.] STATUTORY PROVISIONS

debts, or to provide indemnity, must be acknowledged } and re-
corded in the office of the judge of probate in the county in which
the grantor resides, and also in the county where the property is,
at the date of the conveyance ;? and if before the lien is satisfied
the property be removed to another county, the conveyance must
be again recorded within six months from such removal, in the
county to which it is removed. Whenever any personal property
is subject to any lien, incumbrance, mortgage, or trust, for the
security of debts, at the time of its removal to this state, the writ-
ing evidencing the lien, incumbrance, mortgage, or trust, must
be recorded in the county into which it is brought, and remains,
within four months of the arrival of such property.

Things in action are not included in the words “ personal prop-
erty.”

Conveyances of personal property to secure debts, or to pro-
vide indemnity, are inoperative against creditors and purchasers,
without notice, until recorded, unless the property is brought into
this state subject to such incumbrance, in which case four months
are allowed for the registration of the conveyance; and if such
property is removed to a different county from that in which the
grantor resides, the conveyance must be recorded in such county,
within six months from the removal, or it ceases to have effect
after such six months, against the creditors or purchasers of the
grantor without notice.

These provisions include absolute conveyances of personal prop-
erty, defeasible by a defeasance or other instrument; and in such
case the defeasance must be recorded, or the same is void as to
creditors and purchasers from the grantee without notice.

192. Arkansas.2 — A mortgage of personal estate must be
proved or acknowledged in the same manner that deeds for the
conveyance of real estate are, now required to be proved or ac-

1 But acknowledgment or proof of ex-
ecution is not indispensable to registra-
tion. A mortgage of personalty admitted
to record without acknowledgment oper-
ates as constructive notice, in the same
manner as if acknowledgment had been
made. Code 1876, § 2153; Bickley vo.
Keenan, 60 Ala. 293.

2 If the mortgaged property has a fixed

166

situs in the state at the time of the execu-
tion of the mortgage, although the parties
to it be non-residents, it does not protect
the property as against the mortgagor's
creditors until it is recorded here. Hard-
away v. Semmes, 38 Ala. 657.

3 Dig. of Stat. 1874, §§ 4287, 4288; Acts
1877, No. 22; Acts 1877, No. 76, §§ 1-5.

‘
RELATING TO RECORDING, ETC. [§ 192.

knowledged, and recorded in the recorder’s office in the county in
which the mortgagor resides. It is a lien on the mortgaged prop-
erty from the time the same is filed in the recorder’s office for
record, and not before; the filing is notice to all persons of the
existence of such mortgage. Any mortgage or conveyance in-
tended to operate as a mortgage of personal property, and every
deed of trust upon personal property, filed with any recorder upon
which are indorsed the following words: “ This instrument is to
be filed but not recorded,” signed by the mortgagee, his agent or
attorney, when so received shall be marked ‘filed’ by the re-
corder, with the time of filing, upon the back of such instrument,
and he shall file the same in his office, and it shall be a lien upon
_ the property therein described from the time of filing, and the
same shall be kept there for the inspection of all persons inter-
ested ; and such instrument is thenceforth notice to all the world
of the contents thereof, without further record, except as fol-
lows : —

Every mortgage so indorsed and filed is void as against the
creditors of the person making the same, or against subsequent
purchasers or mortgagees in good faith after the expiration of
one year after the filing thereof, unless within thirty days next
preceding the expiration of one year from such filing, and each
year thereafter, the mortgagee, his agent or attorney, shall make
an affidavit exhibiting the interest of the mortgagee at the time
last aforesaid, claimed by virtue of such mortgage; and if said
mortgage is to secure the payment of money, the amount yet due
and unpaid ; and such affidavit shall be attached to and filed with
the instrument or copy on file to which it relates.

A copy of any such original instrument, so indorsed and filed,
including any affidavit made in pursuance of this act, certified
by the recorder, in whose office the same shall have been filed,
shall be received in evidence in all suits or proceedings to which
it may be applicable; and if, in any suit or proceeding, the exe-
cution of said instrument, or its genuineness, shall be questioned
in such manner as to render the production of the original neces-
sary, the same may be produced by the recorder of the county
in obedience to a subpcena duces tecum, or other proper process.

The recorder shall keep a book in which shall be entered a
minute of mortgages and trust deeds of personal property and of
the affidavits filed, indicating in separate columns the time of re-

167
§§ 193, 194.] STATUTORY PROVISIONS

ception, names of the parties, date of the instrument, amount se-
cured, when due, the property mortgaged by general description
of the property and place where located, and also the date of
filing of any affidavit with the amount sworn to be due and un-
paid. In the absence of stipulations to the contrary, the mort-
gagee of personal property has the legal title thereto, and the
right of possession.

193. Arizona Territory.1— All mortgages must be recorded
in the county recorder’s office in the county where the mortgagor
lives, and also in the county or counties where the property is
located or used; but property in transitu from the possession of
the mortgagee to the county of the residence of the mortgagor,
or to a location for use, is during a reasonable time for such trans-
portation considered 4s located. The affidavit verifying the
mortgage must be recorded with it. The mortgagee in all such
mortgages is allowed one day for every thirty miles of the dis-
tance between his residence and the county recorder’s office where
such mortgage ought by law te be recorded, to conform to these
provisions, before any attachment made by the creditors of the
mortgagor shall be valid. If the mortgagee receives and retains
the actual possession of the property mortgaged, he may omit the
recording the mortgage during the continuance of such actual pos-
session. A right of redemption remains in the mortgagor until
the same shall have been foreclosed by due process of law, or by
agreement between the parties to the mortgage, which agreement
must be entered on the record of the mortgage.

194. California.2— Every mortgage must be recorded in the
office of the county recorder of the county in which the mortgagor
resides, and also of the county in which the property mortgaged
is situated, or to which it may be removed. Property in transit
from the possession of the mortgagee to the county of the resi-
dence of the mortgagor, or to a location for use, is, during a
reasonable time for such transportation, taken as situated in the
county in which the mortgagor resides or where it is intended to
be used. For a like purpose personal property used in conduct-
ing the business of a common carrier is to be taken as situated

1 Compiled Laws 1877, ch. 82, §§ 3644, ° 1 Codes & Stats. 1876, §§ 7959-7966.
3646, 3650.
168
RELATING TO RECORDING, ETC. [§ 195.

in the county in which the principal office or place of business of
the carrier is located.

A single mortgage of personal property, embracing several
things of such character or so situated that separate mortgages
upon them would be required to be recorded in different places,
is only valid in respect to the things as to which it is duly re-
corded.

Mortgages. of personal property must be recorded in books kept
for personal mortgages exclusively. A certified copy of a mort-
gage of personal property once recorded may be recorded in any
other county, and when so recorded the record thereof has the
same force and effect as though it was of the original mortgage.

When personal property mortgaged is thereafter by the mort-
gagor removed from the county in which it is situated, it is, ex-
cept as between the parties to the mortgage, exempted from the
operation thereof, unless either the mortgagee, within thirty days
after such removal, causes the mortgage to be recorded in the
county to which the property has been removed, or the mortgagee,
within thirty days after such removal, takes possession of the
property. If the mortgagor voluntarily removes or permits the
removal of the mortgaged property from the county in which it
was situated at the time it was mortgaged, the mortgagee may
take possession and dispose of the property as a pledge for the
payment of the debt, though the debt be not due.

These provisions do not apply to vessels of the United States.

Under an earlier statute of California,! it was provided that no
mortgage sbould be valid except between the parties to it, unless
possession should be delivered and retained by the mortgagee.
The possession required under this statute was actual possession
continued so long as the lien was retained.2— But under the Code
now in force, possession is only required to accompany transfers of
personal property other than mortgages.?

195. In Colorado‘ it is provided that no mortgage on per-
sonal property shall be valid as against the rights and interests of
any third person or persons, unless possession of such personal

1 Laws 1850, p. 267. Clure, 47 Cal. 612; O’Brien v. Chamber-
2 Woods v. Bugbey, 29 Cal. 466; Ste- lain, 50 Cal. 285.

vens v. Irwin, 15 Cal. 5038, 506 ; Godchaux 8 Civil Code, § 3440.

v. Mulford, 26 Cal. 316,323; Regli v. Mo- * Gen. Laws 1877, ch. 12, §§ 124-133.

169
§ 195.] STATUTORY PROVISIONS

property shall be delivered to and remain with the mortgagee, or
the mortgage be acknowledged and recorded as directed. Any
mortgagor of personal property may acknowledge such mortgage
before any justice of the peace or notary public, in the precinct
in which he may reside,? or where such property or the greater
portion thereof may be situate, and said justice of the peace or
notary public shall certify the same as follows : —

“This mortgage was acknowledged before me by A. B. this

day of , 188 ;” and such justice or notary public shall
make on his docket a memorandum of the same, in substance as
follows, namely: “ A. B. to C. D. mortgage of (here describe the
property), acknowledged this day of , 188 ;”’ insert-
ing the name of the mortgagor in place‘of A. B., and the name
of the mortgagee in place of C. D. Any mortgage of personal
property, so certified, shall be admitted to record by the recorder
of the county in which the property mortgaged, or the greater
portion thereof, shall be situated and shall thereupon, if bond
fide, be good and valid from the time it is so recorded, for a space
of time not exceeding two years, notwithstanding the property
mortgaged or conveyed by deed of trust may be left in the
possession of the mortgagor: provided, that such conveyance
shall provide that the property shall so remain with the mort-
gagor.

These provisions extend to all such bills of sale, deeds of trust,
and other conveyances of personal property, as have the effect of
a mortgage or lien upon such property.

A copy of any such mortgage, made, acknowledged, and re-
corded as provided, certified by the recorder of any county wherein
the same is recorded, may be read in evidence in any court of this
state, without any further proof of the execution of the original
thereof, if it shall appear from the affidavit or sworn statement
of any credible witness that the original is lost, or that it is not
in the power of the person wishing to use the same to produce

1A mortgage without this provision
cannot be received in evidence. Machette
v. Wanless, 1 Colo. 225.

° Under this provision a non-resident,
whether a person or a corporation, can-
not execute a valid mortgage. A foreign
corporation does not become a domestic
corporation and acquire a residence in the

170

state by complying with the laws of the
state, in pursuance of which a foreign
corporation may do business without lia-
bility attaching to its stockholders and
officers. The residence of the corporation
still remains in the state or country to
whose laws it owes its existence. Cook v.
Hager, 3 Colo. 386.
RELATING TO RECORDING, ETC. [§§ 196, 197.

it. Any person who may buy, or otherwise obtain any interest in
any personal property which is mortgaged in pursuance of these
provisions, but the mortgage of which has not been recorded, and
with actual notice of such mortgage, shall be deemed and con-
sidered to have bought or obtained such interest in such prop-
erty, subject to such mortgage, the same as though such mort-
gage had been properly recorded.

196. Connecticut.1— Mortgages can be made of particular ar-
ticles of personal property, either in connection with the real
estate upon which they are located, or separate therefrom; and
in either case the mortgage must be executed, acknowledged, and
recorded in the same manner as is a mortgage of real estate. A
mortgage is not effectual against any other person than the mort-
gagor and his heirs, unless recorded in the records of the town in
which the property is situated. '

197 Dakota Territory.2?— A mortgage of personal property is
void as against creditors of the mortgagor, and subsequent pur-
chasers and incumbrancers of the property in good faith for value,
unless the original, or an authenticated copy thereof, be filed, by
depositing the same in the office of the register of deeds of the
county where the property mortgaged, or any part thereof, is at
such time situated. The filing of a mortgage of personal prop-
erty operates as notice thereof to all subsequent purchasers and in-
cumbrancers of so much of the property as is at the time situated
in the county in which such mortgage or authenticated copy is
filed. Property in transit from the possession of the mortgagee
to the county of the residence of the mortgagor, or to a location
for use, is, during a reasonable time for transportation, to be
taken as situated in the county in which the mortgagor resides,
or where it is intended to be used. For a like purpose, personal
property used in conducting the business of a common carrier is
to be taken as situated in the county in which the principal office
or place of business of the carrier is located.

A single mortgage of personal property, embracing several
things of such character, or so situated that separate mortgages
upon them would be required to be filed in different counties, is

1 Gen. Laws 1875, p. 359, § 7, and pp. 2R. C. 1877; §§ 1744-1751 of Civil

358, 354. Code.
171
§§ 198, 199.] STATUTORY PROVISIONS

only valid in respect to the things as to which it is duly filed; but
a copy of the original mortgage may be authenticated by the reg-
ister of deeds in whose office it is filed, and such copy may be
filed in any other county with the same effect as to the property
therein that the original could have been.

A mortgage of personal property ceases to be valid, as against
creditors of the mortgagor and subsequent purchasers or incum-
brancers in good faith, after the expiration of three years from
the filing thereof, unless, within thirty days next preceding the
expiration of such term, a copy of the mortgage and a statement
of the amount of existing debt for which the mortgagee claims a
lien, sworn to and subscribed by him, are filed anew in the office
of the register of deeds in the county in which the mortgagor
then resides. And in like manner the mortgage and statement of
debt must be again filed every three years, or it ceases to be valid
as against the parties above mentioned.

A mortgage is not to be deemed defectively filed by reason of
any errors in the copy filed, which do not tend to mislead a party
interested ; and the negligence of the officer with whom a mort-
gage is filed does not prejudice the rights of the mortgagee.

198. Delaware.1— A bond fide mortgage of personal property,
if duly signed, sealed, and delivered by the party making it, and
acknowledged as mortgages of real property are, shall for the
space of three years be a valid lien upon such personal property,
though the possession remain in the mortgagor, if it be lodged for
record in the recorder’s office of each county where any of the
mortgaged property is held, within ten days from the time of the
acknowledgment thereof. It shall be no objection to a mortgage
of chattels, that the same or any of them are already subject to
execution or mortgage lien.

199. Florida.2— No mortgage of personal property shall be
effectual or valid to any purpose whatever, unless it be recorded
in the office of records for the county in which the mortgaged
property shall be at the time of the execution of the mortgage,
unleas the mortgaged property be delivered at the time of execu-
tion of the mortgage, or within twenty days thereafter, to the
mortgagee, and shall continue to remain truly and bond fide in his

1 Laws 1877, ch. 477, §§ 1, 3, 4. ° Bush’s Dig. of Laws, p. 153, § 19.
172
RELATING TO RECORDING, ETC. [§ 200.

possession ; and mortgages of personal property shall be admitted
to record, upon proof of the execution thereof being made and
exhibited to the recording officer, in any of the ways prescribed
for proving the execution of conveyances, transfers, and mortgages
of real property,! or by proof being made upon oath by at least
one credible person, before the recording officer, of the hand writ-
ing of the mortgagor or mortgagors, in cases in which there shall
be no attesting witnesses to the mortgage.

200. Georgia.?— Mortgages of personalty must be recorded
in the county where the mortgagor resided at the time of its exe-
cution, if a resident of this state; if a non-resident, then in the
county where the mortgaged property is. If a mortgage be ex-
ecuted on personalty, not within the limits of this state, and such
property is afterwards brought within the state, the mortgage
shall be recorded, according to the above rules, within six months
after such property is so brought in.

All chattel mortgages of stocks of goods, wares, and merchan-
dise, or other personal property, shall be recorded, in case the
same is upon property or goods located in some other county than
that of the mortgagor’s residence, in the county where said goods
or personal property is located at the time of the execution of
said mortgage, in addition to the record of said mortgage in the
county of the mortgagor’s residence.

Mortgages not recorded within the time required remain valid
as against the mortgagor, but are postponed to all other liens cre-
ated or obtained, or purchases made prior to the actual record of
the mortgage. If, however, the younger lien is created by con-
tract, and the party receiving it has notice of the prior unrecorded
mortgage, or a purchaser has the like notice, then the lien of the
older mortgage shall be held good against them.

Mortgages when duly executed and recorded shall be admitted
in evidence under the same rules as registered deeds.

A mortgage recorded in an improper office, or without due attes-
tation or probate, or so defectively recorded as not to give notice
to a prudent inquirer, shall not be held notice to subsequent bond
fide purchasers or younger liens. A mere formal mistake in the
records shall not vitiate it.

1 See Jones on Mortgages, § 489. 2 Code 1873, §§ 1955-1960; Supple-
ment 1878, p. 69; Laws 1876, p. 34.

173
§§ 201, 202.] STATUTORY PROVISIONS

The due record of a mortgage, though not made in the time
prescribed, is notice from the time of record to all the world.

A mortgage recorded within the time limited, namely, three
months from its execution, takes effect from the time of its exe-
cution ; and it takes effect in like manner if it be proven by the
subscribing witness and recorded within that time.!

201. Idaho Territory.?— All mortgages must be recorded in
the county where the mortgagor lives, and also in the county
where the property is located ; provided, that property in transitu
from the possession of the mortgagee to the county in which the
mortgagor resides, or to a location for use, during a reasonable
time for such transportation, shall be considered as located ; an
affidavit verifying the mortgage must be recorded with it. It is
the duty of the county recorder to provide proper books of record
and of indexes, and record all mortgages duly executed in the
same manner as they are required by the law to record deeds and
mortgages on real estate.

No chattel mortgage is valid, except between the parties, unless
it be made, executed, and recorded in conformity with the provi-

“sions of the statute: provided, however, if the mortgagee receives
and retains actual possession of the property mortgaged, he may
omit the recording of his mortgage during the continuance of such
actual possession.

The mortgagee in all mortgages is allowed one day for every
twenty miles of the distance between his residence and the county
recorder’s office, where such mortgage ought by law to be recorded,
to conform to the provisions of this act, before any attachment
shall be valid, made by the creditors of the mortgagor.

202. Illinois.’ — No mortgage, trust deed, or other conveyance
of personal property having the effect of a mortgage or lien upon
such property, is valid as against the rights and interests of any
third person unless possession thereof be delivered to and remain
with the grantee, or the instrument provide that the possession of
the property may remain with the grantor; and the instrument
be acknowledged and recorded; and every such instrument is:
deemed a chattel mortgage. Such instrument may be acknowl-

1 Nichols v. Hampton, 46 Ga, 253. 8 R. 8. 1874, and R. S. 1880, ch. 95,
2 Rev. Laws 1875, p. 661, §§ 2, 3, 7. §§ 1-5.

174
RELATING TO RECORDING, ETC. [§ 202.

edged before a justice of the peace of the town or district where
the mortgagor resides; or if the mortgagor is not a resident of the
state at the time of making the acknowledgment, then before any
officer authorized by law to take acknowledgments of deeds.!

A mortgage not acknowledged is void as to subsequent purchas-
ers and mortgagees, notwithstanding the latter became such with
actual notice of such elder mortgage. The statute declares such
a mortgage void as to all third parties, and not merely void as to

subsequent parties without notice.3
An entry of the acknowledgment in the docket of the justice is

essential to its validity as to third persons.4

The entry may be

made in a special docket kept for that purpose.®

The omission of the words, ‘‘and entered by me,” does not
render the acknowledgment subject to objection, if in fact the
justice made entry upon his docket as required.§

If the acknowledgment is of a resident of the state, the justice
of the peace shall enter in his docket a memorandum thereof.?

1 The certificate of acknowledgments
may be in the following form: This
(name of instrument) was acknowledged
before me by (name of grantor) (when the
acknowledgment is by a resident insert
the words “ and entered by me”) this
day of , 18

(Name of officer.) (Seal.)

An acknowledgment to be valid must
be made before a justice of the peace of
the town or election district in which the
mortgagor resides. Henderson v. Morgan,

26 Ill. 431; Stephenson v. Browning, 48

I. 78; Licknor v. McClelland, 84 Il. 471;
McDowell v. Stewart, 83 Ill. 588. If the
acknowledgment be, before a justice of the
peace residing in the same township or pre-
cinct with the mortgagor, it is good if taken
anywhere in the county. It is immaterial
that the justice has his office and keeps his
docket in an adjoining township but a few
rods away where it is readily accessible for
inspection. Durfee v. Grinnell, 69 IL
371. An acknowledgment by one of sev-
eral partners or joint owners in the jus-
tice’s district where such owner resides,
and in which the property is situated, is
sufficient. Funk v. Staats, 24 Ill. 632.
Acknowledgment may be made before a

police magistrate. Herkelrath v. Stookey,
58 Ill. 21; Ticknor v. McClelland, 84 Ill.
471.

2 Sage v. Browning, 51 Ill. 217; Frank
ov. Miner, 50 Ill. 444; Porter v. Dement,
35 Ill. 478; Forest v. Tinkham, 29 III.
141.

8 Sage v. Browning, supra, per Law-
rence, J.

* Koplin v. Anderson, 88 Ill. 120.

5 Pike v. Colvin, 67 Ill. 227.

6 Harvey v. Dunn, 89 Ill. 585 ; Schroder
v. Keller, 84 Ill. 46.

7 Substantially as follows :—

A. B. (name of the mort-) Mortgage of
gagor) to C. D. (name at (here insert

mortgagee). description

of the property mortgaged) acknowledged
this day of ,18 .
Docket Entry.

The failure of a justice of the peace
taking the acknowledgment of a mortgage
to enter a memorandum thereof upon his
docket, as required by law, renders the
mortgage invalid as to subsequent pur-
chasers and creditors of the mortgagor.
Such entry is an essential part of the ac-
knowledgment. Koplin v. Anderson, 88

175
§ 2038.] STATUTORY PROVISIONS

Such mortgage, trust deed, or other conveyance of personal prop-
erty duly acknowledged shall be admitted to record by the re-
corder of the county in which the mortgagor resides at the time
when the instrument is executed and recorded; or in case the
mortgagor is not a resident of this state, then in the county where
the property is situated and kept; and shall thereupon, if bond
fide, be good. and valid from the time it is filed for record until
the maturity of the entire debt or obligation ; provided such time
shall not exceed two years. A copy of such instrument so made,
acknowledged, and recorded, and certified by the proper recorder,
may be read in evidence.

A mortgage having a longer time than two years to run is good
and valid against creditors and purchasers for the period of two
years, if it contain a provision that the property may remain in
the mortgagor’s possession, and otherwise be duly executed and
recorded.!

203. Indiana.? — No assignment of goods by way of mortgage
shall be valid against any other person than the parties thereto,
where such goods are not delivered to the mortgagee or assignee
and retained by him, unless such assignment or mortgage shall be
-acknowledged as provided in case of deeds of conveyance, and re-
corded in the recorder’s office of the county where the mortgagor

. cet

resides within ten days after the execution thereof.

Ill. 120. If the justice fails to make such
entry, he is, without doubt, liable to any
one who is thereby injured for the damage
occasioned by such neglect. Harlow v.
Birger, 30 Ill. 425. The objection to a

chattel mortgage, that no memorandum °

was made in the justice’s docket, must be
urged in the court below or it will not be
considered in the Supreme Court. Funk
v. Staats, 24 Il. 632. In the absence of
proof to the contrary, it will be presumed
that the justice has entered in his docket
the inventory required by law. Harlow
». Birger, 30 Ill. 425. The entry of the
memorandum of the acknowledgment of a
chattel mortgage in a special docket kept
for that purpose by the justice of the
peace, instead of in his general docket,
is a substantial and sufficient compliance

176

Every such

with the statute. Pike v. Colvin, 67 Ill.
227. The law does not require that any
certificate of the entry on the justice’s
docket of a memorandum of the acknowl-
edgment of the chattel mortgage shall be
attached to the mortgage. Harlow v.
Birger, 30 Ill. 425; Schroder v. Keller,
84 Tll.. 46; Harvey v. Dunn, 89 Ill.
585.

1 Cook v. Thayer, 11 Ill. 617; and see
Reed v. Eames, 19 Ill. 594.

21 R. 8, 1876, p. 505, § 10. Prior to
1838 there was no statute in this state au-
thorizing the recording of chattel mort-
gages, and therefore their validity up to
that time was determined by the common
law rules and the statute of frauds. Jor-
dan v. Turner, 3 Blackf. 309; 11 Cent.
L. J. 148.
RELATING TO RECORDING, ETC. [§ 204.
f

mortgage shall be considered as recorded from the time it shall be
left at the proper recorder’s office for that purpose.

The time when a chattel mortgage was left at the recorder’s
office for record may be shown by parol, inasmuch as there is no
law requiring the recorder to make any record or memorandum
of the time when such a mortgage was left at his office for record.!

Inasmuch as the statute provides for the recording of the mort-
gage “ within ten days from the execution thereof,” and not with-
in ten days from the date thereof, the time of execution irrespec-
tive of the date of the instrument fixes the commencement of this
limited time within which record may be made. The date of the
instrument may be primd facie evidence of the time of its execu-
tion; but itis only that. It is competent to show by parol that
thére was a mistake in the date.? It may happen that one pur-
chasing the property and finding a mortgage recorded more than
ten days after its execution may be misled into the supposition
that it is void; but he is nevertheless bound by the constructive
notice imparted by the record if the mortgage was in fact recorded
within that time. The purchaser must be supposed to know the
law, and to know that the date of the instrument may not be the
true date of its execution. He buys, therefore, at his peril.?

204, Iowa.t— No sale or mortgage of personal property where
the vendor or mortgagor retains actual possession thereof is valid
against existing creditors, or subsequent purchasers without no-
tice, unless a written instrument conveying the same is executed,
acknowledged like conveyances of real estate, and filed for record
with the recorder of the county where the holder of the property
resides. The recorder must keep an entry book or index for such
instruments, having the pages thereof ruled so as to show in par-
allel columns the mortgagors or vendors; the mortgagees or ven-
dees ; the date of the filing of the instrument; the date of the in-
strument itself ; its nature; the page and book where the record
is to be found.

No sale, contract, or lease, wherein the transfer of title or
ownership of personal property is made to depend upon any con-

1 Holman v. Doran, 56 Ind. 358. 8 Stonebreaker v. Kerr, supra.

2 Stonebreaker v. Kerr, 40 Ind. 186; * Rev. Code 1880, §§ 1923-1925.
and see Holman v. Doran, 56 Ind. 358;
Hoadley v. Hadley, 48 Ind. 452.

He 177
§ 205.] STATUTORY PROVISIONS

dition, shall be valid against any creditor or purchaser of the
vendee or lessee in actual possession, obtained in pursuance thereof
without notice, unless the same be in writing, executed by the
vendor or lessor, acknowledged and recorded the same as chattel
mortgages.

Whenever any written instrument of the character above con-
templated is filed for record as aforesaid, the recorder shall note
_ thereon the day and hour of filing the same, and forthwith enter
in his entry book all the particulars so required ; and from the
time of said entry the sale or mortgage shall be deemed complete
as to third persons, and have the same effect as though it had
been accompanied by the actual delivery of the property sold or
mortgaged.

205. Kansas.1— Every mortgage, or conveyance intended to
operate as a mortgage, of personal property, which shall not be
accompanied by an immediate delivery and be followed by an
actual and continued change of possession of the things mortgaged,
shall be absolutely void as against the creditors of the mortgagor,
and as against subsequent purchasers and mortgagees in good faith,
unless the mortgage or a true copy thereof shall be forthwith de-
posited in the office of the register of deeds, in the county where
the property shall then be situated, or, if the mortgagor be a resi-
dent of this state, then of the county of which he shall at the
time be a resident. Upon the receipt of any such instrument, the
register shall indorse on the back thereof the time of receiving it,
and shall file the same in his office to be kept there for the inspec-
tion of all persons interested. Every mortgage so filed shall be
void as against the creditors of the person making the same, or
against subsequent purchasers or mortgagees in good faith, after
the expiration of one year after the filing thereof, unless, within
thirty days next preceding the expiration of the term of one year
from such filing, and each year thereafter, the mortgagee, his
agent or attorney, shall make an affidavit exhibiting the interest
of the mortgagee in the property at the time last aforesaid, claimed
by virtue of such mortgage, and if said mortgage is-to secure the
payment of money, the amount yet due and unpaid. Such affida-
vit shall be attached to and filed with the instrument or copy on
file to which it relates. If such affidavit be made and filed before

1 Dassler’s Compiled Laws 1879, §§ 3246, 3252.
178

i

ne
RELATING TO RECORDING, ETC. [§§ 206-208.

4

any purchase of such mortgaged property shall be made, or other
mortgage deposited, or lien obtained thereon, in good faith, it shall
be as valid to continue in effect such mortgage as if the same had
been made and filed within the period above provided.

A copy of any such original instrument, or any copy thereof
so filed as aforesaid, including any affidavit made in pursuance of
this act, certified by the register in whose office the same shall
have been filed, shall be received in evidence, but only of the fact .
that such instrument or copy and such affidavit was received and
filed according to the indorsement of the register thereon, and of
no other fact.

In the absence of stipulations to the contrary the mortgagee of
personal property has the legal title thereto, and the right of pos-
session.

206. Kentucky.!— All deeds and mortgages and other instru-
ments of writing, which are required by law to be recorded, to be
effectual against purchasers without notice, or creditors, must be
recorded in the clerk’s office of the court of the county in which ‘
the property conveyed, or the greater part thereof, may be. No
deed of trust or mortgage, conveying a legal or equitable title to
real or personal estate, shall be valid against a purchaser for a
valuable consideration, without notice thereof, or against creditors,
until such deed shall be acknowledged or proved according to law,
and lodged for record. All bond fide deeds of trust or mortgage
shall take effect in the order that the same shall be legally ac-
knowledged or proved and lodged for record.

207. In Louisiana ? a chattel mortgage, except of a ship or
other vessel, is unknown to the law. Movables are not susceptible
of being mortgaged. Even a mortgage of such property made in
another state, and valid there, will not be enforced in this state,
because the courts do not feel bound by the comity of nations to
enforce a contract, which, if made in this state, would not defeat
rights acquired by attachment under their own laws.?

208. Maine.*— No mortgage of personal property shall be |

1 G. S. 1873, p. 256, ch. 24, §§ 9-11. * R. S. 1871, ch. 91, $§ 1, 2, as amended
2 Rev. Code, 3289. by Act 1880, ch. 193.
3 Delop v. Windsor, 26 La, Ann. 185.

179
§$ 209, 210.] STATUTORY PROVISIONS

valid against any other person than the parties thereto, unless pos-,
session of such property be deliverd to and retained by the mort-
gagee, or the mortgage be recorded by the clerk of the town or
plantation, organized for any purpose, in which the mortgagor re-
sides. When all the mortgagors reside without the state, the
mortgage shall be recorded in said town or plantation where the
property is when the mortgage is made; but if part of the mort-
gagors reside in the state, then in the towns or plantations in
which such mortgagors reside. A mortgage made by a corporation
shall be recorded in the town where it has its established place of
business. If any mortgagor resides in an unorganized place, the
mortgage shall be recorded in the oldest adjoining town or planta-
tion, organized as aforesaid in the county. The mortgage is con-
sidered as recorded when received.

209. In Maryland! no personal property of any description
whatever, whereof the vendor, mortgagor, or donor shall re-
main in possession, shall pass, alter, or change; nor shall any
such property be transferred to any purchaser, mortgagee, or
donee, except by bill of sale or mortgage acknowledged and re-
corded ; but this provision shall not be construed to extend to any
sale or gift where the same is accompanied by delivery, nor to
invalidate such transfer as between the parties thereto. A mort-
gage of personal property shall be executed, acknowledged, and
recorded as bills of sale. Bills of sale must be recorded in the
county or city where the seller or donor resides within twenty
days from the date thereof.

A mortgage of personal property is deemed to contain an im-
plied covenant, unless the contrary is therein expressed, by the
mortgagor to pay the debt and interest specified in said mortgage.

Mortgages of personal property are valid and take effect, except
as between the parties thereto, only from the time of recording;

and in case of more than one mortgage the one first recorded has
preference.

210. Massachusetts.? — Mortgages of personal property are
recorded in the records of the city or town where the mortgagor
resides when the mortgage is made, and on the records of the

1 Rev. Code 1878, art. 44, §§ 45, 49, 50, 2 G. S. 1860, ch. 151, §§ 1-5.
51, 52. For affidavit see § 36.

180
RELATING TO RECORDING, ETC. [§ 211.

city or town in which he then principally transacts his business,
or follows his trade or calling. Whenever it is required that a
mortgage of personal property shall be recorded in two munici-
palities, such mortgage is considered as duly recorded when re-
corded in the records of one of them, provided it is recorded in
the records of the other within ten days from the date of such
first record! If the mortgagor resides without the state, his mort-
gage of personal property within the state when the mortgage is
made must be recorded on the records of the city or town where
the property is.

Unless a mortgage of personal property is recorded within
fifteen days after the date thereof, or the property is delivered to
and retained by the mortgagee, it shall not be valid as against any
other person than the parties thereto.”

Such record is not, however, necessary to the validity of a
mortgage, contract of bottomry, or respondentia or any transfer,
assignment, or hypothecation of a ship or vessel. Nor is a rec-
ord necessary to the validity of any transfer in mortgage of
goods at sea or abroad, if the mortgagee takes possession of such
goods as soon as may be after their arrival in this state.

Such mortgages are considered as recorded at the time when
left for the purpose in the clerk’s office.

Qll. Michigan. — Every mortgage or conveyance intended to
operate as a mortgage of goods and chattels, not accompanied by
an immediate delivery, and followed by an actual-and continued
change of possession of the things mortgaged, is absolutely void as
against the creditors of the mortgagor, and as against subsequent
purchasers or mortgagees in good faith, unless the mortgage, or
a true copy thereof, is filed in the office of the township clerk of
the township, or city clerk of the city, or city recorder of cities
having no officer known as city clerks, where the mortgagor re-
sides, except when the mortgagor is a non-resident of the state,

1 Acts 1875, ch. 14. quired by statute. Taber v. Hamlin, 97

é

2 Acts 1874, ch. 111.

Possession was not necessary to give
effect to a mortgage made in good faith
prior to statute 1832, ch. 157.

8 Such a mortgage may be foreclosed
without recording notice of intention to
do so. Notice need only be served as re-

Mass. 489.

4 Compiled Laws, 1871, ch. 167, pl. 10,
13, 14, or §§ 4706, 4709, 4710.

Section 4703 has no application to mort-
gages or conveyances intended to operate
as such. It applies only to absolute sales,
Cooper v. Brock, 41 Mich. 488.

181
§ 212.] STATUTORY PROVISIONS

when the mortgage, or a true copy thereof, must be filed in the:
office of the township clerk of the township, or city clerk of the
city, or city recorder of cities having no officer known as clerk,
where the property is.

Every such mortgage shall cease to be valid, as against the
creditors of the person making the same, or subsequent purchas-
ers and mortgagees in good faith, after the expiration of one year
from the filing of the same or a copy thereof, unless, within thirty
days next preceding the expiration of the year, the mortgagee,
his agent or attorney, shall make and annex to the instrument or
copy on file as aforesaid an affidavit, setting forth the interest
which the mortgagee has, by virtue of said mortgage, in the prop-
erty therein mentioned; upon which affidavit the township or
city clerk shall indorse the time when the same was filed; pro-
vided, that such affidavit being made and filed before any pur-
chase of such mortgaged property shall be made, or other mort-
gage received, or lien obtained thereon in good faith, shall be as
valid to continue in effect such mortgage as if the same were
made and filed within the period as above provided. The effect
of any such affidavit shall not continue beyond one year from the
time when such mortgage would otherwise cease to be valid, as
against subsequent purchasers or mortgagees in good faith; but
within thirty days next preceding the time when any such mort-
gage would otherwise cease to be valid as aforesaid, a similar
affidavit may be filed and annexed as provided in the preceding
section, and with like effect.

212. Minnesota.'!— Every mortgage of personal property which
is not accompanied by an immediate delivery, and followed by an
actual and continued change of possession of the things mortgaged,
shall be absolutely void as against the creditors of the mortgagor,
and as against subsequent purchasers and mortgagees in good
faith, unless it appears that such mortgage was executed in good
faith, and not for the purpose of defrauding any creditor, and
unless the mortgage, or a true copy thereof, is filed as hereinafter
provided. Every such instrument shall be filed in the town or

1 Stat. at Large, ch. 38, §§ 12-17, 21; leaving the possession of the property with
G. 8. 1878, ch. 39, §§ 1-5. As to filing the mortgagor makes the mortgage only
in counties not organized, see Laws 1876, primd facie fraudulent. Braley v. Bymes,
ch. 53. When the mortgage is duly filed, 25 Minn. 297.

182
RELATING TO RECORDING, ETC. [§ 212.

‘ city where the property mortgaged is at the time of the execution
of such mortgage, and a copy thereof filed in the town or city
where the mortgagor, if a resident of the state, resides at the time
of the execution thereof. In each town such instrument shall be
filed in the office of the town clerk thereof; and in the several
cities in the office of the recorder, clerk, or other officer in whose
custody the records of the city are kept.1 Every mortgage so
filed shall be held and considered to be full and sufficient notice
to all parties interested of the existence and conditions thereof,
but shall cease to be notice as against the creditors of the mort-
gagor, and subsequent purchasers and mortgagees in good faith,
after the expiration of two years from the filing thereof; provided
that no mortgage of goods or chattels shall be notice of any
fact as against the creditors of the mortgagor or subsequent pur-
chasers or mortgagees in good faith; unless the same is acknowl-
edged before some officer authorized to take acknowledgment of
deeds. Township clerks are authorized to take and certify ac-
knowledgments of chattel mortgages.

Every chattel mortgage upon property situate, at the time of
the execution of such mortgage, in a county not organized into
townships, and of which county the mortgagor is then a resident,
shall be filed in the office of the register of deeds for such county.
Such instrument shall remain on file for the inspection of all
persons interested. Every mortgage filed shall be held and con-
sidered to be full and sufficient notice to all parties interested of
the existence and conditions thereof, but shall cease to be notice as
against the creditors of the mortgagor, and subsequent purchasers
and mortgagees in good faith, after the expiration of two years
from the filing thereof; provided that no mortgage of goods or
chattels shall be notice of any fact, as against the creditors of the
mortgagor or subsequent purchasers or mortgagees in good faith,
unless the same is acknowledged before some officer authorized to
take acknowledgments of deeds.

A copy of any such mortgage, or copy filed and indorsed as
aforesaid, together with any statement properly made therewith,
when certified by the clerk or other proper officer to be a true

1 If the mortgagor resides and the prop- village is situated, and it need not be ‘filed
erty mortgaged ‘is situated in an incorpo- in the office of the recorder or clerk of the
rated village, the proper office in which to village. Moriarty v. Gullickson, 22 Minn.
file the mortgage or a copy is the office of 39.
the town clerk of the town in which the 183
§ 218, 214.] STATUTORY PROVISIONS

copy of the original on file in his office, shall be received in evi-
dence in like manner and with like effect as the original mort-
gage, or copy filed with indorsement.

213. Mississippi.!— Every deed respecting the title to personal
property, which by law ought to be recorded, shall be recorded
in the office of the clerk of the chancery court of the county in
which such property may remain; and if, afterwards, the person
claiming title under such deed shall permit any other person, in
whose possession such property may be, to remove with the same,
or any part thereof, out of the county in which such deed shall be
recorded, and shall not, within twelve months after such removal,
cause the deed to be duly certified to the chancery court of that
county into which property may be removed, and to be delivered
to the clerk of the chancery court, to be recorded, such deed, for
so long as it remains without being recorded or delivered for rec-
ord in such last mentioned county, and for so much of the prop-
erty as may have been removed, shall be void, as to all purchasers
for a valuable consideration without notice, and as to all creditors.

Mortgages, deeds of trust, and other liens on personal property,
executed out of this state, shall only be binding on such property
when removed into this state, as against creditors and bond fide
purchasers without notice, from the time such mortgage or deed |
of trust, duly acknowledged or proved, shall be delivered to the
proper clerk in this state for record.

It shall be lawful for persons to make and execute mortgages or
deeds of trust upon growing crops, or upon crops to be grown
within fifteen months from the making of such mortgage or deed
of trust, which incumbrance shall be valid and binding upon the
interest of such mortgagor or grantee in such crop, but shall not
be prior to other liens provided for landlords and employers.

214. Missouri.2— No mortgage or deed of trust of personal
property shall be valid against any other person than the parties
thereto, unless possession of the mortgaged or trust property be
delivered to and retained by the mortgagee or trustee, or cestut
que trust, or unless the mortgage or deed of trust be acknowledged

1 R. Code 1871, §§ 2305, 2298; R.Code 281, §§ 8, 9; R. S. 1879, §§ 2503,

1880, §§ 1210, 1216, 1359. 2504,
2 Wagner’s Statutes 1872, ch. 35, p.

184
RELATING TO RECORDING, ETC. [§ 215.

or proved, and recorded in the county in which the mortgagor or
grantor resides, in such manner as conveyances of lands are, by
law, directed to be acknowledged or proved and recorded.?

These provisions shall not void or defeat a contract of bottomry,
respondentia, nor any transfer, or assignment, or hypothecation
of any boat, vessel, ship, or goods at sea or abroad, if the mort-
gagee, trustee, or cestud que trust shall take possession of such
boat, vessel, ship, or goods, as soon as may be after the arrival
thereof within this state.

215. Montana Territory.2— No mortgage on goods, chattels,
or personal property shall be valid as against the rights and in-
terests of any third person, unless possession of such personal prop-
erty shall be delivered to remain with the mortgagee, or the mort-
gage be acknowledged and recorded. Any mortgagor of goods,
chattels, or personal property may acknowledge such mortgage
before any justice of the peace, or other officer authorized to take
acknowledgments of deeds of the county in which he may reside.
Any mortgage of goods, chattels, or personal property so acknowl-
edged shall be admitted to record by the recorder of the county
in which the mortgagor shall reside at the time when the same is
made, acknowledged, or recorded, and shall thereupon, if bond fide,
be good and valid from the time it is so recorded for a space of
time not exceeding one year, notwithstanding the property mort-
gaged or conveyed by deed of trust may be left in possession of
the mortgagor: provided that such conveyance shall provide for
the property so to remain with the mortgagor.

A copy of such mortgage, made, acknowledged, and recorded
as aforesaid, certified by the proper recorder, from the proper rec-
ord, may be read in evidence in any court without any further
proofs of the execution of the original, if said original be lost or
out of the power of the person wishing to use it.

These provisions are deemed to extend to all such bills of sale,
deeds of trust, and other conveyances of goods, chattels, or per-
sonal property, as shall have the effect of a mortgage or lien upon
such property.

The mortgagee is allowed one day for every twenty miles of
the distance between his residence and the county recorder’s office

1 See White ». Graves, 68 Mo. 218. 2 Codified Stats. 1872, p. 526, ch. 46, §§

1-7.
185
§ 216.] STATUTORY PROVISIONS

where such mortgage ought by law to be recorded, to conform with
these provisions, before any attachment or execution shall be valid,
made by a creditor of the mortgagor.

216. Nebraska.1—Every mortgage, or conveyance intended to
operate as a mortgage, of goods and chattels hereafter made, which
shall not be accompanied by an immediate delivery, and be fol-
lowed by an actual and continued change of possession of the
things mortgaged, shall be absolutely void as against the creditors
of the mortgagor, and as against subsequent purchasers and mort-
gagees in good faith, unless the mortgage, or a true copy thereof,
shall be filed in the office of the county clerk of the county where
the mortgagor executing the same resides, or, in case he is a non-
resident of the state, then in the office of the clerk of the county
where the property mortgaged may be at the time of executing
such mortgage ; and such clerk shali indorse on such instrument
or copy the time of receiving the same, and shall keep the same
in his office for the inspection of all persons; and such mortgage
or instrument may be so filed although not acknowledged, and
shall be as valid as if the same were fully spread at large upon
the records of the county.

Every such mortgage shall cease to be valid as against the cred-
itors of the person making the same, or subsequent purchasers or
mortgagees in good faith, after the expiration of five years from
the filing of the same or copy thereof.

No sale, contract, or lease, wherein the transfer of title or own-
ership of personal property is made to depend upon any condition,
shall be valid against any purchaser or judgment creditor of the
vendee or lessee, in actual possession, obtained in pursuance of
such sale, contract, or lease, without notice, unless the same be in
writing, signed by the vendee or lessee, and a copy thereof filed
in the office of the clerk of the county within which such vendee

1 Laws 1877, p. 51; as amended by Laws
1879, p. 107. Sucha mortgage must be
duly acknowledged or proved in the same
manner as is prescribed for acknowledging
or proving mortgages of real property be-
fore a valid record can be made. Hooker v.
Hammill, 7 Neb. 231, construing the sev-
eral sections of ch. 43 of R. 8S. of 1866;
ch. 61 of G. S. of 1873.

186

Under this statute a mortgage, though
duly recorded, is prima facie void unless
possession of the property be also deliv-
ered to the mortgagee. If no evidence of
the good faith of the transaction be given,
the presumption of fraud becomes conclu-
sive as to creditors and bond side purchas-
ers. Pyle v. Warren, 2 Neb. 241; Bruns-
wick v. McClay, 7 Neb. 137.
RELATING TO RECORDING, ETC. [§ 217.

or lessee resides; said copy shall have attached thereto an affi-
davit of such vendor or lessor, or his agent or attorney, which
shall set forth the names of the vendor and vendee, or lessor and
lessee, or description of the property transferred, and the full and
true interest of the vendor or lessor therein. All such sales and
transfers shall not remain valid against purchasers in good faith,
or judgment, or attaching creditors without notice, for a longer
period than one year, unless such vendor or lessor shall, within
thirty days prior to the expiration of one year from the date of
such sale or transfer, file a copy thereof, verified as aforesaid, in
the office of said clerk, and the said vendor or lessor may preserve
the validity of his said sale or transfer of personal property by an
annual refiling in the manner as aforesaid of such copy.!

217. Nevada.2— No mortgage of personal property is valid
against any other person than the parties thereto, unless possession
of the mortgaged property be delivered to, and retained by, the
mortgagee; provided that a mortgage upon growing crops, exe-
cuted, acknowledged, and recorded, shall be valid as against third
parties without such delivery of possession, and such lien shall
continue until after such crop shall have been harvested, thrashed,
and delivered to the order of the mortgagee. Such mortgage
may be executed as well before as after the planting of the crop;
and if executed before the crop is planted, it shall be expressed in
the mortgage that it is the intention of the parties that the same
shall take effect upon the crop when planted. The affidavit of
both the mortgagor and mortgagee, or some one in their behalf in
case of absence from the county, shall be appended or annexed to
the mortgage, setting forth that the mortgage is given for a debt
actually owing from the mortgagor to the mortgagee, and the
same is not made nor received with intent to hinder, delay, nor
defraud any creditor of the mortgagor.

The record so provided for should be made in the office of the
recorder of the county where the property is situate. These pro-
visions do not apply to contracts of bottomry, respondentia, or
assignments or hypothecations of vessels, or goods at sea, or in for-
eign states, or without this territory ; provided the assignee or

1 Laws 1877, p. 170, § 1. 8 Compiled Laws 1873, §§ 252-254.
2 Compiled Laws 1873, § 294.
187
§§ 218, 219.] STATUTORY PROVISIONS

mortgagee shall take possession of such goods as soon as may be,
after the arrival thereof within this territory.’

A mortgage for a good and valuable consideration upon posses-
sory claims to public lands, all buildings and improvements upon
such lands, all quartz and mining claims, and all such personal
property as shall be fixed in its structure to the soil, acknowledged
in manner and form as mortgages upon real estate are required by
law to be acknowledged and recorded in the office of the recorder
in the county in which the property is situated, shall have the
same effect against third persons as mortgages upon real estate.?

218. New Hampshire.?— Possession of the mortgaged prop-
erty must be delivered to and retained by the mortgagee, or the
mortgage must be recorded in the office of the clerk of the town
in which the mortgagor resides at the time of making the same.

Mortgages of personal property may be recorded in unincorpo-
rated places which may be required to pay any public tax; and
the clerks thereof are required to record the same. When no
such clerk is chosen, such mortgage may be recorded by the clerk
of the town or place adjoining said unincorporated place paying
the greatest proportion of the state tax, and such clerk shall
record the same.

When the mortgagor of personal property resides out of the
state at the time of making the mortgage, it shall be recorded in
the town where the property is situate.

No such mortgage shall be valid against any person except the
mortgagor, his executors, and administrators, unless possession is
delivered or the mortgage is sworn to and recorded in the manner
prescribed. These provisions do not affect any transfer of prop-
erty under bottomry or respondentia bonds, or of any ships or
goods at sea or abroad, if the mortgagee take possession thereof
as soon as may be after their arrival in the state.

219. New Jersey.t— Every mortgage, or conveyance intended
to operate as a mortgage, of goods and chattels hereafter made,
which shall not be accompanied by an immediate delivery and fol-

1 Compiled Laws 1873, § 295. mortgages of personal property was passed

2 Th. § 304. in June, 1832. For affidavit see § 37.

® G. S. 1878, ch. 137, §§2-5,12,16. The 4 R. S. 1877, pp. 708-710, §§ 36-43;
first statute requiring the registration of Laws 1878, ch. 234,

188
RELATING TO RECORDING, ETC. [§ 219.

lowed by an actual continued change of possession of the things
mortgaged, shall be absolutely void as against the creditors of the
mortgagor, and as against subsequent purchasers and mortgagees
in good faith, unless the mortgage, or a true copy thereof, having
annexed thereto an affidavit or affirmation made and subscribed
by the holder or holders of said mortgage, his, her, or their agents
or attorneys, stating the consideration of said mortgage, and as
near as possible the amount due and to grow due thereon, be filed
in the clerk’s office of the county wherein the mortgagor, if a resi-
dent of this state, shall reside at the time of the execution thereof ;
and if not a resident, then in the clerk’s office of the county where
the property so mortgaged shall be at the time of the execution
of such instrument. But in any county where the office of reg-
ister of deeds exists, or may hereafter be created, such instruments
shall be filed in the office of such register.

Every mortgage filed in pursuance of this act shall cease to be
valid as against the creditors of the person making the same, or
against purchasers or mortgagees in good faith, after the expira-
tion of one year from the filing thereof, unless within thirty days
next preceding the expiration of the said term of one year a true
copy of such mortgage, together with a statement exhibiting the
interest of the mortgagee in the property therein claimed by him
by virtue thereof, shall be again filed in the office of the clerk or
register aforesaid of the county where the mortgagor shall then
reside ; or, in case of non-residence, of the county where the
things mortgaged shall then be.

These provisions do not apply to any vessel, rolling stock of
railroads, or to any chattels which, in the ordinary use thereof,
at the time of the execution of the mortgage, are taken from
time to time out of the county wherein they. did lie when so mort-
gaged.

A copy of any such original instrument, or of any copy thereof,
so filed as aforesaid, including any statement made in pursuance
of this act, certified by the clerk or register in whose office the
same shall be filed, shall be received in evidence, but only of the
fact that such instrument or copy and statement was received
and filed according to the indorsement of the clerk or register
thereon, and of no other fact; and in all cases the original in-
dorsement by the clerk or register, made in pursuance of this act

189
§ 220.] STATUTORY PROVISIONS

upon such instrument or copy, shall be received in evidence of
the facts stated in such indorsement.}

220. New Mexico.?— Every mortgage, or conveyance intended
to operate as a mortgage, of personal property, which shall not be
accompanied by an immediate delivery, and be followed by an
actual and continued change of possession of the things mort-
gaged, shall be absolutely void as against the creditors of the
mortgagor, and as against subsequent purchasers and mortgagees
in good faith, unless the mortgage, or a true copy thereof, shall
be forthwith deposited in the office of the county recorder of the
county where the property shall then be situated. Upon the re-
ceipt of any such instrument, the county recorder shall indorse on
the back thereof the time of receiving it, and shall file the same
in his office, to be kept there for the inspection of all persons in-
terested.

Every mortgage so filed shall be void as against the creditors
of the person making the same, or against subsequent purchas-
ers or mortgagees in good faith, after the expiration of one year
after the filing thereof, unless within thirty days next preced-
ing the expiration of the term of one year from such filing, and
each year thereafter, the mortgagee, his agent or attorney, shall
make an affidavit, exhibiting the interest of the mortgagee in
the property at the time last aforesaid, claimed by virtue of such
mortgage ; and if such mortgage is to secure the payment of
money, the amount yet due and unpaid. Such affidavit shall be
attached to and filed with the instrument or copy on file to which
it relates. If such affidavit be made and filed before any pur-
chase of such mortgaged property shall be made, or other mort-
gage deposited, or lien obtained thereon in good faith, it shall be
as valid to continue in effect such mortgage as if the same had
been made and filed within the period above provided. A copy
of such original instrument, or any copy thereof, so filed as afore-
said, including any affidavit made in pursuance of this act, certi-
fied by the recorder in whose office the same shall be filed, shall
be received in evidence ; but only of the fact that such instrument
or copy and such affidavit was received and filed according to the
indorsement of the recorder thereon, and of no other fact.

1 RB. §. 1879, p. 709, § 42. 2 Laws 1876, ch. 36, §§ 1-6, 8; Gen.
Laws 1880, pp. 63-65.
190
RELATING TO RECORDING, ETC. [§ 221.

221. New York.1—Every mortgage, or conveyance intended to
operate as a mortgage, of goods and chattels hereafter made, which
shall not be accompanied by an immediate delivery, and be fol-
lowed by an actual and continued change of possession of the
things mortgaged, shall be absolutely void as against the creditors
of the mortgagor and as against subsequent purchasers and mort-
gagees in good faith, unless the mortgage, or a true copy thereof,
shall be filed in the several towns and cities of this state where
the mortgagor therein, if a resident of this state, shall reside at
thé time of the execution thereof; and if not a resident, then in
the city or town where the property so mortgaged shall be at the
time of the execution of such instrument. In the city of New
York such instruments shall be filed in the office of the register
of said city. In the several cities of this state, other than the
city of New York, and in the several towns in this state in which
a county clerk’s office is kept, in such office; and in each of the
towns in this state in the office of the town clerk thereof; and
such register and clerk are required to file all such instruments
aforesaid presented to them respectively for that purpose, and
to indorse thereon the time of receiving the same, and to deposit
the same in their respective offices, to be kept there for the in-
spection of all persons interested.

Every mortgage so filed shail cease to be valid as against the
creditors of the person making the same, or against subsequent
purchasers or mortgagees in good faith, after the expiration of
one year from the filing thereof; unless within thirty days next
preceding the expiration of each and every term of one year after
the filing of such mortgage, a true copy of such mortgage, to-
gether with a statement exhibiting the interest of the mortgagee
in the property thereby claimed by him by virtue thereof, shall be
again filed in the office of the clerk or register aforesaid of the
town or city where the mortgagor shall then reside, if the mort-
gagor shall then be a resident of this state; and if not such res-
ident, then in the office of the clerk or register of the town or
city where the property so mortgaged was at the time of the ex-
ecution of such mortgage.”

A copy of any such original instrument, or of any copy thereof,
so filed as aforesaid, including any statement made in pursuance

1 R. S. 1875, pp. 148-145, §§ 9-14. 2 As amended, Laws 1879, ch. 418.
191
§ 221.] STATUTORY PROVISIONS

of this act, certified by the clerk or register in whose office the
same shall be filed, shall be received in evidence, but only of the
fact that such instrument or copy and statement was received
and filed according to the indorsement of the clerk or register
thereon, and of no other fact; and in all cases the original in-
dorsement by the clerk or register made in pursuance of this act,
upon such instrument or copy, shall be received in evidence of the
facts stated in such indorsement.

Any person having any lien or incumbrance on any canal-boat,
steam-tug, scow, or other craft navigating the canals of the state,
by a chattel mortgage, shall file the same, or a true copy thereof,
in the office of the auditor of the canal department.!_ Every such
mortgage which shall not be accompanied by an immediate de-
livery, and followed by an actual and continued change of pos-
session of the property mortgaged, shall be absolutely void as
against the creditors of the mortgagor, and as against subse-
quent purchasers and mortgagees in good faith, unless the mort-
gage, or a true copy thereof, shall be so filed. Every mortgage
so filed shall cease to be valid as against the creditors of the
person making the same, or against subsequent purchasers or
mortgagees in good faith, after the expiration of one year from
the filing thereof, unless within thirty days next preceding the
expiration of the said term of one year a true copy of such
mortgage, together with a statement exhibiting the interest of
the mortgagee in the property thereby claimed by him by virtue
thereof, shall be again filed. The record of any bill of sale, mort-
gage, hypothecation, or conveyance of any vessel of the United
States, duly recorded in the office of the collector of customs
where such vessel is registered or enrolled, or a transcript or copy
thereof duly certified by said collector, may be read in evidence
in any of the courts of this state, and in any judicial proceedings
in this state, with the like force and effect as the original bill of
sale, mortgage, hypothecation, or conveyance; provided, however,
that the execution of such bill of sale, mortgage, hypothecation, or
conveyance shall, before having been so recorded, have been ac-
knowledged by the party or parties executing the same, or proved
by a subscribing witness thereto, in the same manner in which

13 R. S. 1875, p. 789, §§ 36-38 ; p. 660, interest of the mortgagee be filed with the
§ 44. Under this statute a refiling is not mortgage or the copy of it. Marsden v.
effectual unless a statement exhibiting the Cornell, 62 N. Y. 215.

192
RELATING TO RECORDING, ETC. [§§ 222, 223.

conveyances of real estate are required to be acknowledged so as
to entitle the same to bé recorded in this state,

222. North Carolina.1— No deed of trust or mortgage of per-'
sonal estate shall be valid at law to pass any property as against
creditors or purchasers for a valuable consideration, from the
donor, bargainor, or mortgagor, but from the registration of such
deed of trust or mortgage in the county where the donor, bar-
gainor, or mortgagor resides; or in case the donor, bargainor,
or mortgagor shall reside out of the state, then in the county
where the said personal property, or some part of the same, is sit-
uate; or in case of choses in action, where the donee, bargainee,
or mortgagee resides.

The register shall indorse on each deed of trust or mortgage
the day on which it is presented and delivered to him for regis-
tration, and such indorsement shall be entered on the register’s
books, and form a part of the registration, and he shall immedi-
ately thereafter register the same, in order of time in which it
was presented and delivered to him; and any register not com-
plying with the provisions and requisitions of this section shall
be liable in an action to the party injured, and also to be indicted
in the superior court, and fined at the discretion of the court,

223. Ohio.2 — Every mortgage, or conveyance intended to
operate as a mortgage, of goods and chattels, which is not accom-
panied by an immediate delivery, and followed by an actual and
continued change of possession of the things mortgaged, shall be
absolutely void as against the creditors of the mortgagor, and as
against subsequent purchasers and mortgagees in good faith, un-
less the mortgage, or a true copy thereof, shall be forthwith de-
posited with the clerk of the township where the mortgagor re-
sides at the time of the execution thereof, if a resident of the
state, and if not such resident, then with the clerk of the township
in which the property so mortgaged is situated at the time of the

1 Battle’s Revisal, 1873, ch. 35, §§12, order in the cause, the mortgagee cannot
18. recover in trover, although the sale ‘is il-

When a mortgagee fails to register his legal and unauthorized, because he is en-
ntortgage until after an attachment of the titled to possession only from the time of
property has been made by a creditor of registration of his mortgage. Murchison
the mortgagor, and the sheriff has pro- v. White, 8 lred. 52.
ceeded to sell the property without any 21 RK. S. 1880, §§ 4150-4153, 4155.

13

193
§ 223.] STATUTORY PROVISIONS

execution of the instrument; but when the mortgagor is a resident
of a township in which the office of county recorder is kept, or when
he is a non-resident of the state and the property is within such
township, the mortgage shall be filed with the county recorder.

The officer receiving any such instrument shall indorse thereon
the time of receiving it and its consecutive number, and enter in
a book to be provided by the township trustees or county recorder,
as the case may be, the names of all the parties thereto, alpha-
betically arranged, with the number of the instrument, its date,
the day of filing it, and the amount secured thereby, which entry
shall be repeated, alphabetically, under the name of every party
thereto; he shall deposit the instrument in his office, to be there
kept for the inspection of all persons interested ; and when such
mortgage is refiled or cancelled, the date of such refiling or cancel-
lation shall be entered upon the margin of such record opposite the
original entry. If the party depositing the instrument desires to
have it recorded, the officer shall record the same at the expense of
the person making the request, in a book to be provided by the
township trustees or county recorder, as the case may be; the of-
ficer shall enter upon the margin of such record, when the instru-
ment is refiled, any affidavit, credit, or statement, placed thereon
after it was recorded ; and where it has been satisfied, the party
holding it shall forthwith notify the officer who made record
thereof, who shall, without delay, note such cancellation and sat-
isfaction upon the margin of the record without charge therefor.

Every mortgage so filed shall be void as against the creditors
of the person making the same, or against subsequent purchasers
or mortgagees in good faith, after the expiration of one year from
the filing thereof, unless within thirty days next preceding the
expiration of the said term of one year, a true copy of such mort-
gage, together with a statement, verified as provided in the last
section, together with a statement exhibiting the interest of the
mortgagee in the property at the time last aforesaid, claimed by
virtue of such mortgage, is again filed in the office where the
original was filed.

The provision, that where there is no change of possession the
mortgage shall be absolutely void unless forthwith deposited with

1 The year within which a refiling may puted at the corresponding day and hour
be made begins to run from the exact of the following year. Seaman v. Eager,
time of the preceding filing, and is com- 16 Ohio St. 209.

194 .
RELATING TO RECORDING, ETC. [§ 224.

the proper recording officer, does not avoid the mortgage in toto,
but it becomes effective whenever deposited from that time.!

224, Oregon.2—Every assignment of personal property by way
of mortgage or security, unless the same be accompanied by an
immediate delivery, and be followed by an actual and continued
change of possession, creates a presumption of fraud as against the
creditors of the assignor during his possession, or as against subse-
quent purchasers in good faith and for a valuable consideration, dis-
putable only by making it appear on the part of the person claim-
ing under such assignment that the same was made in good faith
for a sufficient consideration, and without intent to defraud such
‘ereditors or purchasers, but such presumption does not exist in the
case of a mortgage duly filed or recorded as provided by law.

It shall be the duty of the county clerk upon the presentation
for that purpose of any mortgage, or conveyance intended to oper-
ate as a mortgage, of goods and chattels, or a copy of any such in-
strument, and the payment of his fees, to indorse thereon the time
of receiving the same, and to deposit such instrument or copy in
his office, to be kept for the inspection of all persons interested.

Every such mortgage shall cease to be valid as against the
creditors of the person making the same, or subsequent purchasers
or mortgagees in good faith, after the expiration of one year from
the filing of the same, or a. copy thereof, unless within thirty
days next preceding the expiration of the one year, the mort-
gagee, his agent or attorney, shall make and annex to the instru-
ment, or copy on file as aforesaid, an affidavit setting forth the
interest which the mortgagee has, by virtue of such mortgage, in
the property therein mentioned, upon which affidavit the clerk
shall indorse the time when the same was filed. The effect of
any such affidavit shall not continue beyond one year from the
time when such mortgage would otherwise cease to be valid as
against the creditors of the person making such mortgage, or sub-
sequent purchasers or mortgagees in good faith; but within thirty
days next preceding the time when any such mortgage would
otherwise cease to be valid as aforesaid, a similar affidavit may be
filed and annexed as before provided, and with like effect.

A copy of any such instrument, or of any copy thereof so filed
as aforesaid, including any affidavits annexed thereto in pursu-

1 Gibson v. Warden, 14 Wall. 244; 2 Gen. Laws 1872, pp. 262, 527, 756.
Wilson v. Leslie, 20 Ohio, 161. 195
8§ 225-227.) STATUTORY PROVISIONS

ance of this statute, certified by the clerk in whose office the same
shall be filed, shall be received in evidence, but only of the fact
that such instrument, copy, or affidavit, was received and filed ac-
cording to the indorsement of the county clerk thereon, and of no

other fact.2

225. Pennsylvania.? — In 1876 an act authorizing chattel mort-
gages of certain property was passed, but it was limited to con-
tinue for five years only. By this act mortgages in writing, for
any sum not less than five hundred dollars, upon lumber, iron, and
coal oil in bulk, iron tanks, tank cars, iron ore mined and prepared
for use, manufactured slate, and canal boats, are valid when prop-
erly acknowledged and recorded in the county where the mort-
gagor resides ; but they are good for only one year unless renewed.

226. Rhode Island.2— No mortgage of personal property shall
be valid against any other person than the parties thereto, unless
possession of the mortgaged property be delivered to and retained
by the mortgagee ; or unless the said mortgage be recorded in the
office of the clerk of the town where the mortgagor shall reside, if
in this state; and if not, where the property is at the time of mak-
ing the same; but this requirement shall not affect any transfer of
property under bottomry or respondentia bonds, or of any ships
_ or goods at sea or abroad, if the mortgagee shall take possession
thereof as soon as may be after the arrival of the same in this
state.

Every town clerk shall record mortgages of personal property
in a book to be by. him kept for that purpose, with the time when
the same are received and recorded.

A mortgage of both real and personal property may be recorded
with the record of mortgages of real estate only; in such cases,
the town clerk is required to enter upon the index of personal
property records the books and pages upon which such mortgages
are recorded.+4

227. South Carolina. — All deeds of trust, or instruments in

1 Gen. Laws 1872, p. 522, § 50. * Laws 1878, ch. 707, § 1.

2 Act May 18, 1876, Purdon’s Ann. 5 Acts 1876, p. 92. For some account
Dig. p. 2004. of the earlier acts see McKnight v. Gor-

8G. S. 1872, c. 155, §§ 9, 10. don, 13 Rich. Eq. 222.

196
RELATING TO RECORDING, ETC. [§ 228.

writing conveying personal estate, and creating a trust or trusts
in regard to such property, or changing or incumbering the same ;
all mortgages, or instruments in writing in the nature of a mort-
gage, of any personal property ; all statutory liens on ships and
vessels, shall be valid, so as to affect from the time of such delivery
or execution the rights of subsequent creditors or purchasers for
valuable consideration without notice, only when recorded within
forty days from the time of such delivery or execution in the office
of register of mesne conveyances of the county where the owner of
said property resides, if he reside within the state, or, if he reside
without the state, in the county where such personal property is
situated at the time of the delivery or execution of said deeds or
instruments; but the above mentioned deeds or instruments in
writing, if recorded subsequent to the expiration of said period of
forty days, shall be valid to affect the rights of subsequent credit-
ors and purchasers for valuable consideration without notice only
from the date of such record.

The mortgage of goods or chattels which shall be first recorded
shall be taken, deemed, adjudged, allowed, and held to be the

first mortgage.!

228, Tennessee.? — All mortgages and deeds of trust of sper-
sonal property must be in writing, and proved and registered, to
be valid against the creditors of the bargainor or purchasers under
him fpr value without notice. All deeds, bills of sale, agreements,
and other instruments for the conveyance or mortgage of personal
property, shall be registered in the county where the vendor or
person executing the same resides, and, in case of his non-resi-
dence, where the property is.

To authenticate an instrument for registration, its execution
shall be acknowledged by the maker, or proved by two subscrib-
ing witnesses. All of said instruments shall have effect be-
tween the parties to the same and their heirs and representatives
without registration; but as to other persons, not having actual
notice of them, only from the noting thereof for registration on

1B. S. 1873, p. 549, §2. A former otherwise, was repealed by Act No. 24,
provision, that a person who should mort- 1879.
gage any chattels a second time, while a 2 Compiled Stats. 1871, §§ 2003, 2030,
former mortgage remained in force, should 2033, 2038, 2072-2075.
have no power to redeem in equity or
197
§ 229.] STATUTORY PROVISIONS

the books of the register, unless otherwise expressly provided.
All of said instruments so registered shall be notice to all the
world from the time they are noted by the register for registra-
tion as prescribed ; and shall take effect from said time. Any of
said instruments first registered or noted for registration shall
have preference over one of earlier date, but noted for registration
afterwards, unless it is proved in a court of equity, according to
the rules of said court, that the party claiming under the subse-
quent instrument had full notice of the previous instrument. Any
of said instruments not so proved or acknowledged, and registered
or noted for registration, shall be null and void as to existing or
subsequent creditors or bond fide purchasers from the makers
without notice.

229. Texas.1— Every chattel mortgage, deed of trust, or other
instrument of writing intended to operate as a mortgage of or lien
upon personal property, which shall not be accompanied by’ an
immediate delivery, and be followed by an actual and continued
change of possession of the property mortgaged or pledged by such
instrument, shall be absolutely void as against the creditors of the
mortgagor or person making the same, and as against subsequent
purchasers and mortgagees or lien holders in good faith, unless
such instrument, or a true copy thereof, shall be forthwith de-
posited with and filed in the office of the county clerk of the
county where the property shall then be situated ; or if the mort-
gagor or person making the same be a resident of this state, then
of the county of which he shall at the time be a resident. Upon
the receipt of any such instrument the clerk shall indorse on the
back thereof the time of receiving it, and shall file the same in
his office, to be kept there for the inspection of all persons in-
terested ; provided that if a copy be presented to the clerk for
filing instead of the original instrument, he shall carefully com-
pare such copy with the original, and the same shall not be so
filed unless it is a true copy thereof; and a copy can be filed only
when the original has been acknowledged. A copy of any such
original instrument, or of any copy thereof so filed as aforesaid,
certified to by the clerk in whose office the same shall have been
filed, shall be received in evidence of the fact that such instru-

1 R. 8. 1879, Appendix, p. 15, §§ 1, 2, 3, and 7.
198
RELATING TO RECORDING, ETC. [{§§ 2380, 281.

ment or copy was received and filed according to the indorsement
of the clerk thereon, but of no other fact.

Chattel mortgages, and other instruments intended to operate
as mortgages of or liens upon personal property, shall not be re-
corded at length; but when deposited and filed, in accordance
with the provisions of this act, shall have the force and effect
heretofore given to a full registration thereof; and all persons
shall be thereby charged with notice thereof, and of the rights of
the mortgagee, his assignee, or representative thereunder; but
this provision shall not be so construed as to in any manner affect
the rights of any person under any instrument heretofore recorded
as required by law.

230. Vermont.! — Possession of the mortgaged property must
be delivered to and retained by the mortgagee, or the mortgage
must be recorded in the office of the clerk of the town in which
the mortgagor resides at the time of his making the same; or if
he resides out of this state, in the town in which the property is
situated; and no property, upon which such security is made,
shall be removed from this state, except by consent of the mort-
gagee. Every town clerk shall procure, at the expense of the
town, and keep, a book of records for personal mortgages ; he shall
record therein any mortgage, transfer, or discharge, and give a
certified copy thereof when requested, on payment of his fees
therefor; shall certify the time when the same is received and
recorded, and keep an alphabetical index of mortgagors and
mortgagees, which record and index shall be open to public
inspection.

231. Virginia.2— Every deed of trust or mortgage, conveying
goods and chattels, shall be void as to creditors, and subsequent
purchasers for valuable consideration without notice, until and
except from the time that it is duly admitted to record in the
county or corporation wherein the property embraced in such con-
tract or deed may be; provided, however, that all deeds of trust
or mortgage, and all writings in respect to personal estate, in-
tended to be recorded where such personal estate is situated, lying,
and being within the jurisdiction of a corporation or hustings
court, shall be recorded in the clerk’s office of such corporation or

1 Laws 1878, pp. 58, 59, §§ 2, 12. 2 Code 1878, ch. 114, §§ 5, 6, 8.
199
§ 232.] STATUTORY PROVISIONS

hustings court. Notwithstanding any such writing shall be duly
admitted to record in one county or corporation wherein there are
goods or chattels, it shall nevertheless be void as to such creditors
and purchasers in respect to other goods or chattels without the
same, until it is duly admitted to record in the county or corpora-
tion wherein such other goods or chattels may be.

If any goods or chattels mentioned in such writing be removed
from a county or corporation into which it is admitted to record,
the said writing shall, within one year after such removal, be admit-
ted to record in the county or corporation to which the property is
so removed; otherwise the same, for so long as it is not admitted
to record in such last mentioned county or corporation, shall, as
to the property so removed, be void as to such creditors or pur-
chasers. But such writing shall not be so void in respect to the
interests of any married woman, infant, or any insane person, if
before the end of one year after the disability shall cease the
writing be recorded in the county or corporation to which the
property is removed.

232. Washington Territory.1 — A mortgage of personal prop-
erty is void as against creditors of the mortgagor or subsequent
purchasers and incumbrancers of the property for value and in
good faith, unless it is accompanied by the affidavit of the mort-
gagor that it is made in good faith, and without any design to
hinder, delay, or defraud creditors, and it is acknowledged and
recorded in the same manner as is required by law in conveyances
of real property. A mortgage of personal property must be
recorded in the office of the county auditor of the county in which
the mortgaged property is situated, in a book kept exclusively for
that purpose; provided that property in transit shall be deemed
to be situated in the county to which it is being moved ; and pro-
vided further, that a mortgage on any vessel or boat, or part of a
vessel or boat over twenty tons burden, shall be recorded in the
office of the collector of customs where such vessel is registered,
enrolled, or licensed, and need not be recorded elsewhere.

Mortgages may be made upon all kinds of personal property,
and upon the rolling-stock of a railroad company, and upon all
kinds of machinery, and upon boats and vessels, and on growing
crops, and on portable mills and such like property.?

1 Laws 1879, p. 105, §$ 2, 3. 2 Ibid. p. 104, § 1.
200
RELATING TO RECORDING, ETC. [$$ 233, 284.

233. West Virginia.!— Every deed of trust or mortgage con-.
veying goods or chattels shall be void as to creditors and subse-
quent purchasers for valuable consideration without notice, until
and except from the time that it is duly admitted to record in the
county wherein the property embraced in such contract or deed
may be. Notwithstanding any such writing shall be duly admit-
ted to record in one cotinty wherein there are goods or chattels, it
shall nevertheless be void as to such creditors and purchasers in
respect to other goods or chattels without the same, until it is duly
admitted to record in the county wherein such other goods or chat-
tels may be. If any goods or chattels mentioned in such writing be
removed from a county in which it is admitted to record, the said
writing shall, within three months after such removal, be admit-
ted to record in the county to which the property is so removed ;
otherwise the same, for-so long as it is not admitted to record in
such last mentioned county, shall, as to the property so removed,
be void as to such creditors or purchasers. But such writing
shall not be so void in respect to the interests of any married
woman, infant, or insane person, if, before the end of three months
after the disability shall cease, the writing be recorded in the
county to which the property is removed. Where two or more
writings, embracing the same property, are admitted to record in
the same county on the same day, if the previous section does
not provide for the case, that which was first admitted to record
shall have priority in respect to the property in such county.

234. Wisconsin.2—No mortgage of personal property shall be
valid against any other person than the parties thereto, unless the
possession of the mortgaged property be delivered to and retained
by the mortgagee, or unless the mortgage or a copy thereof be
filed as provided, except when otherwise directed. Every mort-
gage of personal property or a copy thereof may be filed in the
office of the clerk of the town, city, or village where the mort-
gagor resides, or in case he is a non-resident of the state, then in
the office of the clerk of the town, city, or village where the prop-
erty mortgaged may be at the time of the execution of such mort-
gage; such clerk shall indorse on such mortgage or copy the time
of receiving the same, and keep the same in his office for the in-

1 Code 1870, ch. 74, §§ 5-8. - ° R. S. 1878, ch. 105, §§ 2313-2318.
201

.
§ 234.] STATUTORY PROVISIONS

spection of all persons; such clerk shall also enter at the time of
filing, in a book properly ruled and kept therefor, the names of all
the parties, arranging mortgagors alphabetically, the date of each
mortgage and the date of filing the same, and of each affidavit re-
lating thereto. Mortgages so filed shall be as valid and binding
upon all persons as if the property thereby mortgaged had been
immediately upon the execution of such mortgage delivered to,
and the possession thereof retained by, the mortgagee.

Every such mortgage shall cease to be valid as against the cred-
itors of the person making the same, or subsequent purchasers or
mortgagees in good faith, after the expiration of two years from
the filing of the same, or a copy thereof, unless within thirty days
next preceding the expiration of the two years the mortgagee, his
agent or attorney, shall make and annex to the instrument, or
copy on file, an affidavit setting forth the interest which the mort-
gagee has by virtue of such mortgage in the property therein men-
tioned, upon which affidavit the clerk shall indorse the time when
the same was filed. The effect of any such affidavit shall not con-
tinue beyond two years from the time when such mortgage would
otherwise cease to be valid as against subsequent purchasers or
mortgagees in good faith; but within thirty days next preceding
the time when any such mortgage would otherwise cease to be
valid as aforesaid, a similar affidavit may be filed and annexed as
before provided, and with the like effect.

No contract for the sale of personal property by the terms of
which the title is to remain in the vendor, and the possession
thereof in the vendee until the purchase price is paid, or other
conditions of sale are complied with, shall be valid as against any
other person than the parties thereto and those having notice
thereof, unless such contract shall be in writing subscribed by the
parties, and the same or a copy thereof shall be filed in the office

‘of the clerk of the town, city, or village where the vendee resides,
or if he shall not be a resident of the state, then in the office of
the clerk of the town, city, or village where the property may be
at the time of making such contract; and such clerk shall file,
keep, and index the same in like manner as mortgages of personal
property, and receive a like compensation therefor ; but the effect
of such filing shall not extend for more than one year after the
time fixed for payment of the contract price, or for the perform-
ance of the other conditions of such sale.

202
RELATING TO RECORDING, ETC. [§ 235.

A copy of any such mortgage or other instrument, or of any
copy thereof, so filed, including any affidavits annexed thereto in
pursuance of this statute, certified by the clerk in whose office
the same shall be filed, shall be received. in evidence, but only of
the fact that such instrument, copy, or affidavit was received and
filed according to the indorsement of the clerk thereon, and of no
other fact.

All mortgages, liens, bills of sale, or other written instruments,
in any way affecting the ownership of any marked logs in any
lumber district, which shall specify the marks placed upon said
logs and when they were cut, shall be recorded in the office of the
lumber inspector in which said marks are recorded; and no such
conveyance, lien, mortgage, or transfer shall be valid, except as to
the parties thereto, until the same is so recorded, or until the
same shall be filed with some lumber inspector, who shall im-
mediately forward such instrument to the inspector of the proper
district. Such filing and recording of all such instruments and
papers shall have the same effect as notice that the recording of
deeds and mortgages in the office of the register of deeds has.

235. Wyoming Territory.2 — Every mortgage, or conveyance
intended to operate as a mortgage, of goods, chattels, and personal
property, shall be executed and acknowledged in the same man-
ner as provided for the execution and acknowledgment of convey-
ances of land. Every such mortgage or conveyance which shall
. not be accompanied by an immediate delivery, and be followed
by an actual and continued change of possession of the goods,
chattels, and personal property mortgaged, shall be absolutely void
as against subsequent purchasers and mortgagees in good faith,
unless such mortgage or conveyance shall be recorded. Every
such mortgage or conveyance, to be of any force or effect as
against any third party with or without notice, must be recorded
in the office of the county clerk of the county where the property.
is, and shall be recorded by the clerk in a book to be kept for
that purpose, to be called the chattel mortgage record. In case
of the removal of the mortgaged property during the term or va-
lidity of the mortgage or conveyance to some other county by the
consent of the mortgagee, the mortgage or conveyance must there-
upon be immediately recorded in the county to which the prop-

1 RB. S. 1878, ch. 84, § 1739. 2 Laws 1877, p. 20, §§ 1, 2, 3, 4, 5.
203
§ 235.] STATUTORY PROVISIONS, ETC.

erty is removed. Every such mortgage or conveyance shall take
effect and be in force from and after the time of delivering the
same to the clerk for record, and not before, as to all creditors and
subsequent purchasers and mortgagees in good faith without no-
tice; and all such mortgages or conveyances shall be adjudged
void as to all such creditors and subsequent purchasers and mort-
gagees without notice, whose mortgages or conveyances shall be
first recorded ; provided that such mortgages or conveyances shall
be valid between the parties.

Every such mortgage or conveyance, recorded in pursuance of
this act, shall remain in full force and validity for the term for
which it shall have been given, and for. two months thereafter.
Every such mortgage or conveyance so recorded shall cease to be
valid as against the creditors of the person making the same, or as
against subsequent purchasers or mortgagees in good faith, after
the expiration of two months from and after the end of the term
for which it shall have been given, unless before the expiration of
the two months aforesaid notice of foreclosure shall have been
given as hereinafter required; provided that such mortgages or
conveyances shall nevertheless continue to be valid between the
parties.

204
CHAPTER VII.

RECORDING, FILING, AND REFILING.

I. The effect of recording or filing a | III. What instruments are within the re-

chattel mortgage, 236-247. cording acts, 275-285.
II. The requisites of a valid record or | IV. Refiling, 286-298.
filing, 248-274. V. Law of the place of contract, 299-307.

VI. Actual notice, 308-318.

I. The Effect of Recording or Filing a Chattel Mortgage.

936. The recording or filing of a mortgage is generally
equivalent to a change of possession, under the statutes provid-
ing for such record or filing, and relieves the party claiming under
the mortgage from the burden of proving the bona fides of the
transaction.! “Some things must be considered as settled in the
law respecting the mortgage of personal property; and although
the law, as it stands, may be supposed to operate as a temptation to
parties to commit frauds, and to enable them to do so successfully,
yet the danger of fraud is intrinsic and incident to the nature of
the subject..... We must take it as settled that a mortgage of a
chattel vests a property in the mortgagee; not an absolute title,
indeed, but a present: title, defeasible upon a condition subsequent.
An actual delivery and change of possession are not necessary to
perfect the mortgagee’s title, if the mortgage is duly recorded ; the
registration of the mortgage supersedes the necessity of an actual
delivery, and gives all parties concerned constructive notice of its
execution and existence. It seems to follow, as a necessary conse-
quence, that goods mortgaged may be safely left by the mortgagee
in the custody of the mortgagor, without the former’s being
chargeable with laches. Indeed, the most common object of such
a mortgage is to enable the mortgagor to give security on the

1 Forbes v. Parker, 16 Pick. (Mass.) 49 Me. 566; Miller v. Whitson, 40 Mo.
462; Bullock v. Williams, Ib. 33; Cotton 97; Fromme v. Jones, 13 lowa, 474;
uv. Marsh, 3 Wis. 221 ; Donaldson v. John- Feurt v. Rowell, 62 Mo. 524; Robinson v.

son, 2 Chand. (Wis.) 160; Harrington v. Elliott, 22 Wall. 513.
Brittan, 23 Wis. 541; Morrill v. Sanford,
205
§ 237.] RECORDING, FILING, AND REFILING.

goods, and yet for the time being to retain the custody and use
of them.” !

When it is said that registration is a substitute, as well for a
delivery as for retaining possession, it is to be understood that
the mortgaged property is of such a nature and so situated as to
be capable of being specifically designated and identified by de-
scription. If it requires to be weighed, measured, counted off, or
otherwise separated from other like property, such requisites are
not to be considered as dispensed with by registration.”

While registration dispenses with delivery and possession, on
the other hand delivery and possession diapers with the necessity
of a record.8

It is to be observed, however, that the statutes of several states
do not make the recording or filing of chattel mortgages legally
equivalent to an actual delivery and continued change of posses-
sion of the property. In these states the retaining of possession
by the mortgagor is in all cases, whether the mortgage be recorded
or not, primd facie a badge of fraud; and this presumption is only
overcome by proof of the good faith of the transaction. The
statute in fact ‘only adds another to the grounds on which a
mortgage of personal chattels shall be void.” * Such is the case in
New York, Minnesota,® Nebraska, and some other states.

237. A mortgage is good between the parties to it, although
it does not conform to requirements of the statute relating to ac-
knowledgment, record, or the like. The statutes make such a

1 Coles v. Clark, 3 Cush. (Mass.) 399,

per Chief Justice Shaw.

2 Bullock v. Williams, 16 Pick. (Mass.)
33, per Shaw, C. J. f

8 Fromme v. Jones, 13 Iowa, 474;
Cooper v. Brock, 41 Mich. 488; Morrow
v. Reed, 80 Wis. 81.

* Wood v. Lowry, 17 Wend. (N. Y.)
492, per Bronson, J.

5 Horton v. Williams, 21 Minn. 187.

6 Winsor v. McLellan, 2 Story, 492;
Sawyer v. Turpin, 91 U. S. 114; S.C.
13 N. Bank. Reg. 271; Stewart v. Platt,
101 U. S. 731; Hall v. Snowhill, 14 N. J.
L. 8; Lemay v. Williams, 32 Ark. 166;
Davis v. Ransom, 26 Ll. 100; Griffin ».
Wertz, 2 Bradw. (Ill) 487; Frank v.

206,

Miner, 50 Il]. 444; Beeman v. Lawton, 37
Me. 543; Hayman. Jones, 7 Hun (N.Y.),
238; Wescott v. Gunn, 4 Duer (N. Y.),
107; Hudson ». Warner, 2 Har. & G.
(Md.) 415; Fuller v. Paige, 26 Ill. 358 ;
Forest v. Tinkham, 29 Ill. 141; Porter v. |
Dement, 35 Ill. 478; Badger v. Batavia
Manuf. Co., 70 Ill. 302; McTaggart v.
Rose, 14 Ind. 230; Kilbourne v. Fay, 29
Ohio St. 264; Wilson v. Leslie, 20 Ohio,
161; Smith v. Moore, 11 N. H. 55; Wil-
liamson v. N. J. Southern R. R. Co. 26
N. J. Eq. 398; Hackett v. Manlove, 14
Cal. 85; Clagett v. Salmon, 5 G. & J.
(Md.) 314; Johnson v. Jeffries, 30 Mo.
423 ; Machette v. Wanless, 2 Colo. 169.
EFFECT OF RECORDING OR FILING. [§ 238.

mortgage void only against persons other than the parties to it, or
as to purchasers, mortgagees, and creditors of the mortgagor with-
out notice. The only effect of delay in recording or filing a mort-
gage is to render it void as against intervening purchasers or
mortgagees, or creditors obtaining liens by attachment, judgment,
or execution.1 If the time within which a mortgage must be re-
corded or filed be not expressly prescribed by statute, it is suffi-
cient that this be done at any time before possession is taken or
interests or liens are acquired by others; no matter how long this
be after the execution of the mortgage. ‘he record of a mort-
gage being only a substitute for the mortgagee’s possession, it fol-
lows that, in the absence of any record, possession taken by the
mortgagee before others have acquired any interest in the prop-
erty makes his mortgage lien complete.”

A mortgage though not recorded vests the ees property in
the mortgagee, and when there is no stipulation to the contrary,
the right also to the immediate possession of the property, and
therefore he may maintain an action of tort against one who,
without any title, takes the property from the mortgagor’s posses-
sion.® The recording acts do not attempt to make a mortgage
absolutely void for an omission to record or file it, but simply
declare that such omission renders it void as to creditors and
subsequent purchasers in good faith.*

238. As between the parties a mortgage is not invalidated
because it is fraudulent as to the mortgagor’s creditors.5 Even
a statute making the giving of such a mortgage a criminal offence
in both parties does not make it void between the parties when
duly executed and recorded. The contract being completed, the
law will not lend its aid to either party to compel the other to re-
store him to the condition he was in before the transaction was

entered upon. The title to the property passes to the mortgagee

1 Smith v. Acker, 23 Wend. (N. Y.) 379; Brackett v. Bullard, 12 Met. (Mass.)
653; Wescott v. Gunn, 4 Duer (N. Y.), 308.

107; Hayman v. Jones, 7 Hun (N. Y.), * Hayman v. Jones, 7 Hun (N. Y.),
238; Stephenson v. Browning, 48 Ill. 78; 238. :
Gaff v. Harding, 48 Ill. 148. 5 Brown v. Webb, 20 Ohio, 389; Trem-

2 Sawyer v. Turpin, 91 U. S. 114; per v. Barton, 18 Ohio, 418; Gooding »v.
Mitchell v. Black, 6 Gray (Mass.), 100. Riley, 50 N. H. 400, 406, per Bellows,
8 Pratt v Harlow, 16 Gray (Mass.), C.J.
® Andrews v. Marshall, 48 Me. 26.

207
§§ 239, 240.] RECORDING, FILING, AND REFILING,

as between the parties, and he may maintain an action for a
fraudulent conversion of it.}

239. An unfiled or unrecorded mortgage is valid against
the executor or administrator of the mortgagor in the same
way that it is valid against the mortgagor himself? The undis-
puted rule in regard to an unrecorded mortgage of real estate is,
that it is valid against the heir and representatives of the mort-
gagor, equally as against the mortgagor himself.2 ‘+ When it is
considered that the real estate of a deceased debtor is, to the extent
needed to supply the insufficiency of the personal property to pay
the debts of the estate and expenses of administration, assets in
the hands of the executor or administrator, how is it possible that
a real mortgage, not left for record until after the death of the
mortgagor, can be valid and binding against his general creditors,
unless an unfiled mortgage of personalty is also valid?” * That
the rule is precisely the same in the two cases seems perfectly
clear. Neither the heir in one case, nor the administrator in the
other, is a third person, but represents the intestate and has no
better title than he had.

240. But where the estate of the deceased mortgagor is
insolvent, it has been held in some cases that his unfiled or un-
recorded mortgage is void as against his personal representative
into whose hands the possession of the property passes directly
from the deceased mortgagor. These decisions proceed upon the
ground that when the estate of the mortgagor is insolvent, his ex-
ecutor or administrator virtually represents the creditors; so that
the unrecorded mortgage then comes in contest with the creditors.
Against them it is contended that the mortgage is inoperative and
void for want of filing, and that the property covered by it drops
into and becomes general assets, to be administered for the benefit
of the creditors. Against this view it seems a sufficient answer
that a general creditor cannot question the validity of an unfiled
mortgage until he has obtained a lien upon it by attachment or

1 Andrews v. Marshall, supra. This was the decision of a majority of the

2 Griffin v. Wertz, 2 Bradw. (Ill.) 487. court; but two of the five judges dissented

® Gill v. Pinney, 12 Ohio St. 38. and concurred in a dissenting opinion,

* Kilbourne v. Fay, 29 Ohio St. 264, which is clearly the opinion best supported
291, per Boynton, J., dissenting. both by authority and reason.

5 Kilbourne v. Fay, 29 Ohio St. 264.
208
EFFECT OF RECORDING OR FILING. [§ 241.

execution. Until he has seized the property by some process of
law; the unfiled mortgage upon it is equally valid against the
mortgagor’s creditor as it is against the mortgagor himself. The
mortgagor’s death gives no specific lien upon his property in favor
of a general creditor. The property passes to the personal rep-
resentative as the mortgagor left it. One who was a mere gen-
eral creditor before the death remains such after it. His position
with respect to other creditors remains unchanged. He and they
have the same right, through the intervention of an administrator,
to subject to the payment of their debts, if necessary, all the prop-
erty of their debtor which has passed to his heirs, devisees, or
legatees. This right, which constitutes the only lien which a gen-
eral creditor has upon the estate of his deceased debtor, is ac-
quired by no act of diligence on the part of the creditor ; it arises
from no act of the debtor, but from the laws that make the prop-
erty he has at the time of his death subject to the payment of
his debts. This right of the general creditor is limited to the
property that passes; and it is limited also to the property in the
condition in which it passes, subject to the incumbrances and
liens placed upon it by the debtor.!

241. An assignee in bankruptcy or insolvency takes only
the debtoris rights, in the absence of fraud in fact; and con-
sequently is affected with all the claims, liens, and equities which
would affect the debtor if he were himself asserting his interest in
the property. This is the doctrine generally recognized in Eng-
land and in this country. ‘ Assignees in bankruptcy,” said Sir
William Grant,? “take subject to whatever equity the bankrupt
was liable to. They are not considered purchasers for valuable
consideration in the proper sense of the words.” And Lord Hard-
wicke had in an earlier case said :% ‘* The ground that the court
go upon is this: that assignees of bankrupts, though they are
trustees for the creditors, yet stand in the place of the bankrupt,
and they can take in no better manner than he could.” Judge
Story, following this doctrine, held a mortgage effectual against
an assignee in bankruptcy although it had not been duly recorded

1 Gill v. Pinney, 12 Ohio St. 38, 47, per 2 Mitford, v. Mitford, 9 Ves. 87; affirmed
Scott, C. J., and substantially hislanguage; in Sherrington v. Yates, 12 M. & W. 855.
and see dissenting opinion of Boynton, J., 8 Brown v. Heathcote, 1 Atk. 160, 162.
in Kilbourne v. Fay, supra.

14 209
§ 241.] RECORDING, FILING, AND REFILING.

at the date of the bankruptcy ;1 and the doctrine has since been
affirmed in this country in numerous decisions ;? and recent deci-
sions of the Supreme Court of the United States have definitely
and conclusively settled the doctrine in the federal courts, and
swept away the authority of many contrary decisions rendered in
late years by the Circuit and District Courts. In Yeatman ».
Savings Institution? the Supreme Court declared it to be an es-
tablished rule under the bankrupt law, that, except in cases of
attachments against the property of the bankrupt within a pre.
scribed time preceding the commencement of proceedings in bank-
ruptcy, and except in cases where the disposition of property by
the bankrupt is declared by law to be fraudulent and void, the
assignee takes the title subject to all equities, liens, or incum-
brances, whether created by operation of law or by any act of the
bankrupt, which existed against the property in the hands of the
bankrupt. In the later case of Stewart v. Platt‘+ this general
principle was applied to the subject under discussion ; and it was
held that a chattel mortgage not filed in accordance with the
registry laws, but valid and effective as between the parties, was
equally valid and effective as against the mortgagor’s assignee in
bankruptcy. Mr. Justice Harlan, delivering the opinion of the
court, said: ‘Although the chattel mortgages, by reason of the
failure to file them in the proper place, were void as against
judgment creditors, they were valid and effective as between the
mortgagors and the mortgagee. Suppose the mortgagors had not
been adjudged bankrupts, and there had been no creditors, sub-
sequent purchasers, or mortgagees in good faith, to complain, as
they alone might, of the failure to file the mortgages in the towns
where the mortgagors respectively resided. It cannot be doubted
that Stewart, in that event, could have enforced a lien upon the
mortgaged property in satisfaction of his claim for rent. The
assignee took the property subject to such equities, liens, or in-
cumbrances as would have affected it had no adjudication in

1 Winsor v. McLellan, 2 Story, 492; son, 2 Woods, 443; Goddard v. Weaver,
Fletcher v. Morey, 2 Story, 555; Mitchell 1 Woods, 257, 260; Zn re Collins, 12 N.
v. Winslow, 2 Story, 630. Bank. Reg. 379; Platt v. Preston (Dist.

2 Stewart v. Platt, 101 U. S. 731; In Ct. N. Y. 1880), 3*Fed. Rep. 394.
re Griffiths, 1 Lowell, 431; Zn re Dow, 6 8 95 U.S. 764.

N. Bank. Reg. 10; Coggeshall v. Potter, #101 U.S. 731; S. C.19 N. Bank. Reg.
1 Holmes, 75; S. C. 4 N. Bank. Reg. 73; 347; and see Platt v. Preston (Dist. Ct. N.
In re Wynn, 4 Ib. 23; Johnson v. Patter- Y. 1880), 3 Fed. Rep. 394.

210
EFFECT OF RECORDING OR FILING. [§ 242.

bankruptcy been made. While the rights of creditors, whose
executions preceded the bankruptcy, were properly adjudged to
be superior to any which passed to the assignee by operation of
law, the balance of the fund, after satisfying those executions,
belonged to the mortgagee, and not to the assignee, for the pur-
poses of his trust. The latter, representing general creditors,
cannot dispute such claim, since, had there been no adjudication,
it could not have been disputed by the mortgagors. The assignee
can assert in behalf of the general creditors no claim to the pro-
ceeds of the sale of that property which the bankrupts them-
selves could not have asserted in a contest exclusively between
them and their mortgagee. As between the mortgagors and the
mortgagees, the chattel mortgages were and are unimpeachable
for fraud, or upon any other ground recognized in the bankrupt
law.”

A mortgage valid under the laws of the state where it was
executed is valid to the same extent under a national bankrupt
act.}

242. The contrary doctrine has much support. Where this
prevails it is declared that an unrecorded mortgage of chattels
not delivered is not valid against an assignee in insolvency of the
mortgagor.2 “* At common law a mortgage of personal property,
without delivery, would stand on no better ground than any
other sale; and the policy of the law in requiring registration
could hardly be made effectual under the provisions of the insol-
vent law, if assignees were not allowed to take for the benefit of
creditors property which the creditors themselves might have
taken on execution, or which the debtor might have conveyed to

them in satisfaction of their debts.”’?? In like manner an unre-

1 Johnson v. Patterson, 2 Woods, 443; Wynne, Ib. 23; Brock v. Terrell, 2 Ib.

In re Griffiths, 1 Lowell, 431.

2 Re Werner, 5 Dill. 119; Miller v.
Jones, 15 Nat. Bank Reg. 150; Re Gurney,
Ib. 373; S. C.7 Biss, 414 ; Re Leland, 10
Blatchf. 503; Barker v. Smith, 12 Nat.
Bank. Reg. 474 ; In re Collins, 12 Blatchf.
548; Jn re Eldridge, 2 Biss. 362; Platt
v. Stewart, 18 Blatchf. 481; Bank of
Leavenworth v. Hunt, 11 Wall. 391;
Moore v. Young, 4 Biss. 128; Allen v.
Massey, 4 N. Bank. Reg. 248; In re

643; Goodrich v. Michael, 3 Colo. 77;
Bingham v. Jordan, 1 Allen (Mass.), 373.
The case of Bank of Leavenworth v. Hunt,
11 Wall. 391, is placed upon the ground
that the mortgage was fraudulent as
against creditors, though the language of
Mr. Justice Field favors the view above.

8 Bingham v. Jordan, supra, per Hoar,
J. The insolvent law of Massachusetts,
under which this decision was rendered,
differs from the bankrupt acts of the

211
§ 243.] RECORDING, FILING, AND REFILING.

corded, chattel mortgage is void as against an assignee under a
voluntary assignment for the benefit of creditors.1 The assignee
is regarded as representing and standing in the place of the cred-
itors as well as the bankrupt; and as representing creditors, he
has a stronger right than the bankrupt, and therefore may con-
test claims and rights to property which the bankrupt could not
contest.”

943. Possession taken under a mortgage or a record of it
made shortly before the insolvency or bankruptcy of the mort-
gagor is sufficient to protect the mortgagee, if it could not be
objected to as being a preference at the time of its execution, al-
though it would be open to this objection if it had been executed
at the time it was recorded or possession was taken under it.
The mortgage is valid between the parties without either record
or possession, if it be made at a time when the law imposes no
restriction upon the dealings of the parties with reference to cre-
ating a preference, although the mortgagee delays to record it or
to take possession under it until a short time before the mort-
gagor’s insolvency, when the law would prohibit the making of
the mortgage as a preference; yet the mortgage may then be
made effectual by the mortgagee’s recording it or taking posses-
sion under it, because he only asserts and makes secure a right
which he had previously acquired.?

If it be said that the mortgagee’s failure to record his mort-
gage or to take possession under it enabled the debtor to main-
tain a credit which he ought not to have enjoyed, the answer is,
that bankrupt and insolvent acts are not intended to prevent

United States of 1841 and 1867 in that v. Crane, 2 Biss. 496; Zm re Hussman, 2

the assignee in insolvency takes not only
all the debtor’s property, but all that could
be taken on execution against him at the
time of the insolvency; and a creditor
could levy upon chattels covered by an
unrecorded mortgage although he had act-
ual notice of it. Denny v. Lincoln, 13
Met. (Mass.) 200.

1 Lockwood v. Slevin, 26 Ind. 124.

2 In re Gurney, 7 Biss. 414.

8 Mitchell v. Black, 6 Gray (Mass.), 100;
Sawyer v. Turpin, 91 U. S. 114. See
contra, Re Eldridge, 2 Biss. 8362; Harvey

212

N. Bank. Reg. 437 ; In re Manly, 3 Ib. 291;
Foster v. Hackley, 2 Ib. 406; Bean v.
Amsink, 8 Ib. 228; Seaver v. Spink, Ib.
218; In re Morrill, Ib. 117, These de-
cisions, which are regarded as erroneous,
hold that possession taken by a mortgagee
under an unrecorded mortgage, before the
commencement of proceedings in bank
ruptcy, but within four months of that
time, operates as a preference, and lJeavet
the mortgage void as against creditors
and is equally void as against the as
signee in bankruptcy.
EFFECT OF RECORDING OR FILING. [§ 244.

false credits, but insure a ratable distribution of the debtor’s prop-
erty.}

It follows, too, from the same principles, that if a mortgage be
taken in exchange for some other valid security within a short
time of the debtor’s bankruptcy, when the creditor knew he was
insolvent, and when the mortgage would be void as a preference,
if the transaction had then first been entered upon, it will never-
theless be valid.2 The exchange takes nothing from the other
" ereditors. Neither is it necessary that such mortgage be ‘re-
corded or possession taken under it immediately, if this be done
before the debtor’s bankruptcy. Neither does it matter that the
mortgage is retained from record and kept secret under an, agree-
ment of the parties to that effect.t

244, Whether an unrecorded mortgage is good at law
against a general assignment for the benefit of creditors was a
question raised in a recent case in Michigan but left undecided.
The assignee took possession, and proceeded to make sale of the
goods in execution of his trust. Thereupon the mortgagee filed a
bill in equity to foreclose his mortgage. But it was held that in-
asmuch as the statute declared the mortgage void as against the
very parties for whom the assignee was trustee, he had no stand-
ing in equity, and his bill was dismissed.’ If under any strict
rule of common law the mortgagee would have the advantage, he
will be left to seek this at law. Judge Cooley, delivering the
opinion of the court, said upon the latter point: “ It is insisted on
behalf of complainant that his mortgage, notwithstanding the
failure to file it, was perfectly good as against the mortgagor, and
that the latter could not, by a voluntary assignment, transfer a
right to assail it which he did not himself possess. The assignee
is not a purchaser for value, and not a creditor; and even cred-
itors, it is said, cannot attack the mortgage except indirectly,
through a seizure of the property by attachment or other suitable
process. This is doubtless true where the invalidity of the mort-
gage arises from the fraud of the mortgagor, but whether the

1 Sawyer v. Turpin, 91 U. S. 114; S. 170; Stevens v. Blanchard, 3 Cush. (Mass.)
C. 13 N. Bank. Reg. 271, per Strong, J.. 169.

2 Sawyer v. Turpin, 91U.S.114; Cook . 8 Sawyer v. Turpin, supra.
v. Tullis, 18 Wall. 332, 340; Clark ». Ise. * Sawyer v. Turpin, supra, per Strong, J.
lin, 21 Wall. 360; Watson v. Taylor, 21 5 Putnam »v. Fitzgerald (Mich. 1880), 6
Wall. 378; Burfhisel v. Firman, 22 Wall. N. W. Rep. 198.

213
§ 245.] RECORDING, FILING, AND REFILING.

same rule will apply when the mortgage was originally valid,
but is made void by the neglect of the mortgagee, may well be
questioned.”

Under a statute of the State of Ohio, rendering it necessary to
the validity of a mortgage to indemnify a surety that a statement
of such liability shall be entered thereon and verified by oath, it
was held that a mortgage void as to creditors for want of such
statement is void as against an assignee in trust for the benefit
of creditors! It was contended that as the mortgage was good
against the mortgagor, it was good also against his assignee for
the benefit of creditors; that the latter stands in no better situa-
tion than his assignor. The correctness of this position at com-
mon law is admitted ; but not so under the statute. The mort-
gagee not having possession of the mortgaged property, the stat-
ute declares the mortgage void as against the creditors of the
mortgagor. The assignee took the property under the assign-
ment, and held it for the exclusive benefit of creditors. The
mode of providing for creditors by way of assignment, in trust for
their benefit, is recognized and regulated by statute; and we see
no good reason why their rights may not be as effectually asserted
through the assignee as they could be by judgment and execution,
in case there had been no assignment.” 2

245. As against general creditors, having no lien by attach-
ment, an unrecorded mortgage is valid and conclusive, unless it
can be impeached as fraudulent, or as giving a preference under a
bankrupt or insolvent law. But in New York it is held that a
mortgage not duly filed is void as against a general creditor whose
claim has accrued during the continuance of the default in filing
the mortgage, although the creditor is not in a position to raise
the question until he has obtained judgment or process against
the property. The object of the act is to prevent the setting up
of secret mortgages against persons who may deal with the mort-
gagor, on the faith that his property is not thus incumbered.
Therefore when a creditor has obtained judgment and execution,
he may go back to the origin of the debt, and show, if he can, that
when it was contracted, the incumbrance with which he is then
confronted was kept secret, by being withheld from registry.®

1 Hanes v. Tiffany, 25 Ohio St. 549. 8 Thompson v. Van Vechten, 27 N. Y.

° Hanes v. Tiffany, supra, per White, J. 568; Stewart v. Beale, 7 Hun (N. Y.), 405;
214 Fraser v. Gilbert, 11 Hun (N. Y.), 634.
EFFECT OF RECORDING OR FILING. [§ 246.

Moreover the right to preference over the unfiled mortgage at-
taches itself to the debt, and accompanies it when transferred in
the course of the negotiation of commercial paper.!

After a creditor had obtained judgment and issued execution to
the sheriff in the county where chattels of the debtor covered by
an unfiled mortgage were situate, the mortgagee applied for and
obtained the appointment of a receiver of the property, and thus
prevented the judgment creditor from levying his execution and
satisfying his judgment. The moneys received from a sale of the
property having been paid into court for distribution by it asa
court of equity, it was held that the court was bound to preserve
the rights of the judgment creditor, and award the fund to him?

The latest case in New York upon this subject more strongly
asserts that one not having a judgment and execution is not a
creditor within the meaning of the provision of the statute declar-
ing that the omission to file a chattel mortgage renders it void as
against creditors of the mortgagee and subsequent purchasers or
mortgagees in good faith.®

A judgment creditor is estopped from objecting to a mortgage
on the ground that it is not filed, by agreeing with the mortgagee
that the property should be sold free from all incumbrances, and
that the latter should be first paid out of the proceeds, even though
he was ignorant of the defect at the time of the agreement.‘

246. Priority as between unrecorded mortgages is gener-
ally determined by priority of execution. In New York and some
other states, where the rule prevails. that a precedent debt does
not constitute the mortgagee a purchaser in good faith, in a con-
flict between a prior mortgage made for such a consideration and a
subsequent mortgage made to secure a debt created at the same
time, the latter would prevail. As between two unrecorded mort-
gages given to secure antecedent debts, preference is given to that
which is first in time.®

But under a statute which declares that a mortgage not re-
corded shall be absolutely void as against subsequent mortgagees
in good faith, it is held that a second mortgage taken in good faith

1 Thompson v. Van Vechten, supra. see Hayman v. Jones, 7 Hun (N. Y.),
2 Stewart v. Beale, 7 Hun (N. Y), 405; 238.
affirmed 68 N. Y. 629. 4 Lane v. Lutz, 3 Abb. App. Dec. 19.

8 Jones v. Graham, 77 N. Y. 628. And 5 Tiffany v. Warren, 37 Barb. (N. Y.)
571; S. C. 24 How. Pr. 293.

215
§ 247.] RECORDING, FILING, AND REFILING.

although not recorded at all takes priority over a first mortgage
not recorded. “The clear direction of the act is that a prior
mortgage, unregistered, shall be ‘ absolutely void as against’ sub-
sequent mortgagees in good faith. We are asked to say that this
result shall not follow unless such subsequent mortgagee shall
obtain a priority in the registration of his mortgage. But we
cannot say this, because the statute says just the reverse. The
statute prescribes but a single condition to give a second mort-
gage priority over a first unregistered mortgage, viz. bona fides in
the party taking it; it is not, therefore, in the competence of the
court to require the performance of a second condition, viz. that
such second instrument must be put first upon the record.” !

As between two mortgages made by the same person on the
same property, and filed the same minute, priority is determined
by the intention of the parties if there be any indication of such
intention. If it appear that one was executed before the other,
and that this was intended by the parties to constitute the prior
lien, priority will be given to it.?

247. Who are protected by record. — Statutes making unre-
corded mortgages void against subsequent purchasers and mort-
gagees in good faith are intended to protect those only who have
acquired rights of which they would be defrauded except for such
protection. A purchaser who has paid nothing does not come
within this protection, and no one can be protected as a bond
fide purchaser except to the extent of his payments made before
notice.3

The statutes do not protect wrong-doers, or those who acquire
title by fraud or trespass. They can be invoked only by cred-
itors and purchasers in good faith.

A mortgage for purchase money of chattels sold to the mort-
gagor by the mortgagee, —the sale and the mortgage being one
transaction, — takes precedence of a mortgage of the same prop-
erty made by the mortgagor to another person and recorded
before the mortgagor acquired the property.

1 De Courcey v. Collins, 21 N. J. Eq. * Pratt v. Harlow, 16 Gray (Mass.), 379;

357. Moses v. Walker, 2 Hilt. (N. Y.) 536;
? Wray v. Fedderke, 43 N. Y. Superior Johnson v. Jeffreis, 30 Mo. 423.
Ct. 335. 5 Walker v. Vaughn, 33 Conn. 577.

8 Kohl v. Lynn, 34 Mich, 360.
216
REQUISITES OF A VALID RECORD OR FILING. [§ 248.

Although the record is notice to a purchaser of the property, it
is not notice to one who receives the proceeds of a sale of the
property of the mortgagor, and applies the same to the payment
of an antecedent indebtedness. ‘“‘It would greatly embarrass
commercial transactions if a party could not safely receive the
proceeds of personal property without first examining the records
of the hundred counties in the state, to see whether any mortgage
upon the property is recorded. The party receiving the proceeds
of such property has a right to presume that the sale was proper,
or, if not, that the party entitled to the lien will pursue the prop-
erty itself, and not its proceeds. If the fact of the existence of a
mortgage was known, and the identical proceeds could be traced,
a different question might arise.” ?

II. The Requisites of a Valid Record or Filing.

248. Acknowledgment. — Statutes which prescribe the man-
ner in which mortgages shall be executed and recorded must, in
general, be strictly. complied with, A record without an acknowl-
edgment where this is required, or without an affidavit where
that is required, is ineffectual; and it is equally ineffectual if
there be any material defect in the certificate of acknowledg-
ment, or of the taking of the oath, such as the omission of the of-
ficer before whom it was taken to sign the certificate.2 A mort-
gage not executed or acknowledged in conformity with the statute,
although spread upon the record, is not notice to creditors or pur-
chasers.*

A false certificate of acknowledgment invalidates the mort-
gage, so that the property is liable to levy and sale on execution
against the mortgagor.®

The record of a mortgage imperfectly acknowledged imparts no
notice, and accordingly a purchaser of the mortgaged property
from the mortgagor will hold it against the mortgagee under such
a mortgage, although the mortgage be copied upon the recorder’s
books and indexed as a mortgage in the usual index. Whether
actual knowledge of the record on the part of the purchaser, or
even his knowledge of the existence of such a mortgage in any

1 Burnett v. Gustafson (Iowa, 1880), * Frank v. Miner, 50 IIl. 444.

6 N. W. Rep. 132. 5 McDowell v. Stewart, 83 Ill. 538.
2 Burnett v. Gustafson, supra, per Day, J. ® Selking v. Hebel, 1 Mo. App. 340.
8 Hill v. Gilman, 39 N. H. 88.

217
§§ 249, 250.] RECORDING, FILING, AND REFILING.

other way, would make the mortgage valid as against him would
depend upon the form of the statute; for while the statutes of
some states make an unrecorded mortgage void only as to creditors
and purchasers without notice, those of other states make them
void as against all persons except the parties thereto.

A mortgage recorded without the acknowledgment being en-
tered upon the justice’s docket, where this formality is required
by statute, is not notice to purchasers and creditors of the mort-
gagor.2 If a statute require an acknowledgment before a justice
of the peace in the precinct in which the mortgagor resides, and
there be no justice in the precinct, or none capable of acting, the
parties are left to their common law rights, and the mortgage can
be made valid as against third persons only by a change of pos-
session of the property.2 Under such a statute, moreover, a non-
resident cannot execute a mortgage so that the record of it will be
constructive notice of it; and a foreign corporation does not be-
come a resident so that it can make a valid execution of a mort-
gage, although it comply with the laws in pursuance of which for-
eign corporations are allowed to do business.*

Whether a mortgage has been duly acknowledged and recorded
is a question for the court.5

249, An acknowledgment before a justice of the peace who
is one of the mortgagees is void as to other mortgage creditors,
it being against the policy of the law that any officer should per-
form either a ministerial or judicial act in his own behalf.6 In
like manner ap affidavit probating a mortgage, taken before a
notary public who is the attorney of the mortgagee, is not a legal
affidavit, and a mortgage recorded on such probate is not legally
recorded.”

250. Where record should be made. — The statutes providing
for the recording of chattel mortgages generally require such rec-
ord to be made in the town or city where the mortgagor resides at
the time. In this way it often becomes material to fix the resi-

1 See §§ 808 et seg. 5 Bailey v. Godfrey, 54 Ill. 507.

2 Koplin v. Anderson, 88 Ill. 120; 6 Hammers v. Dole, 61 Ill. 307; Wilson
Frank v. Miner, 50 Ill. 444; Porter v. v. Traer, 20 Iowa, 231; Beaman v. Whit-

Dement, 35 Ill. 478. ney, 20 Me. 413. See Darst v. Gale, 83
8 Frank v. Miner, 50 Ill. 444. Mil. 136.
4 Cook v. Hager, 3 Colo. 386. 7 Nichols v. Hampton, 46 Ga, 253.

218
REQUISITES OF A VALID RECORD OR FILING. [§§ 251, 252.

dence of the mortgagor in order to determine whether the mort-
gage has been duly recorded ; and this fact may be determined
by any competent evidence. The declarations of the mortgagor
made at the time of executing the mortgage are competent for this
purpose.! A temporary absence from one’s fixed domicil, on busi-
ness or pleasure, with the intention of returning, and an actual
return in accordance with such intention, does not work a change
of domicil ; and therefore a mortgage made during the period of
such temporary absence should be recorded at the place of the
mortgagor’s fixed residence.”

251. It is the place of residence of the mortgagor at the
time the mortgage is executed, and not his place of residence at
the time it is recorded or filed, that determines the place where it
should be recorded or filed. It does not aid in establishing the
validity of a mortgage, that the mortgagor having bought a farm
in a town other than that of his residence, together with the stock
thereon, gave a mortgage upon the stock, and in a few days after-
wards moved his residence to the farm, and the mortgage was filed
- in the town in which the farm was situated; the mortgage was
void as against a bond fide purchaser. The requirement to file
or record the mortgage in the place of residence of the mortgagor
must be strictly followed; and the mortgagee cannot substitute
for that the filing of the mortgage in any other place, although he
may think that by so doing much better information of the ex-
istence of the mortgage will be afforded than would be afforded
by a literal compliance with the statute.

If the statute simply requires the record to be made in the place
of the mortgagor’s residence, it does not matter that the property
is situated in another town or county, and that it is never after-
wards brought to the place of residence of the mortgagor, if his
mortgage be recorded there.®

252. When some of the mortgagors are residents and others
non-residents of the state, a statute requiring the mortgage to

1 Veazie v. Somerby, 5 Allen (Mass.), 4 Powers v. Freeman, 2 Lans. (N. Y.)

280. 127.
2 Boyd v. Beck, 29 Ala. 703. 5 Singleton v. Young, 3 Dana (Ky.),
8 Hicks v. Williams, 17 Barb. (N. Y.) 559; Vaughn vt. Bell, 9 B. Mon. (Ky.)
523. 447,

219
§§ 2538-255. ] RECORDING, FILING, AND REFILING.

be recorded in the county where the mortgagor resides, if a resi-
dent of the state, and if not a resident, then in the county where
the property is situated, must be complied with by recording the
mortgage in the counties in which such residents live, and also in
the county where the chattels are situated.1 ‘In the present
case,” say the court, “‘ one of the mortgagors resided in the county
of Union, in New Jersey, and the other in New York. With re-
gard to the former, the statutory requisition could be complied
with only by a registry in the place of his residence; and as to
the latter, a similar form was requisite in the county of the situs
of the property. This is a remedial statute, its object being to
discourage the placing of secret liens upon personal property, and
this object is obviously promoted by requiring that these mort-
gages must be recorded at the places of the residence of all such
of the mortgagors as reside in the state; and in the case of
others being non-resident, that there then must be likewise a reg-
istration in the county in which the chattels are situate.”

253. The place of residence of a corporation for the pur-
pose of recording a mortgage by it is the place where it keeps its
principal office.2 It would be most unreasonable to hold that a
mortgage by a corporation or joint-stock association should be re-
corded or filed in each town within the state in which any one of
its stockholders might reside.®

254. A mortgage filed in the proper office, as regards a
portion of the property embraced in it, is not rendered inoper-
ative as to such property by the fact that it was not filed in the
proper office as to other chattels described in it.4

255. Under a statute requiring the record to be made in
the county in which the property may be, a record in another
county is ineffectual,® and the subsequent removal of the property
to such other county does not give it validity from that time; so
that a subsequent mortgage made and recorded in such other
county after the removal of the property there takes precedence.®

1 De Courcey v. Collins, 21 N. J. Eq. * Hubbardston Lumber Co. v. Covert,
357 ; affirming S. C. 19 Ib. 115. 35 Mich. 254.
2 Wright v. Bundy, 11 Ind. 398. 5 Platt v. Stewart, 13 Blatchf. 481.
8 Nelson v. Neil, 15 Hun (N. Y.), 383. § Lane v. Mason, 5 Leigh (Va.), 520.
220
REQUISITES OF A VALID RECORD OR FILING. [§§ 256, 257.

256. The mortgagor’s residence, as well as the fact of rec-
ord, must be alleged and proved, when the validity of a mort-
gage depends upon its having been recorded in the place of resi-
dence of the mortgagor.!' A recital of the place of residence of
the mortgagor in the deed is not sufficient; and although such a
recital might estop the mortgagor to deny that he resided in the
place so recited, it does not estop his other creditors to show that
the recital is erroneous. The statute was enacted for the benefit
of creditors, and it imposes a rigid and unbending condition as
a condition to the validity of a mortgage, namely, that it be re-
corded or filed in the place where the mortgagor actually resides.2
In a recent case before the Supreme Court of the United States,
the holder of a mortgage not filed in the place of residence of the
mortgagors, but filed in the city of New York, which was the
place of business of their firm, laid some stress upon the fact that
the mortgagors described themselves in the mortgage as of the
city of New York. To this the court, speaking through Mr.
Justice Harlan, reply :3 “If that is to be regarded as a repre-
sentation by them that their fixed abode was in that city, it is
obvious that the statute designed for the protection of creditors,
subsequent purchasers, and mortgagees in good faith, cannot be
thus defeated. Their rights depend not upon recitals or repre-
sentations of the mortgagors as to their residence, but upon the
fact of such residence. The actual residence controls the place of
filing, otherwise the object of the statute would be frustrated by
the mere act of the parties, to the injury of those whose rights
were intended to be protected.”

257. A mortgage made by joint mortgagees as partners re-
siding in different towns must be recorded in each of the towns
in which the mortgagors reside. It does not follow that because
the actual possession of the property is in one of several owners,

1 Bither v. Buswell, 51 Me. 601; Smith no importance, and might, for the matter
v. Jenks, 1 Den. (N. Y.) 580. of security, be omitted altogether.” In

4 Platt v. Stewart, 18 Blatchf. 481; Stewartv. Platt, supra, JJ. Field, Swayne,
Chandler v. Bunn, Hill & D:Lalor’s Supp. and Bradley dissented, on the ground that
(N. Y.) 167. the domicil of the firm is the place where

8 Stewart v. Platt, 101 U.S. 731, 737. it is located and carries on its business, and
Nelson, C. J.,is quoted as saying in Chand- that a record there is sufficient.
ler v. Bunn, supra, that the recital of the * Stewart v. Platt, 101 U.S. 731; Rich
residence in the mortgage “seems to be of v. Roberts, 48 Me. 548; S. C. 50 Me. 395.

221
§ 258.] RECORDING, FILING, AND REFILING.

and his possession is in effect the possession of all, the registry of
the mortgage in the town where he resides is sufficient. The
statute requires the record to be made in the town “ where the
mortgagor resides.” But the word “ mortgagor” must be re-
garded as including “ mortgagors.” No other construction of the
statute would effectually secure the giving of the notice intended
by the statute, or would remedy the evils it was intended to pre-
vent.}

Where the members of a firm have their actual and permanent
residence in one place, but transact their business in another,
where they board for a part of the year, but with no intention of
changing their domicil, a chattel mortgage given by them should
be filed at their permanent place of residence. To hold that they
resided somewhere else, merely because they happened to own a
mill in another place, would be a perversion of the plain language
of the statute, which makes their actual residence the proper place
to file chattel mortgages.?

258. The most important decision upon this point is that
by the Supreme Court of the United States in Stewart v. Platt.3
In that case the mortgagors, who resided in Westchester County,
and were lessees of a hotel in the city of New York, made a mort-
gage of the furniture of the hotel, and this was duly filed in the
office of the register of deeds for the city and county of New
York, but was not filed in the towns where the mortgagors respec-
tively resided with their families, as provided by the statute of
New York. It was held that there was no effectual filing of the
mortgage. Mr. Justice Harlan, delivering the opinion of the
court, said: “ The contention of learned counsel for the appellants
is that the firm was the mortgagor, that its residence or domicil
was in the city of New York, and that the manifest object of the
statute was met by filing the several mortgages in the city where
the firm carried on its business. The question thus presented is
within a very narrow compass, and is not free from difficulty. Its
solution depends upon the meaning of the word ‘reside,’ em-
ployed in the statute. It is to be regretted that we are not guided
by some direct controlling adjudication in the courts of New York
construing the statute under examination. But no such decision

1 Morrill v. Sanford, 49 Me. 566. 8 101 U.S. 731.
2 Briggs v. Leitelt, 41 Mich. 79.

222
REQUISITES OF A VALID RECORD OR FILING. [§ 259.

has been brought to our attention. With some hesitation we
have reached the conclusion that a chattel mortgage, executed by
a firm upon firm property, is void, under the New York statute, as
against creditors, subsequent purchasers, and mortgagees in good
faith, unless filed in the city or town where the individual mem-
bers of the firm severally reside. The statute upon its face fur-
nishes persuasive evidence that its framers intended to make a
sharp distinction between the place where the property might be
at the time of the execution of the mortgage and the place of the
mortgagor’s residence.

“Tf he be a non-resident of the State of New York, the mort-
gage may be filed in the town or city where the property shall be
at the time of the execution of the mortgage. If he be a resi-
dent, then his residence, not the actual situs of the property,
governs. If these instruments be executed by several resident
mortgagors, the statute would seem to require that the mortgage
be filed in the towns or cities where the mortgagors at the time
respectively reside. ....

“A good deal was said in oral argument as to the serious incon-
veniences which may result from any construction of the statute
that requires chattel mortgages executed by a firm upon its prop-
erty to be filed elsewhere than in the town or city where the
property is used, and where the firm business is conducted. On
the other hand, it is quite easy to suggest reasons of a cogent
character, why, in view of the manifest purpose of such legisla-
tion, the actual residence of the mortgagors should determine the
place of filing. But these are considerations to be addressed more
properly to the legislature of New York, with whom rests the
power to make such alterations as experience may suggest to be

_ necessary.”

259. In case the individual members of a partnership are
not residents of the state, a partnership having a definite
place of business may be regarded as residing there for the pur-
pose of determining the proper place for filing a mortgage by
the firm made in the firm name strictly for the use of the firm;
and accordingly it has been held that a mortgage of a copartner-
ship executed in its name, and not in the name of the individuals
composing it, by the resident partner, the other partner residing
-in another state, was properly filed in the clerk’s office of the

223
’

§ 260.] RECORDING, FILING, AND REFILING.

town in which he resided and in which the partnership had its
usual place of business.1

260. The removal of a mortgagor from the town in which he
resided when the mortgage was executed, and where it was duly
recorded, and the taking of the mortgaged property with him, does
not invalidate the record of the mortgage, or necessitate the re-
cording of it again in the town to which he has removed.? The
object in requiring a record of the mortgage is to give publicity
to it, and to provide a source of information common to all per-
sons, so that they may determine with some degree of facility, con-
venience, and certainty, the question of title to the property,
whenever they may be interested to know it; while at the same
time it is not among the purposes of the recording acts to subject
a bond fide mortgagee to the inconvenience of the constant vigi-
lance and ceaseless watching which would be requisite to guard
and secure his interests, if he were obliged to record his mortgage
in every town into which the mortgagor might see fit to remove
with the property. If he were required to do this, his security
would be wellnigh worthless; for before he could do this a cred-
itor of the mortgagor might seize the property by process of law,
or the mortgagor himself might pass the title to it by way of sale
to an innocent purchaser.’

In like manner if the mortgage be required to be recorded in
the county of the mortgagor’s residence, his removal with the
property to another county does not necessitate the recording of
the mortgage again in the county to which he removes.*

The same rule also applies when the mortgagor removes with
the property to another state. A creditor of the mortgagor at-
taching the property, or a purchaser of it, must look to the title.
Possession is merely primdé facie evidence of it. If the holder
of the property has recently come from an adjoining state, there

1 Hubbardston Lumber Co. v. Covert, (N. Y.) 523; Pease v. Odenkirchen, 42
35 Mich. 254. This decision would not Conn. 415; Elson v. Barrier, 56 Miss.
apply to a case where both partners re- 394.
sided in the state. 8 Hoit v. Remick, supra, per Woods, J.

2 Brigham v. Weaver, 6 Cush. (Mass.) # Bevans v. Bolton, 31 Mo. 437; Feurt
298; Whitney v. Haywood, Ib. 82; Bar- v. Rowell, 62 Mo. 524.
rows v. Turner, 50 Me. 127; Hoit v. 5 Offutt v. Flagg, 10 N. H. 46; Smith
Remick, 11 N. H. 285; Offutt v. Flagg, v. McLean, 24 Iowa, 322; Feurt v. Rowell,
10 N. H. 46; Hicks v. Williams, 17 Barb. 62 Mo. 524. See § 299.

224
REQUISITES OF A VALID RECORD OR FILING. [$§ 261, 262.

may be a mortgage upon the property in that state; and a pur-
chaser or creditor must exercise his diligence by inquiring there
whether the property is incumbered, just as when the owner has
recently removed from another part of the same state the pur-
chaser or creditor is bound to inquire at such former residence of
the owner for incumbrances there recorded.

261. In case the mortgagor resides out of the state, under
a statute which provides for the recording of a mortgage at the
mortgagor’s place of residence, and does not provide for recording
it in the place where the mortgaged property is situated, there can
be no effectual record of the mortgage; and therefore the only
effectual mode of making the mortgage is for the mortgagee to
take and hold actual possession of the property.t The statute
.does not provide for such a case.

Under a statute which provides that the mortgage shall a re-
corded in the county or town in which the mortgagor resides, but
if he is not a resident of the state, then in the county or town
where the property may be at the time the mortgage is executed,
if there be several mortgagors and some of them reside in and
others out of the state, the mortgage must be recorded in the
counties or towns in which such residents live, and also in the
county or town in which the chattels are situated.”

262. When record required within a limited time. — Un-
der a statute which makes void as against others than the par-
ties a mortgage not recorded within a specified time after execu-
tion, it is incumbent upon the mortgagee, when asserting any
rights under the mortgage, to show that it was recorded within the
time limited? The record is not constructive notice for any pur-
pose unless it be made within the time limited. Although the
want of record within the proper time cannot be cured by a sub-
sequent record, the mortgage may be made effectual by the mort-
gagee’s taking possession before others have acquired rights in

1 Smith v. Moore, 11 N. H. 55. ‘ ecution, a record made on the sixtieth day
2 De Courcey v. Collins, 21 N. J. Eq. after its execution is in due time. Mil-
357. ler v. Henshaw, 4 Dana (Ky.), 325.

3 Chenyworth v. Daily, 7 Ind. 284. 4 Sidener v. Bible, 43 Ind. 230; Mc-
Under a statute requiring a mortgage to Cord v. Cooper, 30 Ind. 9; Lockwood »,
be recorded within sixty days after its ex- Slevin, 26 Ind. 124.

15 : 225
§§ 263, 264.] | RECORDING, FILING, AND REFILING.

the property.! But under a statute which merely provides that
a mortgage must be recorded within a specified time, or be post-
poned to other liens created or obtained, and to purchases made
prior to the actual record of the mortgage, the mortgagee’s only
risk in not recording the mortgage within the time specified is the
risk of having his mortgage lien postponed or destroyed by the
recording of other liens, or the obtaining of judgments while his
mortgage remains unrecorded.2 Under a statute declaring a
mortgage, not recorded within a certain time, invalid against
other persons than the parties thereto, a mortgage not so recorded
is good between the parties ;3 but it has been held that failure to
record the mortgage renders it void as to all persons other than
the parties thereto, whether such persons had or had not acquired
a lien upon the property ; and that, therefore, although a mort-
gagee acquire possession of the property after that time and
before a creditor obtains any lien upon it, it is of no validity
against such general creditor. The statute is regarded as apply-
ing not merely to controversies relating to the priority of liens,
but as absolutely requiring the record to be made within a fixed
time as against all others than the parties to it.4

263. A mortgage does not become a valid lien against
creditors of the mortgagor until it is recorded. That the
mortgage is given for the purchase money of the mortgaged
property does not relieve the mortgagee from the necessity of
recording it before other liens attach. Thus, if there be an execu-
tion in the hands of a sheriff at the time of the debtor’s purchase
of the property, so that the lien of the execution would attach to
the property upon the delivery of it to the debtor, and he gives a
chattel mortgage for the purchase money at the time of the pur-
chase, but the mortgagee neglects for twenty hours to record it,
the execution becomes a prior lien.®

264. If the recording officer be required to minute the
time when the instrument is received, both in the book of
records and on the mortgage itself, it is not recorded until he

1 McTaggart v. Rose, 14 Ind. 230. 3 McTaggart v. Rose, 14 Ind. 230.
2 Hardaway v. Semmes, 24 Ga, 305; # Sidener v. Bible, 43 Ind. 230.
Johnson v. Patterson, 2 Woods, 443. 5 Self v. Sanford, 4 Bradw. (Ill.) 328.

226
REQUISITES OF A VALID RECORD OR FILING. [§§ 265, 266.

has made both of these minutes.1_ But the recording of the mort-
gage supersedes the necessity of noting in the book of records
the time when it was received.2 The validity of the record is not
impaired by the officer’s spreading the instrument upon record in
the wrong book.?

But whether a statute requiring the recording officer to enter
in a book certain facts touching a mortgage makes such minutes
an essential part of the record, so that a failure to make them
will invalidate a mortgage otherwise duly filed, or whether it be
directory only, must depend much upon the terms of the statute.4

265. Who may receive a mortgage for record. —If a vacancy
occur in the office of recorder, a person in charge of the office
may receive and file a mortgage, and such filing is valid' <A
clerk in the store of the town clerk and in charge of the town
clerk’s office may, in the absence of that officer, receive and file
a mortgage.6

266. What is a sufficient delivery for record. — The mere
leaving of a mortgage with a recording officer, to record it at a
. future time, is not equivalent to a record. Thus, where a mort-
gagor intrusted with the recording of a mortgage requested the
officer to * keep it out of sight for a few days,” it was held that
this was equivalent to a direction not to record it until further
orders, and that there could be no record until further orders were
given.’ And so where a mortgagor delivered a mortgage to the
town clerk, and upon some question arising about the recording
fee the mortgagor said, “ Then you may let it lie as it is, and
when I want you to record it I will let you know;” it was held
that it could not be deemed to be recorded until such notice
should be given; and that although the clerk on receiving the
mortgage minuted the day and hour of its reception upon the in-
strument, there was no valid record of it until it was at a sub-
sequent time ordered to be recorded.®

1 Handley v. Howe, 22 Me. 560; Holmes Waggoner (Wis. 1880), 9 Am. Law Ree.
v. Sprowl, 31 Me. 73; Head v. Goodwin, 358.

37 Me. 181. 5 Bishop v. Cook, 13 Barb. (N. Y.) 326.
2 Head v. Goodwin, supra; McLarren " Dodge v. Potter, 18 Barb. (N. Y.) 193;
v. Thompson, 40 Me. 284, Bisbop v. Cook, 18 Ib. 326.
® Head v. Goodwin, 37 Me. 181. 7 Low v. Pettengill, 12 N. H. 337.

4 A statute of this nature in Wisconsin 8 Town v. Griffith, 17 N. H. 165.
was held to be directory only. Smith c. 297
§§ 267, 268.| RECORDING, FILING, AND REFILING.

_ A delivery of a mortgage to the recorder when absent from his
office after business hours is not effectual until it is taken to the
office and there filed, although he mark it as filed when received.

If a mortgagor request the recorder to file a mortgage for record,
but to return it to him without recording it, stating that there
is some trouble about the property and that he may wish to make
some changes in the deed, he may well be regarded as acting as
the agent of the mortgagee in the transaction, in the absence of
proof that the latter repudiated the transaction; and a jury is
warranted in finding that the mortgagor was acting for the mort-
gagee, and was expected to place the deed on record when he
might consider it desirable or necessary.”

267. The mortgagee may make the mortgagor his agent to
file or record a mortgage ; and the fact that it was made and re-
corded or filed without the mortgagee’s knowledge does not ren-
der it invalid, if this was done by his direction or request.3 If a
mortgagor at the request of his mortgagee file a mortgage in the
proper office, but afterwards, for his own purposes and without
the mortgagee’s knowledge, request the clerk to hide it at the bot-
tom of the pile, so that it may not readily be seen, such request,
not being within the scope of his agency for the mortgagee, can-
not prejudice his rights.4

268. A mortgage cannot be withdrawn from the files where
filing instead of recording is prescribed, without endangering the
effect of the filing as notice at least during the time the mortgage
is withdrawn ; but if it be returned to the files, one purchasing
afterwards is affected with notice, although the recording officer
upon its withdrawal had made an entry upon the file book that the
mortgage had been delivered up to the mortgagee, and this entry
remained standing after the return of the instrument. Thus a
purchaser inquiring at the clerk’s offite in regard to the property
was informed by the clerk that the mortgage upon it had been
withdrawn, and the memorandum to this effect was shown him.
It turned out that the clerk was mistaken, and that the mortgage
had been returned, and was then on file. In a suit between the

1 Hathaway v. Howell, 54 N. Y. 97. Sargeant v. Solberg, 22 Wis. 132; see §
2 Haenschen v. Luchtemeyer, 49 Mo. 51. 105.

8 Harrington v. Britton, 26 Wis. 541 ; * Case v. Jewett, 13 Wis. 498.
228 ;
REQUISITES OF A VALID RECORD OR FILING. [§ 269, 270.

purchaser and mortgagee, it was held that the mortgagee’s title
must prevail; that his rights were secure so long as the mortgage
was actually on file. The clerk’s entry was unofficial, and both
this and his statement to the purchaser were unauthorized. The
clerk had no right to deliver the instrument to the mortgagee to
be taken away, but having done so and afterwards allowed it to
be returned, no second indorsement of the filing is necessary to
make it notice under the statute thereafter.’

269. If a mortgage be withdrawn from the files wrongfully
and without the mortgagee’s authority, his lien is not affected.
Such is the case if the withdrawal be made by one while acting
as the agent of the mortgagee, but not acting within the scope
of his authority in making the withdrawal. Thus, a mortgagee
having sent his son to the clerk’s office to see if the mortgage was
on file, the son misunderstood his instructions, and withdrew the
mortgage and took it to his father, who with due diligence caused
it to be refilled. While the mortgage was absent from the files,
the property was attached by a creditor of the mortgagor, with
knowledge of the facts. It was held that the mortgagee’s lien
was good as against the attachment. The agent in taking the
mortgage from the office committed a wrong, as much as if his
business at the office had no connection whatever with the mort-
gage. It was an unauthorized act for which the mortgagee should
not suffer, especially when the opposing claimant had full knowl-
edge of the lien he sought to subvert.”

270. Notice by record is effectual from the time that the
instrument is left for record. It is not essential to give effect
to the record that the instrument be actually spread upon the
record. The time when the mortgage is received is generally

1 Woodruff v. Phillips, 10 Mich. 500.
It was observed by the court, thaf if the
purchaser had called to see the mortgage
while it was out of the office, or if the
mortgagee had given his assent to the
memorandum, a different question would
have arisen, upon which the court ex-
pressed no opinion.

2 Swift v. Hall, 23 Wis. 532. The
court observe that if the attaching cred-
itor had been ignorant of the transaction,

and of the manner in which the mortgage
was withdrawn from the office, and had
called at the office and learned that it was
not on file, and then had attached the
property, a different question would have
arisen, upon which no opinion was ex-
pressed. See also Woodruff v. Phillip, 10
Mich. 500.

8 Craig v. Dimock, 47 Ill. 308 ; M’Greg-
or v. Hall, 3 St. & P. (Ala.), 397; Miller
v. Whitson, 40 Mo. 97.

229
§ 271.] RECORDING, FILING, AND REFILING.

required to be noted upon the instrument and in a book kept for
the purpose. The instrument is considered as recorded when it is
left with the recording officer and so noted as received. The sub-
sequent recording relates back to the time of the noting. If, how-
ever, the noting be omitted, and the mortgage recorded without
it, the record takes effect from the time when it is actually ex-
tended upon the record! If a mortgage be left for record and
indorsed in the usual manner by the recording officer, the record
is valid from that time as against a subsequent attaching cred-
itor, although just previous to the attachment an examination
of the records was made and no mortgage of the property was
found, and the recording officer stated there was no mortgage of
it upon record, but the mortgage was afterwards found by such
officer in his private drawer.?

A mortgage is protected from the time it is recorded, although
a statute declares that unless deposited for record “ forthwith” it
shall be void. Though there be delay in recording the mortgage,
it remains valid between the parties, and it becomes valid against
all men except those who have previously acquired rights in it.’

271. A mortgage is filed, within the meaning of the stat-
utes relating to filing, when it is delivered to the proper offi-
cer, for the purpose of notice. Statutory provisions requiring the
officer to indorse upon the instrument the time of its reception
and the number thereof, and to enter in a suitable book the names
of the parties, the date of the instrument, the amount secured,
and the time when the debt becomes due, do not make these acts
a part of the filing, or prerequisites thereto. ‘ File” means, at
common law, “a thread, ‘string, or wire upon which writs and
other exhibits in courts and offices are fastened or filed, for the
more safe keeping and ready turning to the same.” > ‘ Within
this definition, a paper might be said to be filed when strung upon
the thread, string, or wire. That particular mode of filing having

1 McLarren v. Thompson, 40 Me. 284; 2 Jordan v. Farnsworth, 15 Gray
Head v. Goodwin, 37 Me. 181; Holmes v. (Mass), 517.
Sprowl, 31 Me. 73. Under a statute in 8 Wilson v. Leslie, 20 Ohio, 161.
Maine a noting both upon the mortgage # Gorham v. Summers, 25 Minn. 81, 87.
and in the book was requisite to make the * Wharton’s Law Lexicon; Bouvier’s
record effectual from the time the instru- Law Dictionary.

ment was left. Handley v. Howe, 22 Mo, “Dan Chaucer, well of English undefyled,
560. On Fame’s eternal bead-roll worthie to be fyled.”
SPENSER’s Faerie Queene.

280
REQUISITES OF A VALID RECORD OR FILING. [§$ 272, 278.

almost entirely gone out of use, another mode of filing, the pur-
pose of which is the same, has taken its place, so that, as Bouvier
says, ‘ A paper is said also to be filed when it is delivered to the
proper officer, and by him received to be kept on file.’ This,
which we take to be the present ordinary sense of the word
‘filed,’ would be presumed to be the legislative sense, unless the
contrary is made to appear.” 1

2972. Any neglect of duty by the recording officer need not
concern the mortgagee after he has left for record or filed his
mortgage. Thus, where a mortgage was duly filed with the town
clerk, who was the mortgagor, and he received and indorsed it
without receiving or demanding his statutory fees, his neglect to
enter it upon the index, or to place the instrument in the files of
mortgages, was held not to invalidate the mortgage ; the remis-
sion of the fees or the giving credit therefor concerns no one but
the officer, and the mortgagee having done all the statute required
of him cannot be prejudiced by the failure of the officer to do his
duty.2 “The statute seems to have required the deposit, not
merely for notice to creditors and purchasers, but chiefly to show
the transaction to have been actual and genuine, and to prevent
secrecy and imposition, and to remove the presumption otherwise
arising against good faith. It was to permit such’mortgages to be
given by men in business without requiring them to suspend their
business, or give up possession of their stock in trade, on which
they rely to raise the amount of their debts.” ?

273. A mistake in spreading a mortgage upon the record
may invalidate it as notice; although a mistake which would be
material in one instance might be immaterial in another. Ordi-
narily a mistake in recording the date of the mortgage, such as
recording the date as of an earlier year or earlier month, would
not, perhaps, invalidate the record. But where a mortgage was
made of ship-building materials, and the mortgagee afterwards
claimed a vessel under the mortgage as built of such materials, a
mistake in recording the date of the mortgage as made six months

1 Gorham v. Summers, supra, per 193; Neele v. Berryhill, 4 How. (N. Y.)
Berry, J. Pr. 16,
2 People v. Bristol, 35 Mich. 28; Dike- 8 People v. Bristol, supra, per Camp-
man v. Puckhafer, 1 Abb. (N. Y.) Pr. N. bell, J.
S. 32; Dodge v. Potter, 18 Barb. (N. Y.) 231
§§ 274, 275.] RECORDING, FILING, AND REFILING.

earlier than the actual date of it was held to render the record
of the mortgage ineffectual as against attaching creditors of the
mortgagor.)

An error of the register in indexing a mortgage does not in-
validate the record, although a subsequent purchaser is thereby
misled.?

274. A certificate of the recording officer is conclusive evi-
dence that a mortgage has been recorded.® It does not matter
upon what part of the paper the certificate be written. It is con-
clusive that a memorandum written below the certificate of record,
and referring by asterisks to the mortgage, was recorded ; and the
record itself is not admissible to contradict the certificate The
recording officer may write his certificate upon such part of the
paper as is most convenient for him without varying its interpreta-
tion. If it purports to be a certificate that the whole mortgage
was recorded it must be so. construed.®

A mortgage must be produced and proved by common law
evidence, or its non-production accounted for, so as to authorize
secondary evidence. A certificate of the town clerk, in whose
office a chattel mortgage is filed, stating that a paper is a copy of
the original mortgage, is no proof of the existence of the mort-
gage ; neither is it any proof that the paper purporting to be a
copy of the mortgage is a copy.®

II. What Instruments are within the Recording Acts.

275. A bill of sale absolute upon its face, but executed as a
security and intended to operate as a mortgage, is within the
operation of a statute making void a mortgage not recorded, in
case the property be not delivered to and retained by the mort-
gagee.? Although the condition be not expressed, if the intention
of the parties that the instrument shall operate as a mortgage be

1 Stedman v. Perkins, 42 Me. 130. v Waggoner (Wis. 1880), 9 Am. L. Ree.

2 Dikeman v. Puckhafer, 1 Daly (N. 358. ;
Y.), 489; S.C.1 Abb.(N. Y.) Pr. N.S. # Adams v. Pratt, 109 Mass. 59.

382, 5 Adams v. Pratt, supra.

8 Fuller v. Cunningham, 105 Mass. 442; 6 Bissell v. Pearce, 28 N. Y. 252.
Thayer v. Stark, 6 Cush. (Mass.) 11; 7 Dukes v. Jones, 6 Jones (N. C.) L. 143
Jordan v. Farnsworth, 15 Gray (Mass.), Bird v. Wilkinson, 4 Leigh (Va.), 266;
517; Ferguson v. Clifford, 37 N. H. 86; MKuhn v. Graves, 9 Iowa, 303. And see
Head v. Goodwin, 37 Me. 181. See Smith Sanders v. Pepoon, 4 Fla. 465.

232
INSTRUMENTS WITHIN THE RECORDING acts. [§§$ 276-278.

declared or conceded, the instrument, however imperfect it may be
in form, is within the purview of the statute requiring such mort-
gages to be recorded.}

276. An instrument evidencing a conditional sale need not
be recorded as a chattel mortgage in order to be valid against
creditors or subsequent purchasers.2 Judge Dillon, upon the ad-
visability of a statute embracing such an instrument, said: “ It
may be, that the registry laws, if wisely framed, ought to extend
to such a case as this, and to require the seller to place the evi-
dence of his rights on record; and accordingly we find that some
of the states have recently passed enactments of the character
suggested. But there is no such legislative requirement in Mis-
souri. This instrument was not a mortgage or deed of trust
within the statute above quoted.”

277. The recording of a bill of parcels of chattels taken as
security for a debt without any delivery of them does not make it
a mortgage, nor answer the requirements of statute, that a mort-
gage to be valid except as between the parties shall be recorded,
or the property be delivered to and retained by the mortgagee ;
for an oral mortgage isin its nature such that it cannot be re-
corded under the statute.2 Such a transaction at most amounts
only to a pledge, which is ineffectual by reason of leaving the
possession of the property with the general owner.‘

278. Choses in action. — Statutes respecting the recording of
mortgages of personal property apply only to goods and chattels
capable of delivery, and not to defeasible or conditional assign-
ments of choses in action. It is not necessary to the validity of

1 Shaw v. Wilshire, 65 Me. 485, over-
ruling Knight v. Nichols, 34 Me. 208. Now
by statute in Maine, R. 8. c.111,§5. A
contract in a sale of chattels that the prop-
erty shall remain the property of the ven-
dor until the price is paid, or reserving a
lien for the purchase money, where a note
for this is given, is void, unless it is made
and signed as part of the note, and unless
recordéd like a mortgage of personal prop-
erty, provided such note exceeds thirty

dollars. And see Cooper v. Brock (Mich.
1879), 2 N. W. Rep. 660.

2 Rogers Locomotive Works v. Lewis,
4 Dill. 158.

8 Williams v. Nichols, 121 Mass. 435.

4 Walker v. Staples, 5 Allen (Mass.),
84; Hazard v. Loring, 10 Cush. (Mass.),
267; Whitaker v. Sumner, 20 Pick.
(Mass.) 399; Eastman v. Avery, 23 Me.
248; Beeman v. Lawton, 37 Me. 543;
Shaw v. Wilshire, 65 Me. 485.

288
§ 279.] RECORDING, FILING, AND REFILING.

such assignments that they be recorded.1_ The capital stock of a
corporation is not goods and chattels within the meaning of the
act concerning chattel mortgages, and therefore a mortgage of
such stock need not be filed or recorded? A legacy is not a
chattel, and therefore an assignment of it by way of mortgage
need not be filed in accordance with a chattel mortgage act.?

An agreement between a land-owner and another whereby the
latter agrees to cultivate land and to receive one half the crops
as wages does not confer upon the latter the possession and con-
trol of the crop until it is gathered and divided; and although his
interest in the crop may be assigned as security, yet such assign-
ment is not necessarily a mortgage or in the nature of one, and
need not be recorded.*

279. A mortgage embracing both real and personal prop-
erty must generally be recorded twice, or recorded as a mortgage
of realty and filed as a mortgage of personalty, in order to com-
ply with the recording laws and protect both classes of property.®
But under a statute which provides for the recording of mort-
gages of personal property in the same office in which convey-
ances of real property are recorded, and simply requires the re-
cording officer to record such mortgages in a book kept for the
purpose, a mortgage of both realty and personalty may be re-
corded in a book of records kept for recording mortgages of real
estate, if it be shown to be the usage of the office to record such
mortgages in the book containing such mortgages.

1 Marsh v. Woodbury, 1 Met. (Mass.),
436; Winsor v. McLellan, 2 Story, 492;
Bacon v. Bonham, 27 N. J. Eq. 209;
Monroe v. Hamilton, 60 Ala. 226, 233,
per Brickell, C. J.; Vanmeter v. McFad-
din, 8 B. Mon. (Ky.) 485; Bank of U. S.
v. Huth, 4 Ib. 423, 448; Newby v. Hill, 2
Metc. (Ky.) 530.

2 Williamson v. N. J. South. R. R. Co.
26 N. J. Eq. 398; Rowland v. Plummer,
50 Ala. 182.

The words “ goods and chattels” in the
registry acts do not include a mere chose
in action, such as a debt, or claim on an-
other for money due; and the assignment
of such debt or claim for value, though
not recorded, will be good against a

234

subsequent attachment of such debt or
claim. The words “ goods and chattels”
refer to and only include personal prop-
erty which is visible, tangible, or movable,
while the word “chattels” is one of very
large signification, and generally includes
choses in action as well as all species of
personal property; yet it is plain that it is
used in this connection in a more restricted
sense. Kirkland v. Brune, 31 Gratt. ( Va.)
126,

3 Bacon v. Bonham, 27 N. J. Eq. 209.

4 Hudgins v. Wood, 72 N. C. 256. See
Monroe v. Hamilton, 60 Ala. 226.

5 Stewart v. Beale, 7 Hun (N. Y.), 405;
S.C. 68 N. Y. 629.

6 Anthony v. Butler, 13 Pet. 428.
INSTRUMENTS WITHIN THE RECORDING ACTS. [$§ 280-282.

280. Chattels real, such as leases for years of real estate or
assignments thereof by way of mortgage, are not within the acts
relating to the recording or filing of chattel mortgages. Such
leases are chattels real and not mere chattels. Such leases or
assignments thereof, if required to be recorded at all, should be
recorded under the statutes relating to the record of titles to real
estate. Leases are not usually the subject of a mortgage, and
when they are the statutory provisions relating to chattel mort-
gages have no application thereto. These provisions relate to
goods and chattels which can be removed from place to place, the
possession of which may be changed, and not to chattels real or
choses in action.?

281. Fixtures. — If personal property, such as machinery or
the like, not strictly fixtures, be included in a mortgage of the real
estate upon which such fixtures are situated, and no possession of
the same be taken by the mortgagee, and the mortgage be not
recorded as a chattel mortgage, the property is of course liable to
attachment at the suit of the mortgagor’s creditors.”

In several states there are statutes which provide that mort-
gages of rolling-stock and other fixtures of railroads shall be valid
without recording or filing the same as chattel mortgages. Such
a statute in New Jersey was held to apply to mortgages executed
before its passage so far as to protect them against liens or titles
acquired after the passage of such act ;® though it would not pro-
tect a mortgage given before the passage of the act, as against a
levy under an execution also made prior to the passage of the act,
because the creditor in such case had acquired a vested right by
the levy of his execution.+

282. A schedule referred to in a mortgage and made part
of it should be recorded with it, to give effectual notice to the
public. The general description in the mortgage without the
schedule may be sufficient to transfer the property ; but when the
parties themselves have given it more particular description by a

1 Booth v. Kehoe, 71 N. Y. 341; Breese v. St. Jo. & Denver City Ry. Co. 3 Dill.
v. Bange, 2 E. D. Smith (N. Y.), 474, 412.
2 Potts v. N. J. Arms & Ordnance Co. 8 Kelly v. Boylan, 32 N. J. Eq. 581.
17, N. J. Eq. 395; Gale v. Ward, 14 Mass. 4 Williamson v. N. J. Southern R. R.
852; and see Farmers’ Loan & Trust Co. Co. 29 N. J. Eq. 311.
235
§§ 283, 284.] RECORDING, FILING, AND REFILING.

schedule, and have declared this to be a part of the mortgage, it
must be regarded as an essential part of it; and creditors and
others are not to be excluded from a knowledge of the property
embraced in the mortgage, by the omitting of an essential part of
it from the record. If the mortgage and schedule are both left
with the recording officer, they are sufficient notice to the public
while they remain unrecorded; but after the mortgage alone has
been spread upon the record, that is the only record which the
law recognizes; for a person finding the mortgage without the
schedule is not presumed to be advised from that circumstance
that the schedule existed and was to be found in the office, and
much less to be apprised of its contents, although it may still be
in the hands of the recording officer.”

But if the schedule be merely referred to in the mortgage, and
is not annexed to it, or made a part of it, there is no need of re-
cording it.®

283. When a mortgage secures the performance of a writ-
ten agreement, this forms no part of the mortgage, and need not
be filed or recorded with it in order to render the record effectual.
A chattel mortgage made the debt payable as follows, viz.: “ The
said principal sum and interest to be paid immediately at the ex-
piration of five years from date, except in case default should be
made in the performance of the conditions of a certain agreement
this day executed by,” etc. This agreement provided that the
debt was to be paid in monthly instalments of fifty dollars each.
It was held that the mortgage was not invalidated by the failure
to record or file the agreement referred to.5

284. Separate defeasance.— A statute providing that when
a bill of sale absolute in form appears, by a separate defeasance,
to have been intended only as a mortgage, the person for whose
benefit it was made shall not have the advantage or benefit of re-
cording it, unless the defeasance be recorded with it, has no appli-
cation to the case of a deed absolute upon its face, where no other

1 Sawyer v. Pennell, 19 Me. 167. * Byram v. Gordon, 11 Mich. 531.

2 Sawyer v. Pennell, supra. 5 Shuler v. Boutwell, 18 Hun (N. Y.),

8 Chapin v. Cram, 40 Me. 561. The 171.
case of Sawyer v. Pennell, supra, is re-
ferred to and distinguished.

236
REFILING. [8§§ 285, 286.

instrument is executed, although it was intended merely as a
security, and is in equity recognized as a mortgage.

When a mortgage is made by an absolute bill of sale and a
separate defeasance, and the former is recorded but not the latter,
third persons may consider the sale absolute.”

285. The recording of a copy of a mortgage is of no avail,
unless the statute expressly authorize such a record? The Su-
preme Court of Illinois, rendering a decision to this effect, said :
“The statute in regard to chattel mortgages is in derogation of
the common law, and should be strictly construed. It contem-
plates that an entry shall be-made upon the docket of the justice
of the acknowledgment, together with the names of the mort-
gagor and mortgagee, and a description of the property mort-
gaged at the time when the acknowledgment is taken. The orig-
inal mortgage is required to be recorded in the recorder’s office,
and it is the duty of the recorder correctly to transcribe the same.
To do this, he must have the original before him. The law has
made no provision for authenticating to the recorder a copy of
such a mortgage; he has no authority to transcribe a supposed
copy of such an instrument on the records of his office; and he is
not responsible for the correctness of any such transcript. The
copy or duplicate mortgage was not, and does not purport to have
been, acknowledged as the law requires, and for that reason is
invalid as an original mortgage.”

IV. Rejiling.

286. Successive annual filings of the mortgage, after the
first, are not necessary, in New York, to keep the mortgage on
foot through a number of years, and prevent its becoming void
as against creditors and subsequent purchasers and mortgagees in
good faith of the mortgagor The statute requires but two con-
ditions to the full protection of the mortgage by filing: first, that
it be filed; and second, that it be refiled within thirty days of the
expiration of a year from its filing. When thus refiled, it be-

1 Ing v. Brown, 3 Md. Ch. Dee. 521. * Newell v. Warren, 44 N. Y. 244; re-

2 Gaither v. Mumford, Taylor's Term versing S. C. 44 Barb. 258; and over-
(N. C.), 167. ruling Nitchie v. Townsend, 2 Sandf. (N.

8 Porter v. Dement, 35 Ill. 478; Mars- Y.) 299; Wisser v. O’Brien, 3 J. & Sp.
den v. Cornell, 62 N. ¥. 215. (N. Y.) 149; S. C. 44 How. Pr. 209.

237
§ 287.] RECORDING, FILING, AND REFILING.

comes a completed security, and no further filing is necessary to
make it a continuing security. The statute does not require any
further filing. But a new mortgage for the same debt upon the
same property is not invalidated by neglect to refile the old mort-
gage. It is the policy of the statute that the state of the prop-
erty and the incumbrances upon it from year to year shall be
made known, in one way or the other, to all interested.?

The requirement that a true copy of the mortgage shall be
refiled is met by refiling the original with the proper statement
indorsed thereon. There can be no reason why the refiling of the
original should not have the same effect as the refiling of a copy
of it.3 ’

But in Ohio* and Michigan ® a chattel mortgage can be kept in
force, as against creditors, only by successive filings from year to
year. The lapse of a full year without a renewal of the filing
renders the instrument invalid as against creditors. Each refiling
places it, for the purpose of notice, on the footing of a new mort-
gage. The year within which any filing must be made begins to
run from the exact time of the preceding filing, and is completed
at the corresponding day and hour of the following year. Annual
renewals are to be made, not only for the information of the gen-
eral creditors of the mortgagor, but quite as much for the infor-
mation of those who may have become purchasers or mortgagees
in good faith during the continuance of the earlier mortgage.®

287. A refiling of a mortgage must be effected within the
time limited for that purpose. It is nugatory if done either be-
fore or after that time.’ A refiling after that time is not effect
ual to revive and continue the validity of the mortgage for a year
after such refiling.8 In case the last day for the refiling of the

1 Lee v. Huntoon, 1 Hoff. (N. Y.) Ch.  * Briggs v. Mette (Mich. 1879), 3 N. W.

447. Rep. 231.
2 Meech »v. Patchin, 14 N. Y. 71; Mars- 5 Briggs v. Mette, supra. Dissent from
den v. Cornell, 62 N. Y. 215. the New York cases to the contrary is ex-

8 Stockham v. Allard, 4 T.&C.(N. Y.) pressed.
279; S.C. 2 Hun, 67; and see Fitch v. 7 Newell v. Warner, 44 Barb. (N. Y.)
Humphrey, 1 Den. (N. Y.) 163. 258,

* Seaman v. Eager, 16 Ohio St. 209; 8 Newell v. Warner, supra; overruling
following Nitchie v. Townsend, 2 Sandf. Swift v. Hart, 12 Barb. (N. Y.) 530.
(N. Y.) 299; and see Day v. Munson, 14
Ohio St. 488.

288
REFILING. [§§ 288, 289.

mortgage fall upon Sunday, it must be refiled on or before the
Saturday preceding.}

The refiling required by law must be done within the thirty
days immediately preceding the expiration of the year. A re-
filing before the commencement of the thirty days is unavailing.
Such a mortgage will be postponed to the claims of subsequent
creditors, purchasers, and mortgagees, though it is valid against
the mortgagor.

288. If the mortgagor becomes a non-resident of the state
within the year, the requirement of refiling cannot be complied
with. The declaration that the mortgage shall cease to be valid
unless refiled operates as well when the refiling was rendered im-
possible by the removal of the mortgagor, as when it is omitted
for any other reason.?

289. A refiling without a statement of the interest of the
mortgagee in the property is ineffectual. This statement must
be positive and distinct as to that interest, and must give such
precise information of the amount due as to enable others to
judge how far it may be safe or prudent to give credit to the
mortgagor.® “ This statement is intended to supply the place of
anew mortgage. It might be difficult to obtain a new mortgage
at the end of a year. There would be no obligation on the
part of the mortgagor to execute it, and no necessary inducement
to him to do so. A convenient substitute, and one within the
control of the creditor, was given by the section we are con-
sidering, and this substitute should contain all the essentials of
the original mortgage. It should show especially what was the
_property thus subjected, and what was the amount claimed to
be an incumbrance upon it. The detailed schedule is an im-
portant part of the mortgage, essential to be presented to an
inquiring creditor. The creditor is entitled to have it presented
in the renewal equally as in the original.” ¢ :

1 Nitchie v. Townsend, 2 Sandf. (N. Y.) 4 Fitch v. Humphrey, 1 Den. (N. Y.)
299. 163 ; Marsden v. Cornell, 62 N. Y. 215.

2 National Bank of the Metropolis v. 5 Theriot v. Prince, 1 Edm. Sel. Cas.
Sprague, 20 N. J. Eq. 13; Newell v, 219. :

Warner, 44 Barb. (N. Y.) 258, 6 Platt v. Stewart, 13 Blatchf. 481, 495,

8 Dillingham v. Bolt, 37 N. ¥Y. 198; S. per Hunt, J.

C.4 Abb. (N. Y.) Pr. N.S. 221 ; overruling
‘Dillingham v. Ladue, 35 Barb. (N. Y.) 38. 239
§ 290.] RECORDING, FILING, AND REFILING.

For these reasons a statement, in regard to a mortgage given
as security for rent to accrue on a lease of real estate, which
merely reads, — ‘I hereby certify that the lease within referred
to still exists in full force, and the interests of the parties and
my interests thereunder remain unchanged, except so far as the
same have been altered by the payment of the rent accrued,” is
insufficient.+

The “statement exhibiting the interest of the mortgagee in
the property”? must be made by him, in person or by attorney.
A statement made by the mortgagor or by any third person,
without any authority from the mortgagee, does not answer the
requirement of statute. The mortgagor in possession of the prop-
erty, and interested to keep off creditors, is regarded as the last
person who should be allowed to file the copy and make the state-
ment.?

290. Entire accuracy even to the smallest amount is not
required in the statement, in the absence of fraud, or, perhaps,
gross negligence. Many circumstances may exist rendering it
impossible for a mortgagee to state the sum remaining due with
entire and perfect accuracy. A statement is sufficient, although it
fail to give a credit of two dollars upon a debt of several hundred
dollars.2 A statement, that ‘somewhere about the sum of sixty

’ dollars, as near as can be ascertained,”’ remained unpaid upon
the mortgage, was accepted as sufficiently accurate. ‘“ No doubt,
if the mortgagee should fraudulently make a false statement by
which the amount remaining unpaid should be wilfully exagger-
ated; or should wilfully and with a view to hinder, embarrass, or
mislead creditors or purchasers, make a statement so vague and
indefinite as not to answer the substantial object and purpose
of the statute, the statement must be held insufficient and void.
And perhaps a grossly inaccurate, or vague statement even, with-
out any fraudulent intent, where it appeared that the mortgagee
had the means of making it accurate and definite, might be held
not to be a compliance with the statute. But when the state-
ment is made in good faith, with reasonable care, and is substan-
tially correct and accurate, we think the mortgagee has complied

1 Platt v. Stewart, supra. 8 Patterson v. Gillies, 64 Barb. (N. Y.)
2 Newell v. Warner, 44 Barb. (N. Y.) 563.
258. * Dillingham v. Bolty 37 N. Y. 198.

240
REFILING. [§ 291.

with the spirit and intent of the statute.”! A clerical error in
the copy of a mortgage and the accompanying statement of the
amount claimed, by which such amount is overstated by the sum
of one hundred dollars, is fatal, and the validity of the mortgage
as against creditors ceases with the year after the original filing.”
The error in the copy, or the variation in the amount, must be
material in order to render the filing of the intended copy of no
effect, for the law will not regard trifles.3

291. A statement which annexes and refers to another
document filed with it is sufficient, if the two papers read to-
gether, in connection with the original mortgage, disclose intelli-
gibly the interest of the mortgagee.* All that is necessary is,
that the statement should notify creditors of the extent of the
mortgagee’s lien.6 But a statement which simply refers to the
original mortgage, and sets forth * that there is due and remain-
ing unpaid on said mortgage, the conditions as mentioned in said
mortgage lease; that his interests in the chattels therein de-
scribed remain unchanged, and are hereby renewed for the
amount above written,” was held insufficient ; especially as in this
case the lease contained various stipulations to be observed by the
lessee which were secured by the mortgage clause, and no one by
inspecting the instrument put on file could determine whether
the lessee had observed the covenants or not, or whether any rent
remained due or not.® ‘The affidavit,” say the court, “was am-
biguous. It gave no explanation as to the real state of things.
No one desiring to redeem could ascertain from it what amount
would be necessary. The sum the mortgagee was entitled to call
for was not made known. It might have been five dollars, or it
might have been five hundred, and it would be difficult to base
any certain charge of false swearing upon it, if it were supposed,

1 Patterson v. Gillies, 64 Barb. (N. Y.)
563, per Talcott, J.

2 Ely v. Carnley, 19 N. Y. 496; S. C.3
E. D. Smith, 489.

8 Dictum in Ely v. Carnley, supra.

An understatement of the amount due
does not affect the validity of the mortgage
as to the amount which is stated ; but the
mortgagee cannot afterwards claim that a
greater sum is secured by the mortgage.
Beers v. Waterbury, 8 Bosw. (N. Y.) 396.

16

But it is invalidated by a material over-
statement of the amount due. Ely v.
Carnley, 3 E. D. Smith, 489; affirmed by
19 N. Y. 496.

* Beers v. Waterbury, 8 Bosw. (N. Y.)
396.

5 Miller v. Jones, 15 Nat. Bank. Reg.
150.

6 Briggs v. Mette (Mich. 1879), 3 N.
W. Rep, 231.

241
§ 292.] RECORDING, FILING, AND REFILING.

as it is not, to be dishonest. We are satisfied it failed to convey
any such distinct information as the statute required.”

292. Who may take advantage of an omission to refile. —
In New York a subsequent creditor may take advantage of the
omission to refile, though a subsequent purchaser cannot. A
subsequent purchaser or mortgagee cannot avail himself of an
omission to refile a prior mortgage, unless he becomes such during
the continuance of the default; but a general creditor may take
advantage of the omission, though his right accrued previous to
such default.! This distinction is founded upon the terms of the
statute, declaring that the mortgage, unless refiled, ‘shall cease
to be valid against the creditors of the mortgagor or against sub-
sequent purchasers or mortgagees.” The word subsequent is con-
strued to mean subsequent to the omission to refile.2 It qualifies
the term purchasers and mortgagees, but not the term creditors.

It is not necessary, in order to enable creditors to take advan-
tage of such omission, to refile the mortgage, that their debts
should have become liens by judgment or attachment before the
refiling, if they have been made liens before the question has
arisen.2 One who purchases the mortgaged property from the
mortgagor’s vendee, or from the person in whom it vested upon
the mortgagor’s death, is as much a subsequent purchaser as if
he purchased directly from the mortgagor.*

A subsequent mortgagee, the consideration of whose mortgage
was a precedent debt, cannot, by the law of New York, question
a prior mortgage for a default in refiling it ; for such a mortgagee
is not then considered a purchaser for value.5

In New Jersey and Wisconsin, however, the statute requiring a
refiling is construed to have the effect to invalidate the mortgage
in case of a failure to refile it within the time prescribed, both
against creditors who may afterwards seize the property, and

1 Thompson v. Van Vechten 27 N. Y. 530; Herrick v. King, 19 N. J. Eq. 80, @
568; S. C. 6 Bosw. 373. case arising under the New York statute.
” Latimer v. Wheeler, 30 Barb. (N. Y.) * Dillingham v. Bolt, 37 N. Y. 198; 8.
485; Meech v. Patchin, 14 N. Y. 71; ©.4 Abb. Pr. N. S. 221; Fox v. Burns,
Wray v. Fedderke, 43 N. Y. Superior Ct. 12 Barb. (N. Y.) 677.
335. 5 Thompson v. Van Vechten, 27 N. Y.
8 Thompson v. Van Vechten, 27. N. Y. 568; S. C. 6 Bosw. 373; 5 Abb. Pr. 458;
568, 582; Swift v. Hart, 12 Barb. (N. ¥.) Wiles v. Clapp, 41 Barb. (N. Y.) 645.

242
REFILING. [§§ 298, 294.

against purchasers who may afterwards buy it But such a
mortgage is void only as to those creditors who have raised the
issue by their pleadings.”

293. Purchasers or mortgagees who become such before
the expiration of the year from the first filing cannot take ad-
vantage of an omission to refile the mortgage. Such purchasers
or mortgagees have notice of the existing mortgage, and take title
subject to it. The statute was intended to prevent imposition
upon them, and not to relieve them from incumbrances valid
against them when they acquired their own titles. They stand
in the position the mortgagor was in when they took their title
from him.’ It follows that if two mortgages be executed by the
same person upon the same property and filed the same minute,
but one has priority of the other by agreement or intention of the
parties, neither the neglect of the holder of the mortgage that has
the prior lien to refile it within the year, nor the diligence of the
owner of the other mortgage to refile his in due time, can affect
the respective rights of the parties. The latter mortgagee had
notice of the rights of the former, and took his mortgage ane
to that, and continues to hold it subject to it.‘

Neither does the omission to refile the mortgage affect its valid-
ity as against a subsequent mortgagee with notice.®

294. There is no occasion for refilling if the mortgagee has
taken actual possession of the property.6 The mortgage is valid
against a judgment creditor levying upon the property after the
mortgagee has taken possession, notwithstanding such possession

1 Newman v. Tymeson, 12 Wis. 448;

National Bank of the Metropolis v.
Sprague, 21 N. J. Kg. 530.

2 National Bank of the Metropolis vo.
Sprague, supra.

% Meech v. Patchin, 14 N. Y.71; Thomp-
son v. Van Vechten, 6 Bosw. (N. Y.) 373;
5 Abb. Pr. 458; Wiles v. Clapp, 41 Barb.
(N. Y.) 645; Latimer v. Wheeler, 30 Barb.
(N. Y.) 485; Manning v. Monaghan, 23
N. Y. 539; Dillingham v. Ladue, 35 Barb.
(N. Y.) 38; Lewis v. Palmer, 28 N. Y.
271; National Bank of the Metropolis v.
Sprague, 21 N. J. Eq. 530, See contra in
Michigan and Ohio, Briggs v. Mette (Mich.

1879), 3 N. W. Rep. 461;
son, 14 Ohio St. 488.

4 Wray v. Fedderke, 43 N. Y. Superior
Ct. 335.

5 Thompson v. Van Vechten, supra ;
Hill v. Beebe, 138 N. Y. 556; Lewis v. Pal-
mer, 28 N. Y. 271; National Bank of the
Metropolis v. Sprague, 21 N. J. Eq. 530;
and see De Courcey »v. Little, 19 N. J. Eq.
115; Williamson v. N. J. Southern R. R.
Co. 26 N. J. Tig. 398.

6 Porter v. Parmley, 52 N. Y. 185, per
Peckham, J.; National Bank of the Me-
tropolis v. Sprague, 21 N. J. Eg. 530.

Day v. Mun-

248
§ 295.] RECORDING, FILING, AND REFILING.

is obtained after the expiration of one year from the filing of the
mortgage, and no affidavit of renewal or continuance is filed.
Where two chattel mortgages of the same property, but of differ-
ent dates, have been duly filed, but neither of them are refiled at
the expiration of one year, and the junior mortgagee whose mort-
gage was last filed gets possession of the property, he is entitled
to hold it as against the other. The fact that the junior mort-
gagee failed to comply with the statute does not render his mort-
gage invalid as against the other. It is true, that each of the
mortgages as to the other would be unprotected by the registry
laws after the expiration of the year; but he who first obtained
possession of the property would acquire the prior right.?

295. A possession by the mortgagee sufficient to obviate
the necessity of refiling must be an actual change of posses-
sion. Mere words will not effect a change in law where there is
none in fact. Thus, where there was a mortgage of the furniture
of a hotel made by one member of a partnership which was con-
ducting the hotel and using the furniture, an agreement was made
between the mortgagor and mortgagee, after default in payment,
that a partner of the former should retain possession of the prop-
erty for the latter; but inasmuch as both partners continued in
the actual use of the property in the hotel until after its seizure
by a creditor, it was held that there was no change of possession
which would render a refiling unnecessary.’ If the mortgagee
take actual possession of the property and remove it to another
place, the fact that he employs the mortgagor as his agent to look
after the property does not invalidate his possession.*

The taking possession of the mortgaged property before the
expiration of such time excuses the mortgagee from the obligation
of refiling the mortgage ;° and the taking possession after the ex-
piration of the year, but before a levy of execution upon the prop-
erty, makes the mortgage valid and effective against the execution
creditor. But the mere verbal delivery of the property though

1 Dayton v. People’s Savings Bank, 23 5 Otis v. Sill, 8 Barb. (N. Y.) 102; Na-

Kans. 421. tional Bank of the Metropolis v. Sprague,
2 Brachmann v. Louis, 1 Dis. (Ohio) 21N.J.Eq.530; Porter v. Parmley, 52 N.
288. Y. 185, per Peckham, J.; S. C. 34 N.Y.
8 Porter v. Parmley, 52 N. Y. 185. Superior Ct. 398; 13 Abb. Pr. N. S. 104.
4 Dayton v. People’s Savings Bank, 23 6 Dayton v. People’s Savings Bank, 23
Kans, 421. Kans. 421.

244
REFILING. [8§ 296, 297.

it be of a bulky nature, such as stacks of grain in a field, is not
such a change of possession as will relieve the mortgagee of the
necessity of renewing the mortgage.1

There must be a change in the control of the property. Where
the mortgagor was a member of a firm which was using the mort-
gaged chattels, and in accordance with an agreement between the
parties after default, the mortgagor’s partner retained possession
for the mortgagee, but the firm continued to use it as before, it
was held that there was no such change of possession as would
dispense with a refiling of the mortgage.”

296. By advertising the property within that time for sale
under a power, the necessity of refiling a mortgage within a lim-
ited period is obviated, though the sale do. not take place until
after the expiration of the year.’

If there has been a conversion of the mortgaged property within
the year after filing, so that the mortgagee has a right of action
for the taking of the property, it is not necessary for him, in order
to preserve his right to recover, either to commence an action
within the year from such filing, or to renew the mortgage by re-
filing it.*

297. A refiling is not rendered unnecessary by the mere
fact that the mortgagor has made default and the mortgage
has become absolute by its terms. A refiling is always necessary.
to preserve the mortgagee’s title, unless he has taken possession,
but not after that.6 The mortgage is not dead though there be a
forfeiture of the condition. The mortgagor may compel the mort-
gagee to receive payment and restore the property. Until some-
thing further than mere forfeiture has occurred to change the re-
lations of the parties, such as the mortgagee’s taking possession
or bringing suit to foreclose, the same reason remains for refiling
that existed before forfeiture. The mortgagor is, to the public,
the apparent owner. The statute requires a statement to be filed,

1 Menzies v. Dodd, 19 Wis. 343. v. Tymeson, 12 Wis. 448; Bates v. Wil-
2 Porter v. Parmley, supra; reversing bur, 10 Wis. 415.

S. C.2d. & Sp. 398. 5 Porter v. Parmley, 52 N. Y. 185; Zn
8 Otis v. Sill, 8 Barb. (N. Y.) 102. re Leland, 10 Blatchf. 503; Ely v. Carn-

# Case v. Jewett, 13 Wis. 498; Newman ley, 19 N. Y. 496; 3 E. D. Smith, 489;
Succession of Ynogoso, 13 La. Ann. 559.

245
§§ 298, 299.] | RECORDING, FILING, AND REFILING.

to show the true interest of the parties, for the protection of the
public. Therefore the mortgage, though a forfeiture has cecunred,
ceases to be valid if not refiled.1

298. The refiling of a mortgage is not an extension of
credit, and does not prevent the mortgagee’s insisting upon a, for-
feiture.?

‘V. Law of the Place of Contract.

299. The law of the place of contract gdverns as to the
nature, validity, construction, and effect of a mortgage, which
will be enforced in another state as a matter of comity, although
not executed or recorded according to the requirements of the
law of the latter state.2 Thus, if a mortgage be made in New
Hampshire of property situated there, and it be duly recorded, so
that no change of possession be necessary for its validity under
the laws of that state, and afterwards the property be removed to
Vermont, where at the time no mortgage is valid without a deliv-
ery of possession, and it be there attached by the debtor’s creditors,
the mortgagee may recover it from the attaching officer, because
his lien, being valid by the laws of New Hampshire, is equally
valid in Vermont.4

A mortgage, valid in the state where it was made, is not invali-
dated by the mortgagor’s executing in another state, upon the
same day, a general assignment of his property in the latter state,
‘giving certain preferences, valid by the laws of that state, but not
valid by the laws of the former state. The two instruments can-
not be construed together, as parts of the same transaction, so as
to avoid the mortgage, upon the ground that the assignment is

’ Porter v. Parmley, supra.

2 Dane v. Mallory, 16 Barb. (N. Y.) 46;
Fuller v. Acker, 1 Hill (N. Y.), 473.

8 Bank of U. S. v. Lee, 13 Pet. 107;
Martin v. Hill, 12 Barb. (N. Y.) 631;
Tyler v. Strang, 21 Ib. 198; Clark v.
Tucker, 2 Sandf. (N. Y.) 157; Cushman
v. Luther, 53 N. H. 562; Langworthy v.
Little, 12 Cush. (Mass.) 109; Rhode
Island Central Bank v. Danforth, 14
Gray (Mass.), 123; Barker v. Stacy, 25
Miss. 471; Beall v. Williamson, 14 Ala.
55; Hall v. Pillow, 31 Ark. 32; Smith v.

246

McLean, 24 Iowa, 322; Simms v. McKee,
25 Iowa, 341; Blystone v. Burgett, 10 Ind.
28; Martin v. Hill, 12 Barb. (N. Y.) 631;
Van Buskirk v. Hartford F. Ins. Co. 14
Conn. 583; Offut v. Flagg, 10 N. H. 46,
50; Ferguson v. Clifford, 37 N. H. 86;
Feurt v. Rowell, 62 Mo. 524; Ryan v.
Clanton, 8 Strob. (S. C.) L. 411; Kanaga
v. Taylor, 7 Ohio St. 134.

4 Cobb v. Buswell, 37 Vt. 337; Taylor
v. Boardman, 25 Vt. 581 ; Jones v. Taylor,
30 Vt. 42; overruling Skiff v. Solace, 23
Vt. 279.
LAW OF THE PLACE OF CONTRACT. [§ 300.

fraudulent as to creditors, and that the whole is therefore
vicious.1

A mortgage duly executed in a state where possession of the
mortgaged property by the mortgagor after maturity of the mort-
gaged debt does not invalidate the mortgage is valid in Illinois,
when the property is brought there by the mortgagor in posses-
sion, against a creditor of his, notwithstanding that by the law
of that state such possession in the mortgagor would be frandu-
lent per se as to,the mortgagor’s creditors had the mortgage been
executed there.”

300. But an exception to this rule prevails in those states
which have not adopted the policy of recording mortgages of per-
sonal property. Thus a chattel mortgage being wholly unknown
to the law of Louisiana, the courts of that state do not feel bound
by the comity of nations to enforce such a mortgage made in
another state.2 And so in Pennsylvania, where the rule of the
common law prevails, by which a sale or mortgage of personal
property, unaccompanied by delivery of possession, is void as
against the intervening rights of creditors and purchasers, it is
held that while a mortgage made’ in another state and duly re-
corded there, so that it is valid there without a delivery, might be
enforéed by the courts of Pennsylvania as between the parties,
these courts would not enforce such mortgage as against a cred-
itor or purchaser who had acquired rights in the property after it
had been brought to that state “ By the comity of nations, as a
general rule, a contract valid where it is made is valid everywhere,
and the law of the place of the contract controls as to the construc-
tion of it. Without this rule, there could not safely be commercial
or business intercourse between citizens of different nations. But
the laws of a nation or state have not, ex propria vigore, any
binding force beyond the limits of its territory. Any effect they
have is ex comitate. And the judicial tribunal in Pennsylvania
must determine how far comity is to be permitted to interfere
with the domestic interests and policy of the state.

** As between the parties to the chattel mortgage, Pennsyl-
vania courts could safely enforce the validity of the mortgage,

1 Morse v. Powers, 17 N. H. 286. * MacCabe v. Blymyre, 9 Phila. (Pa.)
2 Mumford v. Canty, 50 Il. 370. 615.
3 Delop v. Windsor, 26 La Ann. 185.

247
§ 801.] RECORDING, FILING, AND REFILING.

and would do so. There would be no public interest or policy of
law that would require us to hold the bill of sale or mortgage
void, as between the parties to it, for want of delivery of posses-
sion of the chattel.

“But it would be an extraordinary stretch of comity that would
induce a court here to hold that a Maryland chattel mortgage
shall be made the means of defrauding our own citizens. Either
the lead rei site must prevail over the lex loci contractus, or we
must open a wide door for fraud, to the detriment of citizens on
both sides of the border. Would it be reasonable to require that
the purchaser should have first ascertained where this migratory
doctor came from, and then have had the records of all counties
in Maryland searched for chattel mortgages? Or is it fairer to
hold that the mortgagees, by allowing the mortgagor to retain
possession of the horse and bring it into Pennsylvania and exercise
notorious acts of ownership, lost their rights under the mortgage
as against an intervening Pennsylvania creditor or purchaser?
No people are bound to enforce a contract in contravention of
their public law and policy. Whilst a lien created by the lex loci
will generally be enforced wherever the property may be found,
yet this is not necessarily so in preference to claims arising under
the lex rei site. The comity extended to the lex loci must yield
to the positive law and public interests of the place where the
remedy is. sought.” !

301. Although the mortgage be not executed in conformity
with the laws of the state to which the property is after-
wards removed, if executed and recorded according to the laws
of the state or country of its execution it is effectual to hold the
property in the state to which it is removed.? This is in ac-
cordance with the general rule of law that the place of contract
governs as to its nature, validity, construction, and effect. In de-
termining whether a mortgage was executed according to the
laws of a foreign state, those laws must be proved as fact by evi-
dence addressed to the court, and not to the jury.®.

There is some authority contrary to this proposition. It is true
that the laws regarding the recording of mortgages have no force’

1 MacCabe v. Blymyre, supra, per Hall, Kanaga v. Taylor, 7 Ohio St. 134; Hall
3 v. Pillow, 81 Ark. 82.
2 Ferguson v. Clifford, 37 N. H. 86; ® Ferguson v. Clifford, 37 N. H. 86.

248

J.

 

iil |
an
LAW OF THE PLACE OF CONTRACT. [§ 802.

beyond the jurisdiction of the sovereignty enacting them ; and it
is therefore held by some courts that a foreign record is no notice
to creditors of the mortgagor when he has brought the property
from a foreign state where it was duly recorded. Thus, where a
mortgage given in Canada, by a person residing there, was
properly recorded as required by Canadian law, but the mort-
gagor was left in possession of the property, and he brought it
into Michigan, where it was taken and sold on execution against
the mortgagor, it was held that the title under the execution sale
was superior to that under the mortgage.!| And so in Vermont it
was formerly held that a mortgage of chattels executed in another
state and valid there without a change of possession does not pro-
tect the property from attachment in Vermont when brought into
that state and there found in the mortgagor’s possession, whether
brought there for a temporary purpose or not.2- This was in con-
formity with the local law of Vermont, which required a change
of possession in all cases to protect the property from the mort-
gagor’s creditors and subsequent purchasers. By later decisions,
however, it is held that the local rule of policy does not extend to
a transfer made in another state, where the parties resided and
where the property was located at the time of the transfer, so as
to defeat a title which was perfect by the laws of that state.2 But
this local rule of policy is universally applied in Vermont to all
transfers made in another state of chattels actually in Vermont at
the time, though in the hands of a third person, and though such
transfers in the state where made were valid without a change of
possession.*

302. A statute which requires a mortgage on property
brought from another state to be recorded within a limited time,
and in failure of such record makes such property liable to the
debts of the person in possession, but is silent as to purchasers,
does not make invalid as to the latter a mortgage valid in the
state where it was executed. In the absence of any express pro-
vision of statute invalidating such mortgages as to purchasers, it

1 Montgomery v. Wight, 8 Mich. 148. 3 Cobb v. Buswell, 37 Vt. 337; Jones v,
2 Skiff v. Solace, 23 Vt. 279; Wood- Taylor, 30 Vt. 42.
ward v. Gates, 9 Vt. 858. But these # Rice v. Courtis, 32 Vt. 460; Martin
early Vermont cases are overruled in later vv. Potter, 34 Vt. 87. See § 305.
cases. 5 Beall v. Williamson, 14 Ala. 55.

249
8§ 803-305.] | RECORDING, FILING, AND REFILING.

is the duty of the court to infer that the legislature did not intend
to change the law as to them.

303. A statute relating to the recording of mortgages has
no application to a mortgage made outside the state, unless
specially made so, though the property be afterwards brought
within the state ;! and it does not matter that such mortgage was
made by a citizen of the state while temporarily absent in another
state with such property.? Ifthe mortgage be duly recorded in
the state where it was executed, and the mortgagor afterwards
take the property with him into another state, no registration of
the mortgage in the latter state is necessary unless made so by
positive statute of that state.®

304. In Michigan, under a statute making no provision for
the recording of a non-resident’s mortgage, an effectual mort-
gage can only be made by the mortgagee’s taking possession.* In
that state it is held that a mortgage executed and recorded in
another state is not valid against the claims of attaching creditors,
when the property is brought within that state. As has already
been noticed, the rule in that state is not in accord with the
general rule that a mortgage valid by the laws of the state where
it was executed, and where the property was at the time, is valid
in any other state to which the property may be removed, with-
out further registration, unless the laws of such other state re-
quire the recording of the mortgage in that state when the prop-
erty is brought into it.

It is not unusual to provide for the filing of the mortgage in the
town, city, county or other registry district in which the property
is at the time, if the mortgagor be a non-resident.

305. The lex situs governs when a mortgage is executed
in a state other than that in which the property is situate!

1 Fairbanks v. Bloomfield, 5 Duer (N. 5 Clark v. Tarbell, 58 N. H. 88; Hard-

Y.), 434. ‘ away v. Semmes, 38 Ala. 657; Green v.
2 Langworthy v. Little, 12 Cush. (Mass.) Van Buskirk, 7 Wall. 139, overruling S.
109. C. 2 Keyes (N. Y.), 119; Rice v. Courtis,
3 Beall v. Williamson, 14 Ala. 55; Of- 32 Vt. 460; Martin v. Potter, 34 Vt. 87;
futt v. Flagg, 10 N. H. 46. Whitman v. Conner, 40 N. Y. Superior
4 Montgomery v. Wight, 8 Mich. 143, Ct. 339; Golden v. Cockril, 1 Kans. 259;
per Campbell, J. and see Denny v. Faulkner, 22 Kans. 89.

250
LAW OF THE PLACE OF CONTRACT. [§ 305.

The mortgage, to be valid, must be executed, acknowledged, and
recorded according to the law of the place where the property is:
at the time. Thus, if a mortgage be made in New York where the
parties reside, of property situate in Illinois, and the property be
attached in the latter state before the mortgage is there recorded,
or the property delivered in accordance with the laws of that state,
the validity of it is determined by the laws of that state and not
by the laws of New York! The theory that the voluntary trans-
fer of personal property is to be governed everywhere by the law
of the owner’s domicil proceeds on the fiction of law that the
domicil of the owner draws to it the personal estate which he
owns wherever it may happen to be located. But this fiction is
by no means of universal application, and as Judge Story says,
“yields, whenever it is necessary for the purposes of justice that
the actual situs of the thing should be examined.” Mr. Justice
Davis, delivering the opinion of the Supreme Court in the case
cited,? said, further: ‘‘ We do not propose to discuss the question
how far the transfer of personal property lawful in the owner’s
domicil will be respected in the courts of the country where the
property is located, and a different rule of transfer prevails. It
is a vexed question, on which learned courts have differed ; but
after all there is no absolute right to have such transfer respected,
and it is only ona principle of comity that it is ever allowed.
And this principle of comity always yields when the laws and
policy of the state where the property is located has prescribed a
different rule of transfer from that of the state where the owner
lives.” By the laws of Illinois an attachment on personal prop-
erty there takes precedence of an unrecorded mortgage executed
in another state where record is not necessary ; and there is no
reason why a different effect should be given to the attachment,
because the owner of the chattels, the attaching creditor, and the
mortgage creditor, are all residents of such other state.®

A recent decision of the Supreme Court of New Hampshire is
equally emphatic, that a mortgage of chattels located in that state,
though executed according to all the requirements of the law of
the domicil of the owner in another state, is invalid as against at-
taching creditors in New Hampshire, who are citizens of that

Contra, Runyon v. Groshon, 12 N. J. Eq. 2 Green v. Van Buskirk, 7 Wall. 139,
86; Blystone v. Burgett, 10 Ind. 28. 150. :
1 Green v. Van Buskirk, supra. 8 Green v. Van Buskirk, supra.

251
§§ 806-308.] | RECORDING, FILING, AND REFILING.

state, unless the mortgage be recorded there in conformity to the
‘laws of New Hampshire! Foster, J., delivering the opinion of
the court, said: “Every state has entire jurisdiction over all
property, personal as well as real, within its own territorial limits,
and the laws of the state regulate and control its sale and trans-
fer, and all rights which may be affected thereby..... Ifa
foreigner or citizen of another state send his property within a
jurisdiction different from that where he resides, he impliedly
submits it to the rules and regulations in force in the country
where he places it. What the law protects it has the right to
regulate. And if two persons in another state choose to bargain
concerning property which one of them has in a chattel not within
the jurisdiction of the place, they cannot expect that the rights
of persons in the country where the chattel is will be permitted
to be affected by their contract.”

306. A mortgage is presumed to have been executed in the
state where it is sought to be enforced, until the contrary ap-
pears.2. But there can be no such presumption when the mort-
gage purports to be executed in another state.3

The statute of another state, upon which a mortgagee relies to
show the validity of his mortgage, must be specially pleaded.+

307. The lex fori determines the remedies upon a mortgage
executed in another state or country. These are regulated exclu-
sively by the laws of the state to which the property is removed,
and in which the creditor seeks to enforce his rights, or any party
in interest seeks to pursue any claim against the subject matter.
The lex fori determines whether the mortgaged property is sub-

ject to attachment, and what the proper mode of proceeding is in
making the attachment.5

VI. Actual Notice.

308. Notice, in the sense here used, includes as well that
which is actual, that which is implied, and that which is con-
structive. It includes actual knowledge on the part of a pur-

1 Clark v. Tarbell, 58 N. H. 88. 8 Blystone v. Burgett, 10 Ind. 28.

2? Franklin v. Thurston, 8 Blackf. (Ind.) 4 Blystone v. Burgett, supra.

160; Hutchins v. Hanna, 8 Ind. 533; ® Ferguson v. Clifford, 37 N. H. 86.
Shaw v. Wood, Ib. 518.

252
ACTUAL NOTICE. [§ 809.

chaser of an existing mortgage, and also conscious knowledge upon
his part of having the means of actual knowledge; and it includes
knowledge derived from direct communication of the fact, and
knowledge that may be gathered from attendant facts and circum-
stances which would lead to a knowledge of the fact itself. A
purchaser who is put upon inquiry by the facts and circumstances
within his knowledge is charged with notice of whatever such in-
quiry would have imparted. If he abstain from inquiry, whether
designedly for the purpose of avoiding knowledge, or negligently,
he cannot be regarded as a bond fide purchaser without notice.?

But notice to be effectual should be equivalent to actual knowl-
edge, and cannot be inferred from an opportunity of knowledge,
unless the opportunity be such that the inference of knowledge is
conclusive. Therefore an instruction that a prior unrecorded
mortgage would have no validity against a subsequent mortgagee
of the same property unless the latter knew of the bill of sale and
all its material provisions, “ or had full opportunity or means of
acquiring actual knowledge ”’ of it, is erroneous.”

Under this rule in regard to the effect of notice, an allegation of
notice to and knowledge by a subsequent purchaser that the prior
mortgage was made upon full consideration and in good faith, is
sufficient without alleging actual fraud in such subsequent pur-
chaser.$

The doctrine of notice, whether applied to mortgages of real or
personal property, is the same. No distinction in the application
of the doctrine can be based upon a distinction between the two
classes of property.

309. Actual notice, to be effectual, should be notice of all
which the statute requires to be recorded.*

Notice of a mortgage which refers to a schedule of the property
and declares this to be a part of the mortgage is not sufficient
without clear notice of such schedule. Notice of the schedule can-
not be inferred from notice of the mortgage.

A purchaser or creditor who has notice that a mortgage to some
one exists cannot avoid the effect of such notice by showing

1 Allen v. McCalla, 25 Iowa, 464. See 8 Gooding v. Riley, 50 N. H. 400.
Jones on Mortgages, §§ 570-609. 4 Sawyer v. Pennell, 19 Me. 167.
2 Foster v. Gillespie, 68 Mo. 643. 5 Sawyer v. Pennell, supra.

2538
§§ 310, 311.] RECORDING, FILING, AND REFILING.

that he believed that the mortgage was withheld from record, in
order to delay and defraud creditors.

One who purchases property in the actual possession of a prior
mortgagee, is put upon inquiry as to the title of the holder of the
property, and in legal effect has notice of the incumbrance.?

310. Actual notice may be proved by facts and circum-
stances. A purchaser of property at a sale upon execution
against the mortgagor was properly charged with notice of a mort-
gage upon it, upon proof that the existence of the mortgage was
known and talked of in the neighborhood, and publicly proclaimed
at the sale.3

Upon the question whether a purchaser or creditor had notice
of a prior unrecorded mortgage, any competent evidence tending
to establish or to disprove the fact is admissible. An imperfect
record of a mortgage of corporate shares on the books of the cor-
poration may, as a means of knowledge, be evidence on the ques-
tion whether a creditor of the mortgagor, levying an execution on
the shares, had notice of the existence of the mortgage.4 And
so the existence of a defective record of a mortgage upon the
books of the town or county where the mortgage should be re-
corded may be proved for the same purpose. Of course, such
imperfect record, not being constructive notice, does not amount
to anything as proof of actual notice until further evidence be
given that the creditor or purchaser had knowledge of the record.
As negativing the existence of such notice, the purchaser may
prove the declarations of the mortgagor to him that the same was
unincumbered.5

311. Notice by a debtor to a sheriff when he was proceed-
ing to attach or to levy upon property is not notice to the
creditor for whom the levy is made.§ Notice which merely puts a
creditor upon inquiry, received after he has procured process and
is proceeding to attach or levy upon the property, would also
probably be insufficient, whatever might be the effect of actual
knowledge of the existence of a mortgage communicated to him

1 Allen v. McCalla, 25 Iowa, 464. also, S. C. 52 N. H. 209, and Hastings v.
2 Smith v. Zurcher, 9 Ala. 208. Cutler, 24 N. H. 481.
3 Merrill v. Dawson, Hemp. 563. 5 Sumner v. Dalton, 58 N. H. 295.

4 Piper v. Hilliard, 58 N. H. 198. See, & Stowe v. Meserve, 13 N. H. 46; M-
Carthy v. Grace, 23 Minn. 182,
204
ACTUAL NOTICE. [§ 312.

at that time. “If we look to the reasons on which the exception
has been founded, a notice cannot be sufficient under circum-
stances where it would operate as a fraud instead of preventing
one. And to hold that a notice to a creditor may be effectual
when it is not given until he has procured his process, and is about
to attach the property, would most effectually encourage fraud.
In fact, if notice by the debtor to the sheriff were held sufficient,
it would almost render nugatory the statute requiring mortgages
of personal property to be recorded; for if the mortgagee could
depend upon the custody, care, and diligence of the mortgagor, it
would not be. necessary to record any such mortgage. It would
only be necessary, when any one came to attach, that notice
should be given.” 1

A mortgage of property in possession of the mortgagor takes
precedence of a prior attachment, although the mortgagee knew
at the time he took the mortgage that the property had once been
attached, but had no notice that the attachment was-still subsist-
ing. Finding the property in the possession of the debtor, he may
well have presumed that the attachment had been dissolved?

312. Notice to a subsequent purchaser or mortgagee before
the completion of the sale or mortgage of an unrecorded mortgage
is conclusive evidence of mala fides on his part, so that his title
will be subject to the equitable rights of the holder of such unre-
corded mortgage.2 ‘ The doctrine which forbids a subsequent

' Per Parker, C. J.,

in Stowe v. Me- H. 400; Patten v. Moore, 32 N. H. 382;

serve, supra.

2 Carpenter v. Cummings, 40 N. H.
158.

8 Paine v. Mason, 7 Ohio St. 199; Day
v. Munson, 14 Ib. 488; Simons »v. Pierce,
16 Ib. 215; Doyle v. Stevens, 4 Mich.
87; Wetherell v. Spencer, 3 Mich. 123 ;
Shuler v. Boutwell, 18 Hun (N. Y.), 171;
Gregory v. Thomas, 20 Wend. (N. Y,)
17; Sanger v. Eastwood, 19. Ib. 514; Tif-
fany v. Warren, 37 Barb: (N. Y.) 571;
Harris v. Norton, 16 Barb. (N. Y.) 264;
Lewis v. Palmer, 28 N. Y. 271, 277; Hill
v. Beebe, 13 N. Y. 556; Meech v. Patchin,
14 N. Y. 71; Gildersleeve v. Landon, 73
N. Y. 609 ; Hudson v. Warner, 2 Har. &
G. (Md.) 415; Gooding v. Riley, 50 N.

Clark v. Tarbell, 57 N. H. 328; Tucker v.
Tilton, 55 N. H. 223; Low v. Pettengill,
12 N. H. 337, 339; Stowe wv. Meserve, 13
N. H. 46; National Bank of the Metropolis |
v. Sprague, 21 N. J. Eq. 530; William
son v. N. J. Southern R. R. Co. 26 N. J.
Eq. 398; Gould v. Marsh, 4 T. & C. (N.
Y.) 128; Allen v. McCalla, 25 Iowa, 464;
Miller v. Bryan, 3 Iowa, 58; Crawford
v. Burton, 6 Iowa, 476; McGavran v.
Haupt, 9 Iowa, 83; Campbell v. Leonard,
11 Iowa, 489; Kuhn v. Graves, 9 Iowa,
803; Torbert v. Hayden, 11 Jowa, 435;
Fromme v. Jones, 13 Iowa, 474; Smith
v. Zurcher, 9 Ala. 208; Boyd v. Beck,
29 Ala. 703; Steele v. Adams, 21 Ala.
534; Hudson v. Warner, 2 Har. & G.

255
§ 313.] RECORDING, FILING, AND REFILING.

purchaser with notice setting up such a defect to defeat a prio:
conveyance stands upon the ground that such purchase is to be
regarded as made in bad faith, and with the purpose to defeat <
prior equitable right, and therefore, in law, fraudulent; and t
allow such prior right to be defeated in that way would be using
a statute made to prevent fraud as an instrument for the protec.
tion of fraud. This doctrine originated in equity, but is now well
established at law both in this country and in England. It isa
salutary doctrine, and accords with the soundest principles of mo.
rality and public policy, which must regard as bad faith and a
legal fraud an attempt to aid a grantor in defeating a conveyance
fairly made by him, by obtaining a subsequent conveyance ol
the same land, having knowledge of the prior grant.” }

Under this rule it does not matter that the prior mortgage of
which there is actual notice is defective and voidable as to bond
fide purchasers. The notice charges the subsequent purchaser
with knowledge of all the facts at that time exisiting relative to
the mortgage, and he stands at best in no better position than his
vendor; and cannot avoid the mortgage unless his vendor could.
The question in such case would be, whether he fraudulently pur-
chased the property knowing the rights of the prior mortgagee,
and designing by trick and cunning to defraud him of them.?

A prior mortgagee, who registers his mortgage after a subse-
quent mortgage is made by the mortgagor, but before the latter
is registered, is entitled to priority. notwithstanding he had notice
of the latter mortgage at the time of recording his own.

Of course if the prior mortgagee has by his acts or declarations
led a purchaser to believe that his incumbrance has been removed,
he cannot sustain his mortgage as against such purchaser.*

313. A purchaser who has paid nothing is not entitled to
protection as a purchaser in good faith, within the terms of a

415; Coble v. Nonenmaker, 78 Pa. St. duly recorded. Gen. Laws 1877, p. 124,

501; Wright v. Bircher (Mo. 1880), 12 § 133.

Cent. L. J. 44. 1 Gooding v. Riley, 50 N. H. 400, per
In Colorado it is provided by statute Bellows, C. J.

that a person who buys or otherwise ob- 2 Patten v. Moore, 32 N. H. 382. See,

tains an interest in any personal property however, Hill v. Gilman, 39 N. H. 88.

with actual notice of an unrecorded mort- 3 Copeland v. Bennet, 10 Yerg. (Tenn.,

gage upon it shall be deemed to have 355.

bought or obtained such interest subject | 4 Hudson v. Warner, 2 Har. & G. (Md.,

to the mortgage, the same asifit had been 415.

256
ACTUAL NOTICE. [§ 314.

statute making an unrecorded mortgage void against “ subsequent
purchasers or mortgagees in good faith.” The object of the statute
is to protect those who have acquired rights under circumstances
which would render them liable to be defrauded unless so pro-
tected; but a purchaser who has paid nothing cannot be so de-
frauded. One can be protected as a bond fide purchaser only to
the extent of his payments made before he received such notice
as should have prevented him from making further payments.1
Moreover the purchase money must be actually paid, and not
merely secured to be paid, before any notice is received, to entitle
him to the position of a bend fide purchaser, for othewise he
would not be hurt by the prior mortgage.”

314. But under statutes making unrecorded mortgages void
against persons other than the parties to it, such as those of
Massachusetts, Maine, and Missouri, such mortgages have no va-
lidity against subsequent purchasers and mortgagees, although
they have actual notice of the mortgages ;3 and such notice to
a creditor would not debar him from from taking such property
by attachment or execution. Neither is such a mortgage valid
against an assignee in insolvency of the mortgagor ;° or against
an assignee under a voluntary assignment for the benefit of cred-
itors.6 The assignee in the latter case could not be heard to say
that he took possession of the goods as the agent of the mort-
gagee and not under the assignment, as such a relation would be
inconsistent with his duty as assignee.’

There is a marked difference between such a statute and the
usual form of statute relative to the recording of mortgages of real
property. In both Maine and Massachusetts actual notice of an
unrecorded deed of real estate is by statute equivalent. to registry.

1 Kohl v. Lynn, 34 Mich. 360.

2 Patten v. Moore, 32 N. H. 382; Harris
v. Norton, 16 Barb. (N. ¥.) 264; Merrill
v. Dawson, Hemp. 563; Cummings v. To-
vey, 39 Iowa, 195; Kessey v. McHenry
(Iowa, 1880), 6 N. W. Rep. 262.

8 Bingham v. Jordan, 1 Allen (Mass.),
873; Travis v. Bishop, 13 Met. (Mass.)
804; Gassner v. Patterson, 23 Cal. 299;
Donaldson v. Johnson, 2 Chand. ( Wis.)
160.

4 Sheldon v. Conner, 48 Me. 584;-Rich

17

v. Roberts, 48 Me. 548, overruling Sawyer
v. Pennell, 19 Me. 167, so far as contrary ;
Bevans v. Bolton, 31 Mo. 437; Bryson v.
Penix, 18 Mo. 13; Selking v. Hebel, 1 Mo.
App. 340.

5 Hodgson v. Butts, 3 Cranch, 140;
Denny v. Lincoln, 13 Met. (Mass.) 200;
Briggs v. Parkman, 2 Met. (Mass.) 258;
Chenyworth v. Daily, 7 Ind. 284 ; Matlock.
v. Straughn, 21 Ind. 128.

6 Lockwood v. Slevin, 26 Ind. 124.

7 Lockwood »v. Slevin, supra.

257
§$ 315, 316.] | RECORDING, FILING, AND REFILING.

An unrecorded mortgage of personal property not delivered is noi
valid against any other person than the parties thereto; but an
unrecorded mortgage of real property is valid as against persons
having actual notice.

315. In Illinois it was formerly held that a mortgage good as
between the parties to it was good as to purchasers with notice,
and that such purchasers could not be considered bond fide pur-
chasers, and that they only acquired an equity of redemption in
the property subject to the mortgage.? But after considerable
conflict in the decisions it seems to be settled by the later cases
that when possession of the mortgaged property remains with
the mortgagor, unless the mortgage is acknowledged, and entry
thereof is made in the docket of the officer taking the acknowledg-
ment, and the mortgage is recorded pursuant to the requirements
of the statute, the mortgage will be void as to purchasers and
creditors of the mortgagor acting in good faith, even with actual
knowledge of the mortgage ; and that.actual knowledge is not in-
consistent with good faith.?

But one purchasing chattels with knowledge that they are sub-
ject to a mortgage, and in collusion with the mortgagor to cheat
the mortgagee, acquires no title to them.*

316. In Indiana it is to be noticed that the statute relating to
the recording of chattel mortgages differs from the statute of that
state relating to the recording of mortgages of real estate, in that
the want of record makes the mortgage absolutely void except as
between the parties, while an unrecorded mortgage of real estate
is made “fraudulent and void as against any subsequent purchaser

’ Denny v. Lincoln, 18 Met. (Mass.)
200, per Shaw, C. J.; Sheldon v. Conner,
48 Me. 584; Gooding v. Riley, 50 N. H.
400, 410, per Bellows, C. J.; Rich ov.
Roberts, 48 Me. 548.

2 Craig v. Dimock, 47 Ill. 308, 319;
Van Pelt v. Knight, 19 Ill. 535; Forest
v. Tinkham, 29 Ill. 141; Porter v. De-
ment, 35 Ill. 478. The authority of Ha-
thorn v. Lewis, 22 Ill. 395, that one having
actual notice of a mortgage and purchas-
ing the property is not a bond fide pur-
chaser, is considered much shaken, if not
wholly overruled.

258

8 Sage v. Browning, 51 JI]. 217; Me-
Dowell v. Stewart, 83 Ib. 538; Frank v.
Miner, 50 Ill. 444; Lemen v. Robinson,
59 Ib. 115.

* Fuller v. Paige, 26 Ill. 358. Breese,
J.: “We do not say that the mere knowl-
edge of the existence of a mortgage un-
recorded would make the purchase from
the mortgagor a fraud in law, where there
is no intent manifested by such purchaser
to commit a fraud in fact, by enabling the
mortgagor to pocket the avails, and so
cheat the mortgagee.”
ACTUAL NOTICE. [§ 317.

or mortgagee in good faith and for a valuable consideration.”
Under the latter statute one who has notice of an unrecorded in-
strument is not a purchaser or mortgagee in good faith ; but under
the statute relating to the recording of chattel mortgages the want
of record makes the mortgage void as to all men except the par-
ties, even though they have notice of the unrecorded mortgage.!}
The failure to record the mortgage makes it void even as against
an assignee of the mortgagor under a voluntary assignment for
the benefit of creditors,? or an assignee in bankruptcy,® although
such assignee have actual notice of the mortgage.

317. Notice to creditors. — Under a statute making an ‘unre-
corded mortgage of property remaining in the possession of the
mortgagor void against existing creditors or subsequent purchas-
ers without notice, such a mortgage is valid against existing cred-
itors with notice of the mortgage at the time of its execution.
Actual notice is as effectual as constructive notice by record as
against subsequent purchasers, and an attaching creditor stands

in no better position.*

1 Moore v. Young, 4 Biss. 128; Ken-
nedy v. Shaw, 88 Ind. 474. *

2 Lockwood v. Slevin, 26 Ind. 124.

3 Moore v. Young, 4 Biss. 128.

4 McGavran v. Haupt, 9 Iowa, 83;
Allen v. McCalla, 25 Iowa, 464. In Iowa
the statute in express terms provides that
a mortgage not filed is invalid against ex-
isting creditors and subsequent purchasers
without notice. The words without notice
are held to apply to creditors as well as
purchasers, To an argument at bar that
such a construction of the statute would
tend to enable parties to commit, or facil-
itate them in the perpetration of fraud,
the court, in Allen v. McCalla, supra, reply
that there is no soundness in it. “The
filing of a mortgage for record and the
recording thereof is but constructive no-
tice of its existence; and if a party has
notice of its existence otherwise than by
its record, the full purpose of the statute
is attained. Fraud cannot be perpetrated
under cover of a notice to a party other-
wise than by record, any more easily in
degree or effect than when the notice is

A judgment creditor having notice of a

communicated by means of recording.
Any distinction in this particular is im-
aginary, not real. In support of this, we
might cite the decisions under the early
English registration acts, as well as under
certain of our state laws, The early Eng-
lish and some of our state statutes made
no exception in terms as to purchasers, ete.,
with notice; but all conveyances, mort-
gages, etc., were declared to be invalid as
to subsequent purchasers, etc., unless re-
corded ; and yet nothing is better settled
in England and in this country, than that
a purchaser of a legal title will be liable
to all equities of which he had actual or
constructive notice at the time of the pur-
chase; and a purchaser by deed duly reg-
istered will in England be restrained in
equity from availing himself of his pur-
chase when he had notice of a prior un-
registered conveyance, although the stat-
ute does not use the words ‘ without no-
tice;’ and in this country it is held, both
in law and in equity, that a conveyance,
duly registered, passes no title whatever,
when taken with a knowledge of the ex-

259
§ 318.] RECORDING, FILING, AND REFILING.

prior unrecorded mortgage, before he purchases at a sheriff's sale,
is not a bond fide purchaser! That one may be a bond fide pur.
chaser without notice, he must be without notice of the rights
and equities sought to be enforced at the time of the payment of
the consideration.”

318. Under the statutes of some states, notice of a mort-
gage not filed does not affect creditors, but does affect subse-
quent purchasers and mortgagees. This distinction is founded
upon the terms of the statutes. Thus, in New York the statute
declares that such a mortgage is ‘ void as against the creditors of
the mortgagor, and as against subsequent purchasers and mort-
gagees in good faith.” Subsequent purchasers and mortgagees are
not protected unless they take their conveyances in good faith;
and they cannot take them in good faith if they have actual
knowledge of the existence of an antecedent mortgage.? But as
against creditors such a mortgage is declared void without qualifi-
cation. And, therefore, mere knowledge on the part of a cred-
itor that his debtor has executed a mortgage which has not been
duly filed does not preclude him from availing himself of the ob-
jection that it is for this reason void.t If, however, upon an ex-
ecution sale, the sheriff sell expressly subject to such mortgage,

istence of a prior unregistered conveyance,

. We refer to this doctrine for the pur-
pose of showing the radical error of coun-
sel, in supposing that fraud would be fa-
cilitated by holding the words ‘ without
notice,’ in our statute, to apply to credit-
ors as well as to purchasers. For if the
courts of equity, both in England and in
this country, found it necessary, in order
to prevent fraud, to go beyond the lan-
guage of the statute, so as to apply it to
parties having notice otherwise than by
registration, it could hardly be contended
that fraud would be facilitated by giving
full force to the express language of our
statute, which is in precise accord with
those decisions. In other words, if courts
of equity interpolate those words in the
statute, where they are omitted, in order
to prevent fraud, to give them force when

used in the statute will not facilitate .

fraud..... It may be proper, though per-

260

haps unnecessary, to add, that the differ-
ent construction which obtains in Ohio,
New York, Massachusetts, and other
states, grows out of the different, not to
say peculiar, language of the statutes of
those states, and hence we do not deem it
necessary to review the authorities from
those states, cited and ably enforced by
counsel in argument at bar.”

1 Seevers v. Delashmutt, 11 Iowa, 174;
Kessey v. McHenry (Iowa, 1880), 6 N.
W. Rep. 262.

2 Marsh v. Armstrong, 20 Minn. 81; and
see Cummings v. Tovey, 39 Iowa, 195;
Kessey v. McHenry, supra.

8 Farmers’ Loan & Trust Co. v. Hen-
drickson, 25 Barb. (N. Y.) 484; Tyler »
Strang, 21 Ib. 198; Tiffany v. Warren, 37
Ib. 571; Sayrev. Hewes, 32 N. J. Eq. 652.

4 Farmers’ Loan & Trust Co. ». Hen-
drickson, supra; Stevens v. Buffalo &N.
Y. City R. R. Co. 31 Barb. (N. Y.) 590.
ACTUAL NOTICE. [§ 318.

the purchaser, though he be the judgment creditor, acquires only
the equity of redemption.!

The statute of New Jersey makes a similar distinction between
creditors and subsequent purchasers and mortgagees. ‘+ Purchas-
ers or mortgagees,” says Vice-Chancellor Van Fleet,? “to be in
a position to avail themselves of an omission by an antecedent
mortgagee, must have acted without notice of the rights of the
holder of the antecedent security ; but not so with creditors. A
creditor may know that an antecedent mortgage has been given,
yet, if it is not filed according to the requirement of the statute,
and he obtains a judgment and procures a levy to be made, his
lien, by force of the statute, is entitled to preference in payment.”

1 Barker v. Doty, 4 Alb. L. J. 63. R. Co. 29 N. J. Eq. 336; S. C. 28 N. J.

2 Sayre v. Hewes, 32 N.J. Eq. 652,656; Eq. 277.
see, also, Williamson v. N. J. Southern R.

261

t
CHAPTER VIII.

FRAUDULENT MORTGAGES.

I. Fraud arising from the mortgagor’s
continued possession without record,
319-332.

II. Other frauds under the statute of

IV. Fraudulent preferences under bank-
rupt and insolvent laws, 356-366,

V. Fraud in mortgages of consumable
property, 367, 368.

frauds and at common law, 333-| VI. Fraud arising from the mortgagor's

351,

III. Trust assignments in the. nature of

mortgages, 352-355,

possession after default, 369-378.

I. Fraud arising from the Mortgagor’s Continued Possession

without Record.

319. Whether an immediate delivery of possession is es-
sential to the validity of an absolute sale of personal property
is a question upon which there is some conflict of authority. It
was formerly the doctrine in England,! and it continues to be the
doctrine of many of the American courts? that an absolute bill of

1 Twyne’s case,3 Rep. 805; Wordall
v. Smith, 1 Camp. 332 ; Edwards v. Har-
ben, 2 T. R. 587 ; Steel v. Brown, 1 Taunt.
381.

2 California: So by statute. Laws 1850,
p- 267; 1 Codes & Stats. 1876, § 8440;
Woods v. Bugbey, 29 Cal. 466. In all
other cases the question is one of fact.

Connecticut: Osborne v. Tuller, 14
Conn. 529; Kirtland v. Snow, 20 Conn.
23; Lake v. Morris, 30 Conn. 201; Nor-
ton v. Doolittle, 832 Conn. 405; Hall v.
Gaylor, 37 Conn. 550; Hatstat v. Blakes-
lee, 41 Conn. 301. But whether there has
been in fact’such a retention of possession
is a question for the jury. Lake v. Mor-
ris, supra.

Delaware: So by statute.
Richardson, 4 Houst. 300.

Florida: Smith v. Hines, 10 Fla, 258.

Illinois: Davis v. Ransom, 18 IIl. 396;

262

Taylor v.

Thornton v. Davenport, 1 Scam. 296;
Young v. Bradley, 68 Il]. 553; Ticknor v.
McClelland, 84 Ill. 471; Allen v. Carr, 85
Til. 388; Rozier v. Williams, 92 Ill. 187.

Iowa: The Code makes a sale without
delivery void unless the instrument be re-
corded; and the statute is strictly con-
strued. Prather v. Parker, 24 Iowa, 26;
Boothby v. Brown, 40 Iowa, 104; Hesser
v. Wilson, 36 Towa, 152.

Kentucky: Bradley v. Buford, Sneed,
12; Morton v. Ragan, 5 Bush, 334. The
court has more than once expressed dissat-
isfaction with the rule. Daniel v. Morrison,
6 Dana, 182; Enders v. Williams, 1 Mete.
346, 352. The rule does not apply to sales
of property not in a condition to be re-
moved, such as growing crops. Robbins v.
Oldham, 1 Duv. 29; Cummins v. Griggs,
2 Duv. 87; Morton v. Ragan, supra. Nor
to purchasers or cteditors with actual no-
MORTGAGOR’S POSSESSION WITHOUT RECORD. [§ 819.

sale, which is to take effect immediately, is rendered fraudulent
per se by leaving the property in possession of the vendor; al-
though if such possession be consistent with the face of the deed
of conveyance, it may be explained, and the sale may neverthe-
less be valid. The doctrine of fraud in law as applicable to the
subject under discussion has been said to be merely a kind of rule.
of evidence presenting what facts shall be held to show conclu-
sively the existence of fraud and creating a kind of estoppel in
pars.

Where this doctrine prevails the vendor’s continued possession
is fraudulent per se as to creditors of the vendor and purchasers
from him, notwithstanding the sale may have been made in good
faith ;? and this would be the case although authority were given
in terms by the instrument of sale that the vendor might remain

in possession, for such possession is inconSistent with a sale.

tice of such sale. Vanmeter v. Estill, 1
Ky. Law Reporter, 32; S. C. 12 Chicago
L. N. 375. This rule does not embrace
mortgages,

Missouri: So by Statute of 1865; Wag-
ner’s Stats. 281, § 10; Claflin v. Rosen-
berg, 42 Mo. 439; Lesem v. Herriford, 44
Mo. 328 ; Bishop v. O’Connell, 56 Mo. 158 ;
Burgert v. Borchert, 59 Mo. 80; Franklin
v. Gummersell, 11 Cent. L. J. 132.

Nevada: It is provided by statute that
every sale made by a vendor of goods and
chattels in his possession or under his con-
trol, and every assignment of goods and
chattels, unless the same be accompanied
by an immediate delivery, and be followed
by an actual and continued change of pos-
session of things sold or assigned, shall be
conclusive evidence of fraud, as against
the creditors of the vendor, or the credit-
ors of the person making such assignment,
or subsequent purchasers in good faith.
Compiled Laws 1873, § 292.

Oregon: McCully » Swackhamer, 6
Oregon, 438; Gen. Laws 1872, p. 262, §
766.

Pennsylvania: Dawes v. Cope, 4 Binn.
258; Babb v. Clemson, 10 S. & R. 419;
Shaw v. Levy, 17 S. & R. 99; Clow ».
Wood, 5 8. & R. 275 ; McKibbin v. Martin,
64 Penn. St. 352, 356; Bentzv. Rockey, 69

Penn. St. 71; Miller v. Garman, Ib. 134 ;
Garman v. Cooper, 72 Penn. St, 32.

Vermont: Houston v. Howard, 39 Vt.
55; Daniels v. Nelson, 41 Vt. 161.

1 Daniels v. Nelson, supra.

2 Thompson v. Wilhite, 81 Ill. 356;
Allen v. Carr, 85 Ill. 388; Lewis v. Swift,
54 Ill. 486; Ketchum v. Watson, 24 Ill.
591; Powers v. Green, 14 Ill. 386, and
cases cited ; McCormick v. Hadden, 37 Ill.
370; Burnell v. Robertson, 5 Gilm. (IIl.)
282; Jennings v. Gage, 13 Ill. 610; Brun-

dage v. Camp, 21 Ill. 330; Murch v. Wright,

46 Ill. 487; Mich. Cent. R. R. Co. v. Phil-
lips, 60 Ill. 190; Western Union R. R. Co.
o. Wagner, 65 Ill. 197; Young v. Brad-
ley, 68 Ill. 553; Ohio & Miss. R. R. Co. v.
Kerr, 49 Ill. 458; Morris v. Grover, 2
Scam. (Ill.) 528.

8 Thornton v. Davenport, 1 Scam. (IIl.)
296, 299; Rhines v. Phelps. 3 Gilm. (IIl.)
455, 464; Greenebaum v. Wheeler, 90 Ill.
296, 298; Goodheart v. Johnson, 88 Ill.
58, 62; Barnet v. Fergus, 51 Ill. 352, 355.

In regard to this doctrine of fraud per.
se Mr. Bump, in his learned treatise upon
Fraudulent Conveyances, pages 68-73, very
justly says in substance that itis apt to
work injustice; that the advantage of sim-
plicity which it is supposed to possess does
not exist in fact, as may be seen by a

268
§ 820.] FRAUDULENT MORTGAGES.

320. The modern English doctrine,! and that more gener-
ally adopted by the American courts,” is that possession by a
vendor or mortgagor is only primd facie a badge of fraud; that
the presumption arising from that circumstance may be rebutted
by explanations showing the transaction to have been fair and
honest ; and that the question of fraud is always one of fact for a
jury to destacnitie. Mr. May, in his treatise upon Fraudulent Con-
veyances, after referring to the earlier English cases in which
want of possession was regarded as conclusive evidence of fraud,
says: “It by no means follows, though, that because there is no
possession given a transfer is fraudulent; for those cases where
the judges have said that if possession was not given it was frand-
ulent must be taken with reference to the circumstances of each
case. The question of possession is one of much importance, but

glance at the confused mass of author-
ities in which this easy guide to the detec-
tion of fraud has only led to an endless
maze of disputation, and numerous mod-
ifications of the rule and exceptions to it.
He further says that another objection to
the rule is that it Iboks to the form rather
than the substance of the transaction ; that
itis not founded in good policy; that it
restricts trade and industry; that it sets
up a fictitious standard of morals; and
that the attempt to divide honesty into
chapters, or to define morality by sec-
tions, is utterly unavailing. Citing for
this Stoddard v. Butler, 20 Wend. (N. Y.)
507, 545, per Senator Dickinson ; Davis v.
Turner, 4 Gratt. (Va.) 422.

1 Latimer v. Batson, 4 Barn. & Cress.
652; Martindale v. Booth, 3 B. & Ad.
498, 505; Steward v. Lombe, 1 Brod. & B.
506, 512; Arundell v. Phipps, 10 Ves. 139,
145; Kidd v. Rawlinson, 2B. & P. 59;
Leonard v. Baker, 1 M. & 8. 251; Reed

. Blades, 5 Taunt. 212; Paget v. Per-
eed 1 Esp. 205.

In Martindale v. Booth, supra, Parke,
J., said : “I think that the want of deliv-
ery of possession does not make a deed of
sale of chattels absolutely void. The dic-
tum of Buller, J., in Edwards v. Harben, 2
T. R. 587, has not been generally consid-
ered in subsequent cases to have that im-
port. The want of delivery is only evi-

264

dence that the transfer was colorable. . .

. It may be a question for a jury whether,
under the circumstances, a bill of sale of
goods and chattels be fraudulent or not.”
Patteson, J., in the same case, said:
“There is no sufficient authority for say-
ing that the want of delivery of posses-
sion absolutely makes void a bill of sale of
goods and chattels. It was held in Mar-
tin v. Podger, 2 Sir W. BI. 701, that want
of possession was a badge of fraud which
ought to be left to the jury. Then, if it
be a badge of fraud only, in order to as-
certain whether a deed be fraudulent or
not, all the circumstances must be taken
into consideration.”

2 Alabama: Hobbs v. Bibb, 2 Stew. 54;
Millard v. Hall, 24 Ala. 209, 219; Wyatt
v. Stewart, 34 Ala. 716, 721; Mayer v.
Clark, 40 Ala. 259; Moog v. Bonedicks,
49 Ala. 512; Crawford v. Kirksey, 55 Ala.
282.

Arkansas: George v. Norris, 23 Ark.
121.
Georgia : Goodwyn v. Goodwyn, 20 Ga.

600.

Indiana: So by statute. Nutter v. Har-
ris, 9 Ind. 88, 91; Kane v. Drake, 27
Ind. 29; Case v. Winship, 4 Blackf. 425.

Kansas: Denny v. Faulkner, 22 Kans.
89; and see Frankhouser v. Ellett, 22
Kans. 127, 146, per Brewer, J. ; Wolfley
Rising, 8 Kans. 297.
MORTGAGOR’S POSSESSION WITHOUT RECORD. [§ 820.

that is with a view to ascertain the good or bad faith of the trans-
action. In Arundell v. Phipps,! Lord Eldon said that the mere
circumstance of the possession of chattels, however familiar it
might be to say that it proves fraud, amounts to no more than it
is primé facie evidence of property in the man possessing until a
title not fraudulent is shown under which that possession has fol-
lowed; that every case from Twyne’s case downwards supports
that, and there was no occasion otherwise for the statute of King
James. There is no sufficient authority for saying that the want
of delivery of possession makes void a bill of sale of goods and
chattels; it is primdé facie evidence of a fraudulent intention, and
if it be a badge of fraud only, in order to ascertain whether a deed
be fraudulent or not, all the circumstances must be taken into
consideration.” 2 :
The same writer stating his conclusions, after examining the
authorities, says: ‘“‘ The result of the authorities appears to estab-
lish this: that where in strict pursuance of the terms of the deed

Louisiana: Keller v. Blanchard, 19 La.
An, 53; Miltenberger v. Parker, 17 Ib.
254.

Maine: Cutter v. Copeland, 18 Me.
127; Fairfield Bridge Co. v. Nye, 60 Me.
372; McKee v. Garcelon, Ib. 165.

Maryland: Hudson vy. Warner, 2 Har,
& G. 415.

Massachusetts : Brooks v. Powers, 15
Mass. 244; Bartlett v. Williams, 1 Pick.
288 ; Ingalls v. Herrick, 108 Mass. 351.

Michigan :” Jackson v. Dean, 1 Doug.
519; Bagg v. Jerome, 7 Mich. 145;
‘ Hatch v. Fowler, 28 Mich. 205.

Minnesota : Soby statute. St. at Large,
692, § 15; Blackman v. Wheaton, 13
Minn. 326.

Mississippi : Comstock v. Rayford, 20
Miss. 369 ; Hilliard v. Cagle, 46 Miss. 309 ;
Ketchum v. Brennan, 53 Miss. 596.

Nebraska: Robison v. Uhl, 6 Neb. 328.

New Hampshire: Coburn v. Pickering,
8 .N. H. 415, 424; Trask v. Bowers, 4 N.
H. 309; Almy ». Wilbur, 2 Woodb. & M.
371, 388. But the courts are prone to in-
fer conclusively a secret trust from the ven-
dor’s possession, in connection with any
confirming circumstances or agreements.
Coolidge v. Melvin, 42 N. H. 510; Lang

v. Stockwell, 55 N. H. 561; Cutting v.
Jackson, 56 N. H. 253.

New Jersey: Parr v. Brady, 37 N. J.
Eq. 201.

New York: Hanford v. Artcher, 4 Hill,
271; Ball v. Loomis, 29 N. Y. 412, 415;
Tilson v. Terwilliger, 56 N. Y. 273; Mitch-
ell v. West, 55 N. ¥.107; May v. Walter,
56 N. Y. 8; Thompson v. Blanchard, 4
N. Y. 303.

North Carolina: Rea v. Alexander, 5
Tred. L. 644.

Ohio: Barr v. Hatch, 3 Ohio. 527; Hom-,
beck v. Vanmetre, 9 Ohio, 153.

Rhode Island: Sarle v. Arnold, 7 R. I.
582.

Tennessee: Grubbs v. Greer, 5 Cold.
160; Maney v. Killough, 7 Yerg. 440; Car-
ney v. Carney, 7 Baxter, 284,

Texas: Thornton v. Tandy, 39 Tex.
544,

Virginia : Davis v. Turner, 4 Gratt.
422,426; Bird v. Wilkinson, 4 Leigh, 266,
273; Forkner v. Stuart, 6 Gratt. 197;
Curd v. Miller, 7 Gratt. 185.

Wisconsin: Grant v. Lewis, 14 Wis.
487.

110 Ves. 139, 145.

2 P.101,

265
§§ 321, 322.] FRAUDULENT MORTGAGES.

or agreement there is no actual possession given, such want of
possession is not per se even evidence of fraud. In such a case
the fraud against creditors must be looked for in the nature of
the arrangement itself, and not in the way in which that arrange-
ment is acted upon with regard to possession being taken; but in
order to take advantage of this rule the subsequent acts must be
consistent with the deed itself, and not with a parol agreement
between the parties, for that is in the nature of a secret trust and
is always viewed with the greatest suspicion.”

321. Possession as evidence of fraud. — But to speak of pos-
session as being even primd facie evidence of fraud is incorrect.
Possession is only a circumstance of more or less weight, to be
considered in connection with other circumstances bearing upon
the question of fraud. ‘There is much confusion among courts
and law writers respecting possession in a grantor, vendor, or
mortgagor, as evidence of fraud. Some judges loosely speak of it
as being conclusive, and others as being only primé facie, evidence
of fraud; but a careful examination of this branch of the law will
show that neither of the views so expressed is correct.” An ex-
amination of the cases decided in the federal courts leads to this
conclusion: ‘* If the cases cited prové anything, they prove this:
that possession is not necessarily either conclusive or primd’ facie
evidence of fraud. To speak of possession as being in itself even
primd facie evidence of fraud is misleading and improper... .
The correct formulation of the law relating to the subject under
discussion, in view of the authorities considered, and of all the
authorities when considered aright, is, possession is a link ina
chain of circumstances, pertinent in proving fraud, having greater
or less weight according to the circumstances of each case.” 1

322. There is a marked distinction between an absolute
conveyance and a mortgage which by its terms leaves the pos-
session in the mortgagor.? “If the conveyance be conditional,”
says Buller, J.,° “ there the vendor's continuing in possession does

1 Article in 11 Cent. L. J. 21 (July 9, The distinction bétween an absolute con-

1880), by M. M. Cohn, Esq. veyance and a conveyance intended to
2 United States ». Hooe, 3 Cranch, 73, operate by way of mortgage is also rec-
per Marshall, C. J. ognized in Martindale v. Booth, 3 B. & Ad.

8 Edwards v. Harben, 2 T. R. 587, 596. 498; and see Barrow v. Paxton, 5 Johns.

266
MORTGAGOR’S POSSESSION WITHOUT RECORD. [§ 328.

not avoid it, because, by the terms of the conveyance, the vendee
is not to have the possession till he has performed the condition ;

. . and such possession comes within the rule, as accompany-
ing and following the deed.” The purpose of an absolute sale is
usually to give the purchaser the immediate title and possession of
the property, so that he can use it or deal with it as he will; but
the purpose of a mortgage is security only; and therefore it is
usual to provide in the deed that the mortgagor may retain pos-
session of the property until default, for until this occurs it is
uncertain whether the property will vest absolutely in the mort-
gagee, or whether he will need to take possession in order to avail
himself of his security.

A mortgage differs from a pledge in that delivery and posses-
sion are not necessary ; and the omission of them where there
has been an absolute sale is regarded as inconsistent with the
contract, and as raising a presumption of fraud. But the main
object of a mortgage, as distinguished from a pledge, is to enable
the debtor to retain the possession and enjoyment of the prop-
erty so long as he fulfils the condition of the contract. What-
ever danger of fraud there was at common law from the debtor’s
being allowed to retain the possession of mortgaged chattels has
been removed by the registry laws, which make notice of the
mortgage by record or filing equivalent to delivery of’ possession.
But the adoption of these laws has not changed the effect of a
mortgage at common law with or without a change of possession.
If there be achange of possession, then no record or filing of the
mortgage is necessary ; but if there be no such change of posses-
sion and no record or filing of the mortgage, the effect of the
omission is the same now that it was at common law; there is,
as is generally said, a presumption of fraud which may be re-
moved by evidence that there was no fraud in fact.!

323. That the mortgagor’s possession is provided for by
the terms of the deed is generally sufficient to overcome any
presumption of fraud that might otherwise arise from such pos-
session.”

(N. Y.) 258; Bissell v. Hopkins, 3 Cow. ° D’Wolf v. Harris, 4 Mason, 515;
(N. Y.) 166; Marsh v. Lawrence, 4 Cow. Barrow v. Paxton, 5 Johns. (N. Y.) 258;

(N. Y¥.) 461. Hull v. Carnley, 2 Duer (N. Y.), 99; Bis-
1 Hull v. Carnley, 2 Duer (N. Y.), 99, sell vo. Hopkins, 3 Cow. (N. Y.) 166;
109. g Letcher v. Norton, 4 Scam. (Ill.) 575.

267 :
§§ 824, 325.] FRAUDULENT MORTGAGES.

Even possession by the mortgagor inconsistent with the terms
of the deed is generally only primd facie evidence of fraud.1

Sales of chattels which are so situated that there can be no de-
livery at the time are within the exceptions to the general rule
requiring delivery, and the sale is perfect if the vendee take pos-
session within a reasonable time.2 Upon this principle an agree-
ment by a mortgagor and mortgagee of chattels that the latter
shall receive them in payment of the debt, and that he may im-
mediately take possession, is equivalent to actual delivery, if the
chattels are situated at a distance, and the purchaser be not neg-
ligent in obtaining possession.?

324. At common law the continuing possession of the
mortgagor is at most only primé facie evidence of fraud, and
may be explained. There never has been a time when the con-
tinuance in possession of a mortgagor until default in payment was
deemed at common law conclusive evidence of fraud, rendering
the security void as against creditors and purchasers.* It is now
the general practice under the registry laws to provide that the
mortgagor may remain in possession of the mortgaged property ©
until default, and it is a settled rule that such possession does not
render the mortgage void as against creditors.5

A temporary resumption of possession by a mortgagor is in like
manner a badge of fraud, though open to explanation.®

But under the registration laws, if the mortgagor retain posses-
sion of the property without recording the mortgage, it is void
in law, by express provision of the statutes.”

325. It is a settled rule that irrespective of the registry
laws the continuing possession of the mortgagor may be ex-
plained to be consistent with honesty in the transaction.2 Thus,

1 Divver v. McLaughlin, 2 Wend. (N. Y.)
596.

2 Ricker v. Cross, 5 N. H. 570; Conard
v. Atlantic Ins. Co. 1 Pet. 386, 449, per
Story, J.

3 Patrick v. Meserve, 18 N. H. 300.

* Fairbanks v. Bloomfield, 5 Duer (N.
Y.), 434. .

5 Fairbanks v. Bloomfield, supra.

® Look v. Comstock, 15 Wend. (N. Y.)
244,

268

7 Piper v. Hilliard, 52 N. H. 209; Put-
nam v. Osgood, 51 N. H. 192.

8 Conard v. Atlantic Ins. Co. 1 Pet.
386; Almy v. Wilbur, 2 Woodb. & M.
371, 387; Adams v. Wheeler, 10 Pick.
Mass. 199; Macomber v. Parker, 14 Pick.
(Mass.) 497; Shurtleff ». Willard, 19
Pick. (Mass.) 202; Homes v. Crane, 2
Pick. (Mass.) 607; Ash v. Savage, 5 N.
H. 545; Haven v. Low, 2 N. H.13; North
v. Crowell, 11 N. H. 251; Hoit v. Remick,
MORTGAGOR’S POSSESSION WITHOUT RECORD. [§ 825.

it is a sufficient explanation that a debtor having mortgaged a
mare and other chattels to secure an honest debt, retained posses-
sion of the mare with the creditor’s consent, in order to settle and
close the debtor’s business as constable, he having no other horse ;
and that he also retained possession of the other articles to carry
on his business.1_ In a case before the Superior Court of the city
of New York, Hoffman, J., said: ‘It is too late to contend that
in a mortgage of personal property the possession must, in all
cases, be transferred to the mortgagee. It has been settled by
repeated decisions of the Supreme Court of this state, and by
other tribunals entitled to the highest consideration, especially
the Supreme Court of the United States, that where there is a
mortgage of chattels the possession may, in many instances, re-
main with the mortgagor; especially in those cases where the pos-
session must necessarily so remain, from the nature of the prop-
erty mortgaged, and from the objects of the parties in making
the transfer. If those objects be fair and proper, and for a full
consideration, then there is no fraud in the transaction, and with-
out fraud the mortgage is not void. Neither is the position to be
sustained that the transfer is ipso facto void per se, because the
possession has been left with the mortgagor. If this were true,
then there could be no such thing as a mortgage of chattels, for
the very idea of a mortgage ex vi termini implies that the pos-
session is to remain with the mortgagor. Still it is too strong to

Ib, 285 ; Russell v. Butterfield, 21 Wend. v. Sheldon, 4 N. Y. 581; Butler v. Van

(N. ¥.) 300; Runyon v. Groshen, 12 N.
J. Eq. 86; Reed v. Jewett, 5 Me. 96;
Smith v. Putney, 18 Me. 87; Cutter v.
Copeland, 18 Me. 127; Lane vu. Borland,
14 Me. 77; Gleason v. Drew, 9 Me. 79;
Holbrook v. Baker, 5 Me. 309; Pierce v.
Stevens, 30 Me. 184; Lunt v. Whitaker,
10 Me. 310; Googins v. Gilmore, 47 Me. 9;
Hughes v. Cory, 20 Iowa, 399; Hombeck
v. Vanmetre, 9 Ohio. 153; Thompson v.
Blanchard, 4 N. Y. 303; Bissell v. Hop-
kins, 3 Cow. (N. Y.) 166; Marsh v. Law-
rence, 4 Ib. 461; Smith v. Acker, 23
Wend. (N. Y.) 653 ; Murray v. Burtis, 15
Ib. 212; Cole v. White, 26 Ib. 511; Lewis
v. Stevenson, 2 Hall (N. Y.), 63; Hull v.
Carnley, 2 Duer (N. Y.), 99; Gardner v.
Adams, 12 Wend. (N. Y.) 297; Griswold

Wyck, 1 Hill (N. Y.), 438; Fuller ».
Acker, Ib. 473; Newell v. Warren, 44
N.Y. 244; Letcher v. Norton, 4 Scam.
(Ill.) 575; Watson v. Williams, 4 Blackf.
26; Hankins v. Ingols, Ib. 35; Ross v.
Wilson, 7 Bush (Ky ), 29; Head ». Ward,
1 J. J. Marsh. (Ky.) 280; Bucklin v.
Thompson, Ib. 223 ; Vernon v. Morton, 8
Dana, 247; Lyons v. Field, 17 B. Mon.
543; Killough v. Steele, 1 St. & P. (Ala.)
262; Magee v. Carpenter, 4 Ala. 469;
Pyle v. Warren, 2 Neb. 241; Merrill vu.
Dawson, Hemp. 563; Volney Stamps »v.
Gilman, 43 Miss. 456; Snyder v. Hitt, 2
Dana (Ky.), 204; Bank of 8. C. v. Gour-
din, Speers Eq. (S. C.) 489.

1 Bissell v. Hopkins, 3 Cow. (N. Y.)
166.

269
§§ 326, 827.] FRAUDULENT MORTGAGES.

say that possession by itself implies nothing, for it is prima facie
evidence of ownership. It will throw upon a party who claims
against it, or in spite of the possession, the necessity of showing
the bona fides of the transaction, and will compel him to show
why the possession was so left, and moreover to prove a proper
consideration and an actual transfer.” + ,

326. This is a mere rule of evidence calculated to shift the
onus probandi from the creditor to the vendee.? If there has been
no record or filing of the mortgage, and no actual and continued
change of possession, before the mortgage can be upheld as a valid
security the person asserting its validity must establish affirma-
tively that it was made in good faith and without any intent to
defraud creditors or purchasers. It is not enough to show that it
was given for a good and valid consideration. It is equally
necessary to prove the absence of fraudulent intent. But the
same evidence which establishes the one fact may also be perti-
nent with reference to the other. The fact that a mortgage was
executed upon a good and valid consideration tends to prove the
absence of a fraudulent intent, and it is proper on such evidence to
submit the question to the jury whether it was not also executed
without intent to hinder or delay creditors. If there be no evi-
dence that the mortgagor was indebted to any other person, and
there is nothing in the case to show the mortgage was executed
for any other purpose than to secure a bond fide debt, the jury
will be justified in finding in favor of the validity of the mort-

gage.t ;

327. It is a question of fact for the jury whether a chattel
mortgage is fraudulent as to creditors by reason of the mort-.
gagor’s continued possession ; 5 and the jury having decided on the
evidence before them against the alleged fraud in a mortgage, the

1 Lewis v. Stevenson, 2 Hall (N. Y.); Putney, 18 Me. 87; Patten v. Smith, 4

63. Conn. 450; Bushnell v. Wood, 85 Ill. 88;
2 Runyon v. Groshon, 12 N. J. Eq. 86; Hull v Carnley, 2 Duer (N. Y.), 99; But-
and see Daniels v. Nelson, 41 Vt. 161. ler v. Van Wyck, 1 Hill (N. Y.), 438;

8 Groat v. Rees, 20 Barb. (N. Y.) 26; Fuller v, Acker, Ib. 473; Swift v. Hart,
Randall v, Parker, 3 Sandf. (N. Y.) 69. 12 Barb. (N. Y.) 530; Brunswick v. Me-
4 Groat v. Rees, 20 Barb. (N. Y.) 26. Clay, 7 Neb. 187; Maney v. Killough, 7
5 Rowley v. Rice, 11 Met. (Mass.) 333; Yerg. (Tenn.) 440.
Cutter v. Copeland, 18 Me. 127; Smith v.

270
MORTGAGOR’S POSSESSION WITHOUT RECORD. [§ 328.

court will not, except in very glaring cases, disturb their verdict
and grant a new trial.

328. This general rule, however, does not prevail in Penn-
sylvania and Illinois. In the former state an absolute delivery
is essential to a mortgage of chattels, and a statement upon the
face of the mortgage that the mortgagor may retain possession is
not sufficient to make it valid; but it will be regarded as fraudu-
lent per se.2 If, however, the mortgage be of property of which
a change of possession is impossible, it may be good without such
change, for the law will not require that which is impossible.
Thus a lessee of land upon which he has erected buildings under
a lease which restrains him from assigning his interest under the
lease and from removing the buildings, but provides for the pay-
ment to him of the money value of the improvements upon the
termination of the lease, may mortgage the improvements without
delivering possession, because such a delivery is impracticable.?
A mortgage of growing crops falls within the same principle.*

In Illinois possession retained by the mortgagor makes the
mortgage fraudulent per se, unless the retaining of possession be
consistent with the terms of the mortgage ;° and by this is meant
that the right of possession must be given by the very terms of
the mortgage ; ® or must arise by necessary implication from those
terms; as where a mortgage provides that if default be made,
or the mortgagor shall attempt to sell the property, or the mort-
gagee shall be in danger of losing his security, the latter may
enter and take possession of the mortgaged property.’

At common law all sales and pledges of personal property were
void as to third parties, unless possession accompanied and went

+

1 Googins v. Gilmore, 47 Me. 9; Hunter
v. Corbett, Up. Can. 7 Q. B. 75; Smith
v. Smith, 24 Me. 555; Swift v. Hart, 12
Barb. (N. Y.) 530; Butler v. Miller, 1 N.
Y. 496; Bishop v. Cook, 13 Barb. (N. Y.)
326; Swift v. Hart, 12 Ib. 530; Smith v.
Post, 3 T, & C.(N. Y.) 647; Oliver v.
Eaton, 7 Mich. 108.

2 Clow v. Woods, 5 8. & R. 275; Welsh
v. Bekey, 1 Penn. 57.

8 Luckenbach v. Brickenstein, 5 Watts
& §. (Penn.) 145.

4 Fry v. Miller, 45 Penn. St. 441,

5 Thornton v, Davenport, 1 Scam. (Ill.
296, 298,

6 Thornton v. Davenport, supra; Kitch-
ell v. Bratton, 1 Scam. (Ill.) 300; Rhines
v. Phelps, 3 Gilm. (Ill.) 455, 464; Reed v,
Eames, 19 Ill. 594, 596; Thompson v.
Yeck, 21 Ill. 73, 74; Constant v. Mat-
teson, 22 Il]. 546, 558; Cass v. Perkins,
23 Ill. 382; Funk v. Staats, 24 Ill. 632;
Reese v. Mitchell, 41 Ill. 365, 369; Burn-
ham v. Muller, 61 Ill. 453.

7 Letcher v. Norton, 4 Scam. (Ill.) 575;
Babcock v, McFarland, 43 Ill. 381.

271
§ 829.] FRAUDULENT MORTGAGES.

with the title or to the pledgee; and where the vendor or pledgor
retained the possession, the transaction was held in this state to
be fraudulent per se, and incapable of explanation. Legislation
in this state has altered the common law in so far, and only so
far, as to permit the mortgagor to retain possession of the mort-
gaged property, where it is provided in the instrument itself,
when properly executed and acknowledged, by having a proper
entry made by the justice of the peace in his docket, and by hav-
ing it duly recorded. But if either of these requirements is want-
ing, while the mortgage may be binding between the parties, it
is void as to purchasers and creditors of the mortgagor.

The recording of a chattel mortgage is not equivalent to pos-
session in the mortgagee for the purpose of giving validity to the
mortgage, and does not take away the necessity that the mort-
gagee be authorized by the very terms of the mortgage, or by nec-
essary implication therefrom, to retain possession of the property,
in order to render the mortgage a valid security as against third
persons while he does so retain possession.”

To permit the mortgaged property to remain in possession of
the mortgagor contrary to the terms of the mortgage is per se
fraudulent, and admits of no explanation.’

329. Under the registry laws the filing or recording of a
mortgage has the same effect as a delivery of the property in
relieving the mortgagee of the onus of proving the honesty and
good faith of the transaction. Hither of these acts is sufficient to
compel any one assailing the mortgage to prove affirmatively that
it is fraudulent in fact. This is the general and prevailing rule.

This view is fully expressed by the Supreme Court of Kansas

1 Porter v. Dement, 35 Ill. 478, 479;
Frank v. Miner, 50 Ill. 444, 447; Greene-
baum v. Wheeler, 90 Ill. 296; Hammers
v. Dole, 61 Ill. 307, 310; Koplin v. An-
derson, 88 II]. 120, 124.

2 Kitchell v. Bratton, 1 Scam. (Ill)
800, 302, 303; Frank v. Miner, supra;
Hammers v. Dole, supra; Greenebaum »v.
Wheeler, 90 Ill. 296, 298; Read v. Wil-
son, 22 Ill. 377, 380. Under R. S. 1845
a chattel mortgage may provide for the
mortgagor’s retaining possession of the
mortgaged property for the period of two

272

years, though the indebtedness secured
mature before that time. Cook v. Thayer,
11 Ill. 617; Read v. Eames, 19 Il. 594,
595 ; Burnham v. Muller, 61 Ill. 453, 455.
But under R, S. 1874 (ch. 95, § 4) the
mortgage cannot provide that the mort-
gagor retain possession longer than two
years, nor longer than until the maturity
of the debt.

3 Funk v. Staats, 24 Ill. 632.

¢ See authorities cited in § 236, and
Cotton v. Marsh, 3 Wis. 221; Bond ».
Seymour, 1 Chand. (Wis.) 40.
MORTGAGOR’S POSSESSION WITHOUT RECORD. [§ 829..

in a recent case! Mr. Justice Brewer, speaking for the court,
says: ‘“* There is nothing inherently vicious or against public pol-
icy ina mortgage. The right to mortgage is an incident to own-
ership. As a man may sell so may he mortgage his personal prop-
erty. Possession is not an essential element of title. A man may
own property in another’s possession. This is universally recog-
nized in cases of loan, agency, and bailment; and the owner, in
such cases, does not forfeit his title, or the right to assert and pro-
tect it even against third parties, by the mere fact of non-posses-
sion. Jf an owner may surrender his possession without losing
title, why may not one acquire a good title without acquiring pos -
session? Must the origin of title be accompanied by possession
to make it perfect against third parties? There seems to be no
sufficient reason therefor. A failure to deliver possession may be
evidence tending to show no sale, or a lack of good faith; but as
a delivery of possession is not essential to a transfer of title, a
want of it is not conclusive evidence that there was no sale. A
sale or mortgage is good inter partes without delivery of posses-
sion ; so the authorities agree. If it is void as against creditors,
it should be because some wrong is thereby done to them; but if
the transaction is in good faith and they have notice of it, wherein
are they wronged? If they claim that they are wronged ought
they not to prove the fact ?

“ A mortgage is a lien. The grantor does not purport to trans-
fer his entire interest. He retains all not necessary to perfect the
security. Possession may be of little benefit to the grantee, but
of great benefit to him. Why should he, after notice is given to
the world of what has been done, be compelled to surrender that
which is of so much benefit? A mortgage differs from a pledge,
in that possession is necessary to perfect the latter and not the
former. If possession is not necessary, why should a lack of it be
held a wrong? Why should that which is right in and of itself
be considered evidence of wrong? But it may be said that third
parties, presuming title from possession, may be misled, to their
prejudice. But with notice they cannot be misled. Registration
is notice. Again it is said that such a transaction may be used as
a cover for wrong. So may almost any transaction. A delivery
of possession is not conclusive against wrong. Why should a le-
gitimate transaction be condemned because improper use may be

1 Frankhouser v. Ellett, 22 Kans. 127, 145.
18 273
§ 829.] FRAUDULENT MORTGAGES.

made of it? But the statute concerning sales says a failure to
deliver possession is primé facie evidence of wrong as against
creditors. True; but in sales there is no registration, and there-
fore no notice. In mortgages there is registration and notice,
Again, the statute impliedly grants the right to stipulate for a
retention of possession by the mortgagor. Can that which the
legislature authorizes to be done be construed to be evidence of
wrong? Can an act done in pursuance of law be adjudged fraud-
ulent per se, or even evidence of fraud ?

« Briefly, then, we hold that the statute authorizes a stipulation
in a chattel mortgage fot a retention of possession by the mort-
gagor, and that a possession retained in accordance with the terms
of such mortgage is not, when the mortgage is duly filed, per se
fraudulent, or even primd facie evidence of fraud as against cred-
itors or subsequent purchasers.”

But in New York,! Nebraska,” Minnesota, and perhaps one or
two other states, although the mortgage be duly recorded, a legal
presumption of fraud arises from the continued possession of the
property by the mortgagor, which can only be overcome by evi-
dence that the mortgage was made in good faith, and without in-
tent to defraud creditors. In these states the statutes providing
for filing or recording chattel mortgages are not construed to
make the recording or filing of them legally equivalent to actual
delivery and continued change of possession. On the contrary,
these statutes are held not to repeal the statute concerning fraud-
ulent conveyances. They only add another to the grounds on
which a mortgage of personal chattels may be declared void.
Continuance of possession in the mortgagor is regarded as afford-
ing the highest presumption of fraudulent intent, amounting to
conclusive proof, unless it be rebutted by evidence showing af-
firmatively the good faith of the transaction. Guilt and not
innocence is presumed, and the burden of proof of that inno-
cence is thrown wholly upon the party claiming under the mort-

gage.

1 Smith v. Acker, 23 Wend. 653; 4 Wood v. Lowry, 17 Wend. (N. Y,)
Dutcher v. Swartwood, 15 Hun, 31. 492, 496.
2 Brunswick v. McClay, 7 Neb. 187; 5 Smith v. Acker, 23 Wend. (N. ¥.)
Pyle v. Warren, 2 Neb. 241; G. S. ch. 653, 678. See § 236.
25, §§ 11, 14, 15. One cannot forbear to remark that the
8 Horton v. Williams, 21 Minn. 187, statutes leading to this result are bad, and
that the interpretation of them by the
274 court is entitled to no commendation:
FRAUDS UNDER STATUTE AND AT COMMON LAW. [§§ 330-333.

330. If the mortgaged property be exempt from attachment
there can be no presumption of fraud from the mortgagor’s pos-
session. He can have no possible motive for putting property
under cover of a mortgage, when it is already protected by stat-
ute from every demand.1

331. A clause authorizing the mortgagor to retain posses-
sion until the mortgagee deems himself insecure does not
render the instrument void if executed in good faith.? A deed
of trust or mortgage is not invalidated by reason of a stipulation
that the mortgagor or trustee shall retain possession until the
mortgagee desires to take possession or requests that the property
may be sold.? Nor is a mortgage invalidated by a provision that
the property shall be sold before default if the mortgagor desires
it.

332, Waiver of invalidity. — The right of a purchaser of
goods to contest the validity of a prior mortgage on account of the
mortgagor’s continued possession is one simply personal to such
purchaser. He may waive this right if he choose; and in a suit
by him against his vendor for fraud in concealing the existence of
the mortgage, the latter cannot claim that the purchaser might
have successfully contended against the mortgagee’s demand for
the goods.6

II. Other Frauds under the Statute of Frauds and at Com-
mon Law.

333. The statute of 13 Elizabeth, perpetuated by 29 Eliza-
beth,® and in this country either adopted as a part of the common
law or substantially reénacted, for, avoiding fraudulent convey-
ances devised “ to the end, purpose, and intent to delay, hinder,
or defraud creditors and others of their just and lawful actions,”
etc., declared and enacted that every conveyance for such pur-
pose should be deemed, as against such creditors and others, to
be utterly void and of none effect. But the act excepts from
its operation transactions bond fide and founded upon a good con-

1 Patten v. Smith, 4 Conn. 450,; Fos- 8 Brock v. Headen, 13 Ala. 370; Du-
ter v. McGregor, 11 Vt. 595; Prout v. bose v. Dubose, 7 Ala. 235.
Vaughn (Vt. 1880), 23 Alb. L. J. 97; 4 Sipe v. Earman, 26 Gratt. (Va.) 563.
Vaughan v. Thompson, 17 Ill. 78; Derby 5 Rust v. Morse, 2 Hill (N. Y.), 655.

v. Weyrich, 8 Neb. 174. § 13 Eliz. ch. 5.
2 Frost v. Mott, 34 N. Y. 253. 975
§§ 334-336.] FRAUDULENT MORTGAGES.

sideration. Under this statute, one who takes a mortgage of prop-
erty, with knowledge of a fraudulent design of the mortgagor
thereby to defeat or delay his creditors, is in law charged with a
participation in the fraud, although he may pay a full considera-
tion and take immediate possession. The transaction is then mala
fide, and the mortgage to him utterly void and of no effect as to
creditors.}

334. A mortgage which is executed not alone to secure an
indebtedness to the mortgagee, but to protect the property of
the mortgagor, and to hinder and delay his creditors, this fact
being known at the time by the mortgagee, is fraudulent as to
creditors.? It is not necessarily fraudulent because its effect is to
hinder and delay creditors ;® it must be shown that the mortgage
was a fraudulent contrivance for that purpose, and that the mort-
gagee was privy to the fraudulent design. A debtor has an un-
doubted right to secure his creditor by mortgage, and notwith-
standing the ultimate effect of this may be to delay other credit-
ors, it will be valid if made in good faith solely for security.®

335. Fraud on the part of the mortgagor does not affect
the mortgagee unless he was a party or privy to it, and re-
ceived the mortgage with the intent to hinder, delay, or defraud
the creditors of the mortgagor.6 Both parties must participate in
the fraudulent intent to make the mortgage void.’

336. A fraudulent intent and knowledge on the part of one
of two mortgagees to whom a mortgage is made to secure sepa-
rate and distinct debts does not affect the rights of the other.
He stands in the same position as if he had taken a separate
mortgage to himself. There are virtually two mortgagees instead

1 Twyne’s case, 3 Coke, 80; Robinson
v. Holt, 39 N. H. 557.

2 Strohm v. Hayes, 70 Ill. 41; Crapster
v. Williams, 21 Kans. 109. See Herkel-
rath v. Stookey, 63 Ill. 486.

8 Cornell v. Pierson, 8 N. J. Eq. 478.

4 Hempstead v. Johnston, 18 Ark. 123.

5 Francis v. Rankin, 84 Ill. 169;
Thornton v. Davenport, 1 Scam. (IIl.)
296,

6 Smith v. Post, 1 Hun (N. Y.), 516;

276

Prior v. White, 12 Ill. 261; Hessing ».
McCloskey, 37 Ill. 341, 351; Bust v.
Mansfield, 25 Ill. 336, 388; Myers v. Kin-
zie, 26 Ill. 86; Miner v. Phillips, 42 Ill.
123; Cornish v. Dews, 18 Ark, 172; Sto-
ver v. Herrington, 7 Ala. 142; Price ».
Masterson, 35 Ala. 483; Fifield v. Gaston,
12 Iowa, 218; McLarren v. Thompson, 40
Me. 284,

7 Meixsell v. Williamson, 35 Ill. 529;
Herkelrath v. Stookey, 63 Ill. 486.
FRAUDS UNDER STATUTE AND AT COMMON LAW. [8§§ 887, 338.

of one, with distinct interests; and the fraud which vitiates the
mortgage relates to the substance and subject matter of the
mortgage, and not to the parties. The fraud of one mortgagee
taints the mortgage debt secured to him, and does not affect the
mortgage debt secured to the other. Although two persons are
secured separately in one mortgage, it must be considered as a
transfer, separate and distinct, which enables each one to hold the
property independently of the other, in proportion to the debt
secured.?

An intentional fraud in the maker of a trust deed as to some of
the beneficiaries whose claims are provided for, but not partici-
pated in by the other beneficiaries whose debts are valid, renders
the deed void as to so much of the debt secured as is covered by
the fraudulent purpose of the maker, and concurred in by the
beneficiaries whose claims are false and fictitious.”

337. Fraud, like any fact, may be proved by circumstances.
The rule that fraud must be proved and not inferred does not
mean that fraud can be proved -only by positive evidence; but
that it cannot be established by circumstances that merely raise
a suspicion. When the circumstances are so strong as to pro-
duce conviction of the truth of the charge, although there may
remain some doubt, it will be considered as proved. Thus in
determining the fairness of a mortgage made by one who had
obtained the mortgaged goods from another on credit, by false
and fraudulent representations in regard to his responsibility, the
jury may properly consider the circumstances that the mortgagee
took his mortgage for a larger sum than was actually due him,
and knew at the time he took the mortgage that the mortgagor
was insolvent at the time he obtained the goods on credit, and
that they were not paid for.*

338. Circumstances clearly indicating an intention to de-
lay creditors, by placing a mortgage upon the debtor’s property,
constitute a legal fraud, although neither of the parties to the
mortgage had the intention of perpetrating a legal fraud, and

1 Smith v. Post, 1 Hun (N. Y.), 516. lock v. Narrott, 49 Ill. 62; Rothgerber v.

2 Troustine v. Lask, 4 Bax. (Tenn.) Gough, 52 Ill. 486; Sparks v. Mack, 31
162. Ark. 666, 672, per Walker, J.

® Bryant v. Simoneau, 51 Ill. 324; Bul- 4 Strauss v. Kranert, 56 Ill. 254,

21T
§§ 839, 340.] FRAUDULENT MORTGAGES.

although they may have intended to act for the benefit of all the
creditors of the mortgagor.1 Such facts and circumstances as the
following are sufficient to overcome a denial of the mortgagee of
a fraudulent motive on his part :? ‘“* The transaction was between
near relatives, — father and son; the transfer was in gross, and
of all the visible property of the mortgagor; no account of stock
was taken ; no change was made in the actual possession of the
property mortgaged; the business was carried on in the same
manner after as before the mortgage ; no settlement was made by
which the respective rights of the parties were determined ; the
mortgagor was deeply embarrassed and in constant apprehension
that his creditors would attach his goods, which fact the mort-
gagee well knew, as also he did the motive which induced the
mortgagor to act.”

339. An over-statement of the amount secured made with
a fraudulent intent to hinder, delay, and defraud the mortgagor’s
creditors renders the mortgage void.? But the mere fact that the
mortgage secures a greater sum than was actually due is not
conclusive of fraud. The over-statement may have been a mis-
take; or the mortgage may have been intentionally and in good
faith made in this form, in order to coyer future advances in ad-
dition of an amount of an actual debt; and in such case, if it
appear by the recitals of the deed that it was the purpose of the
parties to provide for future advances, the over-statement will not
even be primd facie evidence of fraud.é

340. The question of fraudulent intent, where the transac-
tion is equivocal, and different inferences may be drawn as to
its character, or where there is conflicting evidence as to the good
faith of the transaction, or its validity or invalidity rests upon ex-
trinsic facts, is a question for the jury and not for the court.®

* 1 Wheelden v. Wilson, 44 Me. 1. Hawes, 10 Conn. 50; Willison v. Desen-

2 Wheelden v. Wilson, supra.

8 Anderson v. Hunn, 5 Hun (N. Y.),
79; Bailey v. Burton, 8 Wend. (N. Y.)
339 ; Hawkins v. Alston, 4 Ired. (N. C.)
Eq. 137; Wright v. Hencock, 8 Munf.
(Va.) 521; Bennett » Union Bank, 5
Humph. (Tenn.) 612; Mitchell v. Beal, 8
Yerg. (Tenn.) 134.

4 As stated in § 92. See Weeden »v.

278

berg, 41 Mich. 156; Tully v. Harloe, 35
Cal. 802; Butts v. Peacock, 23 Wis. 359;
Blakeslee v. Rossman, 43 Wis. 116, 123;
Barkow v. Sanger (Wis. 1879), 3 N. W.
Rep. 604; Wood v. Scott ei 1880), 7
N. W. Rep. 501.

5 Frost v. Warren, 42 N. y. 204.

6 Weaver v. Reilly (N. Y. Supreme Ct.
June, 1880), 10 N. Y¥. Weekly Dig. 241;
FRAUDS UNDER STATUTE AND AT CoMMON LAW. [§§ 341-348.

The burden of proving fraud is upon him who alleges it ;1 and
the proof is insufficient unless it creates a clear and full impres-
sion that the allegation is true.?

341. A provision of statute that fraudulent intent shall be
deemed a question of fact precludes the application of the rule
of constructive fraud to a mortgage or other instrument ; but this
provision is held to apply only to cases of actual and intended
fraud, and not to written instruments which the law adjudges to
be fraudulent on their face and consequently void.3

342. A mortgagee's title cannot be defeated by the subse-
quent acts or declarations of the mortgagor impeaching it as
void against his creditors. His declarations that the mortgage
was made for a fraudulent purpose are inadmissible, unless it be
shown that the mortgagee had knowledge of such purpose at or
before the delivery of the mortgage.® The fact that the property
consisted of goods in a store, and that the mortgagor retained pos-
session of them, and used and sold them, and applied the pro-
ceeds to his own use, will not make such declarations admissible.®
. The declarations of the mortgagor made at the time of the ex-
ecution of the mortgage are admissible in evidence as part of the
res geste ;7 and so are his declarations afterwards while in pos-
session.®

343. A mortgagee is not affected by the fraudulent act of
the mortgagor alone, although the act be done while the latter
is acting as the agent of the former, if it be not within the scope
of the agency. Thus, a mortgagee having intrusted the mort-
gagor with filing his mortgage, the latter at the time of filing it,

Herkelrath v. Stookey, 63 Ill. 486 ; Potter
v. McDowell, 31 Mo. 62.

1 Washington v. Ryan, 5 Bax. (Tenn.)
622.

2 Pogodzinski v. Kruger (Mich. 1880),
6 N. W. Rep. 116.

8 Robinson v. Elliott, 22 Wall. 513.

4 Perkins v. Barnes, 118 Mass. 484. See
Winchester v. Charter, 97 Mass. 140; Mer-
rill v. Dawson, Hemp. 563; Cornish v.
Dews, 18 Ark. 172; Hempstead v. John-
ston, Ib. 123.

5 Bartley v. Wells, 61 Ill. 59; Brown v.
Riley, 22 Ill. 45; Meixsell v. Williamson,
35 Ill. 529; Bell v. Prewitt, 62 Ill. 361;
Prior v. White, 12 Tl. 261; Wheeler ce.
McCorrristen, 24 Ill. 40; Herkelrath o.
Stookey, 63 Ill. 486; Donaldson v. John-
son, 2 Chand. ( Wis.) 160.

§ Donaldson v. Johnson, supra.

7 Bushnell v. Wood, 85 Ill. 88; Potter
v. McDowell, 31 Mo. 62.

8 City Bank v. Westbury, 16 Hun (N.

Y.), 458.
279
§§ 344, 345.]. FRAUDULENT MORTGAGES.

for his own purposes and without the mortgagee’s knowledge, re-
quested the clerk to hide the mortgage at the bottom of the pile,
so that it might not be seen, as he did not wish it known that he
had given it; and it was held that this request not being within
the scope of the agency, the mortgagee’s right was not preju-
diced.1 But where a mortgage was intrusted by a mortgagee to
the mortgagor to be recorded, and he left it with the recording
officer, with instructions to “ keep it out of sight for a few days,”
it was held that this was equivalent to a request that the mort-
gage should not be placed on record until further orders; and
that an attachment made in the mean time took precedence.?

A mortgagee is not affected by the fraud of the mortgagor who
has purchased the property and obtained possession of it by franud-
ulent representations, unless such mortgagee has knowledge of the
fraud at the time of taking his mortgage. He is not deprived of
his rights by a subsequent knowledge of the fraud.?

344. The understanding of a witness as to what was to
be intended in a mortgage, is not admissible to show fraud in
its execution, especially when it is not shown at what time. the
witness had the understanding. Neither are the declarations of.
the conveyancer who drafted the mortgage admissible for the pur-
pose of showing fraud in including part of the property described
in it.4

345.. Only creditors of the mortgagor and purchasers in
good faith can assail a mortgage under which the mortgagor re-
tains possession. Before a creditor can contest a mortgage on this
ground he must show that he is a creditor in good faith ; and be-
fore a purchaser can contest it he must establish the fact that he
is a purchaser for value and in good faith.5

Creditors of a mortgagor may impeach a mortgage for fraud,
although the mortgagor himself might not be heard to impeach it
for that reason; therefore, in an action by the mortgagee against
a judgment creditor of the mortgagor for a wrongful taking and
conversion of the property, such a creditor may show in mitiga-

1 Case v. Jewett, 13 Wis. 498. 190; Chicago Dock Co. v. Foster, 48 Ill.
2 Low ». Pettengill, 12 N. H. 337. 507.
8 Kranert v. Simon, 65 Ill. 344; Michi- * Hurd v. Gallaher, 14 Iowa 394.
gan Cent. R. R. Co. v. Phillips, 60 IIL 5 Pyle v. Warren, 2 Neb. 241.
280
FRAUDS UNDER STATUTE AND AT COMMON LAW. [§ 346.

tion of damages that the mortgage was given and taken with in-
tent to defraud creditors. In such case it does not matter that the
mortgaged property was exempt from sale on execution.

A creditor by attaching property or levying execution upon it
acquires a specific lien, which entitles him to impeach a prior
mortgage as fraudulent.2, In some states a creditor may call in
question an existing mortgage by garnishee or trustee process.®

A purchaser at an execution sale of chattels subject to a mort-
gage has the same right to attack the validity of the mortgage
that the judgment creditor himself had, unless the chattels be sold
expressly subject to the mortgage.*

As between the parties to a chattel mortgage, it is valid and
may be enforced, however fraudulent it may be as to creditors.®

346. A mortgage is void only as to creditors who are hin-
dered and defeated, and who have raised the issue of fraud by
their pleadings. The statute does not make the conveyance ab-
solutely void as to all persons. The case is different from a mort-
gage void for usury or gaming where other incumbrances must,
ex necessitate, when the tainted instrument is removed, take its
place. A creditor claiming to set aside a mortgage as fraudu-
lent must establish his position as one of those in whose aid the
statute is framed. ‘That he occupies such position the parties
adverse to him in interest: may contest, and the only way in which
the issue can be formed and this matter brought to the considera-
tion of the court is by the pleadings. If the creditor sets up this
defence in answer, the debtor or the preferred creditor may show
that he assented to the arrangement, that he has released his
claim to the property affected by it, or any other matter appli-
cable to the case, and if he files no answer, the court cannot even
say that he is dissatisfied with the arrangement. The affirmative
is upon the creditor, and it is incumbent upon him to place him-
self upon the record so that his opponent can be heard and his
case adjudicated.” ®

1 Jewett v. Fink, 47 Wis. 446. v. Craig, 57 Ill. 257; Ward v. Enders, 29
° Frost v. Mott, 34 N. Y. 253; Rinchey Ill. 519; Lowry v. Orr, 1 Gilm. (IIl.) 70;
v. Stryker, 26 How. (N.Y.) Pr. 75; Braley Choteau v. Jones, 11 Ill. 300; Harmon v.

v. Byrnes, 20 Minn, 435. Harmon, 63 Dl. 512.
8 Fearey v. Cummings, 41 Mich. 376. 6 National Bank of the Metropolis v.
4 Wagner v. Jones, 7 Daly, 375. Sprague, 21 N. J. Eq. 530.

5 Davis v. Ransom, 26 Ill. 100; Upton

281
§§ 347, 348.] FRAUDULENT MORTGAGES.

347. A junior mortgagee, upon proof that a prior mortgage
of the same property was fraudulent as to creditors, is entitled to
a judgment setting it aside! And so a purchaser at a sale under
a junior mortgage may impeach the validity of a prior mortgage;
and it is even held that he is not precluded from doing this by
reason that the auctioneer in making the sale announced that it
would be made subject to the other mortgage, and in consequence
of this announcement the property was sold at much less than its
real value; for if the other mortgage was not already a valid lien,
the declaration of the mortgagee could not make it so.?

But to entitle a junior mortgagee to avoid a prior mortgage on
the ground of fraud, he should first show by evidence dehorg the
instrument itself that his own mortgage was taken for a valuable
consideration, or to secure the payment of an honest debt.3

348, A bill in equity to obtain the surrender and cancella-
tion of a mortgage may under some circumstances be maintained
against the mortgagee. Thus, the assignee of an insolvent debtor,
denying the validity of a recorded mortgage upon property be-
longing to the estate, may maintain such a bill against a mort-
gagee who has not taken possession of the property, or in any
way intermeddled with it. There is in such case no cause of ac-
tion at law against the mortgagee, and he might keep the ap-
parent incumbrance upon the property indefinitely, unless the
cloud can be removed by bill in equity.!

Creditors of an insolvent estate may maintain a bill in equity
against the debtor’s administrator, to whom the debtor had fraud-
ulently conveyed property in mortgage, to have the mortgage
declared void, and he may be enjoined pending the proceedings
from selling the property under his mortgage.6 Such a bill may
also be brought against the administrator and a fraudulent mort-
gagee, when the administrator has refused or neglected to take
any steps towards recovering the mortgaged chattels as assets of
the estate. It is true the administrator is the representative of
the creditors and of the next of kin as well, and in the former

1 Anderson v. Hunn, 5 Hun (N. Y.), see Wray v. Fedderke, 43 N. Y. Superior
79. Ct. 335.
2 White v. Graves, 68 Mo. 218, * Sherman v. Fitch, 98 Mass. 59.
8 Baskins v. Shannon, 3 N. Y. 310; and 5 Becker v. Anderson, 6 Neb. 499.
6 Hagan v. Walker, 14 How. 29.

282
FRAUDS UNDER STATUTE AND AT COMMON LAW. [§§ 349, 350.

capacity might be able to make good his claim to a sufficient
amount of the mortgaged property to enable him to pay the
debts. But the impracticability of taking an account of the debts
at law, and proportioning the recovery to the amount required to
pay them, would render a resort to equity indispensable to do en-
tire justice between the parties, even if the assets were legal in
their nature.1

349. A mortgage procured by duress is wholly void; that

is it is void, as against the mortgagor as well as against others.

' Thus if a creditor fraudulently obtains possession of his debtor’s

property, and refuses to surrender it until the debtor executes a

note and mortgage for an amount much in excess of the actual
debt, the mortgage is wholly void?

A chattel mortgage procured to be executed under threat of ar-
rest is void not only because given under duress, but also because
it is against public policy to permit such an abuse of process.?

A mortgage which a blind or illiterate person has been induced
to execute in ignorance of its contents is wholly void.*

350. Fraudulent in part, void in toto. —If a mortgage be
void because of an intention participated in by both parties to
delay, hinder, and defraud the mortgagor’s creditors, it is fraudu-
lent in toto, and cannot be supported to any extent as against
such creditors; it cannot be supported to the extent of an actual
debt covered by such mortgage.’ If a statute of frauds either ex-
pressly or by necessary implication make a conveyance contrary
to the statute totally void, such a conveyance cannot be good in
part and bad in part, but it is void in toto, both as to creditors
and as between the parties, and no interest passes to the grantee
under the part which is good.®

458; Mackie v. Cairns, 5 Cow. (N. Y.) 547.
In the former case the court, by way of

1 Hagan v. Walker, supra, per Curtis, J.
2 Lightfoot v. Wallis, 12 Bush (Ky.),

498.

8 Bane v. Detrick, 52 Ill. 19.

4 Owens v. Thomas, 6 U. C. C. P. 383.
See Shepherd’s Touchstone, 56; Bennet
v. Vade, 2 Atk. 324, 327.

5 Weeden v. Hawes, 10 Conn. 50 ; Beall
v. Williamson, 14 Ala. 55; Sommerville
». Horton, 4 Yerg. (Tenn.) 541.

6 Hyslop v. Clarke, 14 Johns. (N. Y.)

illustration, say that it appears to be an
established rule, that where a bond is void
in part, as against the positive provisions
of a statute, the whole bond is void; cit-
ing Norton v. Simmes, Hob. 12, 14, and
Maleverer v. Redshaw, 1 Mod. 35. In the
latter case one of the judges said: ‘Ihave
heard my Lord Hobart say upon this oc-
casion that because the statute would make

283
§ 351.J FRAUDULENT MORTGAGES.

A mortgage which contravenes the insolvent laws as to some
portion of the debt secured is wholly void.!

A mortgage made to secure promissory notes, a part of the con-
sideration of which is spirituous liquors sold in violation of law, is
wholly void.?

In New York, and one or two other states, a mortgage which
is void by reason of containing provisions allowing the mortgagor
to sell merchandise covered by it in the usual course of trade, is
void as to every other kind of property embraced init. Being
void as to a part of the property included in it, it is void as to the
whole. The fraudulent and unlawful intent of the parties cannot
be confined to a part of the property, but vitiates the entire in--
strument, although it may include lands or other property as to
which it would be valid if it could be regarded as a mortgage of
that only, and in relation to which there is a bond fide intent to
convey it as security for an honest debt.?

351. But a mortgage not actually fraudulent may be valid
in part and void in part. Such is the case where a mortgage
secures a debt which is in part valid and in part void for usury.*
And so a mortgage obtained under inequitable or suspicious cir-
cumstances, but not with a fraudulent intent, may be set aside in
part and allowed to stand as a security for what is equitably due.®
Although a mortgage be inoperative as to part of the property
described, because it has not been acquired, it is not for that
reason invalid in respect to other property which the mortgagor
owned at the time of executing the mortgage.§

A mortgage covering a stock of goods and fixtures, although
void as to the stock of goods by reason of the mortgagor’s right

sure work, and not leave it to exposition
what bonds should be taken, therefore it
was added that bonds taken in any other
form should be void. For, said he, the
statute is like a tyrant: where he comes he
makes all void ; but the common law, like
a nursing father, makes void only that part
where the fault is and preserves the rest.”

1 Denny v. Dana, 2 Cush. (Mass.) 160.

° Brigham v. Potter, 14 Gray (Mass.),
522,

8 Russell v. Winne, 37 N. Y.591; S. C.
4 Abb, Pr. N.S. 384 ; Goodrich v. Downs,

284

6 Hill (N. Y.), 438; Jackson v. Packard, 6
Wend. (N. Y.) 415; Mittnacht v. Kelly, 3
Abb. (N. Y.) Dec. 301; Goodhue ». Ber-
rien, 2 Sandf. Ch. (N. Y.) 680; Har-
man v. Hoskins, 56 Miss. 142; Horton v.
Williams, 21 Minn. 187. See contra, §
351.

4 Langdon v. Phelps, 52 How. (N. Y.)
Pr. 387.

5 Weeden v. Hawes, 10 Conn. 50.

6 Gardner v. McEwen, 19 N. Y. 123;
Van Heusen v. Radcliff, 17 N. Y. 580.
TRUST ASSIGNMENTS IN THE NATURE OF MORTGAGES. [§ 352.

to continue in possession and sell them, is held binding upon the
fixtures, as to which the power of sale did not apply.!

Ill. Trust Assignments in the Nature of Mortgages.

352. An assignment by a debtor of his personal property
to a creditor upon trust to sell and pay his debt, with a reser-
vation to himself of any surplus there may be, is'in effect a mort-

‘gage.2 The reservation of the surplus is only an expression of
what the law would imply without a reservation, and is no evi-
dence of a fraudulent intent. Such an assignment is to be distin-
guished from an assignment to trustees for the payment of spe-
cific debts with a reservation of the surplus to himself. ‘“ The
surplus is always within the reach of the other creditors, and can,
by a creditor’s bill or proceedings supplementary to the execution,
be attached and appropriated to the payment and satisfaction of
their debts. Such a disposition of a debtor’s estate is therefore
free from the weightiest objections against assignments upon trust
to third persons for the payment of debts. There is no trustee
interposed between the creditors and the property of their debtor.
The assignee does not acquire the entire legal interest in the prop-
erty conveyed subject to the trust, but a specific lien upon it; and
the property is still subject to the process of the courts, and may,
subject to the mortgage creditor, be devoted to the satisfaction of
the other creditors’ debts.”? Assignments upon trust, to pay
debts giving preferences, are not favored by the courts, and are
only upheld when they do not violate the condition that the

1 Inre Kahley, 2 Biss. 883; Barnet v.
Fergus, 51 Ill. 352; Donnell +. Byern, 69
Mo. 468; State v. Tasker, 31 Mo. 445;
Voorhis v. Langsdorf, 31 Mo. 451; State
v. D’Oench, 31 Mo. 453; Ie Kirkbride, 5
Dill. 116. In the latter case Judge Dillon,
referring to the cases upon this point in
Missouri, said: “I am entirely satisfied
that these cases show that when the con-
veyance is not actually fraudulent, and
when the power of disposition is retained
as to part of the property, and as to part
it is not retained, it is constructively fraud-
ulent only as to that portion of the prop-
erty as to which the power of disposition
exists.” See contra, § 350.

2 Leitch v. Hollister, 4 N. Y.211; Me-

Clelland v. Remsen, 36 Barb. (N. Y.) 622;
S. C. affirmed, 5 Abb. Pr. N. S. 250; 3
Keyes, 454; Dunham v. Whitehead, 21 N.
Y. 131; Smith v. Beattie, 31 N. Y. 542;
Wilson v. Russell, 138 Md. 494; Fouke v.
Fleming, 13 Md. 392; Henshaw v. Sum-
ner, 23 Pick. (Mass.) 446; Davidson »v.
King, 47 Ind. 372; Godchaux v. Mulford,
26 Cal. 316; Catlin v. Currier, 1 Sawyer,
7; Hempstead v. Johnston, 18 Ark. 123;
Gage v. Chesebro, 49 Wis. 486; S. C. 8
N. W. Rep. 881. But see otherwise,
Brown v. Webb, 20 Ohio, 389; Selz v.
Evans (App. Ct. Ill. 1880), 12 Chicago
L. N. 385. These cases are bad law.
8 McClelland v. Remsen, 36 Barb. (N.
Y.) 622, per Brown, J.
285
§ 353.) FRAUDULENT MORTGAGES.

debtor shall devote all his property to the satisfaction of his debts,
without qualification, and that he shall receive nothing from the
assigned property to himself until all his creditors are paid. Such
an assignment, with any reservation by the debtor for his own use
or benefit in any way, is fraudulent per se, and absolutely void.
It is also void if it leaves the property to any extent under the
control of the debtor or of his assignee. The rights of the cred-
itors under the assignment must be settled by the deed itself.

353. A mortgage necessarily creates a trust in favor of the
mortgagor as to the surplus, after satisfying the debt secured.
Yet such trust is not within the statute of frauds, which declares
all transfers of goods made in trust for the party making the
same to be void as to creditors.. Such a trust is not the object of
the mortgage, but is a mere incident ; and it is immaterial in this
respect whether the instrument be upon its face a mortgage con-
taining the usual defeasance, and there is an open trust as to any
excess, or it be in the form of an absolute conveyance, with an un-
derstanding that it is merely a security, so that there is a secret
trust as to such excess. Other creditors are not in any legal sense
hindered, delayed, or defrauded by such a transaction. They may
sue notwithstanding, and reach the residuary interest of the mort-
gagor by attachment and execution, or by bill in equity. This
provision of the statute of frauds was not intended to prohibit
chattel mortgages, but to prevent a debtor from placing his prop-
erty in the hands of a trustee to hold for the sole benefit of the
debtor to the prejudice of his creditors.?

A statute avoiding trusts for the use of the person making the
same has no application to trust mortgages made in good faith to
raise money to pay the mortgagor's debts, although the surplus,
after satisfying the debt secured, is by way of resulting trust, or by
express stipulation, to be for the use of the mortgagor. Nor has
such a statute any application to conveyances made primarily and
principally for the use of the grantee, and where the reservation
to the grantor is merely incidental and partial.

1 Owen v. Arvis, 2 Dutch. (N. J.) 22; ® Curtis v. Leavitt, 17 Barb. (N. Y.)
National Bank of the Metropolis v. 309; S. C.15 N. Y. 9, 124-182, 205-208.
Sprague, 21 N. J. Eq. 580; Sheldon v. # Camp v. Thompson, 25 Minn. 175;
Dodge, 4 Denio (N. Y.), 217. Vose v. Stickney, 19 Minn. 367; Truitt v.

2 Godchaux v. Mulford, 26 Cal. 316; Caldwell, 3 Minn. 364.
and see Catlin v. Currier, 1 Sawyer, 7.

286 -
TRUST ASSIGNMENTS IN THE NATURE OF MORTGAGES. [§§ 354, 255.

354. A provision in a deed of trust to secure creditors,
that the trustee may continue the business and replenish the
stock, if intended merely as a means of enforcing the security,
and with a view to winding up the business, does not necessarily
make the deed fraudulent; but is only evidence of fraud to be
left to the jury.!. In such a deed a provision that the grantor
shall attend to the business, but shall be under the control of the
trustee, who may at any time dispose of the trust property at auc-
tion, does not make the deed fraudulent.?

A provision in a mortgage of a manufacturer’s stock in trade,
whereby the mortgagee undertakes to complete the manufacture
of the unfinished goods and prepare them for sale, is not incon-
sistent with his rights and duties as mortgagee, and consequently
does not render the assignment void. Yet, in the case of a gen-
eral assignment by an insolvent debtor to a trustee for the pay-
ment of his debts, a like provision would be adjudged fraudulent
and void, because the debtor could not confer such a power with-
out creating delay, which the courts could not control or correct.*
But such a power conferred upon a mortgagee does not fall within
the principle or reason of the objection to such a power in a trus-
tee, because the mortgagee does not acquire the entire legal and
equitable interest in the property, and the residuary interest may
be reached by execution or bill in equity at the suit of any other
creditor.

355. It is not essential to the validity of a mortgage that
it be wholly for the benefit of the mortgagee. It is not objec-
tionable that it secures a debt due him and a debt due another, so
that the mortgagee holds the mortgage partly in trust for the ben-
efit of a third person. Such a trust does not give it the character
of an assignment, within the act requiring assignments to compre-
hend all the property of the debtor, and to be without prefer-
ences.®

A mortgage to trustees to secure demands in favor of several

1 Marks v. Hill, 15 Gratt. (Va.) 400; Kendall v. N. E. Carpet Co. 13 Conn.
Cunningham v. Freeborn, 11 Wend. (N. 383; Marks v. Hill, supra.
Y.) 240; Dunham v. Waterman, 3 Duer 3 Smith v. Beattie, 31 N. Y. 542.
(N. Y.), 166; Woodward v. Marshall, 22 4 Dunham v. Waterman, 17 N. Y. 9.
Pick. (Mass.) 468. . 5 Smith v. Beattie, supra, per Brown, J.
2 De Forest v. Bacon, 2 Conn. 633; § Morse v. Powers, 17 N. H. 286.

287
§ 356.] FRAUDULENT MORTGAGES.

creditors is not necessarily fraudulent as made to hinder, delay, or
defraud creditors; but the question of fraudulent intent in such
mortgage is one of fact for the jury.!

A mortgage is not objectionable as an assignment for the ben-
efit of creditors which is made to a creditor to secure a debt to
him, and also the debts of other creditors named.?

IV. Fraudulent Preferences under Bankrupt and Insolvent
Laws.

356. A debtor has a right to prefer a creditor by a mort-
gage or otherwise, unless such preference contravene some pro-
vision of a bankrupt or insolvent law; and the fact that the con-
sideration of the mortgage is wholly a preéxisting debt does not
make it any the less valid and binding as against other creditors
of the mortgagor It is neither illegal nor immoral, says Lord
Kenyon, to prefer one set of creditors to another.‘

Neither is it illegal to prefer a single creditor. Although the
result of the preference be the payment of the preferred debt in
full, and the leaving of nothing for the payment of other debts, it
does not follow that the debtor intended to defraud his other cred-
itors, or that he did in fact defraud them. In a case before the
Supreme Court of Kansas, Mr. Justice Brewer, speaking for the
court, said: ® “* The exercise of an undoubted right does not show
wrong. The debtor sought an extension of the other claims, but
he did this in the hope of selling his entire stock and paying all
claims. There is nothing to show that this was not a reasonable
and justifiable expectation. If so, it does not indicate an inten-
tion to defraud. He continued in business, and the proceeds of
the sales, with the exceptions to be hereafter noticed, were applied
to the payment of his preferred creditor. This does not look

1 Bagg v. Jerome, 7 Mich. 145.

2 Chapman v. Hunt, 14 N. J. Eq. 149;
Gage v. Chesebro (Wis. 1880),5 N. W.
Rep. 881.

8 National Bank of the Metropolis v.
Sprague, 20 N. J. Eq. 13 ; Funk v. Staats,
24 Ill, 632; Thornton v. Davenport, 1
Scam. (IIL) 296; McConnell v. Scott, 67
Ill. 274; Prior v. White, 12 Ill. 261. See
48 Ill. 323; Dance v. Seaman, 11 Gratt.
(Va.) 778; Phippen v. Durham, 8 Ib. 457 ;
M’Cullough v. Sommerville, 8 Leigh ( Va.),

288

415; McTaggart v. Rose, 14 Ind. 230;
Cornish v. Dews, 18 Ark. 172; Hempstead
v. Johnston, Ib, 123; Frankhouser v. El-
lett, 22 Kans. 127, 148, per Brewer, J.;
Bennett v. Union Bank, 5 Humph. (Tenn.)
612,

*£ In Estwick v. Caillaud, 5 T. R. 420.
See, also, to same effect, Nunn »v. Wils-
more, 8 T. R. 521; Small v. Oudley, 2 P.
Wms. 427.

6 Frankhouser v. Ellett, supra.
PREFERENCES UNDER BANKRUPT, ETC., LAWS. [§ 357.

like intent to wrong. If he had appropriated the proceeds of such
sales or squandered them, such conduct might be significant of
wrong; but applying them fairly and honestly to the payment
of his debts, although all went to one creditor, shows honesty of
purpose.”

A mortgage given by an insolvent debtor with intent to prefer
a creditor is not invalid, unless some statute take away his right
to prefer, although such preference by mortgage may operate to
delay and hinder other creditors. If made in good faith to secure
a creditor, and not at all to delay and hinder other creditors, it is
lawful! Any mortgage interposes an obstacle in the way of the
legal remedies of other creditors, and may to that extent be said
to hinder and delay them ; but this fact is not of itself sufficient
to render the mortgage void, in the absence of an intent to so
hinder and delay the mortgagor’s creditors.”

The fact that the mortgagor was insolvent at the time of mak-
ing a mortgage, and continued in possession of the property a
long time, both before and after the maturity of the debt secured,
and had no other attachable property, is not conclusive evidence
of fraud, but is only a circumstance tending to show it.?

The fact that a mortgage covers the debtor’s present and fut-
ure stock of goods, and that he has nothing else liable to execu-
tion, does not make it conclusively fraudulent.+

357. The relationship of the parties to such a mortgage is
not of itself evidence of fraud, though it is a circumstance to
awaken suspicion. In a case where a trust deed was attacked as
fraudulent because it was made to secure preéxisting debts to kins-
folk and intimate friends at a time when a heavy suit was pend-
ing against the mortgagor, and this was just about to ripen into
judgment, it was insisted that these facts made the mortgage

1 National Bank of the Metropolis v. 8 North v. Crowell, 11 N. H. 251.
Sprague, 20 N. J. Eg. 13; Garretson v. # Willison v. Desenberg, 41 Mich. 156.
Brown, 2 Dutch. (N. J.) 425; affirmed, 3 5 Hempstead v. Johnston, 18 Ark. 123;
Ib. 644; Hempstead v. Johnston, 18 Ark. Frankhouser v, Ellett, 22 Kans. 127, 148,
123; Sparks v. Mack, 31 Ark, 666,672; per Brewer, J.; Sparks v. Mack, 31 Ark.
Rich v. Levy, 16 Md. 74; Fromme v. 666; Bumpasv. Dotson, 7 Humph. (Tenn.)

Jones, 13 Iowa, 474; Troy v. Smith, 33 310, 317; Troy vo. Smith, 33 Ala. 469;
Ala. 469; Welsch v. Werschem, 92 Ill. Smith v. Hardy, 36 Wis. 417; Kaye v.

115; Bentley v. Wells, 61 Ill. 59. Crawford, 22 Wis. 320. See Manseau v.
2 Dance v. Seaman, 11 Gratt.(Va.) 778, Mueller, 45 Wis. 430; Hawkins v. Alston,
782, 4 Tred. (N. C.) Eq. 137.

19 289
§ 358.] FRAUDULENT MORTGAGES.

fraudulent in law, although no fraud in fact was intended. “The
defect in this position,” replied the court,! “is in misconceiving
the nature and effect of the doctrine of innocent purchasers with-
out notice, or rather in failing to note the very words necessary
to be used in announcing it. He is a bond fide purchaser in the
eyes of the law who has paid value without notice of defects in
the title of the thing bought, or of fraud upon the part of the
seller. Where one has bought under such circumstances, his
purchase will ordinarily cut off all unknown equities, and relieve
against all secret frauds. But if there be no defects of title to be
cured, and no fraud upon the part of the seller to be relieved from,
there is no occasion for the buyer to invoke the doctrine, nor can
he be compelled to resort to it until the fraud or the defects have
been affirmatively established by him who attacks the transac-
tion. Conceding all that is claimed here, the defendants did only
what they had a perfect right to do. Pressed by one creditor,
they elected to incumber their property in favor of otbers whom
they thought more meritorious, or for whom they felt more affec-
tion, and in so doing they exercised a right immemorial in the
common law, and one which every man practically and daily ex-
ercises when he pays one debt leaving others unpaid. The only
way in which other creditors can successfully assail such a con-
veyance is by showing that the debts pretended to be secured
are simulated, or that the security was never intended to be en-
forced, and was given only as a sham to ward off the attacks of
others, or that some benefit has been received by the grantor,
as by a stipulation for unusual indulgence, or in some other

way.” ,

358. The fact that a mortgage is given to a single cred-
itor by a debtor in failing circumstances and pressed by other
creditors, while it may be considered by the jury with other cir-
cumstances in determining the question of fraudulent intent, is
not itself conclusive of fraud.2 The transaction is valid against
other creditors, if the jury find that no fraud was actually in-
tended.? It does not matter that the creditor knew of his debt-
or’s insolvency and took a transfer of all his property, if he did

1 Surget v. Boyd, 57 Miss. 485. = Bartels v. Harris, 4 Me. 146.

? Allen v. Kennedy, 5 N. W. Rep. 625;
S.C. 49 Wis. 549.

290
PREFERENCES UNDER BANKRUPT, ETC., LAWS. [§ 358.

this with an honest design to secure the debt due himself and
with no intent to defraud other creditors.

The fact that a mortgage was executed upon the same day that
a judgment was rendered against the mortgagor, unaccompanied
by circumstances calculated to cast suspicion upon the transac-'
tion, is not of itself sufficient to attach to it the implication of
fraud.?

An unregistered bill of sale or mortgage does not become ob-
jectionable as giving a fraudulent preference merely because pos-
session of the goods is obtained by means of a transaction which
would have been a fraudulent preference had there been no bill
of sale. Thus a surety upon a promissory note, having taken a
bill of sale as security against his liability, the day before the
note fell due was informed by the debtor that he should not be
able to meet the note, and was advised by him to do what was
legal in the matter. The mortgagee was under the impression
that, as the bill of sale was not registered, he was not entitled to
seize the goods comprised in it; and it was therefore arranged
that some of the articles which were comprised in the bill of sale
should be invoiced to him as a purchaser, and sent to him by the
debtor. This was done, and a receipt for the purchase money was
signed by the debtor. The mortgagee paid the note when it be-
came due, and a few days afterwards the debtor filed a liquidation
petition, and was adjudged a bankrupt. When the petition was
filed, the goods in question were in the mortgagee’s possession,
and so remained. The court below held that the transaction by
which the mortgagee obtained possession of the goods was a fraud-
ulent preference, and ordered a return of the goods to the trus-
tee, or payment to him of their value; but the Court of Appeal
reversed this decision, on the ground that the property in the
goods had passed to the mortgagee by the bill of sale, and his
title to them could not be impeached.?

A mortgage upon the furniture of a hotel to secure the pay-
ment of notes payable monthly through a period of five years, and
representing the rent of the hotel for that period of time, is not
fraudulent in law as against other creditors of the mortgagor ;
but the mortgagee having acted in good faith and without knowl-
edge of the mortgagor’s embarrassment, the mortgage will be

1 Gage v. Chesebro, 49 Wis. 486. 8 Ex parte Symmons (Ct. of App. 1880),
2 Thornton v. Davenport,1 Scam. (Ill.) 24 Solicitors’ Journal, 609.

296. 291
§§ 359, 860.] FRAUDULENT MORTGAGES.

held good. Neither is the time the mortgage has to run unrea-
sonable.}

359. Objection under a bankrupt law that a chattel mort-
gage is not in the usual and ordinary course of business, and
is therefore primd facie fraudulent, is not applicable to such a
mortgage made to secure an honest debt, wholly or partly in-
curred at the time.?

4

360. The two clauses of the thirty-fifth section of the
bankrupt act, the first avoiding certain acts of the bankrupt if
dcne within four months before the filing of the petition, and
the second imposing a like result if the transaction be within six
months of that time, differ mainly in their application to two
different classes of recipients of the bankrupt’s property ; that is
to say, the first clause is limited to a creditor, and the second to
a purchaser or mortgagee. The first refers to the past, and the
second to the present. The first clause imports that the consid-
eration is one growing out of a former transaction, and the sec-
ond imports that the transaction was original and complete in
itself at the time it occurred. The first is directed against pref-
erences of creditors; and the second against transfers made to
prevent the property from coming to the assignee in bankruptcy,
or to hinder or delay the operation and effect of the bankrupt act.

If, therefore, a mortgage be attacked as falling within this sec-
tion of the bankrupt act, and the consideration of the mortgage
be a past transaction, the first clause must be applied, and ‘the
right of attack upon the instrument is limited to a transaction
had with a view to give a preference to a creditor which has taken
place within four months prior to the filing of the petition. If,
however, a mortgage was made for a present consideration, an at-
tack upon it is limited to a transaction within six months before
the filing of the petition, and to a transaction intended to defeat
or delay the operation and effect of the bankrupt act.

A bond fide preference of a creditor by a mortgage made more
than four months before the commencement of proceedings in
bankruptcy is not open to objection.!

1 Stewart v. Cockrell, 2 Lea (Tenn.),  % Gibson v. Warden, 14 Wall. 244.
369. 4 Coggeshall v. Potter, 1 Holmes, 75;
2 Moore v. Young, 4 Biss. 128, Bean v. Brookmire, 4 N. Bank. Reg. 196.
292
PREFERENCES UNDER BANKRUPT, ETC., LAWS.

[§ 861.

361. An assignee in bankruptcy or insolvency may avoid a

fraudulent mortgage.

The title attempted to be passed by such
a mortgage vests in such assignee.
and may bring an action to enforce his right of possession.

He is entitled to possession,
Such

an action is not analogous to a creditor’s bill, and it is no objection
to it that the claims against the bankrupt are not in judgment.!
In a recent case before the Court of Appeals of New York, Allen,
J., speaking for the court, upon this point said:? ‘ The policy of

1 Southard v. Pinckney, 5 Abb. (N. Y.)
N. C. 184; Robertson v, Todd, 31 Conn.
555, 558; Mann v. Flower, 25 Minn. 500,
per Gilfillan, C.J. “ The defendants argue
that the action is in the nature of a cred-
itor’s bill on behalf of the creditors, and
that as the creditors could not maintain
such a suit without judgments on their
claims and executions returned unsatis-
fied, the plaintiff cannot maintain the ac-
tion, there having been no judgment and
execution on the claims of the creditors.
If the bankrupt law merely gave to the
assignee the remedies which the creditors
would have had if the proceedings in
bankruptcy had not been instituted, there
might be something in the argument. But
the bankrupt law, instead of vesting in the
assignee the remedies of the creditors
against the property by judgment, execu-
tion, and creditor’s bill, vests in him at
once the title to the property — makes
him the owner. His remedies to reduce
it to his possession are the same as any
owners. He may take the property if he
can, or he may bring any proceeding to
recover it if detained from him.”

2 Southard v, Pinckney, 5 Abb. (N. Y.)
N. C. 184,192. “It was held by the late
Judge Hall, of the Northern District of
New York, that the assignee represented
the whole body of creditors, and that it was
his right and duty to contest the validity
of any mortgage by which one creditor
had obtained a preference over another.
In re Metzger, 2 N. Bank. Reg. 355. The
same principle was asserted by Chase, C.
J., in the Circuit Court of Virginia, in
Wynne’s case (4 Ib. 23), and by Judge
Curtis, in Carr v. Hilton, 1 Curtis, 230.

The latter judge says: ‘A fraudulent
conveyance is no effectual conveyance, as
against the interest to be defrauded. This
interest the assignee represents, so far as
respects all creditors who prove their
claims.’ In Collins’s case (12 Blatchf.
548) fraud was not alleged. The validity
of the chattel mortgage was contested
upon the sole ground that it had not been
filed as required by law, and Judge Hunt
held that within the terms of the act none
but creditors who had, by judgment and
execution, obtained a specific lien on the
thing mortgaged, or subsequent purchas-
ers or mortgagees in good faith, could at-
tack the mortgage, for the reason alleged,
and that the assignee was not within the
benefits of the statute. The reasoning of
the learned judge, it must be conceded,
would apply toa mortgage alleged to be
fraudulent in fact; but in following it as
an authority, we think the principle should
not be extended so as to prove a shield to
actual fraud. The non-compliance with a
statute, merely imposing a new condition
to the validity of chattel mortgages, for
the protection of the particular classes
mentioned, and not involving the question
of fraud or fraudulent intent, may well be
restricted in its operation to the individ-
uals for whose immediate protection it
was passed. Upon sound reason, the pol-
icy of the law as well as the authorities
quoted, and others that might be referred
to, there can be no doubt, we think, that
the plaintiff, as assignee, has # right of
action for property covered by the bank-
rupt in fraud of his creditors, although
none of the creditors have acquired a spe-
cific lien.”

293
§ 862.) FRAUDULENT MORTGAGES.

the bankrupt law is to secure an equal distribution of all the
property of the bankrupt among his creditors, and this object
would be defeated if.a fraudulent assignor could set the defrauded
assignee at defiance, and a fraudulent conveyance not be contested
by the assignee. Creditors could not well do it after a decree in
bankruptcy. They would be practically remediless. The bank-
rupt court would be a place of refuge for every debtor who had
fraudulently disposed of his property, and the bankrupt act a per-
fect shield for fraud. The assignee represents the creditors’ rights
without the technical obstructions to the enforcement of those
rights by a creditor at large.”

An assignee in bankruptcy, or an involuntary assignee under a
state insolvency statute, represents the mortgagor’s general cred-
itors in such a manner as to entitle him to attack the mortgage ;
although a voluntary assignee for the benefit of creditors has no
greater title than his assignor to the latter’s property, and cannot
question the validity of his recorded mortgage, by suing him in
replevin for chattels covered by the mortgage.!

But except in cases of fraud the assignee in bankruptcy or in-
solvency stands in no better situation than the bankrupt himself
as regards mortgaged property; and the title of a mortgagee re-
mains unaffected by the mortgagor’s assignment in bankruptcy or
insolvency, and unaffected by his discharge obtained in the pro-
ceedings. The assignment passes only the debtor’s interest at
that time.”

362. State courts have jurisdiction of actions brought by
assignees to set aside chattel mortgages for fraudulent pref-
erences within the bankrupt act. Such suits are not matters or
-proceedings in bankruptcy within the meaning of that act; but
are brought upon causes of action created by that act, or existing
independently of it.8

1 Wakeman v. Barrows, 41 Mich. 363. 72; Wente v. Young, 12 Hun (N. Y.),
2 Winsor v. McLellan, 2 Story, 492; 220; Southard v. Pinckney, 5 Abb. (N. Y.)
Leland v. Ship Medora, 2 Woodb. & M. N. C. 184; Mann »v. Flower, 25 Minn. 500;
92; Bentley v. Wells, 61 Ill. 59; Badger Claflin v. Houseman, 93 U.S. 130. Ear-
v. Batavia Paper Manuf. Co. 70 Ill. 302. lier decisions denied jurisdiction to the
See § 241, _ State courts of suits by assignees in bank-
® Ansley v. Patterson, 77 N. Y. 156; ruptcy to set aside such fraudulent convey-
Wheelock v. Lee, 5 Abb. (N. Y.) N. C. ances. Voorhies v. Frisbie, 25 Mich. 476.

294
PREFERENCES UNDER BANKRUPT, ETC., LAWS. [§§ 368, 364.

363. A: mortgage fraudulent and void as to creditors is
valid as against a voluntary assignee for the benefit of credit-
ors. Such an assignee is not a purchaser for a valuable consider-
ation. He takes no greater interest than the mortgagor had ati
the time of the assignment; and the fraudulent mortgage being
valid between the parties, it is valid against such assignee, who
takes only the interest remaining in the mortgagor at the time of
the assignment, namely, the equity of redemption. The mortgagor
could transfer no other or greater interest than he possessed and
had the right to enforce. His voluntary assignee could acquire no
other! The title of the latter being solely a derivative one under
the assignment, he can assert and enforce no claim or right there-
under which the mortgagor could not have legally enforced had
he made no assignment. His creditors have the right to avoid
the mortgage for fraud against them, and they alone can question
it for this reason. They have this right, not as beneficiaries under
the assignment, or by virtue of any of its provisions, but as cred-
itors of the mortgagor, without any reference to the assignment,
and wholly independent of it. ‘The mortgagor could not assert
this right, nor transfer it to his assignee, as he could not transfer
what he did not have, nor can his assignee set up any such claim
in behalf of the creditors, as a trustee holding property for their
benefit, and, therefore, a representative of their interests. His re-
lations to the creditors are solely those created by the instrument
of assignment under which he holds. He only represents them
in respect to their rights and interests under the assignment, and
not as to those rights belonging to them independent of its provi-
sions.”” 2

364. Under the bankrupt act a mortgage of personal prop-
erty was not necessarily void because it was withheld from
record by an arrangement or understanding between the parties
to it, that it should not be recorded unless the mortgagor should
have trouble, and was not in fact recorded until shortly before
the mortgagor’s bankruptcy ; but this fact is entitled to considera-

1 Wakeman v. Barrows, 41 Mich. 363; 23 Minn. 242; Gere v. Murray, 6 Minn.
Flower v. Cornish, 25 Minn. 478; Mann v. 305.
Flower, 25 Minn. 500; Bennett v. Ellison, 2 Flower v. Cornish, supra, per Cor-
nell, J.
295
§§ 365-67. ] FRAUDULENT MORTGAGES.

tion by the jury in passing upon the question whether it is fraud-
ulent at common law.}

365. Only an assignee can claim that proof of the debt re-
leases the security. A first mortgagee is not estopped to claim
the property against a subsequent mortgagee by reason of having
proved his debt against the estate of the mortgagor in bankruptcy
without disclosing his security, while such subsequent mortgagee
has not proved his debt. The assignee in bankruptcy might in
such case be subrogated to the security of the first mortgagee.
But only the assignee can avail himself of the provision of the
bankrupt act that the security shall be released upon proof of the
whole debt; the subsequent mortgagee can derive no advantage
from such provision.?

: 866. When a mortgage is voidable by the mortgagor, his

; assignee in insolvency may undoubtedly avoid or affirm it.
But if he sells the property in terms subject to the mortgage, he
thereby affirms it, and his grantee cannot contest its validity.

V. Fraud in Mortgages of Consumable Property.

367. If the nature of the mortgaged property be such that
the mortgagor in using it necessarily consumes it, his posses-
sion and use of the property with the knowledge and consent of
the mortgagee render the mortgage primd facie colorable and

- fraudulent as to the mortgagor’s creditors, although it be duly re-
corded. Thus, if a mortgage be made of “ all the hay, grain, and
produce growing” on the mortgagor’s farm, to secure the payment
of a sum of money in one year, and he continue with the knowl-
edge of the mortgagee, and without objection on his part, to use
and consume this property in the same manner as he would have
done if no mortgage had been made, the jury is bound to infer, in
the absence of controlling proof to the contrary, that the mortgage
was intended to defraud the mortgagor’s creditors. ‘The prin-
ciple, however, on which such a fraudulent intent is to be inferred
must be understood with some limitations. We have no doubt

1 Folsom v. Clemence, 111 Mass. 273, * Robbins v. Parker, 3 Met. (Mass.)
See, also, Croswell v,. Allis, 25 Conn. 301. 117; Shurtleff v. Willard, 19 Pick.
2 Cook v. Farrington, 104 Mass. 212. (Mass.) 202, per Morton, J.; Sommerville
3 Tuite v. Stevens, 98 Mass. 305. v. Horton, 4 Yerg. (Tenn.) 541.
296
MORTGAGES OF CONSUMABLE PROPERTY. [§ 368.

that articles, in their nature subject to be consumed in their use,
may be mortgaged without any imputation of fraud, provided
they are not to be used, and may be kept without damage until
the mortgage debt shall become payable. But if the articles
mortgaged are perishable and cannot be so kept, or if they are
mortgaged under an agreement or understanding that they may
be used and consumed by the mortgagor, then we think the
transaction must be considered as collusive and fraudulent against
creditors. No other reasonable inference from the conduct of the
parties can be made.” }

But even in that case the mortgage is only prima facie fraudu-
lent, and may be proved by evidence altwnde to have been given
without fraudulent intent or fraudulent effect. Such a mortgage
is not conclusively fraudulent. Mr. Justice Strong, of the Su-
preme Court, upon this point very justly remarks that the reten-

tion of possession by the mortgagor involves necessarily the con-
sumption in a greater or less degree of the thing mortgaged ; that
all personal property is consumed more or less by its use, and cer-
tainly the use involves a constant depreciation in value. He fur-
ther declares that if it be held that authorized consumption of the
chattels mortgaged renders the mortgage in all cases fraudulent in
law, it follows that no valid mortgage of chattels can be made
which stipulates for continued possession by the mortgagor. The
registration acts would, under such a rule, be totally inoperative.”

368. The fact that the goods mortgaged are partly perish-
able in nature and consumable in use does not necessarily avoid
the mortgage ; but the character and condition of the goods are
matters properly to be considered by the jury, in determining
whether the mortgage is fraudulent. Thus a mortgage, not to
be enforced for several years, of crops to be grown upon the mort-
gagor’s land, and of all his stock of horses, mules, cattle, and sheep
then on the land, or which may afterwards be placed thereon, is
not necessarily indicative of fraud. Judge Burks, of the Virginia
Court of Appeals,’ justly remarked, in regard to such a mortgage,

1 Robbins v. Parker, supra; per Wilde, (Va.) 580; Quarles v. Kerr, 14 Gratt.

J. (Va.) 48. See, however, Richmond v.
2 Miller v. Jones, ‘15 N. Bank. Reg. Curdup, Meigs, 581; Simpson v. Mitchell,
150. 8 Yerg. (Tenn.) 417; Darwin v. Handley,

8 Googins v. Gilmore, 47 Me. 9; Brock- 3 Ib. 502.
enbrough v. Brockenbrough, 31 Gratt. ¢ Brockenbrough v. Brockenbrough,

297
§ 369.] FRAUDULENT MORTGAGES.

that instead of indicating fraud, “it is rather indicative of an
honest purpose in the grantor to dedicate not only what he had,
but also what he might make or acquire, to the payment of his
debts.”

There may be chattels so transient in their existence that they
cannot generally be mortgaged.! Such are chattels whose only
use consists in their consumption. But a mortgage of farm stock,
farm produce, and farming tools is clearly not one of this descrip-
tion? In a mortgage of cattle, and other farm stock and crops, a
provision, that ‘the crops conveyed may be used in getting the
stock ready for market,” was held not to make the mortgage
fraudulent in law. This provision was regarded as being for the
benefit of the trust fund, and not of the maker of it. A deed of
trust of horses, cattle, farming implements, household and kitchen
furniture, growing grain and vegetables, which provided that the
grantor should retain possession for three years, by paying the in-
terest on the debt secured, is not fraudulent per se. It is true
that some of the articles embraced in the mortgage must neces-
sarily be consumed in the use, and could not in themselves directly
strengthen the security ; but indirectly they would have this effect
by ministering to the support of the important and substantial
chattels relied on as security.4

Although a portion of the goods embraced in a mortgage be of
so transitory and perishable a nature that they cannot be the sub-
ject of a mortgage, this circumstance does not vitiate the mort-
gage in respect to the residue.®

VI. Fraud arising from the Mortgagor’s Possession after Default.

369. The failure of a mortgagee to take possession at the
time of forfeiture, as stipulated in the mortgage, does not gener-
ally invalidate the mortgage. Under the registry laws, the rec-

supra, He further declares that the pre-
sumption of law is in favor of honesty,
and that the court cannot presume fraud
unless the terms of the instrument pre-
clude any other inference; citing \to this
proposition Dance v. Seaman, 11 Gratt.
(Va.) 778.

1 Sommerville v. Horton, 4 Yerg.(Tenn.)
541.

2 Shortleff v. Willard, 19 Pick. (Mass.)

298

202 ; Ross v. Young, 5 Sneed (Tenn.), 627,
629 ; Masson v. Anderson, 3 Bax. (‘Tenn.)
290; Elmes v. Sutherland, 7 Ala. 262;
Ewing v. Cargill, 21 Miss. 79.

8 Masson v. Anderson, supra.

4 Sipe v. Harman, 26 Gratt. (Va.) 563;
Cochran v. Paris, 11 Gratt. (Va.) 348.

5 Shurtleff v: Willard, 19 Pick. (Mass.)
202.

8 Hudson v. Warner, 2 Har. & G. (Md.)
THE MORTGAGOR’S POSSESSION AFTER DEFAULT.  [§ 370.

ord or filing of a mortgage is made a substitute for a delivery of
possession. Whether the mortgaged goods after default continue
to be holden under the mortgage, or become absolutely the prop-
erty of the mortgagee, the mortgagor’s possession can at most be
but evidence of fraud.

The retention of possession by the mortgagor after the law day
is neither conclusive evidence of fraud,! nor primé facte evidence
of ‘it; nor a circumstance to which the law attaches the presump-
tion of payment.2 “It may be conceded that it is in general the
duty of the mortgagee to avail himself of his security when the
mortgage becomes forfeited ; and if he delays for an unreasonable
time the institution of a suit, or fails to possess himself of the
mortgaged property, the inference will be, in a controversy be-
tween himself and a stranger, that the debt has been paid; but
this is a mere presumption, and may be repelled by evidence.
... + The retention of possession by the mortgagor for an unrea-
sonable length of time may warrant the inference that the debt
was paid, or that the mortgage is held up as a protection for his
property against the demands of creditors. But these are conclu-
sions which may be repelled by proof that the indulgence of the
mortgagee was compatible with fair dealing, and induced by no
intention to favor the’ mortgagor to the prejudice of his creditors.
It must, from the very nature of the case, be a question of fact,
for the solution of the jury, what length of time unexplained
would make the mortgagor’s possession conclusive evidence of
fraud on the part of the mortgagee.” 8

If the mortgage secure several notes falling due at different
times, the mortgagee may permit the property to remain in the
mortgagor’s possession until the happening of the last default.4

370. But in Illinois, Colorado, and Montana the mortgagee
must take possession within a reasonable time after default,
when possession remains with the mortgagor until default, under
a provision to that effect in the deed. If possession be not so

415; Merrill v. Dawson, Hemp. 563 ; 1 Beall v. Williamson, 14 Ala. 55.
Feurt v. Rowell, 62 Mo. 524; Bank of S. 2 Steele v. Adams, 21 Ala. 534.

C. v. Gourdin, Speers Eq. (S. C.) 439; ® Planters’ & Merchants’ Bank of Mo-
Beall v. Williamson, 14 Ala. 55; Shurt- bile v. Willis, 5 Ala. 770, 781, per Collier,
leff v. Willard, 19 Pick. (Mass.) 202; C.J.

Simms v. McKee, 25 Iowa, 341. 4 Magee v. Carpenter, 4 Ala. 469.

299
§ 871.] FRAUDULENT MORTGAGES.

taken, the mortgage is regarded as fraudulent per se.1_ The policy
of the law, in adopting this rule, is to protect purchasers, and to
prevent the perpetration of frauds. As the property vests in the
mortgagee on the maturity of the mortgage, and he allows the
mortgagor to remain in possession, a purchaser from the latter, or
his creditor, is protected, because the law regards his holding pos-
session as evidence that the mortgage is paid; and if it is not
paid, it is a fraud on a bond fide purchaser or creditor that he
should be allowed to hold this badge of ownership.? The ques-
tion of diligence is one both of law and of fact. It is for the
court to determine what time under the law is reasonable, and for
the jury to determine whether the mortgagee reduced the mort-
gaged chattels to possession within that time.®

371. Reasonableness of time for such purpose is deter-
mined by the situation of the parties, and the particular cir-
cumstances of the case. Where the parties both reside in the
same county within a few miles of each other, and three days, or
even two, are suffered to pass after default without any effort to
take possession, the delay as against third persons acquiring rights
is regarded as unreasonable. If the parties reside in the same
county, one day is not an unreasonable time within which to take
possession after maturity.®

A mortgagee who makes no effort to obtain possession within a
month after the maturity of the debt does not use the diligence
that is requisite to protect his security.6 A delay of two days
after maturity in taking possession, when there is no unusual ob-
stacle to prevent this, makes the mortgage fraudulent as against
creditors of the mortgagor and purchasers from him.’

1 Hanford v. Obrecht, 49 Ill.146; Wyl-
der v. Crane, 53 Ill. 490. See Lemen v.
Robinson, 59 Til. 115; Burnham v. Muller,
61 Ill. 453; Reese v. Mitchell, 41 Il. 365,
870; Barbour v. White, 37 Ill. 164; Ar-
nold v. Stock, 81 Ill. 407 ; Reed v. Eames,
19 Il]. 594; Dunlap wv. Epler, 88 Ill. 82;
Travis v. McCormick, 1 Mon. 148; Cha-
pin v. Whitsett, 3 Colo. 315.

2 Arnold v. Stock, 81 Ill. 407; and see
Cass v. Perkins, 23 Ill. 382.

8 Wooley v. Fry, 30 Ill. 158; Travis v.
McCormick, 1 Mon. 347.

300

4 Cass v. Perkins, 28 Ill. 882; Wooley
v. Fry, 80 Ill. 158; Reese v. Mitchell, 41
TIL. 365, 370.

5 Reed v. Eames, 19 II]. 594.

6 Hathorn v. Lewis, 22 Ill. 395, is deemed
to be overruled. Travis v. McCormick, 1
Mont. 347, affirming S. C.1 Ib. 148.

7 Reese v. Mitchell, 41 Ill. 365. See,
also, Thornton v. Davenport, 1 Scam. (Tll.)
296; Reed v. Eames, 19 Ill. 594; Funk »v.
Staats, 24 Ill. 631; Thompson «. Yeck,
21 Ill. 73; Cass v. Perkins, 23 Ill. 382.
THE MORTGAGOR’S POSSESSION AFTER DEFAULT.  [§ 872.

A purchaser from the mortgagor, who has been allowed to re-
main in possession two months after default, acquires a title to the
property free of the lien of the mortgage, although the purchaser
bought with actual notice that such mortgage remained unsatis-
fied.

The absence of the mortgagee in another state at the time of
the maturity of the mortgage is no excuse for delay on his part
in taking possession. He may act through an agent.?

Where the mortgage notes were made payable in the city of
New York, it was held that the agent of the mortgagee in Chi-
cago had until the next day after being advised of default in
payment of the notes in due course of mail, to sue out a writ of
replevin to reduce the mortgaged property to possession, there
being no delay in sending the information of default. In such
cases it is not necessary to resort to the telegraph as a means of
communication, to constitute diligence.?

The mortgagee is not required to take possession of the mort-
gaged property, in order to hold it against creditors and subse-
quent purchasers from the mortgagor, until the expiration of the
days of grace on the note which the mortgage was given to secure.
And where the last day of grace falls on Saturday, there is no
breach of the condition of the mortgage, requiring the mortgagee
to take possession of the property, until the following Monday,
and if he take possession on the next day, Tuesday, that will be
within a reasonable time.*

A mortgagee who endeavored to take possession of the mort-
gaged property the next day after default in payment, but was
unsuccessful, and continuing his efforts was successful the next
day, was held not chargeable with laches.

372. An extension of the mortgage after maturity, or the
taking of a new mortgage for the old debt, will not avail with-
out seasonably taking possession against an intervening execution.
Thus where, on the day of the maturity of a mortgage, the mort-
gagee, without taking possession, extended the time of payment,
and surrendered the old note and mortgage, and a new note and

1 Lemen v. Robinson, 59 Ill. 115 ; Travis ® Barbour v. White, 37 Ill. 164.
v. McCormick, 1 Mon. 148. * Arnold v. Stock, 81 Ill. 407.

2 Wooley v. Fry, 30 Ill. 158; Reed v. 5 Buckley v. Lampett, 24 Ill. 604.
Eames, 19 Ill. 594,

801
§§ 373, 374.] FRAUDULENT MORTGAGES.

mortgage were taken for the old debt and accrued interest, to-
gether with a small additional advance of money, it was held that
the failure of the mortgagee to take possession on default in pay-
ment of the old note rendered the first mortgage void as to cred-
itors, and the lien of the new mortgage was subordinate to that
of an execution against the mortgagor that came into the hands
of the officer after the execution of the first mortgage, but before
the execution and recording of the second mortgage.!

373. As between two mortgagees of the same property,
who have permitted the mortgagor to remain in possession an un-
reasonable time after the maturity of their respective mortgages,
although neither can enforce his claim against a third party, yet
the one who first acquires possession of the property is entitled to
priority as against the other.’

Where there are several mortgages to different persons, all
overdue, and the mortgagor holds possession of the mortgaged
property, any one of the mortgagees may take possession by vir-
tue of his mortgage, and by so doing acquire a preference over the
other mortgagees similarly situated, without reference to the date
of his mortgage. Such mortgagees are in the situation of several
purchasers of a chattel, where the purchaser who first acquires
possession is preferred. This is upon the principle that where dif-
ferent equities are equal, the person who unites to his equity the
possession will be preferred. Qui prior est tempore, potior est
jure.

374. When the mortgagee has the option of taking pos-
session before default, as in case a chattel mortgage provides
that the mortgagor may retain possession and use of the mort-
gaged property until the maturity of the debt, with the right in
the mortgagee to take immediate possession of the property before
the maturity of the debt on the happening of certain contingen-
cies; and any one of the contingencies upon which the mortgagee
is entitled to such possession occurs, he may or may not exercise
his right to reduce the property to his possession before default
in the payment of the debt at maturity, and he is not bound to

1 Burnham v. Muller, 61 Ill. 453. kins v. Byrnes, 71 Ill. 326. See Burnell v.
2 Atkins v. Byrnes, 71 Ill. 326. Robertson, 5 Gilm. 282; Mumford v.
8 Constant v. Matteson, 22 Ill, 546; At- Canty, 50 ILL. 370, 374.

802
THE MORTGAGOR’S POSSESSION AFTER DEFAULT.  [§ 376.

take possession before the maturity of the debt in order to pre-
serve his lien.!

Where by the terms of a chattel mortgage the possession of the
mortgaged property was to be retained by the mortgagor until the
maturity of the mortgage notes, with the right in the mortgagee
or his assignee to declare the notes due and the mortgage for-
feited and to take possession on the happening of a certain con-
tingency; it was held that the happening of the contingency
provided for did not render the notes absolutely due so as to com-
pel the mortgagee to take possession of the property in order to
preserve his lien, but only gave the mortgagee or his assignee
the election to treat the notes as due and take possession, or let
them stand upon the original terms. Until some affirmative act
is done by the mortgagee or his assigns, the rights, duties, and
obligations of all the parties remain precisely the same as if the
mortgage contained no such provision.”

Where several notes maturing at different dates are secured by
the same mortgage, it is optional with the mortgagee to take pos-
session on the first default, or await the maturity of the last
note.8

A mortgage given to indemnify a surety may well provide that
the mortgagee, without having been damnified as surety, may,
upon maturity of the debt, take possession and appropriate the
property to the payment of the debt; and in such case he must
take possession accordingly, or the property will be liable to ex-
ecution against the mortgagor.*

375. What constitutes a sufficient taking of possession.
—A delivery and possession, which would be sufficient to operate
against creditors and purchasers on a sale of personal property, is
sufficient on foreclosure of a mortgage. The mortgaged property
need not in all cases be removed from the premises of the mort-
gagor, particularly if it is so heavy that its removal would be dif-

1 Durfee v. Grinnell, 69 Ill. 371 ; Beach
v. Derby, 19 Ill. 617; Pike v. Colvin, 67
Til. 227 ; Simmons v. Jenkins, 76 Ill. 479;
Barbour v. White, 37 Ill. 164; Cleaves v.
Herbert, 61 Ill. 126; Wilson v. Rountree,
72 Til. 570.

2 Beach v. Derby, 19 Ill. 617; Barbour
v. White, 37 Ill. 164; Cleaves 2. Herbert,

61 Ill. 126, 128; Wilson v. Rountree, 72
Ill. 570, 572.

8 Barbour v. White, 37 Ill. 164; Cleaves
v. Herbert, 61 Ill. 126; Chapin v. Whit-
sett, 3 Colo. 315.

¢ Dunlap v. Epler, 88 Ill. 82; and see
Goodheart v. Johnson, 88 Ill. 58.

803
§ 375.] FRAUDULENT MORTGAGES.

ficult and expensive. If the mortgagee keeps it under his con-
trol, that is sufficient.1 There must be something more than a
mere formal and temporary change of possession. There must be
a real, permanent delivery and change of possession in order to
preserve the lien of the mortgage.”

Where there is an actual, visible change of possession on de-
fault, and the note secured by the mortgage is destroyed, the
property mortgaged becomes the absolute property of the mort-
gagee, who, after having had it for a reasonable time in his pos-
session, may loan it to the mortgagor, or employ him to use it for
the mortgagee’s own benefit, precisely as he might any of his
other property. His doing so does not raise any legal presump-
tion of fraud.? The fact that the business, in case of a mortgage
upon a stock of goods, is continued by the mortgagee in the same
shop, under the old sign, and that the mortgagor continues to act
as a salesman, is not inconsistent with a bond fide change of pos-
session.*

A mortgagee took possession of the mortgaged property on the
day the mortgage became due, and placed it in charge of a cus-
todian, in a room in the house of the mortgagor, who surrendered °
the keys. The custodian remained in charge of the goods night
and day until they were attached by a creditor of the mortgagor,
except that he was absent fifteen or twenty minutes, when the
levy was made ; but at that time he held the keys, and left a boy
employed by the mortgagor in charge of the goods. It was held
that his temporary absence did not amount to a restoration to the
mortgagor, so as to render the transaction fraudulent as to cred-
itors, and the property subject to levy.®

A short time before the maturity of the note secured the mort-
gagor absconded, leaving the mortgaged property, consisting of
horses, on a farm he had rented, whereupon his landlord took pos-
session of the horses, and told the agent of the mortgagee he had
the horses there for him, and intended they should go to the mort-

1 Funk v. Staats, 24 Ill. 631; Ticknor 8 Funk v. Staats, 24 Ill. 631 ; Cunning-
v. McClelland, 84 Ill. 471,473, and cases ham v. Hamilton, 25 Il). 228; Brown v.
cited. Riley, 22 Ill. 45. See Wright v. Grover,

2 Ticknor v. McClelland, 84 Ill. 471; 27 Ill. 426.

Thompson v. Yeck, 21 Ill. 73; Thompson * Read v. Wilson, 22 Ill. 377.

v, Wilhite, 81 Ill. 8356; Thornton v. Day- 5 Dorland v. Bradley, 66 Il. 412.
enport, 1 Scam. (Ill.) 296. See Allen ».

_ Carr, 85 Ill. 388.

304
THE MORTGAGOR’S POSSESSION AFTER DEFAULT. ([§§ 376, 377.

gagee, it was held that this was sufficient to constitute such land-
lord the mortgagee’s custodian.!

In taking possession it is not necessary that the mortgagee or
his agent should remove the property or touch it. It is enough
that having the property in view, and where he can control it, he
assumes dominion over it. Thus, where the mortgaged property
consisted of horses and harnesses, and the mortgagee’s attorney,
under instructions to take possession of the property at the matu-
rity of the mortgage, went with an officer to the stable where the
property was and requested the mortgagor to surrender it, and the
latter pointed out the property and leased the stable to the attor-
ney so that the latter could keep the horses there until the day of
sale, and a custodian was placed in charge of the property, it was
held that. the attorney had done all that was necessary to consti-
tute a sufficient taking of possession, and that he was not liable
for the subsequent neglect of the custodian in permitting the prop-
erty to be seized under execution. The property was in view and
at hand, with nothing to hinder the removal of it, if the attorney
had seen fit, and his putting a third person in charge of it with
directions to prevent its use or control by the mortgagor was a
sufficient act of possession.?

The fact that the mortgagee owns the land upon which the
property mortgaged to him is situated is a sufficient answer that
he did not ‘take possession of the property upon the maturity of
his debt. It is already in his possession.®

376. In case of a mortgage of a railroad to constitute a suf-
ficient change of possession as to third parties, it is not necessary
for the mortgagees or trustees to take personal supervision of the
running of the road, and to discharge all the old officers and em-
ployees. It will suffice if the former superintendent and other
employees carry on the business as the agents or servants of the

mortgagees or trustees, and notices are put up along the road of
the change in possession.*

377. When a mortgagee purchases at his foreclosure sale
he should take possession of the property, and not leave it in
the possession of the mortgagor. If he allows the mortgagor to

1 Upton v. Craig, 57 Ill. 257. 3 Smalley v. Ellet, 36 Ill. 500.
% Gaines v. Becker, 7 Bradw. (IIl.) 315. * Palmer v. Forbes, 23 Ill. 301, 314.

i 3805
§ 378.] FRAUDULENT MORTGAGES.

retain the possession of the property after the sale, taking his re-
ceipt therefor, the property will be liable to attachment by the
creditors of the mortgagor.1 But where, on default, the mort-
gagee took possession of the property and placed it in the hands
of a custodian, where it remained ten days, until the day of sale,
when it was sold to a third person, who left it in the possession of
the mortgagor, where it was levied on by a creditor of the latter,
it was held that the mortgagor’s possession was not fraudulent,
and the property could not be held under the execution.”

378. It is only as against third persons that the mortgage
becomes void through the continued possession of the mortgagor
after default. The widow, heir, or administrator of the mort-
gagor is not a third person, but is concluded by the lawful acts
and contracts entered into by the mortgagor.®

1 Thompson v. Yeck, 21 Ill. 73. See 8 Sumner v. McKee, 89 Ill. 127; Griffin

Allen v. Carr, 85 Ill. 388. v. Wertz, 2 Bradw. (Ill.) 487.
2 Hanford v. Obrecht, 49 Ill. 146.

306
CHAPTER IX.

MORTGAGES OF MERCHANDISE WITH POWER OF SALE IN
THE MORTGAGOR.

I. General statement of the subject, | III. The doctrines of the federal and
“879-381. English courts, 410-413.
II. The doctrines of the state courts,|IV. A summary of authorities, 414, 415.
382-409. V. The subject considered upon principle
| and policy, 416-425.

I. General Statement of the Subject.

379. Introductory. — Whether a mortgage of the stock of
goods of a trader or manufacturer, which permits the mortgagor to
sell the mortgaged property in the usual course of trade, is neces-
sarily fraudulent, is one of the disputed questions of our jurispru-
dence. Prior to the enactment of laws for registering mortgages
of personal property, the retention of possession by the mort-
gagor, like retention of property by a vendor after an absolute
sale, was either presumptive or conclusive evidence of fraud.
This rule was designed to prevent a person from acquiring a false
and deceptive credit on the strength of the possession and ap-
parent ownership of property which he had sold or mortgaged.
This was a doctrine of the courts, and nota declaration of stat-
ute.2_ The statute of 13 Elizabeth simply avoids all dispositions
of property by a debtor, contrived or made “ to delay, hinder, or
defraud creditors.” The established doctrine in England, how-
ever, is, that want of delivery of possession does not make a deed
of sale of chattels, as security, absolutely void, but is only evi-
dence of fraud, to go to the jury with all the circumstances of the

1 In 2 South. L. Rev. (N. S.) 731, ap-
peared an able and elaborate article entitled

the present chapter appeared in the same
Review in vol. 5, p. 617; and the writer of

“An American Phase of Twyne’s Case,”
presenting the arguments and authorities
in favor of the rule that fraud is inherent
n such an instrument. The substance of

the first-named article replied to it in the
same periodical, vol. 6, p. 96.
2 Dillon, J., in Hughes v. Cory, 20 Iowa,

399,
3807
§ 380.] MORTGAGES OF MERCHANDISE

case.! In the United States, irrespective of the registry laws, —
while in some courts the continuing possession of a vendor of
personalty is regarded as a fraud at law, or, in other words, con-
clusive evidence of fraud in the transaction, — the prevailing doc-
trine is, that such possession is at most only evidence of the fact,
of fraud, but not a fact, in judgment of law, of itself conclusively
establishing the fraud.”

In the absence of any statutory provision for the recording of
chattel mortgages, a stipulation that the mortgagor should retain
possession until default has not been generally regarded as con-
clusive evidence of fraud, because such a stipulation is not unrea-
sonable, nor inconsistent with the purpose of the mortgage; nor
is it to be presumed that the mortgagor would thereby gain a false
eredit.2 IE sucha mortgage were made to secure future advances,
without any other consideration at the time, it might, in the ab-
sence of any record of it, be regarded as void against creditors,
as tending to collusion, and enabling the mortgagor to get credit
on his property without any notice that it was incumbered.*
Neither is the continuance of the mortgagor’s possession after the
mortgage has become absolute fraud per se, but, at most, only
evidence of frand.6

380. Statutes providing for the recording of mortgages of
personal property are a substitute for possession by the mort-
gagee, and repel all imputation of fraud which would arise from
the want of it.6 The ground of the common law rule requiring
a change of possession was the prevention of secret transfers of
personal property ; and this is done away with, as regards mort-
gages of such property, by the statutes providing for the record-
ing of them. Modern legislation, in obedience to the wants of

' Martindale v. Booth, 3 Barn. & Adol.
498. The dictum of Butler, J., in Edwards
v. Harben, 2 Term Rep. 587, is not con-
sidered as importing the contrary.

2 See § 320; 18 Am. L. Reg. (N.58.)
137.

8 Badlam v. Tucker, 1 Pick. (Mass.)
389; Homes v. Crane, 2 Pick. (Mass.)
607, and numerous cases cited; Ward v.
Sumner, 3 Pick. (Mass.) 59.

4 Per Wilde, J., in Badlam v. Tucker,
supra.

308

5 Shurtleff v. Willard, 19 Pick. (Mass.)
202. And see § 369.

6 Bullock v. Williams, 16 Pick. (Mass.)
83; Forbes v. Parker, 16 Pick. (Mass.)
462; Shurtleff v. Willard, 19 Pick. ( Mass.)
202; Hughes v. Cory, 20 Iowa, 399, per
Dillon, J.; Torbert o. Hayden, 11 Iowa,
435; Smith v. Moore, 11 N. H. 55; Hoit
v. Remick, 11 N. H. 285; Clary v. Frayer,
8 Gill & J. (Md.) 398; Hambleton v. Hay-
ward, 4 Har. & J. 443, 446; Gregory v.
Perkins, 4 Dev. (N. C.) L. 50; Head »v.
Ward, 1 J.J. Marsh. (Ky.) 282.
WITH POWER OF SALE IN MORTGAGOR. [§ 881.

trade, has, through the recording acts, enabled the mortgagor to
retain possession of the property without invalidating the secu-
rity. Possession so retained in conformity with the terms of the
mortgage, or with the consent of the mortgagee, outside the
mortgage, when this is duly recorded, is not fraudulent per se,
but it is generally primé facie evidence of fraud as against cred-
itors or subsequent purchasers.1 This change, giving owners of
personal property the privilege of using it as security without any
actual change of possession, has given an additional value to such
property, and been highly beneficial to the community.

Under the registry laws, the retaining of possession by the
mortgagor being no longer required, and no longer a badge of
fraud in law, there is no reason why a reasonable use of the
property by the mortgagor should be held to constitute fraud in
law. If the use be such that the property is not consumed by the
very act of using it, there can be no reasonable objection to allow-
ing such use. It is to the advantage, rather than the injury, of
creditors of the mortgagor that he should be allowed to make a
beneficial and reasonable use of the property.? If, for instance, a
livery stock of horses and carriages be mortgaged for a sum very
much less than its intrinsic value, and possession be retained by
the mortgagor, a reasonable use of the property would not be in-
compatible with an honest purpose, but would rather be a neces-
sary incident flowing from the right of possession under the law.

381. There is generally good reason why the mortgagor of
a stock of goods should remain in possession of the goods,
and continue to sell them in the usual course of his trade. It
may, as a rule, be assumed that he can manage them better than
the mortgagee, even if any one could be found willing to make a
loan and take the business of the borrower in charge in order to
obtain security. Such a transfer of the business would be pro-
ductive of loss to both the parties to the mortgage. Neither can
a trader or manufacturer stop his business in order to give secu-
rity to a mortgagee of his stock.

It is true that recording a mortgage simply operates as a sub-

1 Frankhouser v. Ellett, 22 Kans. 127, 8 Per Lowe, C. J.,in Torbert v. Hay-
147, den, 11 Iowa, 435.

2 Per Dillon, J., in Hughes uv Cory, 20
Towa, 399. See §§ 367, 368.

809
§ 381.] MORTGAGES OF MERCHANDISE

stitute for a change of possession. In this way it may be re-
garded as being in effect a constructive delivery of the property.1
It does not directly affect the question of invalidity in a mort-
gage, except it arise from the absence of a change of posses-
sion. But indirectly the recording acts have an important bear-
ing upon the question under consideration. The general purpose
of these acts is to enable a mortgagor to retain possession of the
mortgaged property, and at the same time to give a valid security
upon it. The statutes would fail in accomplishing this purpose
in respect to important classes of property, namely, merchandise
held for sale, and property consumable by use, if the rule of con-
structive fraud be allowed to intervene, and make mortgages of
all such property void. The policy of the registry laws is not
consistent with the policy of the rule making void mortgages with
power to use and sell mortgaged goods in the usual course of
trade; and the latter rule should be made to yield to the more
important general policy of the registry laws.

Upon principle, a mortgage of a stock of merchandise which
provides that the mortgagor may sell the goods in the usual course
of trade, shall keep up the stock to its value at that time, and shall
apply the proceeds of the sale to the payment of the debt secured
by the mortgage, should not be held to be fraudulent on its face.?
Judge Dillon, delivering the judgment of the Supreme Court of
Towa to this effect, said: “If the debt be real, and the creditor
in good faith desires security, what objection is there, in reason,
to just such a transaction as that which is disclosed in the mort-
gage now before us? The debtor isa merchant. He cannot pay
at maturity. He wishes time to dispose of his goods in the usual
way ; and to secure that, and to prevent a sacrifice at forced sale,
is willing to give one of his largest: creditors a mortgage on his
stock. He is acquainted with the stock, has a business estab-
lished, and can probably dispose of the goods more advantageously,
both for himself and his creditors, than the mortgagee could
himself do if he should take possession. Why, we ask, should he
not be permitted to stipulate for time, and for the right to dis-
pose of his goods and apply the proceeds to the payment of his
debts? No reason can be given, unless the arrangement be such,
from its intrinsic nature or inevitable tendency, as unnecessarily

1 See articles in 10 Cent. L. J, 281; and 2 Hughes v. Cory, 20 Iowa, 399.
6 South, Law Rev. 96.

310 “é
WITH POWER OF SALE IN MORTGAGOR.  [§§ 882-384.

and injuriously to affect or impair the rights of other creditors.”
Examining the reservations of the mortgage, the learned judge
concludes that they cannot be made the means of defrauding
other creditors, either by warding them off, or by enabling the
mortgagor to secure the enjoyment of the property to himself.
The mortgagor’s right of reserving a part of the proceeds of the
sales is more favorable to his other creditors than would be a
provision that the mortgagee should receive all the proceeds of
sales; and yet, as will presently be noticed, the leading courts
that hold such mortgages to be fraudulent in law, hold also that
they are not fraudulent per se when the proceeds of the sales are
to be paid wholly to the mortgagee.

II. The Doctrine of the State Courts.

382. Introductory. — Before entering further upon the consid-
eration of this subject, it is deemed best to state what the doc-
trine of the American courts is in relation to such mortgages ;
and, not only on account of the diversity of doctrine held, or
rather the numerous modifications made of the principal doctrine,
but also because of the diversity of reasons given by different
courts for holding the same doctrine, it is deemed best to state
the rule adopted in each of the different states that have passed
upon the question.

383. In Alabama a mortgage by adebtor engaged in mercan-
tile business, reserving to him the possession of the goods, and
the right to continue to carry on the business as before, is not
fraudulent in law; but if the debtor was insolvent or in failing
circumstances when he executed the mortgage, and the mortgagee
knew that fact, there is'a presumption of fraud, which, if not re-
butted by other facts and circumstances, will make the instrument
fraudulent and void as to creditors.!

384. In Colorado it seems that a mortgage of a merchant’s
stock of goods is void as against his creditors, if the mortgagee
voluntarily allows him to continue to carry on his business and
sell the goods in the usual course.” ;

1 Constantine v. Twelves, 29 Ala. 607; Knight, 27 Ala. 336; Price v. Mazange,
Ticknor v. Wiswall, 9 Ala. 305, approv- 31 Ala. 701.

ing the Massachusetts cases; Wiley v. 2 City National Bank v. Goodrich, 3
Colo. 139.
311
§§ 385, 386.] MORTGAGES OF MERCHANDISE ;

385. In Georgia the Code provides that a mortgage may
cover astock of goods, or other things in bulk, but changing in
specifics, in which case the lien is lost on all articles disposed of
by the mortgagor up to the time of foreclosure, and attaches on
the purchases made to supply their place! But such a mortgage
can only cover an amount of goods equal to that on hand at the
time of the mortgage.? It would be a fraud upon the mortgagor's
creditors to make a mortgage upon a small stock of goods and
allow it to be enforced upon a large stock, purchased upon credit
soon afterwards. But the mortgage is good upon future purchases
to the extent of the value of the goods at the time of the mort-
gage, although such purchases were made on credit and remain
unpaid for. Asa matter of course, if the goods brought into the
stock were stolen, or were at the time subject to some other lien,
or some third person had at the time a valid title to them, the
mortgage would not cover them.? Such a mortgage does not
cover goods added to the stock by any one other than the mort-
gagor, and not even additions made by a new firm, which has

purchased the stock, and of which the mortgagor remains a mem-
ber.4
«

386. In Illinois the New York decisions are followed, holding
that if by any arrangement, express or implied, the mortgagor is
permitted to continue the sale of a mortgaged stock of goods at
retail for his own benefit, the mortgage is unavailing against his
judgment creditors; and such arrangement or permission, when

1 Code 1873, § 1954.

% Chisholm v. Chittenden, 45 Ga. 213.
In regard to the position of the State of
Georgia upon this question the enactment
of the statute of the state, authorizing
mortgages of changing stocks of goods,
tends to show that such a mortgage was
not there esteemed conclusively fraudu-
lent. The opinion of the court in the case
of Goodrich v. Williams, 56 Ga. 425, does
not afford any indication that the court
would, except for the statute, regard such
a mortgage fraudulent inlaw. The point
made by the court in that case was, that
while a mortgage may cover a stock of
goods as it changes by purchases and
sales, yet it can only cover an amount

812

equal to what was on hand at the time.
“The permission to give such a mort-
gage, though a very convenient privilege,
is one very easily used to commit fraud,
and we think the spirit of the Code, as
well as public policy, requires it to be lim-
ited as we have limited it. We have
known of several cases where mortgages
of this character have been given with a
small stock of goods at the time, and large
purchases made on credit afterwards.”
The statute, at any rate, shows what, in
this state, is now regarded as the true pol-
icy upon this question.

8 Goodrich ». Williams, 50 Ga. 425;
Johnson v. Patterson, 2 Woods, 443.

* Anderson v. Howard, 49 Ga. 313.
WITH POWER OF SALE IN MORTGAGOR. [§ 386.

not contained in the mortgage, may be found by the jury from
the attending circumstances! A right in the mortgagor to sell
the mortgaged property and appropriate the proceeds to his own
use is regarded as inconsistent with the nature of a mortgage
security.2. But if the mortgagee takes possession of the mort-
gaged goods under authority given in the mortgage, the possession
so taken is not vitiated, because of the vicious provision in the
mortgage. The fact, too, that the mortgagee or his agent, after
taking possession, permits the mortgagor to continue in the store
under his old sign, and sell the goods for the benefit of the mort-
gagee, does not destroy the apparent good faith of the transaction.®
A provision in a mortgage of a stock of wines, liquors, cigars, and
saloon fixtures and furniture, that the mortgagor may retain pos-
session of the property, and use and enjoy it until default, does
not necessarily imply that the mortgagor may sell the same, al-
though he is a trader in liquors. But a mortgage given by a
carriage manufacturer upon his stock, taken in connection with
a written agreement whereby the mortgagor was allowed to man-
ufacture the materials into carriages, to sell the same, receive the
price, and retain a certain sum for each month to enable the mort-
gagor to run the business, pay the workmen, and support his own
family, was held to be fraudulent and void as against other cred-
itors of the mortgagor. The power given to the mortgagor to
‘dispose of the property was regarded as inconsistent with the nat-
ure of the security, and prohibited by the policy of the law.5
Such a mortgage would be void although it was agreed that the
mortgagor should receive and hold the proceeds of the sales as
the agent of the mortgagee.6 Where a mortgage covers different

1 Simmons v. Jenkins, 76 Ill. 479, fol- 3 Read v. Wilson, 22 Ill. 377.

lowing Gardner v. McEwen, 19 N. ¥. 123;
Edgell v. Hart, 9 N. Y. 213. The ques-
tion of fraud, in such cases, is declared to
be one for the jury. See, also, Davis v.
Ransom, 18 Ill. 396; Zn re Forbes, 5:Biss.
510. In Read v. Wilson, 22 Ill. 377, it
was held that if the mortgagee in such a
mortgage takes possession of the property
before the rights of creditors intervene, his
possession is not vitiated by the vicious
provision in the mortgage.

2 Greenebaum v. Wheeler, 90 III. 296,
299; Barnet v. Fergus, 51 Ill. 352, 355;
Goodheart v. Johnson, 88 Il. 58, 61.

4 Cleaves v. Herbert, 61 Ill. 126. It
may be that the purpose was to keep the
liquors in store that they might improve by
age. See Re Foster, 10 Chicago L. N. 315.

5 Greenebaum v. Wheeler, 90 Ill. 296.

» Dunning v. Mead, 90 Ill. 376. The
statutes of Illinois (R. 8. 1845, ch. 20, §§
land 3, and R. 8. 1874, ch. 95, § 1), pro-
vide that no mortgage shall be valid
against third persons unless possession be
delivered to and retained by the mort-
gagee, or the mortgage provides that pos-
session shall remain with the mortgagor
not exceeding two years. The possession so

3138
§ 386.] MORTGAGES OF MERCHANDISE

kinds of property, — as for example, a stock of goods in a store,
held for the purposes of trade, and also horses upon a farm, — it
does not follow that the mortgagee, by permitting the mortgagor
to sell his stock of goods in the usual way, thereby loses his right
to enforce his mortgage lien upon the horses. ‘‘ The utmost that
could be said to his injury would be, that, where the bona fides
of the mortgage come in question, the fact that he has permitted
the mortgagor to use the goods in a manner inconsistent with his
own rights as mortgagee is a circumstance which a jury would
have a right to consider in determining the'question whether the
mortgage was originally made to defraud creditors, and is there-
fore equally void as to both goods and horses. The degree of
weight to be given to this circumstance would, of course, greatly
depend upon the other evidence in each case. Taken by itself,
and with no other circumstances to throw discredit upon the mort-
gage, it would merely show that the mortgagee had consented
to release the goods from the lien of his mortgage, thereby im-
pairing his own security to that extent, but would by no means
justify the inference that he intended to abandon his lien upon
the horses.” 1 These principles were applied to a mortgage cov-
ering a printing-press and its appurtenances, and certain books
and blanks which had been printed by the mortgagor, and which
were held by him for sale. The latter property he continued,
with the knowledge of the mortgagee, to sell in the same way
after the mortgage as before it was made; but the mortgagee
had consented to no disposition of the other part of the property,
and none had been made. It was held, therefore, that the mort-
gagee’s waiver of his lien as to the books and blanks did not af-
fect his lien upon the printing-press and its appurtenances.?
Moreover, the doctrine is still-further qualified in a decision
upon a mortgage, which provided that the mortgagor might retain
possession of the property and use it until default. The mort-

contemplated is a possession for use and 1 Barnet v. Fergus, 51 Ill. 352, per Law-

custody, and not one for sale or disposal
of the property in the course of business
and trade, which is regarded as against
the evident policy of the statute. Greene-
baum v. Wheeler, 90 Ill. 296, 298; Davis
v. Ransom, 18 IIl. 396, 402; Read v. Wil-
son, 22 Ill. 377, 380; Barnet v. Fergus, 51
Til. 352.

314

rence, J. See also Read v. Wilson, 22
Ill. 377.

2 Barnet v. Fergus, supra. And see In
re Kahley, 2 Biss. 383; Goodheart v.
Johnson, 88 Ill. 58; Garrettson v. Pegg,
64 Ill. 111; Ogden v. Stewart, 29 Ill.
122,
WITH POWER OF SALE IN MORTGAGOR. [§ 887.

gagor accordingly sold a part of the property, and appropriated
the proceeds to his own use. There was also evidence of a writ-
ten consent from the mortgagee to the mortgagor to sell the mort-
gaged property at public or private sale! It was held that,
under the circumstances of the case, the sale of inconsiderable
parts of the property did not render the transaction fraudulent,
and did not bring the case within the rule of Barnet v. Fergus.

387. In Indiana it is declared that a mortgage upon a stock
of merchandise, which contains a stipulation that the mortgagor’
may sell and dispose of the property, but ‘contains no covenant
that the mortgagor shall apply the proceeds of sales of the mort.
gaged stock to the payment of the mortgage debt, or the debt of
any other creditor, is void upon its face as against other creditors
of the mortgagor.2 The law upon this point was determined to
like effect by the Supreme Court of the United States, in Robin-
son v. Elliott,? with especial reference to the statutes and decisions
of this state. ‘* We are not prepared,” said Mr. Justice Davis,
“to say that a mortgage under the Indiana statute would not be
sustained, which allows a stock of goods to be retained by the
mortgagor, and sold by him at retail for the express purpose of
applying the proceeds to the payment of the mortgage debt. In-
deed, it would seem that such an arrangement, if honestly carried
out, would be for the mutual advantage of the mortgagee and the
unpreferred creditors.. But there are features engrafted upon this
mortgage which are not only to the prejudice of the creditors, but
which show that other considerations than the security of the
mortgagees, or their accommodation even, entered into the con-
tract. Both the possession and right of disposition remain with
the mortgagors. They are to deal with the property as their own,
sell it at retail,.and use the money thus obtained to replenish their
stock, There is no covenant to account with the mortgagees, nor

1 Goodheart v. Johnson, 88 Ill. 58, 62;
7 Cent. L. J. 234. ,

2 Inre Burrows (U.S. Dist. Ct. Ind.),
5 N.Y. Week. Dig. 187; 6 Am. L. Ree.
203; Mobley v. Letts, 61 Ind. 11. In this
ease, the phrase, “with the privilege of
using the same,’ was construed to mean
a power to sell and dispose of the stock.
See Jordan v. Turner, 3 Blackf. 309. And

see New Albany Ins. Co. v. Wilcoxson, 21
Ind. 355, cited in the foregoing case, and
also relied upon, as indicating the law in
Indiana, by Judge Davis, in Robinson ».
Elliott, 22 Wall. 513; Jordan v. Turner,
3 Blackf. 309 ; Maple v. Burnside, 22 Ind.
139.
3 22 Wall. 513.

315
§ 888.] MORTGAGES OF MERCHANDISE

any recognition that the property is sold for their bonefit.5 In-
stead of the mortgage being directed solely to the bond jide secu-
rity of the debts then existing, and their payment at maturity, it
is based on the idea that they may be indefinitely prolonged.”
The mortgage in this case was given to indemnify an indorser for
the debtor’s accommodation, and stress is laid upon the apparent
intention of the parties that the business should be carried on by
the continued renewal of the notes upon which the indorser was
liable ; and it was, in fact, so carried on for more than two years.
The necessary result of the mortgage was to allow the mortgagors,
under cover of the mortgage, to sell the goods as their own and
appropriate the proceeds to their own purposes ; and this, too, for
an indefinite length of time. Such a mortgage, in the opinion of
the court, is objectionable, as being no security to the mortgagees,
and as cperating to ward off other creditors; and as the instru-
ment on its face shows that the legal effect of it is to delay cred-
itors, the law imputes to it a fraudulent purpose.

Even a provision in a mortgage by a silversmith of fixtures and
merchandise in his shop, reserving the privilege until default to
keep possession of the property, ‘‘and to use and enjoy the same,”
is held to make the mortgage void on its face as to merchandise
embraced in it, it being apparent from the nature of the property
that the only reasonable use the mortgagor could make of it is to
sell it. But as to the fixtures embraced in such mortgage, the
mortgage was held valid, because these articles were such as are
of permanent use in a silversmith’s shop, and are not ordinarily
kept for sale, and, therefore, the reservation of the right to use
and enjoy did not necessarily carry with it by implication the
right on.the part of the mortgagor to sell and convert those arti-
cles to his own use. The mortgage may be void in part and good
as to the residue.?

388. Kansas.— A mortgage upon a stock of goods, with a
stipulation that the mortgagor shall remain in possession, and ac-
companied by a subsequent agreement outside the mortgage that
the mortgagor may continue to dispose of the goods in the ordi-

1 Davenport v. Foulke, 68 Ind. 382; stock of goods, makes the entire mortgage
10 Cent. L. J. 427. But in Burrows, mre absolutely void, — as where it embraces
(U.S. Dist. Ct. Ind.), 5 N.Y. Week. Dig. fixtuyes to which this provision could not
137, it was held that the objectionable apply.
provision, although it applies only to a

316
WITH POWER OF SALE IN MORTGAGOR.  [§§ 3889, 390.

nary course of business, and use a portion of the proceeds for the
support of his family, paying the remainder over in discharge of
the mortgage debt, is not fraudulent and void as against creditors
and subsequent purchasers, but will be upheld or condemned ac-
cording as the arrangement is entered into and carried out in good
faith or not.1. “ The mortgagor, if he keep the possession, may as
well make the sales as a stranger. He acts in that respect as a
quasi agent at least of the mortgagee, and as such agent and sales-
man is entitled to compensation for his services. Doubtless such
arrangements are liable to abuse, and should always be closely
scanned ; but still they are not absolutely and in all cases to be
adjudged void as matter of law.” 2

389. In Iowa a chattel mortgage which allows the mortgagor
to retain possession and dispose of the mortgaged goods is held
not to be fraudulent in law, but affords, at most, only a primd
facie badge of fraud, which may be removed by proper evidence
that there was no fraud in fact.?

390. In Kentucky a mortgage which permits the mortgagor
to retain possession, and sell and replenish the stock in his hands
in the ordinary course of business, without accounting to the mort-
gagee, is not fraudulent per se. Such a mortgage may wear a
badge of fraud; but it is not such evidence of meditated fraud
on the part of the mortgagor as is requisite to establish an alle-
gation, by an attaching creditor, of a sale of his property with
the fraudulent intention of hindering and delaying his creditors.*

1 Frankhouser v. Ellett, 22 Kans. 127,
150; S. C. 31 Am. R. 171, and note.
Horton, C. J., dissenting, said: “ With
such a license in force, the so-called mort-
gage resolves itself merely into personal
security. The power granted to the mort-
gagor by the mortgagee enables the latter
to defeat the provisions of the instrument.
For the time being, the exercise of this
power ‘destroys it. It is completely félo
de se.”

2 Frankhouser v. Ellett, supra, per
Brewer, J.

8 Fromme v. Jones, 13 Iowa, 474; Wil-
helmi v. Leonard, Ib. 330; Smith ». Mc-
Lean, 24 Iowa, 322; Torbert v. Hayden,

11 Iowa, 435; Hughes v. Cory, 20 Iowa,
399; Adler v. Claflin, 17 Iowa, 89; Kuhn
v, Graves, 9 Iowa, 303; Campbell v. Leo-
nard, Ib. 489.

4 Ross v. Wilson, 7 Bush, 29. In En-
ders v. Williams, 1 Metc. (Ky.) 346, 352,
it was said that the tendency of modern
decisions in this as well as in the courts of
most of the other states has been to leave
the question of fraud open to investiga-
tion, to be determined by all the facts
which tend to show the actual intention
with which the conveyance was executed ;
andin Daniel v. Morrison, 6 Dana, 182, 185,
the doctrine of per se fraud was character-
ized as arbitrary and inconsistent with the

317
§§ 391, 892.] MORTGAGES OF MERCHANDISE

Neither is an attempt to make a mortgage embrace subsequently
acquired property, though ineffectual, and perhaps prejudicial to
creditors as presenting an apparent obstacle to the enforcement of -
their legal remedies, any reason for declaring the mortgage void.'

391. In Maine the question of fraud in a mortgage which
allows the mortgagor to retain possession of the property, and
to dispose of it, is one for the jury to determine from all the evi-
dence in the case2 And so a mortgage of perishable goods, such
as a stock of groceries, meats, fruits, and vegetables, which pro-
vides that the mortgagor may remain in possession for a year, is
not necessarily fraudulent. The character and condition of the
goods are only matters to be considered by the jury in deter-
mining whether there was fraud in fact.?

A mortgage duly recorded cannot be pronounced fraudulent
upon its face because it covers property of a manufacturing com-
pany, and provides that the company may retain possession, and
manufacture and sell their goods, even if it stipulates that such
possession shall continue beyond the time when the debt becomes
due ; provided such possession is not inconsistent with the security
of the mortgagee.* If there be mingled in the contract an inten-
tion to delay or defraud other creditors, or to protect the property
from them beyond what may be necessary for the security of the
mortgagee, the contract will be deemed to be fraudulent and void.
If, by its terms, it is to continue a great number of years, this
might be deemed evidence of a fraudulent intention ; but a stipu-
lation that the mortgagor may continue in possession of a large
manufacturing business for five years is not to be so regarded.

392. In Maryland, while a mortgage of goods in a store does
not, at law, as against a creditor of the mortgagor, cover renewals
and substitutions for such goods, the mortgage is valid as to such
goods as were in the store at the time of the mortgage. Where
the mortgagee sues for the taking of the goods by a creditor, the
burden is upon him to show that the goods seized were on the
harmony of legal science. Both quoted And see Brown v. Thompson, 59 Me. 372;
with approval in Vanmeter v. Estill (Ky. Melody v. Chandler, 12 Me. 282; Abbott
Ct. of Appeals, 1880), 12 Chicago L. N. v. Goodwin, 20 Me. 408,

375. ® Googins v. Gilmore, 47 Me. 9.

1 Ibid. * Brinley v. Spring, 7 Me. 241.
2 Stedman v. Vickery, 42 Me. 132,

818
WITH POWER OF SALE IN MORTGAGOR. [§ 393.

premises at the date of the mortgage.! No question seems to
have been made as to any fraud in such transaction. It seems
that a mortgage may create a valid lien in equity upon subse-
quently acquired property.”

393. In Massachusetts a mortgage of a trader’s stock is not
necessarily fraudulent, although it provides that, until condition
broken, he may remain in possession of the property, and may sell
and dispose of the goods.? Jt may well be that such a mortgage
was made with no other than an honest purpose of securing the
mortgagee. It may happen that the mortgaged stock much ex-
ceeds in value the debt for which security is required, and the
creditor might be willing to consent to the disposition of a part
of the goods mortgaged, being satisfied that the goods remaining
would furnish an adequate security.*

A mortgage of property consisting in part of groceries and pro-
visions, conditioned that the mortgagee shall not, except with the
consent in writing of the mortgagor, sell or remove the same
from the building in which it is situated, is not necessarily given
in fraud of creditors because it also provides that the mortgagor
may retain possession of the mortgaged property, and use and
enjoy the same; nor can the consent of the mortgagee that the
mortgagor might sell and consume the property be inferred. So
far as there is any evidence of an arrangement in fraud of cred-
itors, the question of fraud should be submitted to the jury. All
the facts surrounding the transaction are to be taken into account
collectively.®
' Articles in their nature consumable by use may be mortgaged
without any imputation of fraud, provided they are not to be
used, and are kept without damage until the mortgage debt shall
become payable; but if the articles mortgaged are perishable, and ’
cannot be so kept, or if they are mortgaged under an agreement
or understanding that they may be used and consumed by the
mortgagor, the transaction must be considered as collusive and

1 Hamilton v. Rogers, 8 Md. 301; Rose
v. Bevan, 10 Md. 466; Preston v. Leigh-
ton, 6 Md. 88.

2 Triebert v. Burgess, 11 Md. 452; But-
ler v. Rahm, 46 Md. 541.

3 Jones v. Huggeford, 3 Met. 515;
Briggs v. Parkman, 2 Met. 258; Barnard

v. Eaton, 2 Cush. 294; Cobb v. Farr, 16
Gray, 597. And see Rowley v. Rice, 11
Met. 333.

* Ibid.

5 Sleeper v. Chapman, 121 Mass. 404;
Briggs v. Parkman, 2 Met. 258. And see
Cobb v, Farr, 16 Gray, 597.

319
§ 394.] MORTGAGES OF MERCHANDISE

fraudulent against creditors. Thus, if a mortgage of all the hay,
grain, and produce growing on a farm be given to secure the pay-
ment of a sum of money due in a year, and the mortgagor, with
the knowledge of the mortgagee, and without objection on his
part, uses and consumes the property in the same manner as he
would have done if no mortgage had been given, the inference is
that the mortgage is colorable and fraudulent against his cred-
itors.! An agreement that in case the mortgagor should make
large sales of the mortgaged goods he would add to the mort-
gagee’s security by other property may tend to repel an inference
of fraud arising from such a mortgage.” But the intention of the
parties, and the circumstances attending the transaction, may al-
ways be shown in order to repel a presumption of fraud. Whether,
in any case, fraud exists is to be decided on the whole evidence.’
Whenever the terms and stipulations of a contract are by possi-
bility compatible with good faith, and have upon the face of them
the essential elements of a legal contract, the question of fraudu-
lent intent and want of good faith is to be submitted to the jury.
The supposed badges of fraud are open to explanation, and may
be shown to be consistent with one of purpose and good faith
in the parties.*

394. In Michigan a mortgage of a stock of goods, which
leaves the mortgagor in possession, with authority to sell the same.
in the usual course of business, is good between the parties, and
is not fraudulent on its face as against the mortgagor’s creditors.
The question of fraud is one to be determined by the jury, from
all the circumstances of the case bearing upon the good faith of
the transaction. Each case is considered by itself, and stands
upon its own merits. A mortgage of a stock of goods ina store,
which is otherwise valid, is not rendered void by a proviso that
the mortgagor “shall be allowed to continue the sale of goods

1 Robbins v. Parker, 3 Met. 117.
° Briggs v. Parkman, 2 Met. 258.
3 Homes v. Crane, 2 Pick. 607.

transaction is not necessarily fraudulent.
Cotton v. Marsh, 3 Wis. 221; Smith v.
Waggoner (Wis. 1880), 6 N. W. Rep.

# Jones v. Huggeford, 3 Met. 515, per
Dewey, J. And so if a mortgagee take
possession of the mortgaged property af-
ter default, and then puts the mortgagor
back in possession with authority to go
on and sell and remit the proceeds, the

320

568.

5 Gay v. Bidwell, 7 Mich. 519; Oliver
v. Eaton, 7 Mich. 108; The People v.
Bristol, 35 Mich. 28; Fry v. Russell, 35
Mich. 229,
WITH POWER OF SALE IN MORTGAGOR. [§ 395.

from said store as though this instrument was not made.” This
clause simply authorizes sales in the ordinary course of business,
and mortgages reserving such a power to the mortgagor have
uniformly been held valid in this state.?

The decisions go still farther, and make valid and effectual a
mortgage of goods which, in terms, covers subsequent purchases.
Thus, a mortgage of a stock of goods, which permitted the murt-
gagor to sell in the ordinary course of trade, and required him to
keep his stock of like goods to a specified amount as security to
the mortgagee, was held to cover guods so purchased and added
to the stock.”

395. In Minnesota a chattel mortgage, not followed by an
immediate delivery and continued change of possession of the
mortgaged property, is absolutely void as against the creditors
of the mortgagor and purchasers in good faith, unless it appears
both that the mortgage was made in good faith, without the pur-
pose of defrauding any creditor, and that the mortgage was duly
filed.2 Want of continued change of possession makes the mort-
gage primdé facie fraudulent. Unlike the statutes of some other.
states, the filing of the mortgage is not made legally equivalent
to actual delivery and continued change of possession, but it merely
adds another to the grounds on which the mortgage will be de-
clared void. If a mortgage provide that the mortgagor may
retain possession of the property and sell it as his own, without
satisfaction of the mortgage debt, it is regarded as necessarily
fraudulent and void as against the mortgagor’s creditors.6 If the
intent that the mortgagor may retain possession of the goods and
dispose of them as owner is apparent in the mortgage itself, the
existence of such intent is to be determined by the court ; other-
wise the existence of the intent is a question for the jury, upon
the evidence. But in every case, if the intent is found to exist,
the law declares the mortgage fraudulent.’ If, before any cred-

7 Wingler v. Sibley, 35 Mich. 231. 5 Horton v. Williams, 21 Minn. 187,

2 Leland v. Collver, 34 Mich. 418. per Young, J.

32 Stats. at Large (1873), p. 714; 6 Chophard v. Bayard, 4 Minn. 533;
Laws 1860, ch. 23; Lienau v. Moran, 5 First Nat. Bank v. Anderson, 24 Minn.
Minn. 482. And see Marsh v. Armstrong, 435; Stein v. Munch, 24 Minn. 390;

20 Minn. 81. Mann v. Flower, 25 Minn. 500, 507.
4 Byrnes v. Braley, 6 Reporter, 688 ; 7 Gere v. Murray, 6 Minn. 305; Horton
Braley v. Byrnes, 25 Minn. 297. v. Williams, 21 Minn. 187.

at 821
§ 396.] MORTGAGES OF MERCHANDISE

itor takes proceedings hostile to such mortgage, the mortgagor, in
good faith, part of the mortgage debt being due, delivers the prop-
erty to the mortgagee, for the purpose of having it applied in
payment of the debt, and authorizes the sale of the property for
that purpose, the mortgagee’s title becomes complete and valid
against any creditor subsequently proceeding against the mort-
gage... But it is not in the power of such mortgagee to remove
the original taint of the mortgage by taking possession of the
property under and by virtue of the mortgage.? In the Circuit
Court of the United States for the District of Minnesota, it was
held that a clause in a chattel mortgage which constituted the
mortgagor the agent of the mortgagee to dispose of the mortgaged
goods and account for their proceeds, with no right or power to
sell for his own use, is not inconsistent with the statutes of the
state, and does not render the mortgage fraudulent on its face.3

396. In Mississippi it is settled that when the mortgage deed
does not in terms provide that the mortgagor may retain posses-
sion of the mortgaged stock of goods and sell them, but the mort-
gagee permits him to dispose of them, the deed is not per se
fraudulent and void. A trust deed of a stock of goods, which
permitted the mortgagor to remain in possession until default but
did not expressly confer upon him a power of sale, although it
provided that upon default he should deliver possession of so much
of the stock as might be then on hand, to be sold by the trustee
in satisfaction of the debt secured, was adjudged not to be void
upon its facet The fact that the goods were sold with the mort-
gagee’s consent may be a circumstance from which a jury might
infer fraud, and may make the mortgage primd facie fraudulent ;
or the disposal of the goods may have been innocently or care-
lessly made, without any intention on the part of either of the
contracting parties to defraud any creditor. The question whether
there was a fraudulent intent in such case is a question for the
jury alone. Moreover, even a mortgage which provides that the
mortgagor may retain possession, and continue to use and have the
right to dispose of the goods mortgaged until the mortgagee shall

1 First Nat. Bank v. Anderson, supra. 462, citing Conkling v. Shelley, 28 N. Y.
2 Stein v. Munch, 24 Minn. 390; 360.

Blakeslee v. Rossman, 44 Wis. 550. * Summers v. Roos, 42 Miss. 749; Hil-
3 Hawkins v. Hastings Bank, 1 Dill. liard ». Cagle, 46 Miss. 309.

822
WITH POWER OF SALE IN MORTGAGOR. [§ 897.

take possession, is voidable only by those creditors who obtain
liens upon the property before the mortgagee in fact takes pos-
session! A mortgage of property, the use of which involves its
consumption, is not in itself fraudulent, unless the use of it is
expressly reserved in the deed. The intention of the parties in
making the instrument may be shown to have been without fraud.
The fact of the mortgagor’s possession of such property, and use
of it, with the consent of the mortgagee, is only evidence upon
the question of fraudulent intent.?

But a mortgage which conveys an entire stock of goods on
hand and all goods which the mortgagor may during the con-
tinuance of the mortgage add thereto, and all notes and ac-
counts and other forms of credit for which such goods may be
sold, and which provides also that the mortgagor may remain
in possession and carry on the business, is fraudulent as to
creditors. Such a mortgage contemplates that the business shall
be continued in the customary way of buying and selling, and
that it shall attach to the substituted goods and to the credits
taken for the goods sold; and its effect is to exclude other cred-
itors from intermeddling during the term of the mortgage, and
consequently to hinder and delay them. This intent being de-
duced from a construction of the instrument, without inquiring

into or finding any fact outside of it, the mortgage is invalid in
law.?

397. In Missouri a mortgage of a trader’s or manufacturer’s
stock in trade, which permits the mortgagor to remain in posses-
sion for the purpose of carrying on his business and selling the
goods in the usual manner, is regarded as fraudulent and void as
against existing and subsequent creditors and purchasers. Such
a mortgage is declared to be in effect a conveyance to the mort-
’ gagor’s own use.4 Although the instrument does not expressly
provide that the mortgagor shall remain in possession, and con-
tinue to dispose of the goods in the usual course of his business, it
is sufficient to avoid it if it appears, from a consideration of the

1 Summers v. Roos, 42 Miss. 749. strong v. Tuttle, 34 Mo. 432; Brooks ».

2 Ewing v. Cargill, 13 Smed. & M. 79; Wimer, 20 Mo. 503; Martin v. Maddox,
Farmers’ Bank of Virginia v. Douglass,11 24 Mo. 575; Martin v. Rice, 24 Mo. 581;
Smed. & M. 469. Reed v. Pelletier, 28 Mo. 173; White v.

8 Harman v. Hoskins, 56 Miss. 142. Graves, 8 Cent. L. J. 177; 68 Mo. 218.
* Lodge v. Samuels, 50 Mo. 204; Arm-

823
§ 397.] MORTGAGES OF MERCHANDISE

whole instrument, that such was necessarily the intent of the par-
ties.1_ But when by the terms of the instrument the mortgagor
is not permitted to dispose of the goods for his own use, but is
required to apply the proceeds to the discharge of the debt secured
by the mortgage, the mortgage is not void as being for the use of
the mortgagor.? Moreover, the agreement for the disposal of the
goods, to render the mortgage fraudulent in law, must appear on
the face of the deed, either in express terms or by necessary im-
plication? The language of a mortgage covering goods in a store,
or * which may be added from time to time to said stock,” does
not necessarily tend to the conclusion that the mortgagor was to
sell the goods, or to make purchases to replenish the stock ;* nor
is such conclusion to be drawn from a clause in a mortgage of
a manufacturing establishment, that it should cover, “also, all
property, goods, tools, wares, materials, fixtures, machinery, stock,
rough or finished materials, and all things whatever, now or that
may be hereafter used, bought, or belong to the said party of the
first part, in the course of his usual trade or business.”5 The
court will not hear extrinsic evidence to the effect that the parties
intended that the mortgagor should continue to make sales in the
usual course of business, and on such evidence, as a matter of law,
pronounce the mortgage void. Neither will the court imply a
power of sale in the mortgagor from the nature of the mortgaged
goods; as for instance, the power will not be implied because
the mortgage is made by a firm of druggists of ‘all their stock of
drugs and fixtures contained in their drug store.” It appeared
from the terms of the mortgage that the mortgagor was to re-
main in possession; but there was nota syllable in the instru-
ment, say the court, from which it could be fairly implied, much
less from which it must necessarily be implied, that the mortgagor
was to have the power tosell. ‘We are not unmindful of the
fact that the property conveyed was merchandise which was pur-

1 Stanley v. Bunce, 27 Mo. 269; Bil-
lingsley v. Bunce, 28 Mo. 547; White v.

* Voorhis v. Langsdorf, 31 Mo. 451;
State v. D’Oench, 31 Mo. 453. See, how-

Graves, 68 Mo. 218; Re Kirkbride, 5 Dill.
116.

2 Metzner v. Graham, 57 Mo.404. But,
in an earlier case, an agreement to apply
proceeds of sales to replenishing the stock
was held not to validate the instrument.
Walter v. Wimer, 24 Mo. 63.

8 Milburn v. Waugh, 11 Mo. 369.

824

ever, State v. Jacob, 2 Mo. App. 183, that
a contemporaneous parol agreement that
the mortgagor may dispose of the goods
will vitiate the deed, with like effect as if
it appeared on the face of the instrument.

5 State v. Tasker, 31 Mo. 445; Voorhis
v. Langsdorf, 31 Mo. 451.
WITH POWER OF SALE IN MORTGAGOR. [§ 398.

chased and held, up to the date of the mortgage, for the purpose
of being sold. This fact, however, cannot vary the interpretation
of the deed. It may give rise to conjecture; but as was observed
by Judge Napton in the case of Voorhis v. Langsdorf,! courts are
not warranted in pronouncing deeds to be void upon conjecture
merely.” Under the registry act personal property of every char-
acter may be safely left in the possession of the grantor. ‘No
exception is made by the statute, and this court has no power to
create one. No matter what may be the character of the prop-
erty or the business of the grantor, the very stipulations of the
deed that the property shall be held to secure the debt, and that
upon default in payment the mortgagee may take possession
thereof and sell the same, are in effect stipulations that the
grantor will not sell it; and unless there are other provisions in
the deed expressly authorizing the grantor to sell, or from which
it must necessarily be implied that he has a power to sell, the
deed cannot be held void upon its face”? Therefore such mort-
gages are not void in law, but questions of fraud arising upon
them are for the jury. Though a mortgage be void as to part of
the property covered by it, on account of a power of disposal
retained by the mortgagor over such part, it may be valid as to
other property embraced in it.?

398. In Nebraska the statute concerning fraudulent convey-
ances provides, that unless there be immediate delivery and con-
tinued possession of the property, the mortgage is presumed to be
fraudulent and void against creditors of the mortgagor and sub-
sequent purchasers in good faith; and is conclusively fraudulent
unless it be made to appear that it was made in good faith, with-
out any intent to defraud such creditors or purchasers. Under this
statute, if the mortgage be duly recorded, the retention of posses-
sion by the mortgagor is primd facie presumption of fraud which
might be overeome by competent testimony; but if no evidence
of good faith is produced, this presumption becomes conclusive as
to creditors and bond fide purchasers. Consequently, a mortgage
of a stock of goods which the mortgagor retained possession of and

1 31 Mo. 451. 116. See contra, Russell v. Winne, 37

2 Weber v. Armstrong, 70 Mo. 217, N. Y. 591.
overruling Lodge v.,Samuels, 50 Mo. 204. # Pyle v. Warren, 2 Neb. 241; Bruns-

3 State v. Tasker, supra; Donnell v. wick v. McClay, 7 Neb. 137.
Byern, 69 Mo. 468; Re Kirkbride, 5 Dill.
825
§ 398.] MORTGAGES OF MERCHANDISE

disposed of in the usual course of business, was held to be void.1
But a mortgage which does not in terms, or by necessary implica-
tion, allow the mortgagor to dispose of the mortgaged property,
but merely provides that the mortgagor may retain the use of the
property, is not fraudulent in law; but the question of fraudulent
intent in making it is a question of fact, which must be submitted.
to the jury. The court cannot look beyond the instrument in
pronouncing it fraudulent.2 Although the property mortgaged be
in part a stock of goods, a provision in the mortgage that the
mortgagor may retain possession and use and enjoy the same
until default does not render it void on its face. The question of
intent, in such case, must be submitted to the jury.? Although a
mortgage of a stock of goods which provides that the mortgagor
may sell, in the ordinary course of trade, is void upon its face as
to the mortgagor’s creditors and purchasers from him in good
faith, it is valid between the parties ;+ and is also valid as against
one who purchases the entire stock of goods with the intent to
hinder and delay creditors, although the mortgage be not recorded
until after the pretended purchase.5

In a recent case it appeared that a bill of sale of a stock of goods
was made in form of an absolute sale but with a verbal defeasance,
so that the transaction was really a mortgage. The mortgagor
was left in possession, and continued to sell the goods. At the
trial the judge charged the jury that if they found there was no
actual and bond fide change of ownership, but the transaction was
intended to prevent the grantor’s creditors from taking the goods,
the grantee could not recover. The Supreme Court, however, said
that this instruction was not applicable to the facts proven in the
case, as there was no evidence tending to prove that the bill of
sale was given for any such purpose.

The mortgagor sold the goods to a creditor of his own in pay-
ment of a debt; but inasmuch as the purchaser was chargeable
with notice of the fact that the transaction was a mortgage, he
acquired no title by the purchase. The court said that from the
mortgagor’s remaining in possession and continuing to sell the
goods the public had a right to presume he had authority for such
sales from the mortgage ; but the purchaser in this case had no

1 Tallon v. Ellison, 3 Neb. 63. * Gregory v. Whedon, 8 Neb. 373.
2 Williams v. Evans, 6 Neb. 216. 5 Gregory v. Whedon, supra.
8 Hedman v. Anderson, 6 Neb. 392.

326
WITH POWER OF SALE IN MORTGAGOR. [§ 399.

right to presume authority on his part to sell the mortgaged goods
at wholesale to pay his own debt, and such sale would convey no
title.

399. In New Hampshire a mortgage of a stock of goods in a
store, or of a manufacturer’s stock, accompanied by an agreement
between the parties, whether formal or not, that the mortgagor
shall continue in possession and sell the goods as before for his
own benefit, followed by such sale in fact, is fraudulent and void
as to the mortgagor’s creditors. Such an arrangement is regarded
as inconsistent with the avowed object of the mortgage, which is
to secure a debt. A secret purpose to protect the mortgagor in
the enjoyment of the property, and enable him to set his other
creditors at defiance, is conclusively presumed.? Although there
was no agreement or understanding at the time of the mortgage
that the mortgagor might continue the sale of the mortgaged
goods, a subsequent agreement to that effect, when carried out,
will have that effect; and such agreement is proved by evidence
that the mortgagor did continue to sell the mortgaged goods
on his own account, with the knowledge of the mortgagee and
without objection on his part. Permitting sales to a substantial
amount is wholly inconsistent with the avowed object of the mort-
_gage, and is only a shield to the mortgagor against the claims of
his creditors.

But in the latest case upon this subject the qualification is
made that a mortgagor may, as agent of the mortgagee, sell the
property for the purpose of applying the proceeds to the payment
of the mortgage debt ;* but the proceeds in such case must be ap-
plied to the mortgage debt, whether they are actually paid over
to the mortgagee or not. Any understanding that the mortgagor
may sell the property for his own benefit, without accounting for
the proceeds, will invalidate the mortgage. This would be a trust
inconsistent with the legitimate purposes of the mortgage, and
would establish a legal presumption of a fraudulent intent to pro-

1 Omaha Book Co. v. Sutherland (Neb. 8 Putnam v. Osgood, 52 N. H. 148.
1880), 6 N. W. Rep. 63. * Gen. L. 1878, v. 137, § 13, prohibits
2 Putnam v. Osgood, 51 N. H. 192; sales by the mortgagor without the con-
Ranlett v. Blodgett, 17 N. H. 298; Coburn sent of the mortgagee in writing upon the
v. Pickering, 3 N.H.415. And see Wink- mortgage and recorded.
ley v. Hill, 9 N. H. 31, 33; Coolidge v.
Melvin, 42 N, H. 510, 520.

327
§ 399.] MORTGAGES OF MERCHANDISE

tect the mortgagor in the enjoyment of the property. But there
is no secret trust when the sale is honestly made for the purpose
of extinguishing the mortgage debt. The existence of a secret
trust is moreover a question of fact; and only the resulting fraud
is an inference of law. Fraud is not to be conclusively inferred
from the mortgagee’s omission to declare, in a written permission
of sale, that the proceeds are to be applied towards the extin-
guishment of the debt, and not retained for the benefit of the
mortgagor. The written consent may be explained. If in fact
the mortgagor act as agent of the mortgagee in making sales, this
may be shown, and the proceeds will then be regarded as applied
upon the mortgage, as soon as they reach the agent’s hands.
There can be no inference of fraud or secret trust under such cir-

cumstances.!

1 Wilson v. Sullivan, 58 N. H. 260; 9
Rep. 614. In this case the mortgagee in-
dorsed upon the mortgage at the time of
its execution the following: “Consent is
hereby given to the mortgagors’ selling
the within mortgaged property, at their
store in Suncook, in the regular and usual
way of retail trade, subject, however, to
the right of the mortgagee to revoke this
consent at his pleasure.” Mr. Justice
Foster, delivering the opinion of the court,
said: “In the case of a recorded mortgage
the retention of possession is of course ob-
jectionable; but the selling of the goods
occupies the same position in respect to
the mortgage that the mere retention and
use of the goods does in respect to an ab-
solute sale. By our statute, a sale by the
mortgagor is as permissible as retention
of possession. The permission undoubt-
edly raises a presumption, prima facie, of
a secret trust, and the secret trust being
shown, the fraudulent intent is conclu-
sively presumed ; but as the intention may
be explained in the case of retention of
property by the vendor after sale, so may
the sale of the goods by the mortgagor.
The explanation need not be expressed in
the written consent. The settled rule,
that the written consent may be explained,
necessarily implies that it may be explained
by evidence not contained in the writing
itself. . . . . There is no secret trust when

328

it appears from all the evidence that the
permitted sale is honestly made for the
purpose of extinguishing the mortgage
debt, and not, except incidentally, for the
advantage of the mortgagor. Such a sale
and such an application of the proceeds
has no tendency to hinder, delay, or de-
fraud the unpreferred creditors.

“ Where the mortgagee, by written and
recorded consent, permits the mortgagor,
as his agent, to sell the goods as the mort-
gagee’s goods and to receive the money as
the mortgagee’s money, the proceeds thus
received by the agent being the property
of the mortgagee in the hands of his
agent, the mortgagor, the transaction is
lawful and valid, and an agreement that
all this may be done (when a written con-
sent to the sale of the goods is recorded)
is a lawful agreement. In the case before
us, if no actual fraud or secret trust is dis-
closed; if the mortgagor, in selling the
goods and retaining the proceeds, is re-
garded simply as the agent of the mort-
gagee ; and if those proceeds, as soon as
they reach the hands of the agent, be re-
garded as applied, and the«debt pro tanto
extinguished, whether the money has act-
ually passed from the hands of the agent
to those of the principal or not, it is dif-
ficult to see how any legal] inference of
fraud or of a secret trust can be said to
result from such circumstances.”
WITH POWER OF SALE IN MORTGAGOR. _[§§ 400, 401.

400. In New Jersey an unrecorded mortgage of personal prop-
erty, the possession of which remained with the mortgagor, was
not conclusively void as against the mortgagor’s creditors and pur-
chasers without notice, prior to the statute requiring either deliv-
ery and possession or record. The mortgagor’s possession was re-
garded as primd facie evidence of fraud, but might be explained.
It merely affected the rule of evidence, shifting the burden of
proof from the party attacking the mortgage to the party setting
it up. In a mortgage by a merchant or manufacturer of his stock
of goods, permission given to the mortgagor to remain in posses-
sion, selling and disposing of his stock without restriction, in the
ordinary course of trade, is only evidence of fraud to go to the
jury that the mortgage was made and kept on foot for fraudulent
purposes. ‘The mortgagor in selling the goods is considered to be
acting as the agent of the mortgagee, and as receiving the pro-
ceeds of the sales for him.?

401. In New York the question of fraud in chattel mortgages
is materially affected by statute; for although a mortgage be duly
filed, it is presumptively fraudulent and void if the mortgagor
remain in possession. It is declared that every assignment of
goods and chattels by way of mortgage or security, unless accom-
panied by an immediate delivery, and followed by an actual and
continued change of possession of the things mortgaged, shall be
presumed to be fraudulent and void as against the creditors of the
mortgagor or subsequent purchasers in good faith; and shall be
conclusive evidence of fraud, unless it shall be made to appear, on
the part of the person claiming under such mortgage, that the
same was made in good faith and without intent to defraud such
creditors or purchasers.*

With some fluctuation of opinion in the courts, the doctrine
prevails that an agreement between the mortgagor and mortgagee
of personal property that the former may dispose of the mort-
gaged property to his own use renders the mortgage fraudulent
and void in law. But it is regarded as material whether the

1 Runyon v. Groshon, 12 N. J. Eq. 86. 8 Dutcher v. Swartwood, 15 Hun, 31;
And see Parr v. Brady, 37 N. J. L. 201. Smith v. Acker, 23 Wend. 653; Groat v.

2 Miller v. Shreve, 29 N. J. L. 250. See Rees, 20 Barb. 26; Otis v. Sill, 8 Barb,
In re Bloom (U. S. Dist. Ct.), 17. N. B.R. 102.

425; Miller v. Jones (U. S.66),15 N.B. * 3 Rev. Stats. 143, § 5.
R. 150.
329
§ 401.) MORTGAGES OF MERCHANDISE

agreement be contained in the mortgage or not.! When such
agreement is not contained in the mortgage, the question of its
existence, and of the indications of fraud arising from it and
the conduct of the parties, is one for the jury.2, The mere fact
that the mortgagor continues to sell the mortgaged property,
consisting of goods in a store, with the knowledge of the mort-
gagee, does not render the mortgage fraudulent in law as against
other creditors, in the absence of proof that this was pursuant to
an agreement between the parties.2 The court cannot pro-
nounce the mortgage void unless there was an agreement, either
in the mortgage itself or between the parties to it, the necessary
construction of which permits the mortgagor to sell the mort-
gaged property for his own benefit;* but if there be such an
agreement in the deed or a separate agreement undisputed, the
court must pronounce the mortgage void, and cannot leave the
question to the jury to determine whether it was made’ in good
faith. And so if the mortgage obviously contemplates, though
it does not expressly provide for the consumption of some of
the mortgaged goods in course of manufacture, the use of the
proceeds in the business of the mortgagor, the purchase of other
chattels to replace those consumed, and the continuance of the
mortgagor in possession until a breach of condition, it is void as
against a creditor of the mortgagor or as against any one suc-
ceeding to such creditor’s rights.®

A clause in a mortgage of a stock of goods, which purports to
extend the lien of the mortgage over after-acquired property, does
not render it absolutely void where there is no arrangement per-
mitting the mortgagor to deal with the goods mortgaged, and no

1 Griswold v. Sheldon, 4 N. Y. 581;
Edgell v. Hart, 13 Barb. 380; S C.9 N.
Y. 213; Wood v. Lowry, 17 Wend. 492;
Gardner v. McEwen, 19 N. Y. 123; Mars-
ton v. Vultce, 12 Abb. Pr. 143; 8 Bosw.
129; Delaware v. Ensign, 21 Barb. 85;
Ford v. Williams, 13 N. Y. 577; Southard
v. Benner, 72 N. Y. 424; Dodds v. John-
son, 3 Thomp. & C. 215; Divver v. Me-
Laughlin, 2 Wend. 596; McLachlan v,
Wright, 3 Wend. 348; In matter of Can-
trell,6 Ben. 482; Bainbridge v. Richmond,
17 Hun, 391.

Considering the doubtful origin of this

830

doctrine in Griswold v. Sheldon, supra,
which was decided by a court equally di-
vided in opinion, it has had a remarkable
following both in New York and in other
states.

2 Gardner v. McEwen, 19 N. Y. 123;
Southard v. Pinckney, 5 Abb. N.C. 184.

8 Frost v. Warren, 42 N. Y. 204.

* Hastings v. Parke (Superior Ct. Buf-
falo, 1880), 22 Alb. L. J. 115; Chatham
National Bank v. O’Brien, 6 Hun, 231.

5 Marston v. Vultee, 8 Bosw. 129.

§ Wagner v. Jones, 7 Daly, 375.
WITH POWER OF SALE IN MORTGAGOR. [§ 401.

intent to defraud creditors is affirmatively found. Jf a mort-
gage be void and fraudulent, by reason of such an agreement, as
to part of the property covered by it,—as for instance, a stock
of goods, —it is void and fraudulent as to all the property em-
braced in it, although the agreement does not apply to such other
property.?

An agreement that the mortgagor shall sell the mortgaged
goods for cash only, for the benefit of the mortgagee, does not
render the instrument conclusively fraudulent; it only raises a
question of good faith, to be determined by the jury, the burden
of proof being upon the party who claims under the mortgage?
In such case the mortgagee makes the mortgagor his agent, and
the latter’s dealing with the property must be considered as the
act of an agent, and not the act of the mortgagor. The sales
made and the proceeds received by the mortgagor under such an
arrangement should be applied in satisfaction of the mortgage,
whether the money is ever actually paid over to the mortgagee
or not.6 The agreement must show that the proceeds are to be
applied wholly to the mortgagee’s benefit;® and therefore an
agreement that the mortgagor may use.the proceeds of sales for his
support and business, and pay to the mortgagee such sums as he
can spare from his general business, will invalidate the mortgage.”

Where, also, the agreement was that the mortgagor, who was
a manufacturer, should remain in possession, and continue to man-
ufacture and sell, either for cash or on credit, in his discretion, the
cash and accounts to be transferred to the mortgagee and ap-
plied on the debt, the mortgage was adjudged fraudulent as to
creditors, and void, because such an arrangement enabled the
mortgagor to sell his entire stock on credit, and keep his other
creditors at bay. Treating the question of fraud in such case as

1 Yates v. Olmsted, 56 N. Y. 632 (re-
versing S. C. 65 Barb. 43, 462, and in ef-
fect overruling Mittnacht v. Kelly, 3 Abb.
App. Dee. 301).

2 Russell v. Winne, 4 Abb. Pr. (N. S.)
384; S. C. 37 N. Y. 591; Mittnacht v.
Kelly, 3 Abb. App. Dec. 301; 3 Keyes,
407.

8 Miller v. Lockwood, 32 N. Y. 293;
Ford v. Williams, 24 N. Y. 359; Conkling
v. Shelley, 28 N. Y. 360; Johnson v.
Curtis, 42 Barb. 588. Ostrander v. Fay,
3 Abb. App. Dec. 431; City Bank v. West-

-1878),6 N. ¥. Week Dig. 338.

bury, 16 Hun, 458; Caring v. Richmond,
22 Hun, 369.

# Conkling v. Shelley, supra.

5 Conkling v. Shelley, supra. See City
Bank v. Westbury, supra.

6 Dolson v, Saxton (N. Y. Sup. Ct.),
5 N. Y. Week. Dig. 126.

7 Southard v. Pinckney (N. Y. Ct. App.
Sce, also,
In re Barrows (U. S. Dist. Ct. Ind.), 5 N.
Y. Week. Dig. 136.

8 City Bank v. Westbury, 16 Hun, 458.

331
§ 402.] MORTGAGES OF MERCHANDISE

one of fact, the acts and declarations of the mortgagor while in
actual possession were declared competent evidence upon the ques-
tion of intent, as part of the res geste.

In case of an omission to file a mortgage in accordance with
the statute, if the mortgagee take possession of the mortgaged
goods before any other lien on them is acquired, and before the
filing of a petition in bankruptcy against the mortgagor, the lien
is valid against his creditors and his assignee in bankruptcy. But
if a mortgage be fraudulent in law, by reason of-an agreement
that the mortgagor may remain in possession and sell the goods,
it is not made valid by the mortgagee’s subsequent act in taking
possession of the property.?

It is to be observed that the New York decisions are based upon
statutory provisions which make retention of possession primd
facie evidence of fraud. ‘Their general tenor may be thus ac-
counted for, but not their want of harmony. “If we should un-
dertake to follow these decisions, we should have very uncertain
guides, and be pursuing a labyrinth without a clew.”* They are
far from unanimous; and while recognizing the authority of the
case of Smith v. Acker,® they seek to evade its force by drawing
untenable distinctions. The tendency of the recent cases upon
this point is to restrict the old rule of constructive fraud so far as
possible, and yet hold to it at all. Thus, the fact of the mort-
gagor’s continuing to sell the goods is not conclusively fraudulent,
unless it be shown that this was by an agreement of the parties ;
and, moreover, the parties may agree that sales may be made by
the mortgagor for cash, for the mortgagee’s benefit.

402. In North Carolina a provision in a mortgage of a stock
of merchandise, that the mortgagor is to remain in possession and
continue to sell the goods, is not fraudulent in law, but raises a
strong presumption of fraud, which throws the burden of disprov-
ing it upon the party claiming under the mortgage.* In case the

1 City Bank v. Westbury, 16 Hun, 458. 4 Per Dillon, J., in Hughes v. Cory, 20
2 Field v. Baker, 12 Blatchf. 438; Brown Iowa, 399.
v. Platt, 8 Bosw. 324; First Nat. Bank v. 5 23 Wend. 653. See, also, the discor-
Anderson, 24 Minn. 435. dant case of Levy v. Welsh, 2 Edw. Ch.
8 Dutcher v. Swartwood, 15 Hun, 31; 438,
S.C.7 N. Y¥. Week. Dig. 201. See, also, 6 Cheatham v. Hawkins, 76 N. C. 335;
§§ 395, 409. S.C. 80 N.C. 161; Young v. Booe, 11
Tred. L. 347.
382
WITH POWER OF SALE IN MORTGAGOR. [§ 402.

mortgagor is not required to account for the proceeds of the sales,
such proceeds substantially belong to him, to be expended or ap-
plied as he pleases. In the mean time, the entire stock is secure
from the reach of his creditors. If there were, moreover, other
unsecured creditors at the time of the mortgage, and the debtor
bad no other property out of which such debts could be satisfied,
a very strong case of presumptive fraud is presented; and if no
proof to rebut such presumption is offered for the jury to pass
upon, the presumption raised by the law becomes conclusive.?
Such presumption of frand is not rebutted by proof that the debt
secured was a bond fide debt, and thatthe insolvency of the debtor
was unknown to the mortgagee at the time of the execution of the
mortgage.” Neither is the testimony of the creditor that an intent
to favor the mortgagor, or to delay or defraud his creditors, was
not in his mind at the time, sufficient to remove the presumption
of fraud arising from the instrument itself, and from evidence
aliunde that the mortgagor was insolvent at the time, and all his
other property under mortgage, and that afterwards he continued
in possession, made additions to the stock, and applied the pro-
ceeds of his sales to his family and personal expenses and the
payment of his other debts. If the law adjudges the effect of a
transaction to be to delay, hinder, or defraud creditors, it is to
be regarded as fraudulent, although this may not have been the
actual intention of the parties.?

1 Per Bynum, J., in Cheatham v. Haw-
kins, supra.

2 Holmes v. Marshall, 78 N. C. 262.

3 Cheatham v. Hawkins, 80 N. C. 161.
See article, by J. O. Prince, Esq., 6 South.
Law Rev. 96, 112. This case is there
wrongly claimed as an authority that a
power of sale reserved to the mortgagor
makes the mortgage constructively fraud-
ulent. This case was twice before the Su-
preme Court of the state. The mortgage
covered the debtor’s entire stock of mis-
cellaneous merchandise, and expressly re-
served to him the possession. The impli-
cation was regarded as irresistible that the
mortgagor was to continue selling and
trading as before, with liberty to apply
the proceeds of sales to his own use as he
might sec fit. Mr. Justice Bynum, deliver-
ing the opinion of the court (76 N. C. 333,

\

334), said: ‘‘This deed approaches the
verge of being fraudulent in law, but is
not so. To find fraud as a matter of
law, it must so expressly and plainly ap-
pear in the deed itself as to be incapable
of explanation by evidence dehors. If the
deed of mortgage had expressed that there
were other outstanding debts unsecured
by the deed, and that the property therein
conveyed was all the bargainor possessed,
then, with the reservation of the possession
contained in this instrument, the court
would hold that such a deed was fraudu-
lent and void on its face. But the court
cannot so declare where it is possible to
show by extraneous evidence that the
mortgage was executed in good faith and
for a legal purpose. If, for instance, it
could be shown that when this deed was
made the mortgagor owed no other debts,

838
§ 403.] MORTGAGES OF MERCHANDISE

403. In Ohio, although possession on the part of the mortgagor
is only a badge of fraud, which may be removed by showing the
transaction was honest, a power of sale reserved to him, either ex-
pressly or impliedly, makes the transaction void in law as against
subsequent purchasers and execution creditors.1 If the power of
disposition appear upon the face of the mortgage, or is fairly to
be inferred from its provisions, it is the duty of the court so to de-
clare it, without submitting the matter to the jury as a question
of fact. If it does not so appear, but is so understood or agreed
by the parties at the time the mortgage is executed, it is equally
void; and such understanding or agreement may be shown by
parol evidence, and may be proved by the conduct of the parties
in relation to the subject matter of the mortgage and other cir-
cumstances. Butin either case, where the fact is made to appear,
the mortgage is fraudulent in law, irrespective of the intention of
the parties.2 A stipulation in a mortgage which permits the mort-
gagor to sell at retail only, that the mortgagee shall at all times
hold absolute and exclusive possession of the goods as against all
persons other than the mortgagor, and shall release all claims to
the property as soon as the debt shall be paid, does not take the
case out of therule.? But it is held that a mortgage with a power
of disposal of the goods reserved to the mortgagor is valid be-
tween the parties to it, and when the mortgagee takes possession
of the goods before the creditors of the mortgagor have obtained

or that owing them, he hadother property and see what is its force and effect.” Af-

outside of the mortgage and liable to exe-
cution amply sufficient to pay them, as
matter of law, the deed must be upheld.
Admitting this to be so, it is yet clear
that the mortgage affords the strongest
possible example of presumptive fraud,
and one which can be scarcely rebutted
by any existing facts outside of the deed.”

After a trial upon the question of fraud,
the case again came before the same court
(80 N. C. 161, 163), and Chief Justice
Smith said: “The case is now before us
with the evidence offered on the one side
to rebut, and on the other to strengthen
and sustain the presumption. The judge
who tried the cause, and by consent of
parties passed upon the facts, held that it
was not rebutted. We will examine the
proof of the ‘facts outside of the deed,’

304

ter examining the evidence offered to re-
but the presumption of fraud raised by
the instrument itself, be said: “ The sur-
rounding facts of this case and the uses
made of the goods, the possibility of
which brought the mortgage to the very
verge of condemnation as fraudulent upon
its face, but strengthen instead of impair-
ing the force of the presumption, which is
said to be almost impossible successfully
to repel.”

1 Collins v. Myers, 16 Ohio, 547 ; Good-
enough v. Harris, 1 Disney, 53; Morris v.
Devou, 2 Disney, 218; In matter of Manly
2 Bond, 261. ~

2 Freeman v. Rawson, 5 Ohio St. 1, per
Ranney, J.

* Harman v. Abbey, 7 Ohio St. 218.
* WITH POWER OF SALE IN MORTGAGOR. [§ 404.

any lien upon them, or purchasers from him have acquired any
rights, the mortgage becomes valid so as to protect the property.1

In a recent case, the court limited the generality of the lan-
guage in the earlier cases to the facts to which such language was
applied. It is observed that in each of these cases the terms of
the mortgage were such as to reserve to the mortgagor the right
to sell the mortgaged property on his own account. Therefore it
is only a power of sale in the mortgagor, which leaves in him a
dominion over the property inconsistent with the alleged lien of
the mortgage, that, according to these earlier cases, is fraudulent
per se. The court, therefore, limits the doctrine accordingly, and
holds that a stipulation i in a mortgage of goods that the mortgagor
shall retain possession and sell the goods in the usual retail way,
paying over the money received therefor to the mortgagee as the
goods are sold, does not render the mortgage per se fraudulent
and void as against creditors of the mortgagor.2 Mr. Justice
Scott, delivering the judgment of the court, said: “* The fact that
the goods may be thus sold for the sole benefit of the mortgagees,
and the proceeds applied in discharge of the mortgage debt, is en-
tirely consistent with the idea of a lien upon the goods for the
security of the mortgagees. And the fact that the proceeds can-
not be applied otherwise, at the pleasure of the mortgagor, is in-
consistent with the idea of his absolute ownership. That the
mortgagor should thus act as the agent of the mortgagees in sell-
ing the goods for their benefit is not necessarily in fraud of the
rights of. other creditors ; and if the transaction is bond fide, it is
difficult to see why it should not be upheld. Such an arrange-
ment raises only a question of good faith, to be determined by the
jury in the light of all the evidence, and is not per se fraudu-
lent.”

404. In Oregon, where it appears either on the face of the
mortgage or by parol evidence that the mortgagee of personal
property has given to the mortgagor an unlimited power to dis-
pose of the property mortgaged for the use of the mortgagor, the
mortgage is pronounced void as to purchasers and attaching cred-
itors of the mortgagor. The statutory provision, that a mortgage
not followed by a continued change of possession in case the in-

1 Brown v. Webb, 20 Ohio, 389. 110 (following Ford v. Williams, 24 N.Y.
2 Kleine v. Katzenberger, 20 Ohio St. 359; Miller v. Lockwood, 32 N. Y. 293).

3385
§ 405, 406.] MORTGAGES OF MERCHANDISE

strument be not duly filed, creates 2 presumption of fraud, dis-
putable by showing that it was in fact made in good faith for a
sufficient consideration and without intent to defraud creditors,
does not reach or affect a mortgage duly filed, and objectionable
only by reason of an agreement between the parties that the
mortgagor may sell the mortgaged goods. The statute is silent as
to the effect of such an agreement; and when this fact is made
to appear, it becomes a question of law for the court to deter-
mine what shall be its legal effect.

405. In Rhode Island, although a mortgage of a manufact-
urer’s or trader’s stock of goods, together with all additions to the
same or renewals of it that might afterwards be made, is in itself
ineffectual to vest in the mortgagee a legal title to the property
afterwards acquired ;? yet if the mortgagee take possession under
the mortgage of the property after it has been acquired by the
mortgagor, the ‘title vests in the mortgagee, both at law and in
equity. Regarding such a stipulation as an equitable contract for
a mortgage of such property, it is executed by the mortgagee’s
possession, and there is no need of the intervention of a court of
equity to decree specific performance.? Without such possession,
a court of equity would establish the mortgage lien upon the
property subsequently acquired.*

It appeared, in these cases, that the mortgagor remained in
possession, and sold the stock in the usual course of business; and
a power in the mortgagor to sel] and exchange, if not given in the
instruments themselves, was implied in them. Upon the question
of fraud the court say: “ While in some states a mortgage contain-
ing a power to sell and replace, or, where the mortgagor retains
possession, has been held to be therefore void, such has not been
the doctrine in this state. Here, the question whether such a
mortgage is fraudulent or not is a fact for the decision of the jury
upon the circumstances and evidence in the particular case.” ®

406. In Tennessee a mortgage conveying a merchant’s stock
of goods, with a stipulation that the mortgagor may continue the
business and dispose of goods, and replenish the stock from time

1 Orton v. Orton, 7 Oregon, 478. £ Williams v. Winsor, 12 R. 1.9. See,
2 Williams v. Briggs, 11 R. I. 476. also, Jenckes v. Goffe, 1 R. 1.511.
8 Cook v. Corthell, 11 R. I. 482. § Williams v. Winsor, supra, per Pot-

836 ter, J.
WITH POWER OF SALE IN MORTGAGOR. [§ 407.

to time, is regarded as void per se. The Supreme Court of the
state placed their decision to this effect upon the principle that
such a mortgage hinders and delays creditors in the enforcement
of their claims, by placing the property in the possession and con-
trol of the debtor, with the right to use the proceeds of it for his
own benefit as if no conveyance had been made, thus giving the
debtor a fraudulent advantage over his other creditors, who can-
not in the mean time reach the property thus protected. In a
later case, before Chancellor Cooper, that eminent judge, though
arriving at the same conclusion, that such a mortgage is void per
se, declared, that “the reason of the decisions against the validity
of such deeds does not rest, as has been thought, on a presump-
tion of fraud, in conflict with the general rule that the question of
fraud, arising out of the retention of possession by the grantor
with power of disposition, is one of fact, to be determined by the
circumstances of the particular case. It rests, principally, upon
the ground that such a transaction, irrespective of fraud, is against
public policy, throwing open too wide a door for possible fraud,
and the contract” (so far as relates to future acquisitions) “ does
-not fall within that class of which a court of equity will decree
the specific performance.” 2

407. Texas. — In a recent case there were strong expres-
sions in the opinion of the justice who pronounced the judgment,
which seemed to give countenance to the conclusion that a mort-
gage upon a stock of goods, where the mortgagor retains posses-
sion, and, with the knowledge and consent of the mortgagee, sells
them in the usual course of trade, and applies the proceeds to re-
plenish the stock, is fraudulent in law as to third persons, although
it be recorded. It was declared that there should be a marked
and well-defined distinction, upon reason and public policy, drawn

1 McCrasly v. Hasslock, 4 Baxt. 1;
Tennessee National Bank v. Ebbert, 9
Heisk. 153, overruling the case of Hick-
man v. Perrin, 6 Coldw. 135, where it was
held that a stipulation in a mortgage that
the mortgage debt should be paid out of
the proceeds of the sales of the mortgaged
goods, the mortgagor retaining only a suf-
ficient amount of them to keep up the
stock, did not invalidate the mortgage.
Judge Shackleford said: “'To hold that a

22

merchant cannot mortgage his goods with-
out closing his doors would be to hold
that no merchant could mortgage his
stock.”

° Phelps v. Murray, 2 Tenn. Ch. 746.

5 Peiser v. Peticolas, 50 Tex. 638; S.C.
32 Am. R. 621; 8 Rep. 408, following
Robinson v. Elliott, 22 Wall. 513. And
see Crow v. Red River Co. Bank, 52 Tex.
362.

337
§ 408.] MORTGAGORS OF MERCHANDISE

between a mortgage with power simply to retain possession, and
one with power to retain possession and dispose of the property,
as though the absolute title and right of disposition still belonged
to the mortgagor.

But in a later case the Supreme Court of the state qualify and
restrict the decision in that case, saying that the court in that
case was exercising the blended functions of court and jury; and
moreover that the facts of the case were peculiar, in that posses-
sion and right to sell were conferred upon the mortgagor for an
indefinite duration.

Upon the main question the court in the later case squarely
hold that a mortgage, which authorizes the mortgagor to retain
possession, and to continue selling in the usual course of trade
until default, is not, per se, fraudulent and void. Chief Justice
Moore, speaking for the court, said: ‘* While there is no doubt
great conflict in the decisions upon the point, we are not prepared
to say that such a stipulation in a deed of trust without reference
to the facts is legal fraud. In our opinion the weight of authority
is against it. To hold that authority to sell in his usual course
of business invalidates the deed would virtually deny to a trader -
the right to give a mortgage upon his stock for ever so short a
time, and however inconsiderable the debt might be in comparison
with the mortgaged property, or however clearly the facts might
demonstrate that there was no intent or purpose to defraud.” |

408. In Virginia a stipulation in a deed of trust conveying a
stock of goods, that the grantor may remain in possession and
make sales, accounting to the trustee if required to do so, is re-
garded as fraudulent per se, and void.2 In the first named case
Mr. Justice Carr, stating the grounds of the decision, said: ‘‘ Now,
can we imagine a power more completely adequate to the destruc-
tion of the avowed purpose of the deed than that retained by the
grantor in this case? The goods, the identical articles of mer-
chandise, constituted the sole security provided by the deed for

1 Scott v. Alfred, decided March 12, pards v. Turpin, 8 Gratt. 873; Spence v.
1880, reported in 3 Tex. L. J. 593; citing Bagwell, 6 Gratt. 444; Quarles v. Kerr, 14
Fletcher v. Morey, 2 Story, 555. Gratt. 48; Marks v. Hill, 15 Gratt. 400;

2 Lang v. Lee, 3 Rand. 410; Addington Brockenbrough vv. Brockenbrough, 31
v. Etheridge, 12 Gratt. 436; Perry v. Shen- Gratt. 580, 590.
andoah Nat. Bank, 27 Gratt. 755; Shep-

838
WITH POWER OF SALE IN MORTGAGOR. [§ 409.

the payment of the debts; and yet the debtor, while affecting to
devote the goods to that purpose, retains the possession, the use,
the power of selling every article, to whom, in what manner, and
on what terms he pleases. He is to account, though, 7 called on.
But is this more than a personal accountability ? The goods are
gone; you cannot follow them. The money received from them
has no ear-mark. You cannot follow it, though the grantor pay
it away the moment after he receives it, in satisfaction of his own
debt. What are you, then, after all, but a general creditor?”

The rule is the same where there is no express provision that
the grantor shall retain possession and carry on the business,
but the power to do so arises by clear and irresistible implica ~
tion.?

409. In Wisconsin a mortgage of a stock of goods which
permits the mortgagor to remain in possession and to sell and
apply the proceeds, or any part of them, to his own use, is fraud-
ulent and void in law as against the mortgagor’s creditors.2 An
agreement allowing the mortgagor to dispose of the goods in the
‘eourse of his trade, and apply one half of the proceeds of the
sales upon the mortgage debt, without making any provision for
the disposition of the other half, in effect leaves the other half at
the absolute disposal of the mortgagor, for his own use, and ren-
ders the mortgage void in law.? In a controversy respecting such
a mortgage, between the mortgagee and a creditor of the mort-
gagor, there can be no question for the jury whether the mortgage
was in fact made in good faith. The taking of possession of the
goods by the mortgagee, upon default, does not give him a valid
title against the mortgagor’s creditors. His possession under the
mortgage is just as good, or just as bad, as the mortgage itself.
A void mortgage cannot be transmuted into a valid pledge. No
change of possession can purge the mortgage of the fraudulent
provision for the disposal of the goods, or operate to make that
valid which was void before.* Yet the mere fact of leaving a

1 Perry v. Shenandoah Nat. Bank, 27 + Blakeslee v. Rossman, supra, criticis-
Gratt. 755. ing Illinois cases to the effect that taking
2 Cotton v. Marsh, 3 Wis. 221; Place v. possession purges the mortgage of fraud,
Langworthy, 13 Wis. 629; Steinart v. as resting upon the theory that the pro-
Deuster, 23 Wis. 136; Bowen v. Clark vision for disposal of the goods does not
(Dist. Ct. for Wis.),5 Am. L. Reg. 203. taint the entire mortgage. Compare ear-

In re Kahley, 2 Biss. 383. lier case, Oliver v. Town, 28 Wis. 328.
3 Blakeslee v. Rossman, 43 Wis. 116. 339
§$ 410, 411.] MORTGAGES OF MERCHANDISE

stock of goods in the mortgagor’s possession, with instructions to
go on and sell as usual, and make remittances to the mortgagee,
though proper evidence to go to the jury, in connection with other
facts, upon the question of fraudulent intent, does not of itself
amount to fraud.}

But when an agreement was made between the parties to a
mortgage before its delivery, that a certain item of property in-
cluded in it should be stricken out because the mortgagor was
under a contract obligation to deliver it to another person, and by
mistake the instrument was delivered without making the agreed
change, and the mortgagor afterwards delivered the property in-
tended to be omitted to such other person, it was held that there
was no fraud against other creditors. The effect of the agree-
ment was not to give the mortgagor permission to sell mortgaged
property and to use the proceeds, but to take such property out of
the mortgage from the beginning.”

III. The Doctrines of the Federal and English Courts.

410. The Supreme Court of the United States, in a case
coming to it from the State of Indiana, has held that a mortgage
of a stock of goods which permitted the mortgagor to remain in
possession, and dispose of the goods in the usual course of trade,
is fraudulent at law, and void.? The decision had reference to the
supposed rule of the courts of the State of Indiana upon the sub-
ject ; yet Mr. Justice Davis, delivering the opinion of the court,
declared this doctrine to be so general and just, that it may be
presumed to be the law of the state, in the absence of express and
unambiguous decisions of the courts of the state to the contrary.

411. In the Circuit and District Courts of the United States
the question has arisen several times, and been passed upon.
Generally, the decisions have followed the doctrine established in
the state in which the case arose, as an established rule of prop-

1 Fiske v. Harshaw, 45 Wis. 665; S. C.

7 Rep. 606; 8 Cent. L. J. 159; Cotton
v. Marsh, 3 Wis. 221. In a case before

the jury that such power of sale, by con-
sent or understanding of the parties, avoids
the mortgage. Jn re Kahley, 2 Biss. 383.

the U.S. District Court for Wisconsin,
Hopkins, J., held thatif such power of sale
be not in the mortgage itself, but the ex-
istence of it be found by the jury, it then
becomes the duty of the court to instruct

340

2 Allen v. Kennedy, 49 Wis. 549; S.C.
5 N. W. Rep. 624.

8 Robinson v. Elliott, 22 Wall. 513.
See, also, Bank of Leavenworth v. Hunt,
11 Wall. 391.
WITH POWER OF SALE IN MORTGAGOR. [§ 411.

erty; and several of these decisions have been noted under the
head of the several state decisions.

The Circuit Court of the United States for the District of Ore-
gon, applying a statute of the state making all conveyances of
goods and chattels, in trust for the person making the same, void
as against his existing or subsequent creditors, and applying as
well general principles of law, held that a mortgage of a stock
of goods, accompanied by an oral agreement or understanding be-
tween the parties that the property should remain in the posses-
sion of the mortgagor, and be disposed of by him in the course
of his business, and the proceeds applied to his own use, is, in
effect, an assignment of such property in trust for the person
making it, and is void as against both existing and subsequent
creditors of the mortgagor.}

The District Court of the United States held, in a case arising
in the District of Nevada, that, independently of the statute, a
mortgage of a stock of goods, accompanied with a verbal under-
standing that the mortgagor should remain in possession, and con-
tinue to sell and traffic with them as his own, so long as the
mortgagee pleased, is fraudulent and void as to creditors.?

In the Circuit Court for the District of Texas, Judge Bradley,
of the Supreme Court, held that a chattel mortgage is not inval-
idated by the mere fact that the mortgagee permits the mortgagor
to sell and dispose of the mortgaged chattels as his own, this being
a matter affecting the mortgagee only, who is not bound to apply
the proceeds of the incumbered property to the secured debt.®

In the Circuit Court for the District of New Jersey,’ a case
arose upon a mortgage of the ordinary goods and chattels con-
nected with a brewery, including lager beer there manufactured,
and such property as the mortgagor might afterwards acquire and
place in the brewery. The mortgagor continued in possession.
The judge of the District Court had held the mortgage fraudulent
in law, relying upon the authority of Robinson »v, Elliott; but the
Circuit Court, Mr. Justice Strong delivering the opinion, distin-
guished the case before it from Robinson v. Elliott, in that it con-
tained no express agreement that the mortgagor might remain in

1 Catlin v. Currier, 1 Sawyer, 7; Code 8 Barron v. Morris (1876), 14 Bank.

of Oregon, § 655. Reg. 371.
2 In re Morrill, 2 Sawyer, 356; S. C. 8 4 Miller v. Jones, 15 Nat. Bank. Reg.
Bank. Reg. 117. 150.

341
§ 411.] MORTGAGES OF MERCHANDISE

possession, though such an agreement might perhaps be fairly in-
ferred; and also that it contained no stipulation that the mort-
gagor might sell or dispose of the chattels mortgaged for his own
use, or for any purpose at all. The district judge had noticed
this difference between the present case and that in Robinson v.
Elliott, but thought it of no importance, because, as he said,
through all the years of the existence of the mortgage, the mort-
gaged goods were continually changing with the knowledge and
assent of the mortgagee, and he could not help knowing that such
must necessarily follow the mortgagor’s method of carrying on the
business. Upon this point Mr. Justice Strong said: “*‘ When the
question is whether an instrument in writing is of itself a fraud
in law, the answer must be made in view of the instrument alone.
A court cannot call to its aid a presumed or assumed collateral
understanding adverse to or differing from the written contract of
the parties. The existence or non-existence of such an under-
standing or agreement is a fact, which, like other facts, must be
found by the jury. Certainly must this be so when the conduct
of the parties after the mortgage was made is relied upon as proof
of the collateral parol understanding. In such case the fraud or
honesty of the attempted transfer of the property is dependent for
its proof upon a mingled body of evidence, partly parol and partly
written, which, of course, must go to the jury. I think, there-
fore, the District Court erred in concluding, upon the supposed
authority of Robinson v. Elliott, that the mortgage under consid-
eration in this case was fraudulent in law.”

Upon the general question involved in Robinson v. Elliott, the
learned judge, after remarking that it had in many cases been de-
cided that a mortgage of chattels which permits the mortgagor to
remain in possession, and to dispose of the goods in the ordinary
course of his business, is not of course fraudulent as a matter of
law, further said : —

“ The English registration acts, and those of many of our states,
have, at least, for their object, protection of both the mortgagor
and mortgagee, in the retention of possession and use by the for-
mer, and this without any wrong to other creditors, for provision
is made for notice to them. But the retention of possession by
the mortgagor involves necessarily the consumption in a greater
or less degree of the thing mortgaged. All personal property is
consumed more or less by its use; certainly the use involves a

842
WITH POWER OF SALE IN MORTGAGOR. [§ 412.

constant depreciation in value. If, therefore, authorized consump-
tion of the chattels mortgaged renders the mortgage in all cases
fraudulent in law, it follows that no valid mortgage of chattels can
be made which stipulates for continued possession by the mort-
gagor. Then the registration acts are totally inoperative. But
this is nowhere claimed. It was not in Robinson v. Elliott. It
has been held, indeed, in a few states that a chattel mortgage
which stipulates that the mortgagor may continue in possession
and sell the goods in the ordinary course of business is*construc-
tively fraudulent, but the doctrine is denied in England, in Maine,
Massachusetts, Iowa, and Michigan.”

412. Brett v. Carter. — The case, however, which, more than
any other, has brought about the discussion and examination of
the subject within the last few years is that of Brett v. Carter,!
in the United States District Court for Massachusetts. Judge
Lowell, in an opinion of marked ability and force, criticises the
doctrine of fraud in law as applied to such cases, and clearly sets
forth the grounds of his own decision against this new doctrine.
He said: * I had supposed it to be well settled, — after much de-
bate and conflict of opinion, certainly, but substantially settled, —
that’ when a vendor or mortgagor was permitted to retain the pos-
session and control of his goods and act as apparent owner, the
question whether this was a fraud or not was one of fact for the
jury, excepting under a peculiar clause of the bankrupt law of
England. It is so pronounced by Mr. May, in his valuable trea-
tise on Voluntary and Fraudulent Conveyances,? and by ‘the cases
he cites; and by the learned editors, both English and American,
of Smith’s Leading Cases. By the law of England, as I under-
stand it, there are no constructive or artificial frauds, or, if the
term is preferred, frauds in law, remaining, excepting, 1st, such as
are expressly made so by statute; as, for instance, when a bank-
rupt retains the order and disposition of goods as apparent owner,
with the consent of the true owner. We have not adopted this
part of the bankrupt law, as was somewhat emphatically said in a
late case in the Supreme Court ;* or, 2d, where the act is neces-
sarily a fraud on creditors; as where an insolvent person gives

1 2 Low. 458; 3 Cent. L. J. 286. 8 Notes to Twyne’s case, vol. i. p. 1,
2 P. 126. &e.
4 Sawyer v. Turpin, 91 U.S. 114, 121.

843
§ 413.] MORTGAGES OF MERCHANDISE

away a part of his estate for no valuable consideration, or the
whole of it to one antecedent creditor. These, to be sure, are ex-
amples; but very few others could be adduced ; and I understand
the true law both here and in England to have been, until lately,
that a conveyance for a valuable present consideration is never a
fraud in law on the face of the deed, and if fraud is alleged to
exist, it must be proved as a fact; and that was the law even
before registration was required for the benefit of persons dealing
with the mortgagor. It is very strange that after our legislatures
have met the difficulties of Twyne’s case, by requiring registra-
tion, which gives not only constructive, but in most cases actual
notice of mortgages, and when many of them have provided that
fraud shall be a question of fact for the jury, the decisions which
T have cited and others following them should have reverted to
the harsher doctrine, which had already grown obsolete before the
laws provided any notice at all, or any rule of evidence about

“If it be said that this is one of those cases in which fraud is
a necessary result of the deed, all I can say is that this brings us
to an ultimate fact of observation and experience ; and I am una-
ble to see the necessity. Indeed, it is much more difficult for me
to see how creditors can be defrauded in such case when they. are
told in the deed itself that the debtor has no credit and no prop-
erty that he can call his own; than that the mortgagee is most
outrageously defrauded by such a rule, which devotes his property
to the payment of another person’s old debts the very instant that
he has parted with the possession, taking back a security which is
admitted to be honestly given. Take this very case as an illus-
tration. It is admitted there was no fraud in fact; that the
trader’s whole stock was supplied by the defendant; that the
mortgage shows that all the stock present and future is hypothe-
cated, not as a cover or blind, for there was none, but to the pay-
ment of a certain debt by certain instalments. No offer is made
to prove that any one was deceived or even was ignorant of the
mortgage ; but I am asked to find fraud in law when I know, and
it is admitted, there was none in fact.”

413, In England the doctrine of constructive or artificial fraud
has no application whatever to conveyances, whether absolute or

conditional, made for a valuable consideration. If fraud is alleged
344
WITH POWER OF SALE IN MORTGAGOR. [§ 414.

to exist in a sale or mortgage, it must be proved as a fact, and is
never adjudged to exist, in law, on the face of the deed. Though
the vendor or mortgagor remain in possession, and act as apparent
owner of the mortgaged property, either with or without a power
of disposal, the question of fraud is, in every case, to be deter-
mined as one of fact.! Such, also, is understood to be the law of
Canada.2_ Even a mortgage of the whole of a debtor’s property,
including household furniture, implements of husbandry, farm
stock, and all personal property which the debtor may from time
to time, and at all times thereafter, be possessed of or entitled to,
made to secure a present debt and future advances, is not void
under the statute 13 Elizabeth, although it was intended that the
mortgagor should remain in possession of the property comprised
in the deed, and should carry on his business, substituting new
chattels for those which he sold in the ordinary course of busi-
ness, and that the mortgagee’s security should continue on the
substituted chattels. A mortgage of such future property, since
the case of Holroyd v. Marshall,* has invariably been held to be
valid; and it makes no difference, in regard to the statute of
Elizabeth, whether the mortgage deals with the whole, or only a
part, of the grantor’s property.

IV. Summary of Authorities.

414. It will be observed that the question under considera-
tion has been passed upon in only about half of the whole
number of states and territories of the United States. In
some of the older states the question has not arisen, because they
have had no recording acts applicable to chattel mortgages, and
thus these instruments have not been in use, or, if used, have been
subject to the common law rule requiring delivery of possession.
Thus, in Pennsylvania, “ chattel mortgages are not sanctioned.
The common law rule prevails, that one man shall not have a lien
on personal property owned by and in possession of another, as
against creditors and innocent purchasers.”5 Very much the

1 May on Voluntary & Fraudulent Con- 8 Ex parte Games, Ct. App. in Bank.
veyances, 106; Twyne’s case, 1 Smith’s 40 L. T. 789.
Lead. Cas. 1 et seq.; per Lowell, J.in Brett 4 10H. L. Cas. 191.
v. Carter, 2 Low. 458. 5 Euwerv. Van Giesen, 6 Weekly Notes
2 Iunter v. Corbett, 7 Upper Canada of Cases, 363. An act authorizing chattel
Q. B. 75. mortgages of a few specified articles was

345
§ 414.]

MORTGAGES OF MERCHANDISE

same may be said in regard to Vermont, where there was no
chattel mortgage act until one was passed at the session of the

legislature in 1879.

In California, Nevada, and Connecticut,

only a few enumerated articles can be mortgaged, if possession is

retained by the mortgagor.

passed in 1876, but its operation was lim-
ited to five years. Purdon’s Ann. Dig.
2004.

This state has been claimed as an au-
thority for the doctrine of constructive
fraud; 6 South. Law Rev. 112; and the
following cases have been adduced in sup-
port of that claim, but they do not support
the claim in the least.

The case of Welsh v. Bekey, 1 Penn. 57,
arose upon a mortgage of growing crops
which was not accompanied by any de-
livery of possession or other indicia of
ownership ; and it was in consequence de-
elared fraudulent. Clow v. Woods, 5 S.
& R. 275, was a similar case. The ques-
tion was one of delivery and possession.
Duncan, J., said: “ The security by mort-
gage of lands depends on the title and on
the registry ; of a mortgagee or pawnee of
personal property, on the right of the
mortgagor or pawnor, and on the delivery
of the chattel mortgaged or pledged; the
custody and possession of which is to re-
main in him, or be detained by him, as a
security for his debt. It therefore appears
to me, that by the principles of the com-
mon law, and the settled construction of
the statutes of Elizabeth, to a mortgage of
chattels; delivery is necessary, that every
such mortgage, when the parties stand in
the relation of debtor and creditor, unac-
companied with such possession as the
subject matter is capable of, is fraudulent
and void against all other creditors.”

The case of Hower v. Geesaman, 17 S.
& R.251, has no bearing whatever upon
the question under consideration. There
a debtor reciting his insolvency made a
general assignment of “all his estate, real,
personal, and mixed,” to trustees, to sell
the same with all convenient speed and
pay all his debts, with preferences to cer-
tain creditors, and return the surplus to

346

What the doctrine in these states is,

the assignor. The assignees did not take
possession, but on the contrary the as-
signor continued his business, which was
that of a tavern-keeper and hat-maker, as
before; the court say: “ We are all of opin-
ion that the deed of assignment was null
and void as against creditors, and fraudu-
lent inlaw. The deed is absolute upon
the face of it. The grantor retained pos-
session. He held and used the property
as before; sold and disposed of it as his
own. To make such a deed valid in any
case the possession must accompany and
follow the transfer.”

The transaction was not a mortgage, or
anything in the nature of a mortgage. It
was a voluntary assignment for the benefit
of creditors, and as such was clearly void.

But it is said that “the later case of
McKibbin v. Martin, 64 Pa. St. 352, ex-
hibits the very pronounced views of the
Supreme Court of this state upon the
question.” The question in this case was
whether, upon the sale of the furniture of
a hotel, the purchaser had taken such act-
ual possession or control of the property
as to make the sale valid against the cred-
itors of the vendors, or whether the pos-
session was merely colorable and the sale
fraudulent. The vendee was the father of
the vendors, and all the parties had lived
together at the hotel and had assisted in
conducting it before the sale, and contin-
ued to do so afterwards in very much the
same manner. The transaction was not a
mortgage but asale. No one ever called
itamortgage. Distinctions between fraud
in fact and fraud in law were noticed by
the court; and it was declared that the
retention of possession by the vendor is a
fraud in law whenever the thing sold is
capable of delivery, and no honest and fair
reason can be given for his not giving up
possession to the vendee.
WITH POWER OF SALE IN MORTGAGOR. [§ 414.

upon the question in hand, has not been determined. Obviously,
decisions upon mortgages subject to the common law rule requir-
ing delivery of possession are not of much account! Jn Louisiana
chattel mortgages are unknown.? The statutes of several of the
states do not make the filing or recording of a chattel mortgage
equivalent to actual delivery and continued change of possession,
but only add another to the grounds on which such a mortgage
shall be void. If, for any other reason, it was void by the statute
concerning fraudulent conveyances, the filing or recording of the
mortgage, under the statutes of these states, does not make it
valid. It is to be noticed that in Nevada the statute requires de-
livery of possession to the mortgagee in all cases ;* while in New

1 There is reason to suppose that the
doctrine of fraud in fact will be applied in
Connecticut when the question is raised.
Walker v. Vaughn, 33 Conn. 577; Rowan
v. Sharps’ Rifle Mfg. Co. 29 Conn. 282;
Calkins v. Lockwood, 16 Conn. 276. Yet
this state has been claimed (6 South. Law
Rey. 112) as an authority in favor of the
doctrine of constructive fraud, upon the
strength of the following cases.

In Beers v. Botsford, 13 Conn. 146, 154,
Williams, C. J., said : “The court have de-
cided that when the question is, whether a
conveyance is in fact fraudulent, it is a mat-
ter which we cannot in this court decide.
But where the question arises upon certain
facts found, whether these facts constitute
a deed fraudulent in law, the fraud is the
judgment of law upon the facts and in-
tents.”

‘To same effect Pettibone v. Stevens, 15
Conn. 19, 26.

In Bishop v. Warner, 19 Conn. 460, the
question before the court was the effect of
a colorable change of possession of per-
sonal property undet a mortgage not re-
corded. “ For about a year after the pos-
session was first formally delivered, up to
the time of the attachment, the mortga-
gors were carrying on an extensive man-
ufacturing business with the mortgaged
property: supplying their customers from
day to day; selling the carriages, as they
were finished, and they were able to find
purchasers ; and yet no account of the
avails was at any time taken. Can any-

thing short of direct and positive evi-
dence of the fact more clearly or satisfac-
torily show that the possession, from time
to time, delivered to the different assignees
of the mortgages, was merely formal and
pretended ; that it was done only because
its tendency was to keep creditors off?
Such a possession surely is no better than
none; if anything, it is rather worse than
none. An entire neglect to take posses-
sion renders a sale or mortgage construc-
tively fraudulent ; and in some cases, un-
doubtedly, is conclusive evidence of a
fraudulent trust, when there is none such
in fact.

“ But where the possession is only color-
ably changed, the parties themselves know-
ing and admitting that its tendency is to
keep creditors off, it can hardly be other-
wise than that such was its principal object ;
and therefore fraudulent in fact. On the
ground that there was no real change in
the possession of this property, and that
there was no evidence in the case that au-
thorized the jury to find any such change
of possession, we are satisfied that it re-
mained liable to attachment.”

But these cases do not touch the ques-
tion of the effect of a power of sale reserved
to the mortgagor.

2 Delop v. Windsor, 26 La. Ann. 185;
R. Code, 3289.

8 Wood v. Lowry, 17 Wend. 492 ; Hor-
ton v. Williams, 21 Minn. 187, per Young,
J.
* Compiled Laws 1878, § 294.

B47
§ 415.] MORTGAGES OF MERCHANDISE’

York and Nebraska the mortgage is primd facie fraudulent unless
possession be delivered. The fact that in some states no provision
is made whereby a creditor of the mortgagor can attach his inter-
est in mortgaged personal property has doubtless helped, in such
states, to establish the doctrine that mortgages with possession and
a power of disposal in the mortgagor are conclusively fraudulent.

415. The state courts which have passed upon this ques-
tion are about equally divided. The courts of thirteen of the
states hold to the doctrine that a mortgagor’s possession of mort-
gaged goods, with power of disposal, does not make the transac-
tion fraudulent per se, but at most only primd facie evidence of
fraud, which is a question of fact for the jury, upon all the evi-
dence and the surrounding circumstances of the case. These
states are Alabama, Georgia, Iowa, Kansas, Kentucky, Maine,
Maryland, Massachusetts, Michigan, New Jersey, North Carolina,
Rhode Island, and Texas. On the other hand, the courts of four-
teen other states, namely, those of Colorado, Illinois, Indiana,
Minnesota, Mississippi, Missouri, Nebraska, New Hampshire,
New York, Ohio, Oregon, Tennessee, Wisconsin, and Virginia,
have, in some form, declared the doctrine that a mortgagor’s pos-
session of the mortgaged goods, with power to sell them, is con-
clusively fraudulent, and must be so pronounced by the court as
a matter of law.! ie

The courts which adopt the doctrine of conclusive fraud have
been spoken of as positive witnesses, and those which reject it,
as negative witnesses upon this subject; thus hinting to an un-
warranted inference that the testimony of the latter courts is
not entitled to the weight that should be accorded to that of the
former.2 But this is not the case of a number of witnesses who
have seen a certain act, and testify of their own knowledge, against
other witnesses, who testify that they did not see the act. There

1 In the Review article (2 South. Law
Rev. 769) the writer refers to the deci-

this majority, nine of which are named in
the second class above enumerated, the

sions of the courts of eight of the first-
mentioned states, with the remark, that
“these doubtiul and dissenting opinions
cannot, it is believed, avail to weaken the
force of a rule which is, by a majority of
the courts of the land, so well established
and so generally assented to.’ Eleven
state courts are named as constituting

348

others being those of Connecticut and
Pennsylvania. The majority of the courts
of the land, so made out, are spoken of as
“a great number of positive witnesses on
one side, and a number of merely nega-
tive witnesses on the other.”

2 Article in 2 South. Law Rev. 769.
WITH POWER OF SALE IN MORTGAGOR. [§ 416.

is no analogy whatever between courts passing upon this question
of law, and witnesses so testifying to facts.

But it is submitted that the state tribunals that have adhered to
the safe and just rule, that fraudulent intent is in all cases a ques-
tion of fact, are not inferior in any respect, and are not regarded
anywhere as speaking with less weight of authority than the
other state tribunals that have revived the old rejected doctrine
of constructive fraud.

lt is true that the Supreme Court of the United States has com-
mitted itself in some measure to the doctrine of constructive fraud.
How far the decision was influenced by the supposed tendency of
the courts of Indiana, under whose laws the case arose, and how
far the strong expressions of Judge Davis in favor of the general
doctrine represent the views of the whole court, it would be
fruitless to inquire.

The circuit and district courts are of divided opinion. The
English courts are against the doctrine of constructive fraud, and
the doctrine in question is rightly considered an American doc-
trine.

V. The Subject considered upon Principle and Policy.

416. Turning now from the consideration of the authorities
upon this question of fraud in mortgages of stocks of merchandise,
how does the subject look in the light of legal principles and of
reason? And, first, What is fraud in law as distinguished
from fraud in fact ?— Constructive or presumptive fraud is an

1 Again, the writer of the Review arti-
cle has a sort of argument ad hominem on
this subject, which it is not conceivable he
could have used had there been enough
better arguments at hand. The courts
that have adopted the rule of constructive
fraud have, through “ keen perception and
clear explanations,” detected and exposed
“the innate fraud that poisons all these
fair-looking instruments purporting to be
mortgages on stocks of goods in trade;”
while the courts that have left the question
of fraud, in such instances, to the jury,
have either not known what fraud is, or
haye been unable to see fraud when it was
right before their eyes, by reason of a
“ defect_of judicial vision.” But, if an ar-

gument ad hominem is to be introduced
into this discussion, it may just as well be
used on the other side; it may just as
well be said that the courts which have
adopted the rule of constructive fraud
have either not known what fraud is, or
have doubted their ability to aid in the dis-
covery and detection of it in particular in-
stances, and therefore have invented this
new arrangement, or easy method of find-
ing out where fraud is, by making a fixed
rule, that if an instrument contains a cer-
tain provision, the parties who made it
shall be regarded as having conclusively
intended to defraud somebody, whether
they knew it or not.

849
§ 416.] MORTGAGES OF MERCHANDISE

inference of law. When certain facts indicating fraud are estab-
lished, there is a probability that fraud has been committed. This
inference is deduced from the common experience of mankind.
But there are different degrees of presumption applicable to dif-
ferent facts, The inference of fraud may conclusively follow cer-
tain facts, while other facts indicating fraud are open to explana-
tion. In the one case, fraud is sglf-evident upon the face of the
facts proved ; while in the other a probability of fraud exists until
it is discovered that there was no fraud in fact. In the one case,
it is the province of the court to adjudge the existence of fraud as
a matter of law; but when the presumption of fraud may be dis-
puted, it is the province of the jury to determine, from all the
evidence, whether the inference of fraud is false; but, if no rebut-
ting evidence be offered, the court in this case also will adjudge
the existence of fraud as matter of law.}

By the Roman law of the classical period, there was no such
thing as absolute presumptions of law, or irrebuttable presump-
tions. The utmost extent to which presumptions were carried was
to determine thereby the burden of proof. Arbitrary presumptions,
which determine the effect of evidence rather than the burden of
proof, were an invention of the scholastic civilians of the Middle
Ages. “ Business, in the old sense, was extinct ; and courts no
longer ‘met to hear arguments on the application of principles to a
concrete case.” Speculations upon jurisprudence were based upon
an imaginary, and not on an actual, humanity. The jurists made
ideas realities, and they made men unrealities.2 ‘ In the place of

Hence books of casuis-

1 See Bigelow on Fraud, 468, 474.

2“ The realistic theory took immediate
hold of the jurists of the Middle Ages,
and this for several reasons. The jurists
were mostly ecclesiastics, and dogmatic
ecclesiasticism then accepted realism as a
divine verity. The jurists had no concrete
cases to decide, for their opinion was not
then asked by the rude courts who dis-
posed of property and life. The jurists,
also, in penal inquiries, held the canon Jaw
to be authoritative; and the canon law,
for the purposes of the confessional, con-
structed an elaborate theory of presump-
tive proof, based upon realism. The sac-
erdotal judgment had to be guided so as
to determine rightly ‘all the probable cases

350

that might arise.
try were published, in which all the cur-
rent forms of guilt were generalized, spe-
cific qualities assigned to each, and the an-
nouncement made, that for certain general
overt acts certain motives were to be im-
peratively presumed. It is remarkable
that Lord Coke’s classification of presump-
tions was taken from the canon lawyers,
whose authority in other respects he so
vehemently denounced. And it is still
more remarkable that the realistic hypoth-
esis, derived from theology and meta-
physics, should linger even to the present
day in our courts of law.” 2 Whart. on
Ev. § 1231, note, citing article in Forum
for 1875, p. 201.
WITH POWER OF SALE IN MORTGAGOR. [§ 417.

the real man, as he might happen to appear on the trial, they set
up an ideal man, who was to be always presumed, no matter what
be the evidence, to have specific, unvarying attributes. In like
manner, to every act which might be the object of litigation they
attached other attributes. Every man was presumed to act from
a routine motive. Every act was presumed to have been done
with a routine intent.”

Such is the account of the origin of the doctrine of presump-
tions given by Dr. Wharton; and continuing the history, the
learned author says: “The term presumptio juris et de jure,
which was introduced by the glossators of the twelfth and
thirteenth centuries, was originally intended to express an intense
presumption. Much difficulty had been felt in finding suitable
limits for such ‘superlative’ presumptions. At last it was con-
cluded to get rid of all doubt as to their force by making them
irrebuttable, and it was announced that presumptions juris et de
jure were presumptions which did not admit of judicial disproof.”
Commenting upon the assignment of irrebuttability to presump-
tions, he says that this doctrine is as repugnant to the practical
jurisprudence of business life as it is to the philosophical jurispru-
dence of Rome, and that nothing should be left of it beyond ex-
press statutory prescriptions and the leading axioms of the law,
which are really the necessary principles from which jurispru-
‘dence starts.?

417. There are instruments which by statute are declared
to be fraudulent upon their face, — instruments whose provi-
sions are such that they cannot be reconciled with honesty of pur-
pose. The instruments against which this inference has been
most frequently invoked have been general assignments by insol-
vent debtors. As the rules applying to these require an unre-
served surrender of property, with no resulting benefits to the
debtor until his debts are paid, the arrangement, if these primary
rules are plainly violated, cannot be reconciled with fairness. The
bankruptcy and insolvency laws make all assignments and con-
veyances by insolvent debtors void in law, under certain circum-
stances. But, outside of such general assignments and such con-
veyances under the bankruptcy and insolvency laws, the cases

1 2 Whart. on Ev. ch. 14. ern civil law, as stated by the best German
2 And such is the doctrine of the mod- and French writers.

851
§ 418.] MORTGAGES OF MERCHANDISE

proper for declaring the existence of fraud in law which cannot
be explained or disproved are few, if any such exist.’

418. Formerly an absolute sale of goods without delivery
of possession was deemed fraudulent in law per se, both in
England and in most of the American states; but this doctrine
has been overturned in England and in several American states
where it had formerly prevailed, so that now the prevailing doc-
trine is, that a sale without delivery of possession is only primd
facie fraudulent, and may be explained to be a bond fide trans-
action. In several of the states the old rule remains, because it
has been enacted by statute; while in others it is adhered to by
the courts because it was too firmly established by the early de-
cisions to be overturned by judicial action; and the courts feel
obliged to content themselves with expressions of dissatisfaction,
while they strictly confine the rule to that class of cases to which
it has already been authoritatively extended. Thus in Kentucky
it was said in one case,” that the tendency of modern decisions in
that as well as in other states has been to leave the question of
fraud open to investigation, and to be determined by all the facts
which tend to show the actual intention with which the convey-
ance was executed; and in another case,° the doctrine of fraud
per se was characterized as arbitrary and inconsistent with the
harmony of legal science.*

It should be a cardinal rule in the interpretation of instruments
never to infer a dishonest meaning if an honest one is possible and
consistent with the whole tenor of the instrument.6 An arbitrary
rule, declaring void all mortgages of personal property containing
provisions that the mortgagor may retain possession and sell in
the usual course of business, must have the effect of annulling
very many transactions which are without fraud in fact; and it is
confidently believed and asserted that such a rule prevents or
annuls a hundred honest transactions for each one that is dis-
honest. It is not the true policy of the law to declare void, under
an absolute and unchangeable presumption, instruments which

1 Per Campbell, J., in Gay v. Bidwell, and enforced in Vanmeter v. Estill (Sup.

7 Mich. 519. Ct. April, 1880), 1 Ky. Law Reporter, 32.
2 Enders v. Williams, 1 Metc. 346, 352. See §§ 319, 320.

8 Daniel v. Morrison, 6 Dana, 182, 185. 5 Nye v. Van Husan, 6 Mich. 329; Gay
* Both these observations are repeated v. Bidwell, 7 Mich. 519, per Campbell, J.
852
WITH POWER OF SALE IN MORTGAGOR. [§ 419.

are ordinarily, or even in numerous cases, reconcilable with an
honest and legal intent. At most such instruments should raise
only a presumption of fraud, which the party claiming the benefit
of the instrument may rebut; and the better rule, it is submitted,
in regard to the instruments under consideration, is, that they are
primd facie legal and honest, and that illegality and fraud in them
must be made out by those who attack them. In either case, the:
question of fraud is one for the jury, to be determined from all the
facts. Hach transaction then stands upon its own merits.

419. The objection that facts not appearing upon the face
of the instrument are presumed, in order to help out this pre-
sumption of fraud, may be urged against the rule that a fraud
upon creditors shall be inferred, as a matter of law, from a pro-
vision that a mortgagor may remain in possession, and dispose of
goods in the course of his business. Mr. Justice Campbell, con-
sidering the presumptions which may arise upon such a mortgage,
inquires:! ‘* How can any one, from the face of this mortgage,
and without reference to extraneous facts, draw any conclusion
whatever concerning either its intent or its bearing upon cred-
itors? It would certainly be valid, under any circumstances, if
there were nocreditors. It does not appear from the mortgage that
there were any. It would not injure other creditors if they were
abundantly secured. It does not show they were not. It would
not be void if they had authorized it. And many other cases
might be suggested, showing that without proof of external facts
there could be no conclusive presumption at all.” To like effect
it is declared, in a recent case before the Supreme Court of North
Carolina, that “to find fraud, as a matter of law, it must so
expressly and plainly appear in the deed itself as to be incapable
of explanation by evidence dehors. If the deed of mortgage had
expressed that there were other outstanding debts unsecured by
the deed, and that the property therein conveyed was all the
bargainor possessed, then, with the reservation of the possession
contained in this instrument (coupled with a power of disposal),
the court would hold that such a deed was fraudulent and void on
its face. But the court cannot so declare where it is possible to
show by extraneous evidence that the mortgage was executed in

1 Gay v. Bidwell, 7 Mich.519. See,also, ing opinion of Mullet, J., in Griswold v-

Oliver v. Eaton, 7 Mich. 108, and dissent- Sheldon, 4 N. Y. 581.
23 Q2FQ
§ 420.] MORTGAGES OF MERCHANDISE

good faith, and for a legal purpose. If, for instance, it could be
shown that, when this deed was made, the mortgagor owed no
other debts, or that, owing them, he had other property outside
of the mortgage, and liable to execution, amply sufficient to pay
them, as matter of law, the deed must be upheld.” !

420. The strongest argument, perhaps, against the validity
of such a mortgage is, that a power in the mortgagor to dispose
of the property for his own benefit makes him the substantial
owner of the property. Such a power is likened to a general
power of appointment, which makes the donee of the power the
substantial owner of the property ; and is likened also to a power
of revocation reserved to a grantor, which makes the grantor
the substantial owner of the property.?

One objection to this argument, however, is, that it assumes a
power of disposition in the mortgagor such as is never given, —
namely, a power to dispose of the whole property at once, whereas
the power of disposal in such mortgages is merely that the mort-
gagor may sell in the ordinary course of trade. Permission to the
mortgagor to sell goods at retail is permission to free small por-
tions of the goods, from time to time, from the incumbrance of
the mortgage. It may be that a power reserved by the mort-
gagor to dispose of the entire stock of goods absolutely, for his
own benefit, might well be regarded as rendering the instrument
void. The grant might well be regarded as nugatory, and the
mortgagor as remaining the substantial owner of the property.
Such a reservation, moreover, would bear upon its face the badge
of fraud ; for it would render the mortgagee’s security altogether
worthless, and not merely decrease his security, as in the case of
a power reserved to sell the goods in the usual course of a trader’s
business. There is very little authority, however, for holding
that a mortgage which reserves to the mortgagor a right to con-
tinue selling the mortgaged goods is entirely inoperative as a
transfer between the parties. Where this doctrine has been de-
clared, it has had special reference to future acquisitions, upon
which it was contemplated the mortgage should take effect.
Such a mortgage has been regarded as void because it is not a
certain security upon specific property. Generally, it may be

1 Cheatham v. Hawkins, 76 N. C. 335, 2 Article by Mr. Bump, in 4 Cent. L. J.

219,
854 ® Collins v. Myers, 16 Ohio, 547.
WITH POWER OF SALE IN MORTGAGOR.  [§§ 421, 422.

said that a mortgage with a right in the mortgagor to sell the
goods in the usual way is not objected to as inoperative to convey
the goods, but on the ground of fraud.

421. It has been objected that a mortgage of a stock of
goods, with possession and power of disposal in the mort-
gagor, is no better than a mortgage of a specific article, — as,
for instance, a horse, — with authority in the mortgagor to sell it ;
that the use of the word stock does not preserve the identity of
the property; that the word is not a thing; and that such a
mortgage is, in effect, a mortgage of a word instead of a sub-
stance, and while the substance is permitted to be sold, the mort-
gage attaches and remains fixed only to the word.!_ But it is not
claimed that the word stock represents a fixed thing, which re-
tains its identity even when renewed by the substitution of new
articles, the same as a horse preserves its identity, although in
the process of time every particle composing him may be thrown
off and renewed. That would be poor philosophy and bad law.
In determining the question of fraud in such a mortgage, it is im-
material whether the mortgage is framed to attach to additions
made to stock or not. It is argued that a mortgage giving pos-
session and a power of disposition of the property to the mort-
gagor is nothing, in the last analysis of the transaction, but a
reliance upon the honesty of the mortgagor, and, in fact, is no
security, because it is within the power of the mortgagor, at any
moment, to defeat the mortgage lien by an entire disposition of
the whole property covered by the mortgage; that such a mort-
gage, being no security to the creditor, is of no benefit except to
ward off other creditors.2 This argument is valid when applied
to a mortgage of a specific article with such a power of dis-
position; but it is doubtful whether even such a mortgage should
be regarded as absolutely void. It should rather be regarded as
valid between the parties until it is defeated by a sale by the
mortgagor; and‘as against his creditors it should be regarded
at most as only presumptively fraudulent.

422. But the doctrine that is supported by the author-
ities relates to mortgages of such property as stocks of mer-
chandise, which the owners dispose of in the ordinary course of

1 Collins v. Myers, 16 Ohio, 547, per 2 Thid.

n._

QER
§ 423.] MORTGAGES OF MERCHANDISE

business ; and the power of disposal on the part of the mortgagor
which is here contended for is not a power which would allow the
mortgagor to sell the entire mortgaged property at once, and
wholly defeat the mortgage, but a power to sell in the ordinary
and usual course of trade of the mortgagor. Under such a power
of disposal, the mortgagor could not, if he would, make a valid
sale of the entire property at once. The mortgage being duly
recorded, a purchaser would have legal notice of the extent of the
power of sale reserved to the mortgagor, and he would know
that a sale of the entire property would be subject to the mort-
gage lien just as much as if the mortgage contained no authority
whatever in the mortgagor to sell. Under such a power, any sale
by the mortgagor, not in the usual course of his business, would
be fraudulent and void, whether the sale be of the entire property
or of a large part of it.

When a mortgagor is permitted to remain in possession of
the goods, and disposes of them in the ordinary course of trade,
the goods sold under such permission are discharged from the
lien of the mortgage. The mortgagor may well enough be re-
garded as the agent of the mortgagee in making the sales and in
receiving the purchase money.! ‘ This principle would not apply
to the case of the sale of an entire stock of goods, out of the ordi-
nary course of trade, by the mortgagor, unless the mortgagor had
been permitted, with the express knowledge of the mortgagee, to
hold himself out to the world as the owner of the property unin-
cumbered by any mortgage.” ?

423. Public policy. — There is still another view of the effect

1 Again, as remarked by Judge Camp- gagor, while remaining in possession, is

bell, in delivering the judgment of the Su-
preme-Court of Michigan in a recent case
(The People v. Bristol, 35 Mich. 28), the
doctrine concerning the effect of giving
permission to the mortgagor to dispose of
his goods in the usual way may depend
somewhat upon the view taken of the nat-
ure of the mortgage. Where the theory
is held that a mortgage is a mere security,
and nota trausfer of title, and that the
mortgaged chattels do not cease to be-
long to the mortgagor until some steps
have been taken to end his right by the
enforcement of the mortgage, the mort-

306

not the agent of the mortgagee, but the
owner of the incumbered property. Per-
mission to sell at retail is permission to
pass title free from incumbrance, but it
cannot be regarded in any sense as a pay-
ment to himself as agent, by himself as
agent, of a debt due by himself as princi-
pal. His debt remains unpaid until it is
paid to the creditor, who has simply re-
leased a portion of the goods from his
mortgage, and incurred so much risk.

2 Miller v, Pancoast, 29 N. J. L. 250,
per Whelpley, C. J.
WITH POWER OF IN SALE MORTGAGOR. [§ 423.

of a provision in a mortgage of a stock of goods that the mort-
gagor may sell in the usual course of trade, and the mortgage
shall attach to new goods bought to keep up the stock, and this
is, that, irrespective of fraud, such a mortgage is against public
policy, throwing open too wide a door for possible fraud ; and is
void, because it does not fall within that class of cases of which a
court of equity will decree the specific performance. This doc-
trine is clearly and ably stated by Chancellor Cooper, of Tennes-
see, in a recent decision, in which, upon this ground, he declared
void per se a mortgage conveying a stock of goods, together with
any other goods which might from time to time, during the ex-
istence of the security, be purchased by the mortgagor and put
into his store to replace any part of the stock which might have
been disposed of, or to increase or enlarge the stock then on hand.!
He starts with the principle that a conveyance of property not in
esse can be sustained in equity only upon the principle that the
contract is one of which a court of equity would decree specific
performance. Upon this principle he concedes that a mortgage
which simply applies to after-acquired property, or which gives a
limited power of disposition of specific articles, with a view to
replacement by similar articles, — such as the machinery and
tools of a manufacturing company, or the rolling-stock of a rail-
road, — or which covers the return cargo of a ship freighted for
foreign commerce, is unobjectionable. But when, in a purely pri-
vate transaction, a mortgage lien is sought to be created on per-
sonal goods, the only profitable use of which is as articles of
commerce, and an unlimited power of disposition is reserved to
the mortgagor, he declares that the contract is not one which a
court of equity will enforce. Such a mortgage does not create
an absolute lien on any property, but, as has been said, a fluctu-
ating lien, which opens to release that which is sold, and to take
in what may be newly purchased. The contract is invalid at law,
and not enforcible in equity.

This view of the subject is entitled to candid consideration.
If a mortgage of the class under consideration is to be declared
void at all, this may be a rational ground upon which to declare
it so. This view does away with the presumption of fraud in
such cases, which is a presumption unfounded in experience and
reason, and is “‘ in conflict with the general rule that the question

: Phelps v. Murray, 2 Tenn. Ch. 746; 4 Cent. L J. 583.
857
§ 424.] MORTGAGES OF MERCHANDISE

of fraud arising out of the retention of possession by the grantor,
with power of disposition, is one of fact, to be determined by the
circumstances of the particular case.”

To this objection, that a right of sale of a stock in trade re-
served to the mortgagor is against the policy of the law, Judge
Story replies:1 “I am not aware of any policy of the law, or of
any principle of law, which makes any conveyance of this sort
invalid as to creditors, if they have full notice, or may have full
notice of it by the exercise of reasonable diligence. Indeed, the
law makes the registration of the deed constructive notice of its
contents to all persons, since it was required to be registered, and
was registered in conformity to law. What ground is there, then,
to assert that the conveyance was against the policy of the law?
The phrase itself is somewhat indefinite, and, in its actual applica-
tion here, is difficult to be grasped and comprehended. I profess
that I am not able to perceive any ; and, so far as authorities go;
they point the other way.”

424. What, then, is this doctrine of constructive fraud, as
applied to chattel mortgages by the American courts? Are
the courts which are supposed to have adopted the doctrine in
accord as to what the doctrine is? Stated in its broadest terms,
it is said that a mortgage of a merchant’s or manufacturer’s
stock, accompanied by an agreement, whether in the mortgage or
not, or whether made at the same time or subsequently, that
the mortgagor may continue to dispose of it, is conclusively fraud-
ulent in law, and void as to the mortgagor’s creditors ; and such
agreement is proved by evidence of sales made by the mort-
gagor with the knowledge of the mortgagee, and without objec-
tion on his part. This is the doctrine as it was formerly an-
nounced and maintained by the courts of New Hampshire,
though the latest decision in that state has in some measure mod-
ified the earlier doctrine. If, now, we turn to the courts of New
York, from which the doctrine was undoubtedly adopted by most
of the other courts, we find several modifications: First, If the
agreement be not contained in the mortgage itself, the question
whether there is any such agreement, and what are the indica-
tions of fraud arising from it, is one for the jury. Second, If the
agreement be to sell for cash for the benefit of the mortgagee, the

1 Mitchell v Winslow, 2 Story, 630, 647.

858
WITH POWER OF SALE IN MORTGAGOR. [§ 424.

mortgage is no longer conclusively fraudulent, but only raises a
question of good faith for the jury. Zhird, The mere fact that
the mortgagor continues to sell the mortgaged goods with the
knowledge of the mortgagee, is not proof of an agreement be-
tween the parties for such sales, and does not render the mort-
gage fraudulent in law. ‘

In Illinois, the same modifications are adopted, excepting, per-
haps, the sécond above named; and the further qualifications are
made that such a mortgage may be good in part and void in part,
—good in so far as it covers property of which the mortgagor
has no power of disposal, and void as to the part over which he
has such power. Moreover, in this state, and in Ohio as well, if
the mortgagee takes possession of the property before the rightg
of creditors intervene, his possession is not vitiated by the vicious
provision in the mortgage. In New York, however, these two
further modifications are rejected in express decisions upon them.

In Minnesota, Missouri, Nebraska, and Ohio, as well asin New
York and Illinois, if the agreement or intent that the mortgagor
may dispose of the mortgaged goods be not contained in the
mortgage itself, the existence of such intent is a question for the
jury, and the court cannot pronounce the mortgage fraudulent
per se.

The qualification that an agreement that the mortgagor may
sell for the sole benefit of the mortgagee, without making the
mortgage conclusively fraudulent, prevails not only in New York
but also in Minnesota, Missouri, New Hampshire, and Ohio; and
Mr. Justice Davis, in Robinson »v. Elliott, said: “* We are not
prepared to say that a mortgage under the Indiana statute would
not be sustained, which allows a stock of goods to be retained by
the mortgagor, and sold by him at retail for the express purpose
of applying the proceeds to the payment of the mortgage debt.”

After all these qualifications of the rule, what is there of value
left of it? All the principal branches of the young tree have
been lopped off, and there is nothing left of it but a bare pole,
with one tuft of green at the top. Can it long survive ?

It has been justly declared that “the difference between an
agreement on the face of the instrument and one proved aliunde
does not afford room for any distinctions as to the question of
fraud in law.” But the most vital infringement upon the doc-
trine is that which allows the mortgagor to retain possession of

809
§ 425.] MORTGAGES OF MERCHANDISE

the goods, with an agreement to apply the proceeds of sales to
the payment of the mortgage debt, without making the mortgage
conclusively fraudulent. This whole doctrine of fraud arising
from the mortgagor’s possession and power of disposal was de-
signed to guard against secret trusts. As was said in Twyne’s
case: “Fraud is always apparelled and clad with a trust, and
trust is the cover of fraud.” Is there any the less a trust be-
tween the parties when the mortgage provides that the mort-
gagor shall apply the proceeds of all sales to the mortgage debt,
than there is when it says nothing about -such application ?
The proceeds of the sales are in the mortgagor’s hands, and the
mortgage lien does not cover them. If a mortgagor’s retention
of a power of disposal of the mortgaged goods is inconsistent with
the idea of a security, is the inconsistency any the less when the
mortgagor agrees to use the proceeds, not for his own benefit, but
for the benefit of the mortgagee? Is not the distinction a mere
shadow ?

425. In conclusion, in regard to this and all the other qualifica-
tions of the doctrine, it seems just to say that they have been made
because the courts have wished to avoid the wrongs and hardships
that would be wrought by adhering to the rule that the mort-
gagor’s possession, with right to sell, makes the mortgage conclu-
sively fraudulent. As a matter of experience and_observation, the
courts must have seen that such mortgages are no more likely to
be fraudulent in fact than any other; and they must have seen
that in a mercantile or manufacturing community, if not else-
where, the doctrine works badly, and is contrary to sound policy.
In relation to the policy of this doctrine, Judge Campbell, of
Michigan, uses the following language:! “No court has given
any satisfactory reason why such a provision should necessarily
vitiate a chattel mortgage, although it is undoubtedly liable to
abuse. The recording law enables all vigilant persons to ascer-
tain the existence of such securities. Many small merchants, es-
pecially beginners in business, have no other means of securing
their creditors for the stock they purchase, and can only meet
their debts out of current sales. If any creditor is likely to be
injured by allowing the debtor to dispose of the mortgaged prop-
erty, it is rather the creditor whose security is thus cut down,

1 Gay v. Bidwell, 7 Mich. 519, 525.
360
WITH POWER OF SALE IN MORTGAGOR. [§ 425.

than the one who has no claim upon the specific property. To
hold that a merchant cannot mortgage his goods without closing
his doors would be to hold that no mortgage of a merchant’s
stock can be made at all.”

The conclusions deduced from the foregoing examination of
this subject are: That the doctrine of absolute fraud arising in a
mortgage of merchandise from the mortgagor’s retaining posses-
sion, with a power of disposal in the usual course of trade, is not
supported by any preponderance of authority; that it is contrary
to sound principles of jurisprudence ; that it has no reason for its
existence, derived from general observation and experience ; that
it is contrary to sound policy; and that the qualifications of the.
doctrine made by leading courts have in large measure destroyed
its force, and are indicative that these courts wish themselves well
rid of the whole of it.

361
CHAPTER X.

THE RIGHTS OF THE PARTIES BEFORE FORFEITURE.

I. The right of possession as between
the parties, 426-453.
II. The mortgagor’s right to sell the
mortgaged property, 454-468
III. The mortgagor’s power to create
liens upon the property, 469-477.

IV. Confusion of mortgaged goods, 478-
483.
V. Rights of subsequent purchasers,
484-491.
VI. Rights of subsequent mortgagees,
492-500.
VII. Rights of assignees, 501-519.

I. The Right of Possession as between the Parties.

426. The right of possession of mortgaged chattels vests
in the mortgagee immediately upon the execution of the
mortgage if there be no express or implied stipulation in it to
the contrary, whether the mortgage debt be due and payable or

not.

1 Brackett v. Bullard, 12 Met. (Mass.)
808 ; Holly v. Huggeford, 8 Pick. (Mass.)
78; Pickard v. Low, 15 Me. 48; Flanders
v. Barstow, 18 Me. 357; Broadhead v. Mc-
Kay, 46 Ind. 595; Robinson v. Fitch, 26
Ohio St. 659; Clark v. Whitaker, 18 Conn.
543 ; Ellington v. Charleston, 51 Ala. 166;
Brown v. Lipscomb, 9 Porter (Ala.), 472,
475; Ross v. Ross, 21 Ala. 322; Kan-
nady v. McCarron, 18 Ark. 166; Wil-
liams v. Rorer, 7 Mo. 556; Robinson v.
Campbell, 8 Mo. 365 ; Jamieson v. Bruce, 6
G. & J. (Md.) 72; McGuire v. Benoit, 33
Md. 181; Wildman v. Radenaker, 20 Cal.
615; Wilson v. Brannan, 27 Cal. 258;
Thornhill v. Gilmer, 4 Sm. & M. (Miss.)
153; Wolfley v. Rising, 12 Kans. 535;
Bates v. Wiles, 1 Handy (Ohio), 532; Bean
v. Barney, 10 Iowa, 498 ; Langdon v. Buel,
9 Wend. (N. Y.) 80, 83; Burdick v. Mc-
Vanner, 2 Den. (N. Y.) 170; Fuller v.
Acker, 1 Hill (N. Y.), 473, 475; Smith

362

The mortgage vests the title to the chattel in the mort-

v. Acker, 23 Wend. (N. Y.) 654, 667;
Patchin v. Pierce, 12 Ib. 62; Willner v,
Morrell, 8 J. & S. (N. Y.), 222; Shuart v.
Taylor, 7 How. (N. Y.) Pr. 251; Chad-
wick v. Lamb, 29 Barb. (N. Y.) 518; Fer-
guson v. Clifford, 37 N. H. 86; Leach »v.
Kimball, 34 N. H. 568; Miller v. Pan-
coast, 29 N. J. L. 250; Sanderson v. Price,
1 Zab. (N. J.) 637, 646 ; Mattison v. Bau-
cus, 1 N.Y. 295; Holmes v. Sprowl, 31
Me. 73 ; Stewart v. Hanson, 35 Me. 506;
Woodman v. Chesley, 39 Me. 45; Pease
v, Odenkirchen, 42 Conn. 415, 425; Case
v. Winship, 4 Blackf. (Ind.) 425 ; Whisler
v. Roberts, 19 Ill. 274; Nelson v. Whee-
lock, 46 Ill. 25; Frank v. Miner, 50 Til.
444 ; Chipron v. Feikert, 68 Ill. 284; Con-
stant v. Matteson, 22 Ill. 546; Hamlyn v.
Boulter, 15 Kans. 376. In Iowa, R. Code
1880, § 1927, Kansas, supra, § 205, and
Arkansas, supra, § 192, it is declared by
statute that in the absence of stipulations

‘
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§ 427.

gagee ; not an absolute title, indeed, but a present title, defeasible
upon a condition subsequent, ‘As a general rule, the right of
possession follows the right of property; and, therefore, where
there is no restraining stipulation, the mortgagee having the right
of property, until defeated by the performance of the condition,
has as incident thereto the right of possession, and may therefore
take the goods into his own custody, or maintain trespass or trover
for them, against any one who takes or converts them to his own
use.” !

The right of possession follows as incident to the right of prop-
erty, unless the mortgage expressly or impliedly provides that the
possession shall remain with the mortgagor until a breach of the
condition. In the absence of such a stipulation the right of pos-

_ session passes immediately to the mortgagee, and the possession
of the mortgagor is the possession of the mortgagee.” If there
‘be such a stipulation, the right of possession follows the right of
property upon a breach of the condition. When the mortgagee is
entitled to the possession of the property, the mortgagor, having
no right to the possession as against the mortgagee or his asstgns,
cannot maintain an action of tort in the nature of trover for a
conversion of the property.? A reservation of possession in favor
-of the mortgagor only affects the possession according to the terms
of the reservation, the title to the property in the mean time re-
maining in the mortgagee, who becomes entitled to possession im-
mediately upon breach of the condition.*

427. Exceptions to this rule.— In Michigan a chattel mort-
gage does not transfer the legal title to the property until after
foreclosure or something equivalent to that; and this must usually
be by sale. The true relation of the parties is that of debtor on
the one side, and creditor secured by lien on property upon the
other.6

to the contrary the mortgagee has the 324; Goodrich v. Willard, 2 Gray (Mass.),
legal title, and the right of possession. 203; Leach v. Kimball, 34 N. H. 568.

1 Coles v. Clark, 3 Cush. (Mass.) 399, * Robinson v. Fitch, 26 Ohio St. 659.
per Chief Justice Shaw; and see Hall »v. 5 Kohl v. Lynn, 34 Mich. 360 ; Lucking
Sampson, 35 N. Y. 274, 277, per Porter, v. Wesson, 25 Mich. 443 ; Baxter v. Spen-

J., to same effect. cer, 83 Mich. 325; Cary v. Hewitt, 26
2 Boise v. Knox, 10 Met. (Mass.) 40; Mich. 228; Flanders v. Chamberlain, 24
Landon v. Emmons, 97 Mass. 37. Mich. 305; People v. Bristol, 35 Mich.

* Holmes v. Bell, 8 Cush. (Mass.) 322, 28.
363
§ 428.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

A mortgage being a mere security and not a transfer of title,
the mortgagee cannot maintain assumpsit for the value of the
mortgaged goods when they have been seized by a creditor of the
mortgagor and applied to the satisfaction of his claim. Only an
owner can maintain assumpsit. The mortgagee’s remedy for an
injury to his security is an action upon the case.!

In Mississippi the provision of the Code? declaring that the
mortgagor is the owner of the legal title of property conveyed by
mortgage or deed of trust except as against the mortgagee and his
assignee or trustee after breach of condition, applies to personal
as well as real estate. After condition broken, the mortgagee
may pursue his legal remedy and assert his legal title by reducing
the chattels to possession, in any appropriate action; although
upon obtaining possession he holds the property as mortgagee ‘for
the purpose of converting it into money by a sale to discharge the
debt secured, until the equity of redemption is cut off by such sale.
But before condition broken, the mortgagee cannot recover posses-
sion of the property by replevin or detinue; for to recover in such
an aetion the mortgagee must have the right of immediate posses-
sion, either by virtue of a general property as owner, or of a spe-
cial property as bailee, and the mortgagee has neither.8 His only.
remedy for protecting the property against loss is to apply to a
court of chancery for the exercise of its restraining power.

In Missouri it is held that a trustee or mortgagee is not entitled
to possession until after default made or condition broken. IE be-
fore that time he is justly apprehensive that the property will be
lost or destroyed, he is not without remedy ; but his remedy does
not consist in an action for possession.+

In New Mexico Territory it is provided by statute that in the
absence of stipulation to the contrary the mortgagor of real or
personal property has the right of possession thereof.5

428. A provision allowing the mortgagor to remain in pos-
session gives him a legal and exclusive right of possession until
the event occurs whereby he loses such right. The mortgagor’s

1 Randall v. Higbee, 37 Mich. 40; Peo- * Buck v. Payne, 52 Miss. 271, 280;
ple v. Bristol, 35 Mich. 28; Carpenter and see Elson v. Barrier, 56 Miss, 394.
v. Graham (Mich. 1879), 3 N. W. Rep. * Barnett v. Timberlake, 57 Mo. 499;
974, Sheble v. Curdt, 56 Mo. 437.
2 R. Code 1880, § 1204. 5 Gen. Laws 1876, p. 65, § 8
364
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§ 429.

possession is a legal right, and not a mere covenant. Neither is
he in such case a mere bailee, but an owner with a right of pos-
session.?

When the mortgaged property is rightfully in the possession of
the mortgagor, and by the terms of the mortgage no right has
accrued to the mortgagee to take possession of it, the mortgagee
has no right to enter the mortgagor’s house in his absence and
take away the property, without license express or implied from
the mortgagor, although he believed and had cause to believe
that the mortgagor did not mean to return to the house? A right
to enter the premises of the mortgagor, without legal process, is
not essential to the security of the mortgagee of personal property.
Permission to do so is not implied, therefore, from the existence
of that relation alone.®

The fact that a mortgagor is in possession and control of the
property is primd facie evidence of his right of possession ; and a
third person cannot impeach that right without producing the
evidence by which it would appear that the possession was wrong-
ful, or that the right had been lawfully divested.+

Whether parol evidence is admissible to prove that at the time
of making the mortgage it was agreed that the mortgagor should
continue in possession until he should fail to perform the condition
of the mortgage is a question upon which the authorities are not
agreed ; for while there are cases which hold that such evidence is
not admissible, there are others which declare it to be admissible
because such an agreement does not contradict the written mort-
gage.6

429. The mortgage generally defines the circumstances
under which the right of possession shall vest in the mort-
gagee, and this right is always subject to any agreements the
parties may make regarding it.6 The default of the mortgagor in
paying the principal or interest of the debt secured is usually the
event that is fixed upon to terminate his right of possession; but

1 Fenn v. Bittleston, 21 L. J. (N. 8S.) * Rogers v. King, 66 Barb. (N. Y.) 495.
Ex. 41; 8 L. & Eq, 483; Fairbanks v. 5 Case v. Winship, 4 Blackf. (Ind.) 425;

Bloomfield, 5 Duer (N. Y.), 484. Colman v. Packard, 16 Mass. 39; Pierce
2 McLeod v. Jones, 105 Mass. 403. v. Stevens, 30 Me. 184; and see Ripley v.
8 Per Wells, J.in McLeod ». Jones, Dolbier, 18 Me. 382.

supra. Otherwise after foreclosure. Me- 6 Jamieson v. Bruce, 6 G. & J. (Md.)

Neal v. Emerson, 15 Gray (Mass.), 384. . 72, 75.
§ 429.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

other circumstances may equally well be made the occasion of his
forfeiting the right of possession. The mortgage may authorize
the mortgagee to take possession whenever he may deem himself
unsafe, and then the mortgagor’s possessory right will terminate
whenever the mortgagee in good faith exercises his discretionary
authority in taking possession.! In like manner the mortgagee may
be authorized to take possession in case the mortgagor attempt to
remove or dispose of the property; and in that case the mortga-
gee may take possession of the property or take it in a replevin
suit, although the time of payment of the debt secured by the
mortgage has not arrived? A clause in a mortgage that “ the
above property vests in mortgagee when mortgagor attempts to
defraud,” though somewhat uncertain in its meaning when taken
by itself, was construed with reference to the whole instrument and
the attending circumstances to mean that the mortgagee should
have the right to the possession of the property in the event that
the mortgagor attempted to defraud him by some act having a
tendency to defeat the mortgage security.’

A provision in a chattel mortgage that the mortgagor may re-
tain the possession and use of the property until the maturity of
the debt, but in case the same or any part thereof shall be levied
on or attached or claimed by any other person at any time before
the payment of the money secured, or in case the mortgagor shall
sell or attempt to sell the property without the consent of the
mortgagee, that the latter shall then have the right to take im-
mediate and full possession of the whole of the property, is valid.‘
So is a provision that the mortgagor may retain the possession
and use of the property, with the right in the mortgagee to take
possession at any time he may deem himself in danger of losing
his debt, or any part thereof, by delaying the collection thereof
until its maturity ;° or that he may take immediate possession of
the property at any time he may feel himself “ unsafe or inse-
cure” before the maturity of the debt.®

In Washington Territory a mortgagee of personal property
where a debt for the security of which the mortgage has been

1 Hall v. Sampson, 35 N. Y. 274; Cline Derby, 19 Ill. 617; Wilson »v. Rountree,
v. Libby, 46 Wis. 123. 72 Ill. 570; Pike v. Colvin, 67 Ill. 227.

2 Russell v. Butterfield, 21 Wend. (N. 5 Fox v. Kitton, 19 Ill. 519, 521.

Y.) 300. ' 6 Bailey v. Godfrey, 84 Ill. 507; Lewis

8 Sidener v. Bible, 43 Ind. 230. v. D’Arcy, 71 Ill. 648; Durfee v. Grinnell,

* Prior v. White, 12 Ill. 261; Beach v. 69 Ill. 871.
266
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§§ 480, 431.

given has become due, or, if the debt is not yet due, and the
mortgagee has reasonable ground to believe that his debt is in-
secure, and that by allowing the property longer to remain in the
hands of the mortgagor he would be in danger of losing his debt
or security, may have the property taken from the possession of
the mortgagor and sold in the manner provided for the foreclosure
of such a mortgage.t

430. If the parties make an express stipulation in regard to
possession, that determines their rights. Thus where a mort-
gage secured the payment of two notes, one payable in three
months and the other in six months, and provided “ that until
default in the conditions and covenants therein contained, and
until the non-payment of said two promissory notes at maturity,
the mortgagor should possess and use the property thereby mort-
gaged;” and further, “that upon default as aforesaid to pay
said notes and perform said covenants, the mortgagee, his per-
sonal representatives and assigns, might take immediate posses-
sion of the property,” it was held that the mortgagor could not be
deprived of his right of possession upon default in the payment of
the note first maturing, but that his right of possession continued
until default upon the other note as well; for by the terms of the
provision, possession was to be retained by the mortgagor ‘ until
the non-payment of said two promissory notes at maturity.” 2

431. A provision that the mortgagee may take possession
whenever he shall deem himself unsafe is for his benefit, and
authorizes him to take possession when, in his judgment, he deems
it best for his safety to do so; and upon his taking possession be-
fore default no proof is required to show that he considered him-
self unsafe, as the legal presumption is that such was the fact.3
He is made the sole judge of the happening of the contingency
upon which he may take possession. It is immaterial whether
his apprehension of loss be well or ill founded.6 Being entitled to
possession of the property for such cause, he may maintain an ac-

1 Gen. Laws 1879, p. 105, § 4. 519; Evans v. Graham (Wis. 1880), 15

2 McGuire v. Benoit, 33 Md. 181. Am. Law Rev. 154; S. C. Wis. Leg.

3 Cline v. Libby, 46 Wis.123; Huebner News, Dec. 23, 1880.

v. Koebke, 42 Wis..319; Smith v. Post, 1 4 Bailey v. Godfrey, 54 Ill. 507.

Hun (N. Y.), 516; and see Durfee v. Grin- 5 Huebner v. Koebke, 42 Wis. 319.
nell, 69 Ill. 371; Fox v. Kitton, 19 Ill.
367
§ 432.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

tion for the possession of it against any one who detains it,’ or
trover for the conversion of it.2 He may moreover take posses-
sion without making any previous demand for payment.®

Such a clause vests in the mortgagee an absolute discretion to
take possession of the property whenever he may deem himself
insecure, and the exercise of this right does not depend upon the
fact that he has reasonable ground for deeming himself insecure.
Nor is such a contract a hard and unconscionable one, especially
as the right of possession passes with the legal title by force of
the mortgage, in the absence of any agreement to the contrary.
When the parties have made their own contract the courts will
not set that aside and make a new one for them.*

But in Illinois it is held that if the mortgagee take possession
for any reason other than default in payment he must have a
reasonable apprehension of insecurity, or danger of losing his debt
by delaying its collection until its maturity, or of waste or removal
of the goods.6 And if he take possession without such reasonable
apprehension, he will be liable to the mortgagor in trespass; and
if the property be retaken by replevin by the mortgagor, the
proper measure of the latter’s damages will be the difference be-
tween the market value of the property at the time when it was
first taken and its market value when retaken by replevin, to-
gether with such actual loss to business as may be proved as the
direct result of the first taking ; and if the first taking was mali-
cious, the jury may also give exemplary damages. The taking
possession of the property at an unusual hour of the evening of
the day the mortgage was executed, without previous notice, is a
strong circumstance showing malice ;7 but if such possession was
taken by an agent, the mortgagee, to disprove the inference of
malice, may prove his directions to the agent as to taking pos-
session.

432. The right of the mortgagor to remain in possession
of the mortgaged property may be implied from provisions de-
fining the circumstances under which the right of possession is

1 Frisbee v. Langworthy, 11 Wis. 375; 5 Furlong v. Cox, 77 Ill. 293; Daven-

Welch v. Sackett, 12 Wis. 243. port v. Ledger, 80 Ill. 574. See contra,
2 Grove v. Wise, 39 Mich. 161; Harvey Huebner v. Koebke, 42 Wis. 319; Cline v.
v. McAdams, 32 Mich. 472. Libby, supra,
8 Huggansv. Fryer, 1 Lans. (N. Y.) 276. ® Davenport v. Ledger, 80 Ill. 574.
* Cline v. Libby, 46 Wis. 123. 7 Davenport v. Ledger, supra.

QRR
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§ 483.

to vest in the mortgagee. Such provisions impliedly qualify the
mortgagee’s right, as legal owner, to the immediate possession of
the property. Thus a safety clause in a mortgage, that is, one
which authorizes the mortgagee to take possession whenever he
shall deem himself insecure, implies the mortgagor’s right of pos-
session until the mortgagee in good faith demands the goods under
this clause.t :

Such provisions in connection with a clause providing that the
mortgagor should keep the property in repair imply that the mort-
gagor is to retain possession until the debt becomes due, notwith-
standing the erasure of the express clause permitting the mort-
gagor to remain in possession.”

A stipulation in a mortgage of a horse that the mortgagor shall
feed the animal is not sufficient to show that he was to retain
possession, when it also appears that he was to use the horse in
cultivating lands rented from the mortgagor, and that he has
abandoned the lands.? A provision that the mortgagee shall have
power to enter and take possession of the property and sell it for
the purpose of paying the debt, “ provided the same should not be
paid at maturity,” does not deprive the mortgagee of the right of
immediate possession of the property. Such a provision does not
touch the general authority of the mortgagee to take possession
at any time, but enables him to enforce payment after maturity
sooner than he otherwise could under the statute.*

433. Possession under a safety clause. — Under such a clause
the levy of an execution upon the mortgaged chattels as the prop-
erty of the mortgagor gives the mortgagee a clear right to treat
the condition of the mortgage as broken, and to reclaim possession
by replevin or otherwise, both as against the mortgagor and the
officer making the levy. It does not matter that the levy was
rightfully made while the property was in the hands of the mort-
gagor. There is no hardship in this rule, because the mortgagee
would be compelled to offer the property for sale at once, and any

1 Hall v. Sampson, 35 N. Y. 274, over- (Ill.) 575; Sherman v. Clark, 24 Minn.
ruling, on this point, Rich v. Milk, 20 37,
Barb. 616; Chadwick v. Lamb, 29 Ib. 2 Babcock v. McFarland, 43 Jl. 381.
518. See, also, Hathaway v. Brayman, 8 Ellington zv. Charleston, 51 Ala. 166.
42 .N. Y. 322 ; Letcher v. Norton, 4 Scam. 4 Ferguson v. Thomas, 26 Me. 499.

24 369
§$ 484, 485.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

surplus there might be after satisfying his debt would be subject
to the execution.!

If the mortgagor sell the property without the knowledge of
the mortgagee, the latter, under such a provision, may immedi-
ately maintain an action of trover against the purchaser.? In such
case if the mortgage embrace other property not sold, it is not es-
sential to the right of recovery against the purchaser that the
mortgagee should show that such other property was insufficient
to satisfy the mortgage debt, or that he had been unable to reduce
such remaining property to possession.®

Under a provision that the mortgagor may remain in posses-
sion unless he or some other person should attempt to sell, remove,
or otherwise dispose of the property, a seizure of the property on
a distress warrant for rent due from the mortgagor entitles the
mortgagee to immediate possession ;* and so does the levy of an
execution upon the property and the removal of it from the mort-
gagor’s possession.®

434. A mortgagor cannot maintain trespass against a mort-
gagee rightfully in possession of the property, for he has neither
the property nor any right of possession. Although the mortgagee
sell the property in a manner not, prescribed by statute, he does
not become a trespasser ab initio, or forfeit his title under the
mortgage, and consequently the mortgagor cannot maintain tres-
pass. His remedy is by an action on the case,® or by bill to re-
deem. To an action of trespass by the mortgagor against the
mortgagee for entering the mortgagor’s premises and carrying
away the mortgaged chattels, it is a good defence that the mort-
gage had become forfeited.’

435. Neither can the mortgagor maintain trover against
a mortgagee rightfully in possession. The action of trover de-
pends upon title either general or special for its support, and there-
fore a mortgagor, having no title, cannot maintain the action

1 Lewis v. D’Arcy,71 Il. 648; Beach v. ter v. Town, Hill & Den. Supp. (N. Y.)

Derby, 19 Ill.617; Frisbee v. Langworthy, 72; Russell v. Butterfield, 21 Wend. (N.
11 Wis. 375; Welch v. Sackett, 12 Wis. Y.) 300.

243. 5 Ashley v. Wright, 19 Ohio St. 291.
2 Bailey v. Godfrey, 54 Ill. 507. 6 Leach v- Kimball, 34 N. H. 568.
8 Bailey v. Godfrey, supra. ” Nichols v. Webster, 1 Chand. ( Wis.)

* Conkey uv. Hart, 14 N.Y. 22; Carpen- 208.
, 370
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§ 435.

against the mortgagee for refusing to deliver the property. His
only right is to redeem in equity! It does not avail the mort-
gagor in such suit to show that the mortgage has been paid, or
that the liability which the mortgage was given to indemnify the
mortgagee against has terminated without loss to him.?

A second mortgagee is in this respect in the same position as
the mortgagor. So long as the possession remains with the first
mortgagee, the second mortgagee cannot sustain an action of tro-
ver against him, by showing on the trial that the debt secured
by the first mortgage had been satisfied before bringing the suit.
The second mortgagee has neither a special title resulting from
possession nor the legal title with the right of possession.?

A sale of the entire property by the mortgagee, entitled to pos-
session, before foreclosure, does not amount to a conversion of it
for which the mortgagor may maintain an action in the nature of
trover.t Of a case which apparently holds the contrary to this,®
it is to be observed that the sale there made was of a part only
of the mortgaged property, which might perhaps be held to be in-
consistent with the mortgagor’s right of redemption, and with his
creditor’s right of attachment.

Neither can a subsequent mortgagee, who occupies the same
legal position as the mortgagor in respect to a prior mortgagee,
maintain an action for conversion against a purchaser to whom
the prior mortgagee in possession, or entitled to possession, has
sold the entire property.®

Where there was an absolute bill of sale which the grantor
claimed was intended to operate by way of mortgage, but the
grantee claimed was intended to be an absolute sale, and accord-
ingly took possession of the property as absolute owner, denying
that he held it by virtue of the mortgage, upon a finding by a
jury that there was no sale,’ the grantor was allowed to maintain
trover. It would not be safe, however, to follow this precedent ;
for if the grantor claim that the transaction is a mortgage, it would
seem that his only proper remedy is by bill to redeem.

1 Holmes v. Bell, 3 Cush. (Mass.) 322, 4 Landon v. Bmmons, 97 Mass. 37, per
323; Brown v. Bement, 8 Johns. (N. Y.) Gray, J.
96 ; Burdick v. McVanner, 2 Den. (N. Y.) 5 Spaulding v. Barnes, 4 Gray (Mass.),
170,171; Heyland v. Badger, 35 Cal. 404. 330.

2 Holmes v. Bell, supra. 6 Landon v. Emmons, supra.

* Hume v. Breck, 4 Litt. (Ky.) 285. 7 Clark v. Rideout, 39 N. H. 238,

3T1
§§ 436, 437,] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

436. The mortgagor cannot maintain replevin against a
mortgagee who has obtained possession of the property for a
breach of condition of the mortgage, upon the ground that the
consideration of the mortgage was illegal.1_ He cannot recover
back the property any more than he could recover back money
after paying it upon an illegal contract. The maxim, Potior est
conditio possidentis, is applicable in all such cases.?_ And so where
a mortgagee having become insolvent, an officer took possession
of the mortgaged property as messenger, under a warrant which
was void, and afterwards, the condition of the mortgage having
in the mean time been broken, the officer delivered the property
to the assignee under a valid warrant, it was held that the mort-
gagor could not maintain replevin against the officer, for he was
no longer in possession ; nor against the assignee, for he held the
rights and title of the mortgagee.

If, however, the mortgage be void, the mortgagor may maintain
replevin for the property although it be in the possession of the
mortgagee.!

Where a mortgagor brought replevin against the mortgagee for
the mortgaged property, and the latter set up the mortgage and
notes, and alleged a default in the payment of the note last ma-
turing, and the mortgagor replied that the notes were given on
a purchase from the mortgagee of the mortgaged property in re-
spect to which there was a warranty, and that the damages arising
from the breach of the warranty equalled in amount the note re-
maining unpaid, and sought to have such damages applied in ex-
tinguishment of that note, it was held in Illinois, that the replica-
tion was good, and that the matters involved therein could be
properly adjusted in such action of replevin.®

437. But a mortgagee is liable in trespass or trover to a
mortgagor for wrongfully disturbing the latter’s possession.
Thus, a mortgagor who has by the terms of the mortgage the
right to remain in possession until default may maintain trover
or trespass against the mortgagee if he disturbs his possession be-
fore default.6 The measure of damages in such case is the value

1 Dougherty v. Bonavia, 124 Mass. 210; 3 Hall v. White, 106 Mass. 599.
Fikes v. Manchester, 43 Ill. 379; Hutt v. 4 McCartney v. Wilson, 17 Kans. 294.
Bruckman, 55 Ill. 441. 5 Hutt v. Bruckman, supra.

2 King v. Green, 6 Allen (Mass.), 139. 6 Ford v. Ransom, 39 How. (N. Y.) Pr.

3872
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§ 438.

of the right of possession until forfeiture of the condition of the
mortgage, and the value of the property after payment of the
mortgage debt.! But special damages can be recovered only when
they are alleged and claimed in the declaration.2 In case a mort-
gagee unlawfully take possession of the mortgaged goods after
they have been lawfully attached by a creditor of the mortgagor,
the rule of damages in replevin by the sheriff is the value of the
property over and above the mortgage debt.®

A sale of the mortgaged property by the mortgagee before fore-
closure is a conversion, for which he is liable to the mortgagor.*
Even after default the mortgagor may, according to some author-
ities, maintain trespass against the mortgagee for taking possession
of the property, if he can show that the mortgage has been satis-
fied; and to show satisfaction he may prove payments made by
him after forfeiture, but before the mortgagee took possession.®

No one but the mortgagor, or some one having his title, can
object to the mortgagee’s taking possession before he has a right
to do so by the terms of the mortgage. The objection cannot be
taken by a third person who had no interest in the property at
the time possession was taken.§

438. The mortgagor may in a proper case have the mort-
gagee enjoined from taking possession. Thus, when a mort-
gagor has the right to retain possession for a stipulated period, he
may by an injunction prevent the mortgagee’s taking possession
before the expiration of the time limited.’ But when the mort-
gagee has the right to take possession and sell whenever he may
deem himself insecure, the mortgagor cannot restrain him by an
injunctional order, and require him to accept a tender of addi-
tional security for the mortgage debt. The mortgagee, under
such a clause in a mortgage, has a right to assert his possession,
and a court of equity will not interfere.’

429; S.C.8 Abb. Pr. N.S. 416; Hall vo. 8 Saxton v. Williams, 15 Wis, 292.
Sampson, 35 N. Y. 274; Pierce v. Has- 4 Spaulding v. Barnes, 4 Gray (Mass. ),
brouck, 49 Il. 23. 330; Mathews v. Fisk, 64 Me. 101.

1 Brown v. Phillips, 3 Bush (Ky.), 656; 5 Thornton v. Cochran, 51 Ala. 415. |
and see Burrill v. Butterfield, 21 Wend. § Gaar v. Hurd, 92 Il. 315; McConnell
(N. Y.) 300; Blodgett v. Blodgett, 48 Vt. uv. Scott, 67 Ill. 274.

32; Brink v. Freoff (Mich. 1880),6 N. W. 7 Ford v. Ransom, 8 Abb. Pr. (N. Y.)
Rep. 94. N. S. 416.
2 Brink v. Freoff, supra. 8 Cline v. Libby, 46 Wis. 128. In sup-

373
$$ 489, 440.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

439. A receiver will not be appointed over a mortgagee in
possession, where he upon oath claims a balance due him, much
less where the debtor himself states such a balance, and admits
that the property is an inadequate security for such balance.’
Neither will a mortgagee be restrained by injunction from selling
the property after default, to reimburse himself for the debt se-
cured, unless there be an allegation of irresponsibility on his part
and danger of loss to the mortgagor. The fact that there are un-
settled accounts between the parties, or that the mortgagor has a
claim, which if valid might be set off against the sum due on the
mortgage, will not entitle him to an injunction against the mort-
gagee’s selling, or to the appointment of a receiver to make the
sale and keep the proceeds until the accounts are settled between
the parties, so long as the mortgagor’s claims are not established,
or the amount thereof adjusted.”

The appointment of a receiver of mortgaged chattels held by a
mortgagee in possession will only-be made in cases of pressing and
apparent necessity, in order to secure the rights of the mortgagor
or others claiming under him. To make the appointment in any
other case is to impair the obligation of the contract between the
parties to the mortgage, and is therefore beyond the constitutional

powers of both the court and the legislature.?

440. As against third persons who have taken the mortgaged

property from the custody of the

port of the position that a court of equity
could properly exercise its jurisdiction to
restrain the mortgagor from exercising his
legal right, and to the point that a court
of equity will not enforce penalties but re-
lieve against them, the case of Williamson
v. New Albany R. R. Co. 1 Biss. 198, was
cited. In that case Judge McLean made
a remark to the effect that where there is a
hard and unconscionable contract, a court
of equity will withhold its aid, and leave
the party to his remedy at law. All this
is familiar doctrine, but it has no appli-
cation to the point under consideration.
“ Here,” says Mr. Justice Cole, “ the mort-
gageée is not seeking the aid of a court of
equity to enforce the contract ; nor is there
any ground for saying that the clause in
the mortgage in regard to the defendant’s

374

mortgagor when he has the right

taking possession of the property, when
she deemed herself insecure, is a hard or
unconscionable agreement. The execu-
tion of a chattel mortgage vests in the
mortgagee the legal title, subject to’ be de-
feated by the performance of the condi-
tion... . . But we have not been referred
to any case where an injunction was
granted to restrain the mortgagee from
asserting his possessory right under a
clause in the mortgage like the one in
question.”

1 Bayaud ». Fellows, 28 Barb. (N. Y.)
51; Quinn v. Brittain, 3 Edw. (N. Y.)
314.

2 Bayaud v. Fellows, supra.

8 Patten v. Accessory Transit Co. 4
Abb. (N. Y.) Pr. 235.
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§§ 441, 442.

of possession by the terms of the deed, he alone can maintain an
action for the recovery of it. The mortgagee cannot maintain
such an action because he has no present right of possession! He
cannot maintain a possessory action against an officer who has
levied upon the mortgaged chattels as the property of the mort-
gagor.2, Yet contrary to this it has been held by other courts
that a provision that the mortgagor may retain possession until
maturity of the debt, unless he does some act inconsistent with
the object of the deed, does not affect the mortgagee’s right of
possession as against third persons; and he may therefore recover
the property before default from one who takes it out of the mort-
gagor’s possession.?

A mortgagor entitled to possession may maintain trespass
against a third person who has taken the property from him, and
may recover more than nominal damages.*

441. A mortgagor cannot be made to account either at law
or in equity for profits arising out of his use of the mortgaged.
property. The profits received, even if he has specially agreed
to account for them, constitute only a debt, and not a trust. The
creditor can recover no more than the debt secured. He has a
personal claim upon the mortgagor for this, and it would be futile
for him to have or to enforce a personal obligation for the profits,
which if paid must go to pay the mortgage debt. Such profits re-
ceived in the lifetime of the mortgagor and carried into his gen-
eral funds cannot after his death be reached by the mortgagee as
a trust. Buta contract in the mortgage to apply the profits to
the extinguishment of the mortgage debt is binding on the per-
sonal representatives of the mortgagor, and if profits are received
by such representative from the use of the chattel after the mort-
gagor’s death, he is not to consider them as general assets of the
estate, but to account for them as a trust.®

\
442. A mortgagee may maintain replevin against the mort-

1 Fenn v. Bittleston, 21 L. J. (N. S.) Tallman v. Jones, 13 Kans. 438.
Ex. 41; 8 L. & Eq. 483; Fairbanks v. 5 Stewart v. Fry, 3 Ala. 573; Graves v.
Bloomfield, 5 Duer (N. Y.), 434; Hamil- Sayre, 5 B. Mon. (Ky.) 390.
ton v. Mitchell, 6 Blackf. (Ind.) 131. 8 Stewart x. Fry, supra; North v. Dray-
2 Shinners v. Brill, 38 Wis. 648. ton, Harper (S. C.) Ch. 34.
8 McLeod v. Bernhold, 32 Ark. 671.
And see §§ 446, 447.

3875
§ 442.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

gagor for the property before the maturity of the mortgage debt,
if there be no agreement in the mortgage that the mortgagor shall
retain possession.! But it is a sufficient defence to such action
that by the terms of the mortgage the mortgagor is entitled to
possession.2 The mortgagee may maintain replevin, although the
debt secured be not due, if there be a clause in the mortgage au-
thorizing him to take possession of the property and sell it when-
ever he shall deem himself insecure. But in such case he has
not constructive possession of the property until he has done some
act asserting his right under this provision.£ He may also main-
tain replevin before default, upon the mortgagor’s removing or
selling the property contrary to a provision in the mortgage giv-
ing the mortgagee the right to take possession and sell the prop-
erty upon such removal or sale.5

A mortgagee before condition broken, under a mortgage which
by its terms entitles the mortgagor to retain the possession and
use of the property until the maturity of the debt, cannot main-
tain replevin for the property, because a right to the immediate.
possession is essential to this action.6 But under a mortgage con-
taining no provision that the mortgagor shall retain possession, the
mortgagee may maintain replevin for the property at any time.’
And so under a mortgage containing an express stipulation that
if the mortgagor should commit waste, or misuse, or attempt to
secrete or ‘remove the property, the mortgagee should be author-
ized to take immediate possession, if an execution be levied upon
the property at the suit of another creditor of the mortgagor, and
the property be removed from the mortgagor’s possession and
away from the place of his residence, the mortgagee may maintain
replevin for the property, for such removal is regarded as a breach
of the condition upon which the mortgagor’s right of possession
depended.®

But under a provision that if the mortgagor should sell or in
any way dispose of the mortgaged goods, the mortgagee might

1 Ferguson v. Thomas, 26 Me. 499; 5 Russell v. Butterfield, 21 Wend. (N.

Pickard v, Low, 15 Me. 48. Y.) 800.
2 Redman v. Hendricks, 1 Sandf. (N. Y.) ® Curd v. Wunder, 5 Ohio St. 92; Sim-
32; Ingraham v. Martin, 15 Me. 373. ,_ mons v. Jenkins, 76 Ill. 479 ; Hathaway v.

8 Frisbee v. Langworthy, 11 Wis. 375; .Brayman, 42 N. Y. 322.

Chadwick v. Lamb, 29 Barb. (N. Y.) 518; 7 Pickard v. Low, 15 Me. 48.

Lewis v. D’Arcy, 71 Ill. 648. 8 Ashley v. Wright, 19 Ohio St. 291;
4 Skiff v, Solace, 23 Vt, 279. Quinn v. Schmidt, 91 Ill. 84.

376
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§§ 448, 444.

take possession of and keep them until default, it was held in
New York that an attachment of the goods, without any con-
nivance on the part of the mortgagor, was not a sale or disposal of
them, and the mortgagee could not maintain replevin for them.1

443. When demand necessary before suit. — To sustain an
action by a mortgagee against a mortgagor for an unlawful de-
tention of the mortgaged property, as distinguished from an un-
lawful taking of it, the mortgagee must show a demand for it
and a refusal to deliver it.2 But it is held, that no demand by
the mortgagee having the right of immediate possession is neces-
sary in order to sustain an action of replevin against a subse-
quent purchaser from the mortgagor.’

In Michigan, where a chattel mortgage is regarded as a secu-
rity and not a sale, it is said that a replevin suit by a mortgagee
against a mortgagor, resting on either a tortious taking or deten-
tion, cannot be brought until a demand has been made. Until
a demand is made by the mortgagee, the mortgagor’s possession
is rightful.4 “ The contrary doctrine,” said Campbell, C. J., “ be-
longs to the old theory of chattel mortgages, which treated them
as sales and not as securities.”

To entitle a mortgagee who has the right of immediate posses-
sion to recover for a wrongful conversion of the mortgaged prop-
erty, no demand is necessary before bringing suit.®

444. A mortgagee or his assignee may bring trover for
the mortgaged property without a formal demand, upon the
refusal of the person in possession to surrender it upon request,
when the mortgagee is entitled to possession. Such a refusal
amounts to a conversion of the property.6 The refusal must
amount to an absolute denial of the mortgagee’s right. <A rea-
sonable excuse or apology for not complying immediately, as when
the demand is made by an agent, and the party in possession

1 Carpenter v. Town, Hill & Den. Supp. 5 Moses -v. Walker, 2 Hilt. (N. Y.) 536;
(N. Y.) 72. Nordman v. Wilkins, 28 Ark. 191.

2 Roberts v. Norris, 67 Ind. 386; Henby 6 Brown v. Cook, 3 E. D. Smith (N.
v. Forgy, 7 Ind. 284; Monnot v. Ibert, 33 Y-), 123; Cutter v. Copeland, 18 Me. 127;
Barb. (N. Y.) 24. Badger v. Batavia Paper Mfg. Co. 70 Ill.

3 Partridge v. Swazey, 46 Me. 414; 302; Montgomery ». Kerr, 1 Hill (S. C.),
Pease v. Odenkirchen, 42 Conn. 415; Bra. 291; Cotton v. Marsh, 3 Wis. 221; Bates
ley v. Byrnes, 20 Minn. 435. v. Wilbur, 10 Wis. 415.

4 Cadwell v. Pray, 41 Mich. 307. BTT
.
§§ 445, 446.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

wishes to verify the agent’s authority before complying, may so
qualify the refusal that it will not amount toa conversion. But
if no excuse be given, the refusal need not be express. A silent
retention of the goods after a distinct demand for their imme-
diate surrender amounts to a conversion of them.1_ If the mort-
gagee be entitled to possession he may maintain trover before,
as well as after, default.2 He may also, at his election, maintain
trespass for an injury to his possession.’

An agreement for the mortgagor’s possession and use of the
mortgaged property is violated by the mortgagor’s so using it as
to unnecessarily injure the property and impair its value; and
the mortgagee may thereupon maintain an action of trover before
the maturity of the mortgage debt.4

Payment of the mortgage, whether made by the mortgagor or
by a stranger, voluntarily invests the title in the mortgagor, and
may be pleaded by him in bar of an action of trover by the mort-
gagee.5 And so, although the debt be not paid, the mortgagor
may plead in bar to such action a parol release of the mortgage.®
If the defendant sets up the defence of payment the burden of
proving it is upon him.’

445. Pleading and evidence. — In an action of trover for the
conversion of the mortgaged property, the mortgagee need not
set out in his declaration the precise nature of his interest in the
property. The nature of his title and the evidences of it are
matters of evidence merely.2 When the action is against a third
person, as for instance an attaching creditor, and the mortgage
fully describes the debt, it is not necessary to prove the contents
of the note, by producing and proving the note itself, in order to
sustain the mortgage. The mortgage itself is in such case evi-
dence of property in the mortgagee.!°

446. As against third persons the mortgagor's possession
* Monnot v. Ibert, 33 Barb. (N. Y.) and see Davis v. Hubbard, 38 Ala. 185;

24, and sge Bellamy v. Doud, 11 Iowa, 285.
2 Spriggs v. Camp, 2 Speers (S. C.), 6 Wallis v. Long, 16 Ala. 738; Acker v.
181. Bender, 33 Ala. 230; and see Barker v.
3 Cotton v. Marsh, 3 Wis. 221; Batesv. Bell, 37 Ala. 354.
Wilbur, 10 Wis. 415; Cotton v. Watkins, * Brooks v. Briggs, 82 Me. 447.
6 Wis. 629. 8 Harvey v. McAdams, 32 Mich. 472.
* Ripley v. Dolbier, 18 Me. 382. ® Quinn v. Schmidt, 91 Ill. 84,

5 Harrison v. Hicks, 1 Port. (Ala.) 423 ; 0 Brooks v. Briggs, supra.

3878
RIGHT OF POSSESSION AS BETWEEN THE PARTIES.  [§ 447.

may be the possession of the mortgagee. Thus, if a mortgagee
leave the mortgaged property in the mortgagor’s possession, under
a stipulation in the mortgage that the latter shall retain posses-
sion of the property and sell it for the purpose of paying the
mortgage debt, he may maintain trover against one who attaches
the goods as the property of the mortgagor. His possession under
such circumstances is considered the possession of the mortgagee.!

The mortgagee may maintain trover for the conversion of the
mortgaged property whilst it was in the possession of the mort-
gagor.2. For instance, he may maintain this action against an
officer who has taken possession of the property by process of at-
tachment, or has levied an execution upon it, as the property of
the mortgagor.?

If a mortgagee is entitled to possession by the terms of his
mortgage, a person who has unlawfully converted the property
cannot set up, in defence to the mortgagee’s action of trover, a
parol understanding between him and the mortgagor that the lat-
ter should have possession. Such an understanding is put an end
to when a third pefson converts the property. It is no objection
to the mortgagee’s right to immediate possession, after default,
that the mortgage provides for the sale of the mortgaged prop-
erty by a factor to be chosen by the mortgagor. Thus, under a
stipulation in a mortgage of a cotton crop that on or before the
law-day the mortgagor should ship the cotton to such factor as he
might select, who should sell it and pay the mortgagee the amount
due him, if the factor appropriate the cotton to his own use and
repudiate the title of the mortgagee, the right of the latter to im-
mediate possession attaches on account of this breach of duty, and
he may maintain trover for the cotton.®

447. A mortgagee may maintain trespass against a stran-
ger, who takes the mortgaged property from the mortgagor, al-
though the mortgage debt be not due? If the property be a
building standing upon the land of a third person, the mortgagee
may maintain trespass against a person who carries away the ma-
terials of the building after it has been pulled down by a tres-

1 Melody v. Chandler, 12 Me, 282; and 4 Harvey v. McAdams, 32 Mich. 472,

see Cutter v. Copeland, 18 Me. 127. 5 Jones v. Webster, 48 Ala. 109.
2 Volney Stamps v. Gilman, 43 Miss. 6 Woodruff v. Halsey, 8 Pick. (Mass.)
456; Hotchkiss v. Hunt, 49 Me. 213. 333.

8 Moore v. Murdock, 26 Cal. 514; Sim-
mons v. Jenkins, 76 Ill. 479. 379
§$ 448-450.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

passer, although the person carrying away the materials was not
engaged in pulling the building down.!

Under a stipulation in a mortgage that if the property be at-
tached by a creditor of the mortgagor the mortgagee may take
immediate possession, a mortgagee may maintain trespass before
default against an officer who makes such an attachment.?

448. The damages which a mortgagee is entitled to recover
is the full value of the property converted at the time of the con-
version. He is not obliged to look to the personal responsibility
of his debtor, or to show his insolvency, before recovering of the
wrong-doer. Neither is he required to first look to any other
security he may hold.*

In a judgment for a return of chattels wrongfully replevied
from a mortgagee, he is entitled to recover any damages suffered
from the taking up to the amount of the mortgage debt; but he
cannot have judgment for the full value of the property if that
exceeds the mortgage debt and costs.*

Under codes which allow equitable defences in actions at law, a
mortgagor, or any one standing in his place, can, when sued for
the mortgaged property, claim the right to redeem ; and may mit-
igate the recovery against him by reducing the judgment to the
amount actually due on the mortgage.®

449. A mortgagee may bring an action for damages to his
reversionary interest, although he has not a right to immediate
possession. Trespass on the case, or trespass, if all distinction
between these forms of action be abolished, is a proper form of
action for such damages; but a suit in trover may be amended
and maintained by adding a count in case.’

450. Equity will enjoin a threatened injury to the mort-
gagee’s rights. Equity will not permit the mortgagor to sell
and place beyond the reach of the mortgagee chattels of which

1 Woodruff v. Halsey, supra. § Googins v. Gilmore, 47 Me. 9; Welch
2 Welch v. Whittemore, 25 Me. 86. v. Whittemore, 25 Me. 86; Manning v.
8 Worthington v. Hanna, 23 Mich. 530. Monaghan, 23 N. Y. 539; S. C. 10 Bosw.
4 Smith». Phillips, 47 Wis. 202. 231.

5 Hinman v. Judson, 13 Barb. (N. Y.) 7 Ayer v. Bartlett, 9 Pick. (Mass.) 156;
629; and see M’Gowen v. Young, 2 St.& Forbes v. Parker, 16 Ib. 462.
P. (Ala.) 160.
380
RIGHT OF POSSESSION AS BETWEEN THE PARTIES. [§ 450.

the latter has the legal title and the right of immediate pos-
session. The mortgagor will be enjoined from disposing of, or
carrying away any of the mortgaged property.! And especially
after forfeiture and after the mortgagee has filed a bill to obtain
foreclosure and sale, the court will not permit the mortgagor to
sell the property, but will prevent a threatened sale by injunc-
tion.?

Equity will protect the interest of the mortgagee in after-ac-
quired property by restraining the mortgagor from disposing of it,
especially if the threatened injury to the mortgagee’s security
would be irreparable.®

A mortgagee may have remedy by a proper proceeding in equity
to prevent a loss of his security through proceedings in behalf of
other creditors of the mortgagor. But inasmuch as the mort-
gagee after default has the absolute legal title to the property, it
would seem that his legal remedy would be sufficient for his pro-
tection, and that a court of equity would decline to interfere by
injunction.é

But where the property is in the possession of the mortgagor,
the court will protect the mortgagee by enjoining a sale until the
debt is paid, or a decree of foreclosure and sale is rendered. The
necessity for such protection may arise in case the mortgage covers
only an undivided interest in property, so that the mortgagee has
no right of possession as against the other part owner.® The
mortgagee is not entitled to an injunction restraining a sale of the
mortgaged property under execution by a creditor of the mort-
gagor, when the property was in the possession of the mortgagee
when it was seized, provided the property be such that its value
is ascertainable and measurable in money; for in such case the
remedy at law is adequate.’ Various cases were cited in argu-
ment, in which jurisdiction in equity was entertained to prevent
the transfer of articles of personal property, or to compel their
specific delivery. ‘‘All these were cases,” said Judge Dyer,
“where the chattels were articles of antiquity or curiosity, or were

1 Chapman v. Hunt, 13 N. J. Eq. 370; * Curd v. Wunder, 5 Ohio St. 92.
Downing v. Palmateer, 1 Mon. (Ky.) 64; 5 Adams v. Nebraska City Nat. Bank, 4
Clagett v. Salmon, 5 G. & J. (Md.) 314, Neb. 370, 373. :

348; Rose v. Bevan, 10 Md. 466. ® Hall v. Bellows, 11 N.J. Eq. 333.
2 Chapman v. Hunt, supra. 7 Lamothe v. Fink. (C. C. Dist. of Wis.
3 1 Story’s Eq. Jur. § 710; Wood v. 1880), 12 Chicago L. N. 152; S. C. 9
Roweliffe, 3 Hare, 304, 309. Rep. 168,

381
§ 451.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

memorials of affection, or constituted insignia of office, and equita-
ble interposition to preserve them to the owner tm specie was sus-
tained, on the ground that they were of peculiar character and
value, and that the recovery of their intrinsic value in money
would not be adequate satisfaction to the owner, There is another
class of cases in which courts of equity have interposed to protect
the owner of specific chattels in the beneficial enjoyment and use
of them in specie; as where certain articles of property were
placed in the hands of an agent to be held for the owner, and the
agent has threatened to dispose of them to a third party in viola-
tion of his trust. The ground upon which equitable relief in such
cases has been afforded is found to lie in the fiduciary relation
which existed between the parties, together with the threatened
mischief.

“The principle upon which jurisdiction may be invoked to
grant relief by injunction or decree for specific delivery of per-
sonal property in the classes of cases mentioned is plainly not ap-
plicable to the case at bar; for here the case is simply that of
seizure and threatened sale upon execution of ordinary personal
property, the entire and actual value of which for all purposes is
ascertainable and is wholly measurable by money, and which the
alleged owner holds only for purposes of sale and conversion into
money to satisfy a debt.

*« In an action at law for the alleged trespass or for conversion
of the property, the measure of damages would be the value of the
property when taken with interest from the time of the taking to
the time of the trial, and this would, under the facts as averred in :
the bill, cover all damages sustained. Moreover, in determining
value, the complainant would not be restricted to amounts real-
ized for the property by the marshal on execution sale. He would
be at liberty to recover actual value, though the marshal might
not have realized one half such value. Whatever damages he
may sustain by execution sale of the property can be completely
repaired at law. A recovery of its value affords complete com-
pensation.”

451. A mortgagee, in case of apprehended danger of loss of
the mortgaged property, may have a receiver appointed, even
before his right to foreclose has accrued?

1 Rose v. Bevan, 10 Md. 466 ; Clagett v. Salmon, 5 Gill & J. (Md.) 314.
382
MORTGAGOR’S RIGHT TO SELL THE PROPERTY. [§§ 452-454.

The power of a court of equity to preserve the mortgaged prop-
erty from destruction, so that it may answer the purpose of the
mortgave, is undoubted. A bill for an injunction and the appoint-
ment of a receiver may be sustained, where it is shown that these
remedies are proper for the mortgagee’s protection, although the
time of payment set in the mortgage has not arrived.! ,

452. A mortgagee in possession may defend his title just
as any absolute owner may defend. A mortgagee rightfully
in possession of the mortgaged property cannot be deprived of it
by the levy of an execution upon it, or the making of an attach-
ment of it by a creditor of the mortgagor. Such mortgagee has
a title which he may defend in the same manner that he may de-
fend his title to any property of which he is the absolute owner.
If an officer attempt to take the property upon an execution issued
against the mortgagor, the execution not being a lien prior to
the mortgage, the mortgagee is justified in forcibly resisting the
officer. But if the officer succeeds in taking the property, the
mortgagee may sue him for the conversion, and recover the value
of the property,* or the value of his interest in the goods.5

453. A mortgagee of a chattel is entitled to the possession
of it against a collector of taxes, who, after the mortgage, has
distrained it for a tax due from the mortgagor.6 Taxes upon per-
sonal property constitute no lien. The collector cannot seize mort-
gaged property in disregard of the rights of the mortgagee.

II. The Mortgagor’s Right to sell the Property.

454. Before forfeiture the mortgagor in possession may sell
the mortgaged property, subject, of course, to the payment of
the mortgage debt.’ The purchaser takes all the interest the

1 Long Dock Co. v. Mallery, 12 N. J.
Eq. 93, 431.

2 Pike v. Colvin, 67 Ill. 227; Prior v.
White, 12 Ill. 261 ; Durfee v. Grinnell, 69
Til. 371; Marsh v. Lawrence, 4 Cow. (N.
Y.) 461; Moore v. Murdock, 26 Cal. 514;
Volney Stamps v. Gilman, 43 Miss. 456 ;
Troy vr. Smith, 33 Ala. 469.

8 Wentworth v. People, 4 Scam. (Ill.)
550.

4 Worthington v. Hanna, 23 Mich. 530;
Nelson v. Wheelock, 46 IIl. 25.

5 Becker v. Dunham (Minn.-1880), 6 N.
W. Rep. 406.

§ Fuller v. Day, 103 Mass. 481.

7 Chapman v. Hunt, 13 N. J. Eq. 370,
per Green, Chancellor; Mech. Building

383
§ 455.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

mortgagor had. Such purchaser may again, before default, sell
and deliver the property to another with like effect, and the
remedy of the mortgagee upon maturity of the debt is to follow
the property and recover it of the last purchaser.1_ Although the
mortgage empowers the mortgagee to take possession of the prop-
erty at any time, in case he deems himself unsafe, the mortgagor
has full authority to sell the property so long as there has been
no default and no demand of possession under the safety clause.
Until such time a sale by the mortgagor does not amount to a con-
version on his part, nor does the purchase amount to a conversion
on the part of the purchaser.”

But after forfeiture the mortgagor has no title to the mortgaged
property and cannot make a legal sale of it. By the mortgage,
the whole legal title passes conditionally to the mortgagee, whose
title upon forfeiture becomes absolute at law, leaving no interest
in the mortgagor save a right to redeem in equity.’ “ Actual pos-
session by the mortgagee is not essential to support his title. If
the mortgagor be allowed to remain in possession after default, he
may transfer such possession together with his equity of redemp-
tion. That is all the interest he has in the property and is all he
can transfer. The mortgagee may at any time take possession.
It is his property, and he may do what he chooses with it.‘

A purchaser from the mortgagor obtains his rights, and no other
or greater rights.6 A purchaser from a subsequent mortgagee in
like manner acquires his interest subject to the prior mortgage.®

455. Under a statutory provision that the mortgagor shall
not sell or pledge the mortgaged property without the written.
consent of the mortgagee, a sale without. such consent is so far
valid that when consummated by delivery of the chattel and pay-
ment of the price, the title passes; but at the same time it is so
far void that no action will lie to enforce a contract of sale; for

& Loan Association v. Conover, 14 Ib. * Chapman v. Hunt, 13 N. J. Eq. 370,
219; Cadwell v. Pray,41 Mich. 307; Daly per Green, Chancellor.
v. Proetz, 20 Minn. 411; Davis v. Blume, * Porter v. Parmly, supra.
1 Mont. 463. 5 Russell v. Fillmore, 15 Vt. 130; Ham-
1 Porter v. Parmly, 34 N. Y. Superior mond v. Plimpton, 30 Vt. 383; Arnold v.
Ct. 398; S. C. 48 How. Pr. 445; Hath- Stock, 81 Ill. 407.
away uv. Brayman, 42 N. Y. 322, 6 Hale v. Omaha Nat. Bank, 39 N. Y.
2 Hathaway v. Brayman, supra. Superior Ct. 207.
384
MORTGAGOR’S RIGHT TO SELL THE PROPERTY. _[§ 456.

the sale being prohibited, and a penalty affixed to the seller, the
transaction, as to him, is void.?

A purchaser from a mortgagor with notice of a stipulation by
him not to sell or dispose of the property, becomes liable to the
mortgagee for a wrongful conversion of the property.?

If the mortgagee has reserved the right to take possession of
the mortgaged chattels if the mortgagor sells them, the right is
optional with the mortgagee, and the mortgagor is not in fault for
not delivering the goods if they are not demanded. The mort-
gagee cannot maintain replevin against him for the goods until
he has made demand for them.®

* 456. A mortgagor may make a valid sale of the mortgaged
property with the mortgagee’s oral consent.4 A manufacturer
of boilers borrowed money from time to time to carry on his busi-
ness, and gave to the lender a mortgage upon his stock and man-
ufactured property. One of these mortgages included a boiler
which the maker sold, received payment for, and by direction of
the purchaser placed it on a lot of land near the maker’s shop.
The purchaser had dealt with the manufacturer for three years,
buying stock and materials included in the mortgages, and some-
times paid him and sometimes by his order had paid directly to
the mortgagee, who had a general knowledge of this course of
dealing and acquiesced in it. From these facts it was proper to
infer that the mortgagee gave the manufacturer general authority
to sell the mortgaged property, and evidence that the mortgagee
did not know of the sale of this specific boiler, or of the delivery of
it to the purchaser, was immaterial.$

Although a sale of the mortgaged property by the mortgagor
without the consent in writing of the mortgagee be prohibited by
statute, if the mortgagee consent verbally to a sale, such sale is
sufficient to pass the title to the purchaser in possession, and the
mortgagee cannot maintain trover for the property.

A mortgagee who has given the mortgagor in possession license
to sell or exchange the property is estopped to claim the property

1 Gage v. Whittier, 17 N. H. 312. 518; Gage v. Whittier, supra; Patrick v.
2 Fisher v. Friedman, 47 Iowa, 443. Meserve, 18 N. H. 300; Brandt v. Dan-
8 Cadwell v. Pray, 41 Mich. 307. iels, 45 Ill. 453.

4 Pratt v. Maynard, 116 Mass. 388; 5 Pratt v. Maynard, supra.

Stafford v. Whitcomb, 8 Allen (Mass.), 8 Gage v. Whittier, supra.
25 385
§§ 457, 458.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

from one who has purchased without knowledge of the mortgage,
or has exchanged other property for the mortgaged chattels.
But if such third person surrender the mortgaged property upon
the mortgagee’s demand, he cannot replevy from the mortgagor
the chattels given the latter in exchange for the mortgaged chat-

tels.2

457. Authority in the mortgagor to sell the mortgaged
property may be inferred. Such authority depends upon the in-
tent of the parties. This intent is a question of fact for the jury ;
and the court should not instruct the jury that if they find the
circumstances from which such intent might be inferred, they are
bound, in the absence of contradictory testimony, to find the au-
thority and intent.® The mortgagor’s authority to sell may be
implied from his covenant to account to the mortgagee for the
proceeds of sales. His authority to sell may also be implied from
the general course of dealing of the parties. Thus, where one had
been in the habit for some years of buying stock and materials
of a boiler-maker, and sometimes making payment to him and
sometimes to a mortgagee of thé property, the latter having a
general knowledge of the course of dealing and acquiescing in it ;
it was held on the trial of the issue whether the purchaser or the
mortgagor had the better title to a boiler purchased and paid for
to the mortgagor, that the jury would be warranted in finding
that the mortgagee had given the mortgagor a general authority
to sell the mortgaged property, and that evidence that the mort-
gagee did not know of the sale of the boiler or of the delivery
of it to the purchaser was immaterial.6 If a manufacturer of
woollen cloth mortgages his stock of wool or some portion of it,
and the mortgagee allows him to carry on his business as before,
and to manufacture the wool. into cloth, and to deal with this
as his own, the mortgagee cannot afterwards set up title to the
cloth against a subsequent purchaser in good faith.®

458. One who purchases of the mortgagor property cov-
ered by a mortgage which authorizes him to sell in the ordi-
nary course of business acquires a good title to it. This is so

1 Carter v. Fately, 67 Ind. 427, # Abbott v. Goodwin, 20 Me. 408.
2 Carter v. Fately, supra. 5 Pratt v. Maynard, 116 Mass. 388.
8 Jenckes v. Goffe, 1 R. I. 511. 6 Thompson v. Blanchard, 4 N. Y. 303.

386
MORTGAGOR’S RIGHT TO SELL THE PROPERTY.  [§ 458.

whether the power to sell be express or only implied ; and if there
be such a power, it does not matter that the mortgage contains a
covenant by the mortgagor not to dispose of any of the goods
without the consent in writing of the mortgagee. In a recent case
in England before the Court of Common Pleas,! the grantee in a
bill of sale given by way of mortgage sought to recover in an
action of detinue possession of a cob or pony included in the bill
of sale. ‘“ The first thing we have to consider,” said Lindley, J.,
speaking for the court, “is the true construction of the bill of
sale, and the real object of it. It appears that the mortgagor was
described as an innkeeper and horse-dealer, and the bill of sale
contains an assignment of all and every the household goods and
furniture, stock in trade, &c., also one entire horse, called ‘ Fire-
away,’ horse called ‘Jimmy,’ cob called ‘ Charley,’ and pony called
‘Nelly,’ light gig, dog-cart, &c., and all goods, chattels, and ef-
fects now on the said messuage, and all other the book and other
debts and sums of money due and owing to the said Wilkinson,
and all other his personal estate. The bill of sale is given as a
security for a loan of money, and the object of the security is not
to paralyze the trade of the grantor, but to enable him to carry on
his trade, and the security would be worthless if we were to con-
strue it so as to paralyze his trade. Thecovenant by the grantor
not to remove any of the things comprised in the’ bill of sale,
without the consent of the grantee, is not a covenant not to sell
at all; for that, to my mind, would be contrary to the inten-
tion of the parties, and would destroy the value of the secu-
rity. The covenant not to remove the chattels must be construed
and regarded as a covenant not to remove or dispose of them
otherwise than in the ordinary course of trade. Then there is a
covenant, ‘it shall be lawful for the said mortgagor, his execu-
tors and administrators, to hold, make use of, and possess the
said premises hereby assigned or intended so to be, without any
hindrance or disturbance of or by the said mortgagee, his execu-
tors, administrators or assigns, provided that the total principal
moneys shall not exceed 800/.’ Taking all these provisions to-
gether, the conclusion is arrived at that the grantor is to carry
on his business in the ordinary course of trade; but if he is de-
sirous of disposing of anything in any other sense, then he is

1 Walker v. Clay, 42 Law Times N. 8. 369, for May 15, 1880; S. C. 49 L. J.

R. 660.
3887
e
§ 459.] ‘RIGHTS OF THE PARTIES BEFORE FORFEITURE.

not to do so without consulting the grantee, and obtaining his
consent, —as if, for instance, he required to move the goods into
another house. Here, then, is the case of a horse-dealer who
sends a horse for sale in the ordinary course of his business, and
a bond fide purchaser for value without notice ; and the question
is, whether he has obtained a good title as against the mortgagee.
It appears to me that this case is quite undistinguishable from the
case of the National Mercantile Bank vy. Hampson.” In the case
last mentioned, a bill of sale by way of mortgage was made of the
growing crops, goods, and chattels, and effects, which were, or
thereafter should be, on a certain farm. Ina suit by the mort-
gagee against a third person for a conversion of twelve quarters
of wheat comprised in the bill of sale, the defence was that the
plaintiff suffered the mortgagor to have possession, and enabled
him to hold himself forth as having the property in the wheat ;
and that the defendant bought it of him in the ordinary course
of his business, and without notice that it did not belong to the
mortgagor. The Court of Queen’s Bench held this defence to be
good.2 “ The bill of sale clearly did not disentitle the grantor to
sell in the ordinary course of his business. There is an implied
license to a trader, who gives a bill of this kind, to carry on his
trade.”

The grantee of the bill of sale might be estopped from dis-
puting the tradesman’s right to give title, if there were evidence
that the latter had made many sales, and the holder of the bill
had not interfered. The right of a trader to deal with such ought
to be secured in the Bills of Sale Act, says Mr. Justice Lind-
ley.

459. But a trader can sell only in the ordinary course of
trade by virtue of an implied license in a bill of sale he has
given of his stock in trade to secure money borrowed, arising from
a power reserved to hold and use the goods without hindrance by
the grantee until default ; and where, therefore, he sells fraudu-
lently, and not in the ordinary course of trade, the purchaser ac-
quires no title to the goods as against the mortgagee, though he
purchased bond fide, and without notice of the fraud. A pur-
chaser bought of one who had no right to sell, for he did not sell

1L, R.5 Q. B. Div.177; S.C.49 Law 2 National Mercantile Bank v. Hamp-

J. Rep. Q. B. 480. son, supra.
388
MORTGAGOR’S RIGHT TO SELL THE PROPERTY.  [§ 460.

in the only way in which he could by law give a title? “It has
been suggested,” said Lord Coleridge, C. J., delivering the opin-
ion, “that this was a case in which there are two innocent par-
ties, and that the one, namely, the grantee of the bill of sale who
enabled the fraud to be committed, must, therefore, bear the loss.
But that doctrine does not apply to this case, in which the prop-
erty was taken out of the person who professed to sell, and was
vested in another by a bill of sale, an instrument known to law
and recognized by parliament.”

Where the rule prevails that a power in the mortgagor to sell
the mortgaged property makes the mortgage conclusively fraud-
ulent, it is held that if the mortgagee knowingly permit the
mortgagor to make sales in the ordinary course of business, he
will be considered, in a contest with a purchaser of the remainder
of the property, to have consented by implication to such sale, and
he therefore cannot object to it.?

An agreement that a mortgagor may retain possession of a
stock of goods and make sales in the usual course of trade, other
goods of equal value being substituted for those sold, does not
authorize the mortgagor to put the mortgaged property into a
partnership as his share of the capital. Such a disposal of the
property is not a sale in the ordinary course of business.%

460. A sale of the mortgaged property by the mortgagor
as owner in exclusion of the rights of the mortgagee is a
conversion of it for which the mortgagee may maintain trover.*
This is upon the general principle that assuming to one’s self the
property and right of disposing of another’s goods is a conversion.
Upon this principle, also, a mortgagor in possession, who again
mortgages the entire property without giving notice of the ex-
isting mortgage, and afterwards gives the second mortgagee pos-
session, or permits him to take possession, is guilty of a conver-
sion, and is liable to the first mortgagee in an action of trover.
After such a sale the mortgagee may take immediate possession,

1 Taylor v. M’Keand, 49 L. J. R. 563 v. Phelps, 12 N. H. 382; Ashmead wv. Kel-

(C. P. Div. May 3, 1880). logg, 23 Conn. 70; Coles v. Clark, 3 Cush.
2 Ogden v. Stewart, 29 Ill. 122; Bar- (Mass.) 399; Chamberlain v. Clemence, 8
net v. Fergus, 51 Ill. 352, 355. Gray (Mass.), 389; Spriggs v. Camp, 2
8 Barnard v. Eaton, 2 Cush. (Mass.) Speers (S. C.), 181; Bellune v. Wallace,
294. 2 Rich. (S. C.) 80.

* Whitney v. Lowell, 33 Me. 318 ; White 5 Millar v. Allen, 10 R. I. 49.
889
§§ 461, 462.] RiGHTs OF THE PARTIES BEFORE FORFEITURE.

although the mortgage in terms provides that the mortgagor may
retain possession until maturity of the debt secured.1_ If a mort-
gagor, for the purpose of defrauding the mortgagee, send the
mortgaged goods to an auctioneer, by whom they are sold, and
the proceeds paid over to the mortgagor, the mortgagee may
maintain trover for the goods against the auctioneer, although the
latter did not participate in the fraud, and had no knowledge of
the existence of the mortgage.”

461. The mere fact that the mortgaged property was sold
by a junior mortgagee for its full value, in the exercise of his
legal right to foreclose his mortgage and sell his interest in the
property, is not sufficient to make such sale hostile to the rights
of a prior mortgagee ; especially if it appear that the property was
not sold in parcels and was not scattered or dissipated. Such asale
is not inconsistent with the right of the prior mortgagee to enforce
his lien, although it may indicate that the purchaser intends to
contest it. That an action could in any case be maintained by a
prior mortgagee against a subsequent mortgagee, upon the ground
that the latter so conducted himself in the exercise of his legal
right of sale as unnecessarily to reduce the value of the lien of the
former, is a question that seems not to have been directly affirmed
by any decision, though several judges have intimated that this
might be done.®

462. A mortgagor in possession is guilty of a tortious con-
version, if he again mortgages the entire property without
giving notice of the existing mortgage, and afterwards gives the
second mortgagee possession, or permits him to take possession.*
A mortgagor in possession is a bailee for the mortgagee, who is
the legal owner, with the right to take possession at any time, un-
less he has otherwise stipulated. He is not a mere bailee because
he has an interest in the property; he has an equity of redemp-
tion. This he may sell or mortgage; but he cannot go further
and sell or mortgage the entire property, and thus deal with that
which belongs to another as if it were his own.5

1 Whitney v. Lowell, 33 Me. 318. # Millar v, Allen, 10 R. I.49; Ashmead
2 Coles v. Clark, 3 Cush. (Mass.) 399, v. Kellogg, 23 Conn. 70; Coles v. Clark,
8 Hale v. Omaha Nat. Bank, 64 N. Y. supra.
550; S.C. 7d, &S8. 207. ® Millar v. Allen, supra, per Durfee, J.
890
MORTGAGOR’S RIGHT TO SELL THE PROPERTY. [8§§ 463-465.

463. A mortgagor remaining in possession after default by
permission of the mortgagee, who has the legal title and right
of possession of mortgaged chattels, is authorized to commit the
temporary custody of them to a teamster to remove them from
one house to another, although the mortgage provides that the
chattels shall not be removed without the consent of the mort-
gagee, and such consent be not given; and the teamster is not
guilty of conversion for so removing them, although forbidden to
do so by the mortgagee. The teamster having no intention to
convert the property to his own use, or to the use of the mort-
gagor, but only to transport them from one house to another,
there is no assumption of ownership, or of a right to dispose of
another’s goods, by wrongfully taking, illegally using, or wrong-
fully detaining them, such as is an essential ingredient of a con-
version.+

464. A mortgagee cannot pursue the proceeds of a sale of
the mortgaged property made by the mortgagor, and received
and applied by a bank or other third party in good faith in pay-
ment of an antecedent indebtedness. The party receiving the
proceeds of such property has a right to presume that the sale was
proper; or, if not, that the mortgagee will pursue the property
itself, and not its proceeds. If the fact of the existence of a
mortgage were known to the party receiving the proceeds of such
property, and the identical proceeds could be traced, a different
question might arise.”

465. A mortgagee waives his lien by consenting to a sale
of the mortgaged property by the mortgagor, and receiving a
portion of his pay from the purchaser as a consideration for his
agreement, upon an understanding that he would look to the
mortgagor for the balance due on the mortgage. He will not
afterwards be permitted to turn round and enforce the mortgage
against the purchaser. Such consent need not be in writing, or
if it be in writing, it need not be indorsed upon the mortgage or
entered upon the record of it. In an action of trover by a mort-

1 Metcalf v. McLaughlin, 122 Mass. 84. 4 Roberts v. Crawford, 54 N. H. 532 ;

° Barnett v. Gustafson (lowa),6 N. W. Pratt v. Maynard, 116 Mass. 388 ; Stafford
Rep. 132. v. Whitcomb, 8 Allen (Mass.), 518.

3 Rider v. Powell, 4 Abb. (N. Y.) App.

Dec. 63. 391
§ 466.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

gagee for the mortgaged chattel, the defendant may show that he
bought it of the mortgagor, and that the mortgagee assented by
parol to the sale! If the mortgagee’s consent to the sale be
shown, the purchaser obtains a good title, and it is immaterial
that at the time of the purchase he did not know of the existence
of the mortgage.”

A second mortgagee, by consenting to a sale of the property by
the mortgagor discharged of his mortgage, does not estop himself
from setting up against the purchaser a title subsequently acquired
by assignment of the first mortgage.®

If the mortgagee consent to a sale of a portion of the mortgaged
property to one who undertakes to pay a part of the mortgage
debt, with the understanding that the mortgage lien shall con-
tinue in the mean time, and such purchaser sells to one who has
no knowledge of their agreement or of the mortgage, the mort-
gagee may follow the property into the hands of the last pur-
chaser.*

A sale of a chattel by the mortgagee with the consent of the
mortgagor vests a good title in the purchaser.®

A mortgagee may waive his lien under the mortgage without
prejudice to his right of action to recover the debt secured.®

466. A mortgagee waives his mortgage by being present
at a sale of the property by the mortgagor without making
known his lien upon it. In a case where the mortgagee was pres-
ent at such a sale and at request of both mortgagor and purchaser
fixed the price between them, and the property was delivered to
the purchaser, the mortgagee was held to be estopped to claim the
property of the purchaser.’

Where a mortgagee of personal property consents to its sale by
the mortgagor, and the purchaser takes possession agreeing with
the mortgagee to pay the mortgage debt within a specified time ;
and such purchaser continuing in possession executes a mortgage
to another who has no actual notice of the former mortgage, the
latter will not be bound to notice the former mortgage, which as
to him the former mortgagee will be deemed to have waived.8

1 Gage v. Whittier, 17 N. H. 312. 5 Patrick v. Meserve, 18 N. H. 300.
2 Stafford v. Whitcomb, 8 Allen (Mass.), § Jones v. Turck, 33 Iowa, 246.

518. 7 See Brooks v. Record, 47 Ill. 30.
8 Clark v. Hale, 8 Gray (Mass.), 187. ® Brandt v. Daniels, 45 Ill. 453.

* Oswald v. Hayes, 42 Iowa, 104.
892
MORTGAGOR’S RIGHT TO SELL THE PROPERTY. [§§ 467-469.

The doctrine that a mortgagee waives his mortgage by standing
by and allowing the mortgagor to sell the property as his own
applies also when a mortgagee allows the mortgagor to assume
the credit of ownership, and is not actually present when the sale
is made.}.

But a mere declaration by a mortgagee on learning that the
mortgagor had sold the mortgaged property, that he cared noth-
ing about the property, and did not want it, does not preclude
him from afterwards asserting his title under the mortgage.2_ Nor
does a mortgagee by his silence on being informed that a portion
of the property has been disposed of by the mortgagor release the
property from his lien ;* though his assent to such disposition of
the property would have that effect.

467. A mortgagee may by agreement waive his mortgage
in favor of another creditor, but he cannot use his mortgage to
protect another creditor against a subsequent mortgagee, unless
the mortgage in express terms covers the claim of such other cred-
itor. Such agreement may be verbal only, or written.

468. A mortgagee does not waive his lien by taking pos-
session of the mortgaged property under a distress warrant
for rent. He is regarded as holding possession both as landlord
and mortgagee ; and as against third parties subsequently acquir-
ing rights in the property, he may subject it to the payment of
either or both liens.§

469. Of course a mortgagee may purchase the equity of
redemption of the mortgaged chattels; but equity looks with a
jealous eye upon sales of the equity of redemption to the mort-
gagee, and requires them to be established by the clearest and
most convincing proof.’ Such a sale must be a fair one. If the
mortgagee uses the power his mortgage gives him over the mort-
gagor, to obtain the equity of redemption at less than its value,
and for a less price than others would have given for it, a court
of equity will hold the transaction to be still a mortgage, and

1 Thompson v. Blanchard, 4 N.Y. 303. 52 Vt. 144; S. C. 14 Am. Law Rev.

2 White v. Phelps, 12 N. H. 382, 539.
8 Patterson v. Taylor, 15 Fla. 336, 6 Atkins v. Byrnes, 71 Til. 326.
4 Hunt v. Daniels, 15 Iowa, 146. 7 Locke v. Palmer, 26 Ala. 312.

6 Poland v. Lamoille Valley R. R. Co.
893
§§ 470, 471.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

will permit the mortgagor to redeem.!_ And so if a mortgagee by
absolute bill of sale falsely represent to the administrator of the
mortgagor that there was no right of redemption, and induces such
administrator to accept an alleged balance of purchase money, and
the latter thereupon surrenders the property, the equity of redemp-
tion is not cut off.?

A court of equity will, however, relieve against a sale made for
a grossly inadequate price.®

470. A mortgagee extinguishes his mortgage by buying
the property ata sale under execution at the suit of a third
person. He cannot afterwards maintain an action on the debt
against the mortgagor; and his title as mortgagee is merged with
his title as general owner.

471. Mortgaged property is subject to forfeiture under the
revenue laws of the United States for the act of the mortgagor
although the mortgagee did not participate in such act. It is true
that it has been held that the interest of a qualified owner, to the
extent of his interest in the res, may be protected by the court
having custody of the res, by directing payment of the lien out of
the proceeds of the property condemned.’ But if only the interest
of the mortgagor be forfeited, how can anything more than his in-
terest be sold; or if the court decrees a forfeiture of the res, and
sells it as forfeited to the government, under what provision of
law is the court authorized to pay the proceeds of sale to other
parties than’ the government? It is clear that the court has no
power to exempt a portion of the proceeds of the sale from the
effect of the condemnation. The remedy of the mortgagee is to
apply to the secretary of the treasury for a remission of the for-
feiture, as respects his demand.’

1 Goodman v. Pledger, 14 Ala. 114. ® United States v. 396 Barrels of Dis-
2 Phillips v. Hunter, 22 Mo. 485. tilled Spirits, 3 Int. Rev. Rec. 114, 123.

8 McKinstry v. Conly, 12 Ala. 678. 7 United States v.7 Barrels of Distilled
4 Merritt v. Niles, 25 Ill. 282. Oil, supra, per Benedict, J.

5 United States v. 7 Barrels of Distilled
Oil, 6 Blatchf. 174.

394 i
MORTGAGOR’S POWER TO OREATE LIENS, ETC. [§§ 472, 478.

Ill. The Mortgagor’s Power to create Liens upon the Mortgaged
Property.

472. A mortgagor in possession has no power to create
by contract a lien that shall have priority of a duly recorded
mortgage. Thus, a mortgagor being in possession of four horses,
which were the subject of a mortgage duly filed, contracted with
a farmer for the keeping of them through the winter; and in the
spring took away three of the horses, leaving one in pledge for the
sum due for the keeping of all the horses ; and the pledgee refused
to deliver this horse to the mortgagee upon his demand until his
charges should be paid. The court decided that the mortgage
had priority of the pledge or lien subsequently created by the
mortgagor’s contract.! The law, in the absence of any special
agreement, gave the farmer no lien upon the horses for the price
of keeping them.

And so an agreement in a lease that certain personal property
upon leased premises should not be removed while any of the rent
should be in arrears, but should be security for it, cannot prevail
against either a prior or subsequent mortgage of such property.
The agreement creates only a lien in equity for the security of the
rent.? ;

A mortgagor cannot create a lien upon the property which shall
take precedence.of his duly recorded mortgage. Thus, a mort-
gagor of horses cannot subject them to a lien for their keeping
without the acquiescence, express or implied, of the mortgagee.’

473. The mortgagee’s authority for the creation of a lien
upon the property may be implied. Thus, where the subject of
a mortgage was a hack let for hire, and it was described as “ now
in use” at certain stables, and it was stipulated that the mort-
gagor might retain possession and use it, it was regarded as the
manifest intention of the parties that the hack should continue to
be driven for hire, and should be kept in a proper state of repair
for that purpose, not merely for the benefit of the mortgagee, but
for that of the mortgagor also, by preserving the value of the se-

1 Bissell v. Pearce, 28 N. Y. 252. 3 Sargent v. Usher, 55 N. H. 287.
2 Smith v. Worman, 19 Ohio St. 145;
Lanphere v. Lowe, 3 Neb. 131.

395
§ 474.] | RIGHTS OF THE PARTIES BEFORE FORFEITURE.

curity and affording a means of earning wherewithal to pay off
the mortgage debt.! ‘

But where one manufacturing engines for certain boats under
contract mortgaged them when they were only partly built, and
afterwards proceeded with their construction under a verbal agree-
ment with the mortgagee that he might go on with the work and
finish the engines, it was held that this agreement did not give
him a lien as against the mortgagee for the work thereafter done
upon the engines, nor authorize him to employ any one else to
work thereon in such a manner as to create a lien for such work.?

474. But alien given upon property by force of law, with-
out any contract to create it, has precedence of an existing mort-
gage. Thus, the lien of a shipwright upon a boat in his posses-
sion, for repairs necessary for its preservation made upon it, may
be enforced as against a prior mortgage duly filed or recorded?
In a case of a shipwright’s lien before the English Court of Com-
mon Pleas, the chief justice said: ‘There is, it seems, no au-
thority to be found bearing upon the question, though I presume
it must have arisen many times. I should rather expect that it
had never been made the subject of litigation because the right
of lien has always been admitted to attach. I put my decision
on the ground that the mortgagee having allowed the mortgagor
to continue in the apparent ownership of the vessel, making it a
source of profit and a means of earning wherewithal to pay off
the mortgage debt, the relation so created by implication entitles
the mortgagor to do all that may be necessary to keep her in an
efficient state for that purpose. The case states that the vessel
had been condemned as unseaworthy by the government surveyor,

’ Hammond v. Danielson, 126 Mass. ble repairs and improvements made upon

294. the property, without objection or notice
2 Globe Works v. Wright, 106 Mass. that they did not intend to have the prop-
207. erty subjected to the lien for repairs; and

8 Beall v. White, 94 U. S. 382; Scott v.
Delahunt, 5 Lans. (N. Y.) 872. In this
case the court also declared that the mort-
gagees were estopped from denying the
validity of the lien, for they knew that the
repairs were being made at the request of
the mortgagor, who was the apparent
owner, and gave no notice of their rights
or claims. They stood by and saw valua-

396

their silence would operate as afraud upon
the shipwright if they should now be per-
mitted to assert their title by virtue of the
mortgage to destroy the lien.

* Williams v. Allsup, 10 C. B. (N. S.)
417; and see The Scio, L. R.1 Adm. &
Eccl. 358, 355; The St. Joseph, 1 Brown
Adm. 202.
MORTGAGOR’S POWER TO CREATE LIENS, ETC. [§ 475.

and so was in a condition to be utterly unable to earn freight or
be an available security or any source of profit at all. Under
these circumstances, the mortgagor did that which was obviously
for the advantage of all parties interested: he put her into the
hands of the defendant to be repaired; and, according to all or-
dinary usage, the defendant ought to have a right of lien on the
ship, so that those who are interested in the ship, and who will
be benefited by the repairs, should not be allowed to take her
out of his hands without paying for them.”

A lien for repairs upon a vessel under mortgage and in posses-
sion of the mortgagor may be enforced after the possession has
been transferred to the mortgagee! And this is true, notwith-
standing the possession has been given him by a decree of a court
in a suit for possession.?

And so a lien given by law for necessary repairs upon a boat
takes precedence of an existing mortgage.® So, also, an agister’s
lien for keeping cattle is paramount to a prior mortgage thereon.4

475. Priority of statutory liens upon crops. — In Mississippi
the act ° giving a “ first lien in law” on crops to secure the wages
of laborers creates a lien in their favor paramount to mortgages
of such crops executed by the landowner to enable him to make
the crops. ‘ The policy of the statute is to make sure to the
laborer his wages. That is accomplished by impressing on the
entire agricultural crop a privilege to be paid in preference to
other creditors or incumbrauces.” The laborer may, however,
waive his lien in favor of his employer’s mortgagee. This waiver
may be made by parol; and the question whether the laborer has
waived his lien in this way is one of fact for the jury. If one
purchase from a laborer a crop which he is supposed to have se-
cured by his labor, the purchaser takes only such right in the
property as the laborer had; and if the laborer has waived his
lien the purchaser cannot shield himself on the plea that he was
an innocent purchaser,’ without notice of such waiver. He is
bound at his peril to inform himself of the terms of the laborer’s
contract. And so in the District of Columbia, a statutory lien of

1 Donnell v. The Starlight, 103 Mass. 4 Case v. Allen, 21 Kans. 217.
227. 5 April 5, 1872.

2 The Granite State, 1 Sprague, 277. 6 Buck v. Payne, 52 Miss. 271

8 Provost v. Wilcox, 17 Ohio, 359.

397
§§ 476-478.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

a landlord for rent has priority of a mortgage of after-acquired
property placed upon the premises by the tenant. Such a. lien
attaches whenever such property is acquired without the taking
of possession, although it is displaced as regards chattels sold by
the tenant in the ordinary course of trade and removed from the
premises, and the purchaser taking them without knowledge of
the lien acquires a perfect title.

476. An instrument which is defective as a statutory lien
for advances may be operative as a mortgage. Thus in Ala-
bama where a statutory lien for advances to make a crop is lim-
ited to debts for specific articles which are essential to the making
of the crop, an instrument which does not contain the statements
essential to create the lien may be held to operate as a mortgage
as between the parties; and if recorded as a mortgage it would
be effectual as against third parties.?

477. In the absence of a statute, a landlord has by virtue
of his ownership no lien upon the crops raised by his tenant;
therefore a mortgagee of the tenant’s crop may maintain trover
against a landlord who has taken possession of the crop and ap-
plied it to his rent account.? It is immaterial that the mortgagee
knew that the chattels were being used upon the leased premises.4

A landlord who has a lien by statute does not lose this by tak-
ing a mortgage and omitting to record it. The mere fact that the
landlord did not record his mortgage, and thereby put it in a con-
dition to create an available lien, is very strong proof that he re-
lied upon, and did not waive, his landlord’s lien.®

478. Improvements and repairs upon the mortgaged prop-
erty made by a mortgagor in possession are at his own cost
and expense. But if a mortgagee expressly promises to pay a

1 Beall v. White, 94 U. 8. 882. The
controversy related to a lease and mort-
gage of the furniture of a hotel, which
was the subject of the lease.

% Tison v. People’s Sav. & Loan Ass.
57 Ala. 323. ‘

8 Robinson v. Kruse, 29 Ark. 575.

€ Jarchow v. Pickens, 51 Iowa, 381.

5 Pitkin v. Fletcher, 47 Iowa, 53. It

398

was contended in this case that the chattel
mortgage was void because it was not re-
corded, and that the taking of the mort-
gage was a waiver of the lien. The court
declared the position was not sound; that
none of the authorities hold that alien is
waived or lost by taking security not en-
forcible against third persons.
CONFUSION OF MORTGAGED GOODS. [§ 479-481.

mechanic for repairs made upon the mortgaged property for the
mortgagor, in consideration of which the mechanic relinquishes his
lien, he is liable upon his promise though it be not in writing.
The promise is not within the statute of frauds and may be en-
forced.?

479. The title of a mortgagee is unaffected by a vendor's
lien for purchase money of which he had no notice either actual
or constructive.?

480. Neither the mortgagor nor any one acquiring his title
is allowed to defeat the mortgagee’s title to the mortgaged
property by setting up ownership in another. A mortgagor hay-
ing the possession and the apparent ownership of personal prop-
erty confers them upon his mortgagee, who may maintain his
right against every one except the real owner, in case the mort-
gagor is not the real owner. Neither can a purchaser, who relies
solely upon the title he acquired from the mortgagor, set up the
title of a third person under whom he does not claim.’

IV. Confusion of Mortgaged Goods.

481. If a mortgagor so confuses the mortgaged goods with
his own that they cannot be distinguished, and refuses to sepa-
rate them, the mortgagee may take all such goods without be-
coming a trespasser.* He will not be compelled to suffer from the
wrongful act of the mortgagor.’ If he can distinguish the mort-
gaged goods from the goods with which they have been com-
mingled he is bound to do so. Whether a mortgagor has pur-
posely or carelessly mingled other goods with his own so that
they are not distinguishable, the result is the same. If he sells
the whole, the mortgagee may replevy the whole from the pur-
chaser, upon the failure of the latter to identify the specific arti-
‘cles not embraced in the mortgage.’ If the mortgagor consign

1 Conradt v. Sullivan, 45 Ind. 180. M’Laughlin (C. C. Dist. Minn. April,
2 Manny v. Woods, 33 Iowa, 265. 1880), 2 Fed. Rep. 128; Simmons ». Jen-
3 Adams v. Wildes, 107 Mass. 123; kins, 76 II]. 479.

Thompson »v. Spittle, 102 Mass. 207. ® Frost v. Willard, 9 Barb. (N. Y.) 440.
* Fuller v. Paige, 26 Ill. 358, 7 Adams v. Wildes, supra; Kreuzer v.

5 Merchants’ Nat. Bank of St. Paul v. Cooney, 45 Md. 582.
899
§§ 482, 483.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

such goods to a third person for sale, the mortgagee is entitled to
recover of the consignee the value of the whole when sold.1

And so if a purchaser of mortgaged goods mixes his own goods
with them and refuses to separate them, the mortgagee may take
all the goods without being a trespasser.”

The foundation of the doctrine of confusion of goods is the
affording of protection to innocent owners. The loss and incon-
venience arising from such confusion is therefore thrown upon the
party who causes the confusion, and it is for him to distinguish
and separate his own property or to lose it.®

482. When new goods have been added to a mortgaged
stock, it is the duty of the mortgagor to identify the latter upon
the mortgagee’s taking possession. Although there be no such
confusion of goods as to absolutely destroy their separate iden-
tity, yet, if they cannot be separated without the mortgagor’s aid,
the same mischief would be produced as that which follows a con-
fusion of goods. If the mortgagor refuse to point out the mort-
gaged goods, so as to enable the mortgagee to select them from
others with which the mortgagor has mingled them, the latter
cannot complain if the mortgagee seize the whole. Neither can
other creditors of the mortgagor complain of such seizure, if it be
made before they have acquired definite rights by attachment or
levy. Before that time the mortgagor could lawfully have deliv-
ered his new goods to the mortgagee by way of pledge, or could
have mortgaged them. What he could have done voluntarily is
no more valid against him than what binds him by estoppel; and
therefore a mortgagee has a perfect right, as against other cred-
itors who have not obtained liens upon the goods, to enforce his
mortgage against all the mixed goods. If attachments or levies
of executions be made upon such goods after the mortgagee has
taken possession, these can affect only the remainder of the goods
or the proceeds thereof after the mortgage is paid.4

483. If the mortgagee by his fault or neglect permit the
mortgaged goods to be intermingled by the mortgagor so that
an officer having a writ or execution against the latter is unable,

1 Willard v. Rice, 11 Met. (Mass.) 493, Dunning v. Stearns, 9 Barb. (N. Y.) 630;

° Fuller v. Paige, 26 Ill. 358, Brackenridge v. Holland, 2 Blackf. (Ind.)

* Kreuzer v. Cooney, 45 Md. 582; Hart 377.
v. Ten Eyck, 2 Johns. (N. Y.) Ch. 62, 108 ; 4 People v. Bristol, 35 Mich. 28.

400
RIGHTS OF SUBSEQUENT PURCHASERS. [§ 484.

after making reasonable inquiry and effort, to distinguish them,
and the mortgagee does not himself identify and point them out,
the officer is justified in taking and selling the whole as the prop-
erty of the debtor.1 A mortgage of a stock of goods containing
a clause by which it is attempted to embrace all goods which
the mortgagor adds to the stock in the course of his business is
regarded as giving permission to the mortgagor to commingle
other goods with those on hand at the time of making the mort-
gage. The mortgage being ineffectual at law to convey the sub-
sequently acquired goods, these are subject to seizure upon execu-
tion by a judgment creditor of the mortgagor ; and the confusion
of goods having taken place by the permissive act of the mort-
gagee, he is not allowed to defeat the rights of the judgment
creditor by claiming the goods under his mortgage.”

V. The Rights of Subsequent Purchasers.

484. A subsequent bona fide purchaser, within the meaning
of the statutes making void as against such a purchaser a mort-
gage not duly recorded, filed, or refiled, is one who becomes a
buyer by mutual assent of the parties, express or implied ; and
not one who has unlawfully converted the mortgaged property, and
has acquired title by the payment of a judgment for the value of
the property obtained against him by the mortgagor or his as-
signee. The intent of the enactments upon this subject is to pro-

1 Robinson v. Holt, 39 N. H. 557. The
property in controversy in this case was

portion of each owner is known, and a di-
vision can be made of equal propoitionate

hay which was mortgaged in the spring of
the year; and when the new crop was
gathered the mortgagor pitched it over
with the old hay covered by the mortgage,
so that the old could not be distinguished
or separated from the new. Fowler, J.,
delivering the opinion in this case, said:
“The doctrine of the confusion of goods
has been often discussed, and may be con-
sidered as clearly and distinctly settled.
If the goods of several intermingled can
be easily distinguished and separated, no
change of property takes place, and each
party may lay claim to his own. If the
goods are of the same nature and value,
although not capable of an actual separa-
tion by identifying each particular, if the
26

value, as in the case of a mixture of corn,
coffee, tea, wine, or other articles of the
same kind and quality, then each may
claim his aliquot part; but if the mixture
is undistinguishable because a new ingre-
dient is formed, not capable of a just ap-
preciation and division according to the
original rights of each, or if the articles
mixed are of different values or quantities,
and the original values or quantities can-
not be determined, the party who occa-
sions, or through whose fault or neglect
occurs the wrongful mixture, must bear
the whole loss.” And see Mowry v.
White, 21 Wis.-417.
2 Hamilton v. Rogers, 8 Md. 301.

401
§ 485.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

tect creditors and honest dealers against hidden and unknown liens,
and not to protect wrong-doers. In an action of trover for conver-
sion, the defendant cannot set up title in a third person, unless he
connects himself with that title so that he may not be able to avail
himself of the existence of the mortgage, and may be liable to
the mortgagee for the value of his lien, after satisfying a judg-
ment obtained by the mortgagor for the full value of the prop-
erty. But if at the time of the recovery of such judgment there
has been a default in the payment of the mortgage, so that the
mortgagee has become the absolute owner subject only to the
right of redemption, and has the right to immediate possession, so
that he, as well as the mortgagor or his assigns, can maintain an
action for the conversion, satisfaction of a judgment obtained by
the latter for the full value of the property transfers to the judg-
ment debtor the title of both, and an action to recover possession
cannot afterwards be maintained against him by the mortgagee.

A purchaser for value of the mortgagor in possession, without
notice, actual or constructive, that the. property is incumbered, will
hold it discharged of any prior incumbrance.2_ A purchaser with
such notice acquires only the rights of the mortgagor.®

485. A purchaser of chattels upon execution sale, without
notice of an unrecorded mortgage, is a subsequent purchaser as
against whom the mortgage is void, whether the debt upon which
the execution was issued was contracted before or after the mort-
gage was executed. And so one who purchases at a sale upon an
execution issued upon a debt contracted with a subsequent cred-
itor, without notice, is a subsequent purchaser entitled to protec-
tion, whether he himself had notice of the mortgage or not.6 In
order to protect subsequent creditors of the mortgagor without no-
tice of the mortgage, it is necessary to insure a good title to pur-
chasers at sales under their executions, whether such purchasers
have notice or not. The creditor’s right to sell cures the infirm-
ity there would else be in the title of an execution purchaser with
notice. In case the purchaser is without notice whether the cred-
itor was entitled to subject the chattel to his satisfaction or not, .
the purchaser may, in his own right, and on the ground of his

1 Marsden v. Cornell, 62 N, Y. 215. * McKnight v. Gordon, 13 Rich. (S. C.)
2 Andrews v. Jenkins, 39 Wis. 476. Eq. 222.
8 McCandless v. Moore, 50 Mo. 511. 5 McKnight . Gordon, supra.

402
RIGHTS OF SUBSEQUENT PURCHASERS. [§§ 486-488.

own merit, interpose the statute between his purchase and the
mortgage.!

486. A purchaser of mortgaged property, sold in violation
of a statute making it a criminal offence to sell the mortgaged
property without the written consent of the mortgagee, or without
informing the purchaser of the mortgage, may show that the sale
was made with the oral consent of the mortgagee, who is thereby
barred of his right to set up his mortgage against the title of the
purchaser. But a mortgagee’s assent to a sale subject to the
mortgage is no waiver of his mortgage as against one who buys.
the property from such first purchaser without actual notice of the
mortgage or of the mortgagee’s assent to the first sale, but his
lien follows the property into the hands of the last purchaser.?

487. A purchaser who has in terms assumed the payment
of an existing mortgage upon the property cannot object to
the validity of it on the ground of an alleged defect in its exe-
cution, when the mortgagor does ‘not interpose any objection upon
that ground. And so one who has purchased property subject to
a mortgage, so that the amount of the mortgage forms a part of
the consideration of the purchase, cannot deny its validity.’

488. But a purchaser or mortgagee of goods subject to a
prior mortgage is not precluded from showing that such prior
mortgage has been paid,® or that it is absolutely void so that the
holder of it could not recover anything notwithstanding the mort-
gagor’s willingness to make it good. If the mortgage were merely
voidable and not-void, then the mortgagor could give validity to
it. As against the first mortgagee, the second mortgagee is
estopped to deny the existence of the prior mortgage; and he
agrees to hold under his mortgage subject to any claim which the

1 McKnight v. Gordon, 13 Rich. (S.C.) or who has assumed the payment of an

Eq. 222. existing mortgage upon the property, are
2 Stafford v. Whitcomb, 8 Allen fully considered in the author’s treatise on
(Mass.), 518. Mortgages, §§ 735-770; and these rights
3 Oswald v. Hayes, 42 Iowa, 104. and liabilities being for the most part the

4 Greither v. Alexander, 15 Iowa, 470. same, whether the property be real or per-

® Kellogg v. Secord (Mich. 1879), 3 N. sonal, reference is made to that work fora
W. Rep. 868. statement of the law.

The rights and liabilities of a purchaser 6 Barry v. Bennett, 7 Met. (Mass.) 354.
who has purchased subject to a mortgage 403
§§ 489-491.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

first mortgagee might by law enforce by virtue of his mortgage ;
but he is not precluded from showing that the first mortgage is at
law a mere nullity.! Neither is he precluded from showing that
the property was never subject to the mortgage referred to.?

A second mortgagee, in contesting the validity of a first mort-
gage upon the property, must show by proper evidence aside from
the instrument itself, that his own mortgage was given for a valu-
able consideration, or to secure an honest debt.?

489. A purchaser of property which is subject to a mort-
gage is not personally liable for the payment of the mortgage
debt unless he expressly assumes such payment. An announce-
ment made upon an auction sale of property, that it is sold subject,
to a chattel mortgage, and that the purchaser will have to comply
with the conditions thereof, does not impose a personal obligation
upon one who hears and assents to the announcement and be-
comes the purchaser, and no action can be maintained against
him for the debt.t

490. Conversion by purchaser. — A purchaser of property
upon which there is a valid mortgage, who consumes or sells the
property or any part of it, is liable to the mortgagee for the dam-
ages so occasioned him ; and it makes no difference that the pur-
chaser took the property in hostility to the mortgage, and deny-
ing that it was an existing lien.5

The measure of damages against one who has purchased mort-
gaged property and has sold it to a stranger, so as to be liable for
a conversion, is the value of the property and interest thereon
from the time of sale by the defendant and not from the time of
his purchase.®

491. A purchaser of mortgaged property cannot be held
liable for a conversion of it without a definite demand by the
mortgagee, or a definite refusal to surrender it. A mortgage of
parts of organs finished and unfinished, together with other prop-
erty in the mortgagor’s factory, contained a condition against re-

1 Housatonic & Lee Banks v. Martin, * Hamill v. Gillespie, 48 N. Y. 556.

1 Met. (Mass.) 294. 5 Beers v. Waterbury, 8 Bosw. (N. Y.)
2 Barry v. Bennett, 7 Met. (Mass.) 354, 396,
8 Baskins v. Shannon, 3 N. Y. 310. ® Barry v. Bennett, supra.

404
RIGHTS OF SUBSEQUENT MORTGAGEES,  [§§ 492, 493.

moval without the mortgagee’s written consent. The mortgagee
subsequently finding parts of an organ in a church, told a com-
mittee authorized to represent the church that he had a mortgage
which included their organ, or parts of it, and demanded the
property, at the same time exhibiting the mortgage. The com-
mittee replied that they knew nothing about it, and refused to do
anything. It was held that there was no evidence of conversion.!

VI. Rights of Subsequent Mortgagees.

492. Under the registry laws subsequent mortgages of
the same property may be made, which will be valid against all
but those claiming under prior mortgages, inasmuch as these laws
dispense with the necessity of a formal delivery of the property,
making the record of the mortgage equivalent to a delivery of the
property.2- A subsequent mortgage conveys only an equitable
title in the property ; and it conveys a title subject to all the ex-
isting rights and equities of the prior mortgagee.?

493. A mortgagee is pro tanto apurchaser. He is entitled
to rely upon the record in the same way that any purchaser may
rely upon it. He is unaffected by any lien or incumbrance upon
the property, such, for instance, as a prior mortgage, or a ven-
dor’s lien for purchase money, of which he has no actual notice,
and no constructive notice by record. A mortgagee is entitled
to rely upon the mortgagor’s possession the same as any purchaser
may rely upon the possession of his vendor. He is unaffected by
a prior verbal contract by his mortgagor to sell the property, al-
though the purchaser has paid the price, but has left the property
in the vendor’s possession.® Bare knowledge by a mortgagee that
the mortgaged goods were manufactured for another is not suffi-
cient to charge him with notice of his rights.6 Although the mort-
gagor obtained possession of the mortgaged goods by means of
fraudulent representations, his mortgagee, without notice of the
fraud, is unaffected by‘it.?

1 Ware v. Georgetown Congregational * Manny v. Woods, 33 Iowa, 265.
Soc. 125 Mass. 584. 5 Hesser v. Wilson, 36 Iowa, 152. ,
2 Smith v. Smith, 24 Me. 555. 6 Hesser v. Wilson, supra.
* Shoenberger v. Mount, 1 Handy T Kranert v. Simon, 65 Ill, 344. i
(Ohio), 566.
405
§§ 494-497.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

494. One who takes a mortgage in terms made subject to
a prior mortgage named, acquires only a right to redeem the
property from such prior mortgage, and though his mortgage be
first recorded, it does not take precedence of such other mortgage.}
The second mortgagee in such case stands in the place of the
mortgagor having the same rights, and coming within the excep-
tion of a statute which provides that recorded mortgages “ shall
not be valid against any person other than the parties thereto.”
The legal effect of such a mortgage is the same as if it had been
in terms of the right of the mortgagor to redeem the first mort-
gage.2 His right to redeen) continues until the foreclosure of the
first mortgage, unless defeated by some other paramount title?

495. If a mortgage be made and recorded of goods under
attachment at the time, notice of the same also being given to
the attaching officer, the property passes to the mortgagee subject
to the lien created by the attachment; andif the goods be sold by
the officer pending the attachment, and the plaintiff fails in his
suit, the proceeds of the sale in the officer’s hands belong to the
mortgagee who may recover them directly of the officer.4 It is
not competent for the officer in such case to show that he did not
receive actual payment for the property®

496. The first mortgagee having the right of property and
the right of possession may sell the property to a third per-
son subject only to the mortgagor’s right of redemption; and a
subsequent mortgagee cannot maintain an action for the conver-
sion of it against such purchaser.6 He has no better title than
the mortgagor as against a prior mortgage duly recorded. His
only right is a right to redeem.

497. A second mortgagee is entitled to possession accord-
ing to the terms of his mortgage against all the world, except
the first mortgagee whose debt remains unpaid, and he may main.
tain an action for possession as against any one else.? To an

1 Pecker v. Silsby, 123 Mass. 108. 5 Appleton v. Bancroft, supra.

2 Howard v. Chase, 104 Mass, 249; 6 Landon v. Emmons, 97 Mass. 37.
Tuite v. Stevens, 98 Mass. 305. 7 Newman v. Tymeson, 13 Wis. 172;

8 Treat v. Gilmore, 49 Me. 34. Treat v. Gilmore, supra.

4 Appleton v. Bancroft, 10 Met. (Mass.)

281,
406
RIGHTS OF SUBSEQUENT MORTGAGEES. [8§ 498, 499.

action of replevin against the mortgagor, a prior mortgage is no
defence if that permits the mortgagor to remain in possession
until breach of condition, and there is no evidence that the prior
mortgagee has made any claim upon the mortgagor.!

498. If a second mortgagee sell the mortgaged property
with the consent of the first mortgagee, the latter cannot
maintain an action against him as for a conversion, although such
consent was given under a false impression as to the respective
rights of the parties to the proceeds of such sale, or as to the
views of the second mortgagee on this matter, such false impres-
sion not having been created by fraud on his part. The consent
to the sale operates as a waiver of the tort that would otherwise
have arisen from the wrongful conversion of the property by the
second mortgagee.”

499. A subsequent mortgagee not in possession cannot
maintain trover or an action in the nature of trover, for a
conversion of the property.2 To maintain such an action, the
plaintiff must be entitled to the possession at the time of the
conversion. It is not enough that he has an equitable title, such
as a right to redeem. This right of action is in the first mort-
gagee. The defendant cannot be held in two actions of the same
kind, at the same time, for the same tort, in favor of different
persons. Nor can the rights of the first mortgagee be defeated
by a subsequent mortgage. Therefore, the first mortgagee alone
can maintain an action of tort for a conversion of the property#
A subsequent mortgagee has no greater rights than the mortgagor
had as against a first mortgage duly recorded.

A decision in apparent contradiction of the proposition that a
second mortgagee not in possession cannot maintain trover was
made in Maine, where it was held that he might maintain an
action of trover against an officer who had attached and sold the
mortgaged goods, his mortgage being paramount to the attach-
ment, and the equity of redemption not having been extinguished
under the first mortgage. The attachment and sale of the prop-

1 Adams v. Wildes, 107 Mass, 123. * Ring v. Neale, 114 Mass. 111; Rugg

2 Anderson v. Case, 28 Wis. 505. v. Barnes, supra; Goodrich v. Willard, 2

8 Clapp v. Campbell, 124 Mass. 50; Gray (Mass.), 203.

Landon v. Emmons, 97 Mass. 37; Rugg v.

Barnes, 2 Cush. (Mass.) 591.
407
§§ 500, 501.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

" erty destroyed the right of redemption of the second mortgagee,
and the officer was liable in damages for that destruction to the
amount of the value of the property above the first mortgage.t
But the facts of the case show that the second mortgage covered
property, of which a part only was subject to a prior mortgage.
The entire property was sold under execution, and the holder of
the first mortgage recovered judgment, which, of course, only cov-
ered his interest in the property. In the subsequent suit by the
second mortgagee, allowance was made in the judgment for the
amount already recovered by the first mortgagee. ‘The recovery
of the first judgment and its payment operated to discharge the
first mortgage, and was properly allowed in mitigation of dam-
ages as a payment which had inured to the benefit of the second
mortgagee. It would seem, therefore, that the rule above stated
was not necessarily encountered in that case. It is doubtful, at
least, whether, without the features in the case above indicated,
the rule would have been disregarded.?

500. The interests of successive mortgagees are distinct,
and they must sue separately for injuries to their several interests.
They are neither joint tenants nor tenants in common of the

property.?
VII. Rights of Assignees.

501. The assignee of a mortgage and the note secured by it
is a purchaser in the same way that a mortgagee is a purchaser.
The assignee without notice stands upon the same footing as a bond
fide mortgagee. He is entitled to the same protection as any
bond fide grantee without notice. He is entitled to rely upon the
record, and when that discloses an unimpeachable title he receives
the ‘protection of the law as against unknown liens and incum-
brances prior to the mortgage, and as against latent defects.*
The legal effect of the assignment is to transfer the entire interest

_} Treat v. Gilmore, 49 Me. 34. If the 2 Ring v, Neale, 114 Mass. 111, per
title of the first mortgagee has become Colt, J.

absolute before the conversion of the prop- 3 Newman v. Tymeson, 13 Wis. 172.
erty, the second mortgagee can of course 4 Pierce v. Faunce, 47 Me. 507; Gould
maintain no action. Clapp v. Glidden, 39 v. Marsh, 1 Hun (N. Y.), 566; 8S. C.4 T.
Me. 448. & C.128. See 1 Jones on Mortgages, §

475,
408
RIGHTS OF ASSIGNEES. [§§ 502, 503.

of the mortgagee in the property to the assignee, who whereupon
in place of the mortgagee becomes the general owner. If the
mortgagee was entitled to the possession of the property, the legal
effect of his assignment is the same as if he had been in possession
of the property, and had sold and delivered it to the assignee.1
His assignee may recover possession in the same manner that the
mortgagee himself might have recovered it.?

502. An assignment by a mortgagee of all his interest in
a mortgage, and everything therein contained, with authority to
the assignee to take all legal measures for the recovery to his own
use and enjoyment of the assigned premises, is an assignment of
the debt secured.2 A sale and delivery of the mortgaged prop-
erty by a mortgagee in lawful possession, by virtue of a voluntary
surrender by the mortgagor, transfers all his rights as mortgagee,
and entitles the purchaser to take and retain possession, as against
the mortgagor, at least, until the debt is paid.t The assignee ac-
quires the same right that the mortgagee had to take possession
under a safety clause, or under a clause providing for the tak-
ing of possession if any attachment or execution should be levied
upon the property.5

503. An assignment of the debt secured passes all the
mortgagee’s interest in the mortgaged property, whether the
assignment be before or after forfeiture.6 The debt is the princi-
pal thing, and the mortgage an incident only. If the debt be in
the form of a negotiable promissory note, the assignee by indorse-
ment takes the mortgage as he takes the note, free from any equi-
ties which existed in favor of third persons while it was held by
the mortgagee.” If the debt be not a negotiable one, the assignee
must abide by the case of the original mortgagee, and takes that
as well as the mortgage subject to the equities. If the debt be in

1 Robinson v. Fitch, 26 Ohio St. 659; 322; Ellett ». Butt, 1 Woods, 214; Tison

Moody v. Ellerbe, 4 S. C. 21. v. People’s Sav. & Loan Ass, 57 Ala. 323;
2 Barbour v. White, 37 Ill. 164. Gaff v. Harding, 48 Ill. 148, 150 ; Woodruff
3 Jones vu. Huggeford, 3 Met. (Mass.) «. King, 2N. W. Rep. 452; S. C. 47 Wis.

515; Barbour v. White, supra. 261; Croft v. Bunster, 9 Wis. 503; Rice
4 Sirrine v. Briggs, 31 Mich. 443. v. Cribb, 12 Wis. 179. See 1 Jones on
& Beach v. Derby, 19 Ill. 617. Mortgages, §§ 813-822.

® Langdon v. Buel, 9 Wend. (N. Y.) ™ Carpenter v. Longan, 16 Wall. 271;
80; Gould v. Marsh, 1 Hun (N.Y.), 566; Gould v. Marsh, supra.
Johnson v. Hart, 8 Johns. (N. Y.) Cas. ,
409
§§ 504, 505.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

the form of a negotiable note, but the assignee takes no indorse-
ment of it, his interest is subject to existing equities ; he acquires
only an equitable interest.1

An assignment of a part of the debt secured carries with it
pro tanto the mortgage security ; and a subsequent payment of
such part so transferred extinguishes the mortgage as to the part
so transferred, leaving it operative as to the part unpaid.?

504. Assignment of part of the debt secured. — Ordinarily
an assignment of one of several notes secured by a mortgage, or an
assignment of any distinct part of the indebtedness secured, car-
ries with it a pro tanto interest in the mortgage. Such was held
to be the effect even of an assignment of a certain amount of the
mortgage moneys with a right of priority of payment. The as-
‘signee was held to be authorized to dispose of so much of the
mortgaged property, that being a stock of goods, as might be nec-
essary to pay the amount for which the assignment was made.®

An assignment of “so much of a mortgage and property therein
described as will amount to”” a certain sum, less than the mort-
gage debt, passes no legal title to the mortgage, as against a sub-
sequent purchaser from the mortgagee without actual notice of
the assignment, although the assignment was recorded before such
purchase. Such a partial assignment might be construed to be of
the nature of a declaration of trust on the part of the mortgagee,
binding him in equity to account with the assignee. But it would
not make such assignee a tenant in common with himself. The
legal title would still remain in the mortgagee so that a subse-
quent sale by him would be good.

505, An assignment of a mortgage without the debt se-
cured by it is either a nullity ora transfer of the legal title in
trust for the benefit of the holder of the debt. But if it appear
to have been the intention of the parties to transfer a beneficial
interest in the mortgage, an assignment of the mortgage will gen-

1 Nelson v. Ferris, 30 Mich. 497. pressly declined to execute a full assign-

2 Emmons v. Dowe, 2 Wis. 322. ment of the mortgage because he was un-

* Emmons v. Dowe, supra. See 1 Jones willing to lose control of the mortgaged
on Mortgages, § 821. property.

* French v. Haskins, 9 Gray (Mass.), 5 Polhemus v. Trainer, 30 Cal. 685.
195. In this case the mortgagee had ex- See 1 Jones on Mortgages, § 804.

410
RIGHTS OF ASSIGNEES. [§§ 506, 507.

erally be held to pass the mortgage debt as well. This is in ac-
cordance with the maxim, that when a thing is granted everything
possessed by the grantor which is necessary to make the grant
effectual passes as incident thereto.2. A mortgage is incident to
the debt secured and not to the note, which is merely evidence of
the debt.8 The retention of the note by the assignor is not, at
any rate, conclusive of his intention not to transfer the debt with
the mortgage.

‘Thus, where a loan was made to a mortgagor upon his agreeing
to procure as security an assignment of a chattel mortgage already
existing upon his property and in part due, and the mortgagee
thereupon executed to the lender an assignment of the mortgage,
which was in its terms a transfer of all right and title in the mort-
gage until the assignee should be fully paid, but did not transfer
the mortgage note, it was held that if essential to give effect to
the assignment, the assignee might be regarded as having acquired
an interest in the debt for which both the note and the mortgage
were securities; and that the legal effect of the transaction was to
transfer to the assignee the property embraced in the mortgage as
security for his advances.*

506. An assignment by a mortgagee not in possession has
the same legal effect as an assignment by a mortgagee in posses-
sion. It passes his entire interest in the property, and the assignee
becomes entitled to all the rights of the mortgagee. If the latter
is entitled to possession, his assignee in like manner is entitled to
possession ©

507. The mortgagee’s assignable interest continues so long
as he has a subsisting mortgage. He has an assignable interest
in a mortgage although he has seized the property upon default.
His interest continues assignable until the right of redemption is
barred by lapse of time or otherwise.®

When a mortgagee has the right to declare the mortgage debt
due and the mortgage forfeited, and to take possession of the prop-
erty, if any execution be levied upon the property, or it be at-

1 Campbell v. Birch, 60 N. Y. 214. 5 Robinson v. Fitch, 26 Ohio St. 659 ;
2 Broome’s Leg. Max. 464. Cotton v. Watkins, 6 Wis. 629.
8 Hill v. Beebe, 13 N. Y. 556. 6 Moody v. Ellerbe, 4 S. C. 21.

4 Campbell v. Birch, supra.
411
§§ 508-510.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

tached for a debt of the mortgagor, he may exercise his own choice
about asserting this right; and until he does some affirmative act
to declare the mortgage forfeited, he may assign it as a subsisting
mortgage. His assignee would then acquire the same right that
the mortgagee himself had to declare the mortgage forfeited.

508. Assignment of a fraudulent mortgage. — An assignee
in insolvency who has taken possession of personal property mort-
gaged in fraud of creditors, and filed a bill in equity to prevent a
transfer of the mortgage by the mortgagee, may hold the property
as against one to whom the mortgage and the note which it was
given to secure were assigned for a good consideration and with-
out notice. The assignee having taken possession of the property
and converted it to his own use before the purchaser acquired any
title, he held the elder and better title. He had avoided the
mortgage. If the purchaser of the mortgage had acquired title in
good faith and for a valuable consideration, before any act had
been done to avoid the mortgage, he would have stood on differ-
ent ground.?

509. A mortgagee, after assigning his mortgage, cannot
maintain an action for an unlawful conversion against an offi-
cer who had previously attached the mortgaged property in an
action against the mortgagor. The assignment passes to the as-
signee the legal title to the property, subject to the attachment,
and leaves no interest in the mortgagee which would authorize a
demand or a suit in his name.2 Suit would necessarily be in the
name of the assignee, to whom passed all the interest the mort-
gagee had.

An assignee of a note secured by a mortgage of personal prop-
erty should maintain trespass against a stranger taking possession
of the property, in his own name, and not in the name of the -
assignor.?

510. A right of action for an injury to the property or to
the mortgagee’s rights does not pass by his assignment of the
mortgage. Thus, an assignee cannot sue for a conversion of prop-

1 Beach v. Derby, 19 Il. 617. 3 Horne v. Briggs, 98 Mass. 510.
2 Bigelow v. Smith, 2 Allen (Mass.), 4 Langdon v. Buel, 9 Wend. (N. Y.) 80.
264, 5 Langdon »v. Buel, supra.

412
RIGHTS OF ASSIGNEES. [S§ 511, 512.

erty which has taken place before the execution of the assignment.
The assignment passes all the mortgagee’s right to the property,
but does not pass his right to sue for a conversion of the property,
or for injuries to it, while he was the legal owner of it.

511. A mortgage that has been paid cannot be revived by
an assignment of it even with the mortgagor’s consent, and al-
though the assignment be upon a valuable consideration. Thus,
a mortgage having been given to save the mortgagee harmless
against his liability as surety upon a note, the mortgagor after-
wards procured a cancellation of the note, and the substitution of
a new one in its stead, with a different surety. Contemporane-
ously with the cancellation of the old note and the substitution of
the new one, by arrangement between the parties the mortgage
was assigned to the new surety. It was held that no interest in
the mortgaged property passed to the assignee because the mort-
gage had been extinguished?

512. A mortgage given to a surety inures to the benefit of
the creditor to whom the surety is bound; and upon the bank-
ruptcy of the mortgagor, a court of bankruptcy will enforce the
trust. If the mortgage upon its face be conditioned to indemnify
the mortgagee against a liability upon certain debts, it expresses
a trust ; and one who purchases the mortgage or takes an assign-
ment of it, takes it with notice of such trust and subject to it.
The sale and assignment are then void in equity, and the as-
signee will be regarded as merely holding the legal title to the
property as trustee in place of the original trustee.‘

To give a creditor the right to be substituted to the place of a
surety who holds a mortgage given to indemnify him against his
liability to the creditor, the claim of the latter on the surety must
. be valid, binding, and capable of being enforced immediately
against him. If the relation of creditor and debtor has never ex-
isted between them, or having existed, it has been terminated by
release, or payment, or in any other mode, there can be no substi-
tution.® ,

1 Bowers v. Bodley, 4 Bradw. (IIl.) 8 Troy v. Smith, 33 Ala. 469. See
279; S. C. 12 Chicago L. N. 52. 1 Jones on Mortgages, §§ 874-885.
2 Brooks v. Ruff, 37 Ala, 371. 4 Ex parte White, 2 Lowell, 343.
5 Constant v. Matteson, 22 II]. 546.

413
§§ 518-515.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

513. The assignee takes free from all equities in favor of
the mortgagor if the mortgage secures negotiable paper Ina
few states, however, this general and prevailing rule is rejected,
and the assignee is held to take such a mortgage subject to all
equities between the original parties.?

If the mortgage secures a non-negotiable debt, the assignee ac-
quires no greater interest than that which the mortgagee could
enforce against the mortgagor. A creditor who buys a chattel
mortgage given by his debtor has no greater right under it than
any other assignee. As purchaser and assignee he acquires only
the mortgagee’s rights; though as creditor he might contest the
validity of the mortgage by attaching or levying on the goods.*

514. And so if a mortgage securing a negotiable note given
as an indemnity for indorsements, made by the mortgagee for
the mortgagor’s accommodation, be assigned before the liability
upon the indorsed notes has become fixed, and the assignee be
a purchaser for value without notice, he will not be affected by the
equities between the original parties; and fif he be not a pur-
chaser for value, or if he have notice of the mortgagor’s equities,
he will take the same rights the mortgagee had. If the mort-
gagee, after such assignment, pay the indorsed notes, the assignee
in the latter case will take the benefit of such payments to the
same extent that the mortgagee would havé done had he made no
assignment.®

515. If a mortgage given to secure future advances be as-
signed before any advances are made under it, to one who
supposes the mortgage was given for an actual indebtedness, the
assignee obtains no greater rights than the mortgagee had, unless
the mortgage debt be represented by negotiable paper; but in-
that case an assignee before maturity would hold the paper and -
mortgage discharged of all preéxisting equities.

1 The rule is the same as that relating take subject to the latent equities of third
to assignees of mortgages of real prop- parties. Brooks v. Record, supra; Bar-
erty. See 1 Jones on Mortgages, §§ 834- bour v. White, 37 Ill. 164.

847; Judge v. Vogel, 38 Mich. 568, 569; 3 Judge v. Vogel, supra.
Gould v. Marsh, 4 T. & C. (N. Y.} 128; £ Judge v. Vogel, supra.
S. C.1 Hun, 566. 5 Potter v. Holden, 31 Conn. 385.

2 Bryant v. Vix, 83 Ill. 11; Brooks v, 6 Judge v. Vogel, supra.
Record, 47 Ill. 30. He does not, however,

414
RIGHTS OF ASSIGNEES. [§$ 516-518.

516. A mortgage made for the temporary accommodation
of the mortgagee is not subject to defence for that reason in
the hands of a bond fide assignee; neither is it any defence as
against such assignee that the mortgagee agreed to use the mort-
gage only as collateral security, but instead of this raised the
money upon it; nor that the mortgagee in order to obtain the ac-
commodation falsely represented himself to be solvent.1

517. An assignment of a chattel mortgage need not be
under seal unless the mortgage itself is required by statute to be
executed under seal.?

518. An assignment need not be recorded. The statutes
relating to recording or filing chattel mortgages do not apply to
assignments of such mortgages. Such a mortgage once having
been properly recorded or filed, the rights of the mortgagee are
secure against subsequent incumbrances made by the mortgagor,
and an assignee of the mortgage takes the same rights, and holds
them securely without any record or filing of the assignment.?
Although a mortgagor, after the mortgagee has assigned the mort-
gage to a third person as collateral security, conveys the mort-
gaged property to the mortgagee by bill of sale, in payment of
his debt, without the knowledge or consent of the assignee, and
the bill of sale is put upon record by the mortgagee, the mort-
gage is not cancelled, or affected thereby, although the assign-

‘ment be not recorded. The mortgagee acquires by such convey-
ance merely an equity of redemption in the mortgaged property.*

1 Jacobsen v. Dodd (Ct. of Errors &  * Bigelow v. Smith, 2 Allen (Mass.), 264,

Appeals of N. J. 1880), 10 Rep. 58. “A
security made for the accommodation of
another, on which it was understood that
the money should be realized in a partic-
ular manner, is not fraudulently misap-
propriated if the money is obtained in a
different way from that which was in-
tended ; if its negotiation effects the sub-
stantial purpose for which it was designed,
it is not material whether it was effected
in the precise manner contemplated, unless
the interest of the party making it is prej-
udiced by the manner in which it was
used.” Per Depue, J.
2 Gilchrist v. Patterson, 18 Ark. 575.

per Hoar, J.: “A mortgage duly recorded
gives certain rights to the mortgagee,
created and defined by the statute; but
the’statute does not change the nature of
the property, nor require that all subse-
quent changes in title shall be shown upon
the record. An assignment or release of
the mortgage is not required to be re-
corded. The mortgagor and mortgagee
may join in a sale, which will give a per-
fect title to the chattel sold, and the record
furnish no evidence of it.” Also see Hall
v. Redding, 14 Cal. 214.

# Baxter v. Gilbert, 12 Abb. (N. Y.)
Pr, 97.

415
§ 519.] RIGHTS OF THE PARTIES BEFORE FORFEITURE.

A mortgagor paying his mortgage debt without receiving the note
or bond secured, or even the mortgage itself, assumes his own risk
as to making payment to the proper person ; for the non-produc-
tion of these instruments by the mortgagee is a suspicious circum-
stance, and is sufficient to put the debtor upon inquiry, and ordi-
narily to make him chargeable with knowledge of the fraud, and
render him still liable to the assignee upon his bond or note for
the mortgage debt.!

519. There is no warranty of title to the mortgaged goods
implied in an assignment by a mortgagee of his interest in the
mortgage, without an express warranty of title.

1 Baxter v. Gilbert, 12 Abb. (N. Y.) Pr. 2 Jones v. Huggeford, 3 Met. (Mass.)

97, per Hilton, J. 515,
416
CHAPTER XI.

MORTGAGES OF SHIPS.

I. Laws of the United States in regard | III. Rights and liabilities of the parties,
to recording, 520-531. 540-549.

II. Priority as between mortgages and | IV. Remedies for enforcing such mort-
liens, 532-539. gages, 550-554.

I. Laws of the United States in Regard to Recording.

520. The statutory enactment of the United States upon
this subject is as follows:1 No bill of sale, mortgage, hypotheca-
tion, or conveyance of any vessel, or part of any vessel, of the
United States, shall be valid against any person other than the
grantor or mortgagor, his heirs and devisees, and persons hav-
ing actual notice thereof, unless such bill of sale, mortgage, hy-
pothecation, or conveyance is recorded in the office of the col-
lector of the customs where such vessel is registered or enrolled.
The lien by bottomry on any vessel, created during her voyage,
by a loan of money or materials necessary to repair or enable her
to prosecute a voyage, shall not, however, lose its priority, or be
in any way affected by this statute.2 The collectors of the cus-
toms shall record all such bills of sale, mortgages, hypothecations,
or conveyances, and also all certificates for discharging and can-
celling any such conveyances, in books to be kept for that purpose,
in the order of their reception; noting in such books, and also on

1R. S. §§ 4192-4194 ; Act of July 29,

1850.

2 The object of this proviso was to
make it entirely clear that « bottomry
bond did not come within the statute, as
it might otherwise be contended that it
was in some sense a hypothecation of the
vessel, and therefore required to be re-
corded. It cannot be contended that such
a lien only is out of the purview of the
statute, and that all other liens not re-

27

corded are to be postponed to that of a
mortgagee. Thus a lien for repairs may
be created by a local statute and given pri-
ority to a recorded mortgage. The Wm.
T. Graves, 14 Blatchf. 189.

See, however, The Kate Hinchman, 7
Biss. 238, where Judge Drummond was
of opinion that the proviso refers to mari-
time liens, and not to those created by
statute. And see Scott’s case, 1 Abb. (U.
8.) 836. See §§ 586-539.

417
§ 521.] MORTGAGES OF SHIPS.

the bill of sale, mortgage, hypothecation, or conveyance, the time
when the same was received; and shall certify on the bill of sale,
mortgage, hypothecation, or conveyance, or certificate of discharge
or cancellation, the number of the book and page where recorded ;
but no bill of sale, mortgage, hypothecation, conveyance, or dis-
charge of mortgage or other incumbrance of any vessel, shall be
recorded, unless the same is duly acknowledged before a notary
public, or other officer authorized to take acknowledgment of
deeds. ‘The collectors of the customs shall keep an index of such
records, inserting alphabetically the names of the vendor or mort-
gagor, and of the purchaser or mortgagee, and shall permit such
index and books of records to be inspected during office hours,
under such reasonable regulations as they may establish; and
shall, when required, furnish to any person a certificate, setting
forth the names of the owners of any vessel registered or enrolled,
the parts or proportions owned by each, if inserted in the register
or enrolment, and also the material facts of any existing bill of
sale, mortgage, hypothecation, or other incumbrance upon such
vessel recorded since the issuing of the last register or enrolment,
namely, the date, amount of such incumbrance, and from and to
whom or in whose favor made.?

521. The mortgage should be recorded in the office of the
collector of the port which is the home port of the vessel, and
not the port of last registry or enrolment when not such home
port.2 The laws provide for a temporary registry when the
owner acquires title to a vessel in a district other than that in
which he resides; but this is to enable him to bring the vessel
to the home port, where she can obtain her permanent registry.
The character of this temporary registry is expressed upon the
face of it, and is delivered up to the collector on the issuing of the
permanent registry. This temporary registry continues only until
the vessel arrives at the port to which she belongs, and where
she may obtain a renewal of her permanent documentary title.

1 The collector shall receive for each Smith, 7 Wall. 646; overruling Potter v.
such certificate one dollar. Irish, 10 Gray (Mass.), 416, and Chad-

2 Blanchard v. The Martha Washington, wick v. Baker, 54 Me. 9, which hold that
1 Cliff. 463; Hays v. Pacific Mail Steam- record should be made in the district of

ship Co. 17 How. 596, 598; Johnson v. last registry, though not the home port of
Merrill, 122 Mass. 153; White’s Bank v, the vessel.

418
LAWS OF UNITED STATES IN REGARD TO RECORDING. [§ 522.

“ Her name, and the name of her home port, remain painted on
her stern, notwithstanding this temporary document, and satisfy
the requirement of the act in that respect, and both continue until
a new home port is acquired by a change of ownership, requiring
a permanent registry or enrolment on account of the different res-
idences of the owners, when the name of that port is substituted.
And, confining the record to the home port, there is great propri-
ety and convenience in requiring bills of sale and mortgages of the
whole or parts of a vessel to be made matters of record in this
office, as in the registries there are all the names of all the owners
under oath, together with their residences. .... There can be
very little difficulty on the part of a purchaser or mortgagee in
ascertaining the true condition of the title of a vessel, as it re-
spects written evidences of the same, or of incumbrances thereon,
from an examination of the records of the collector’s office at the
several home ports of the vessel, as the records of the last home
port refer to the preceding one, the last bill of sale incorporating
into it a copy of the previous certificate of registry.” 4

A record of a mortgage in the collector’s office of a port which
is not the home port of the vessel affords the mortgagee no protec-
tion as against subsequent purchasers and creditors without notice.”

522. This statute* is limited in terms and effect to vessels
of the United States.4 If, upon the sale of a vessel already en-
rolled to a person residing at another port, no new register or
enrolment, such as is required by statute,’ is taken out or applied
for, she ceases to be a vessel of the United States, and a subse-
quent mortgage of her acquires no validity by being duly re-
corded. In like manner the statute has no application to a ves-
sel which has never been registered or enrolled at all under the
laws of the United States. A mortgage of such a vessel must be
recorded in accordance with the statutes of the state relating to
the recording of personal mortgages where the vessel is at the
time.’ Thus if a mortgage be made of a vessel before it is regis-

1 White’s Bank v. Smith, 7 Wall. 646, 5 U. S. St. Dec. 31, 1792, §§ 3, 14;

per Nelson, J. Feb. 18, 1793, §§ 2,5; U.S. R.S. §§
2 The John T. Moore, 3 Woods, 61. 4141, 4171, 4311, 4312.
8 St. July 29, 1850,§ 1; U.S. R.8. § 6 Johnson v. Merrill, 122 Mass. 153.

4192. 7 Veazie v. Somerby, supra; Foster v
* Veazie v. Somerby, 5 Allen (Mass.), Perkins, 42 Me. 168.

280. .

419
§ 523.] MORTGAGES OF SHIPS.

tered or enrolled, and the mortgage is duly recorded according to
the laws of the state where the vessel was at the time, and before
the vessel is registered or enrolled, it is attached, and after the
registry or enrolment another mortgage is executed and duly re-
corded in the office of the collector of custotns, the prior mort-
gage will be valid and effectual as against both the attachment
and the subsequent mortgage.!

A mortgage of a ship on the stocks, to be built and completed
afterwards, as security for advances made and to be made, is not
valid as against attaching creditors, unless it be recorded as a
mortgage of other chattels is required to be recorded in accord-
ance with the state statute, or the property be actually delivered
to and retained by the mortgagee.”

523. Vessels of the United States are such as have been
built in the United States and belonging wholly to citizens of the
United States, and have been registered as required by statute ; ®
or if coasting vessels, such as have been enrolled and licensed as
sucht In the latter case a vessel must be both enrolled and
licensed, to make her a vessel of the United States. In a suit in
regard to the validity of a mortgage of a vessel recorded in the
office of a collector of customs, the mortgagee must show that the
vessel was of such a character or was owned in such a way that
she became a vessel of the United States; and if the vessel be em-
ployed in the coasting trade, he must show that she was both
enrolled and licensed. A purchaser or judgment creditor is not
concluded by the fact that the mortgage was recorded in the
custom-house.®

A canal boat or a scow is not a vessel of the United States
within the meaning of the act relating to the recording of mort-
gages. The fact that such a boat is found upon a navigable
river at the time it is taken upon attachment or upon execution
is immaterial.®

1 Foster v. Perkins, 42 Me. 168. v. Emerson, 59 Me. 319; Stinson v. Minor,

* Goodenow v. Dunn, 21 Me. 86; and 34 Ind. 89; Davidson v. Gorham, 6 Cal.
see Bonsey v. Amee, 8 Pick. (Mass.) 236. 343.

8 Act of Congress, Dec. 31, 1792, § 1. 6 Hicks v. Williams, 17 Barb. (N.' Y.)

4 Act of Feb. 18, 1798, § 1. ° 523, .

5 Best v. Staple, 61 N. Y.71; Perkins

420
LAWS OF UNITED STATES IN REGARD TO RECORDING. [§§ 524, 525.

A pleasure yacht is not within the meaning of the recording
act.

524, A mortgage of a vessel at sea is complete upon the de-
livery of the instrnment, in case there be no statute requiring a
record of it; but if the mortgagee neglects to take possession on
the return of the vessel, the transfer is liable to be impeached by
the mortgagor’s creditors on the ground of fraud.?

And so at common law, a bill of sale of a ship by way of mort-
gage is good as against creditors, although it be made while the
vessel is lying in port, and possession be not taken by the pur-
chaser, if by the terms of the agreement of the parties the mort-
gagor is to have the conduct and management of the voyage on
which the ship is then destined.®

Under the present statutes of the United States, a mortgage to
be valid must be recorded according to the terms of the statute.
But a sale of a vessel at sea forfeits her national character, unless
the new owner pursues all the requisites of the law to obtain a
new registry within three days after her arrival in a port of the
United States.* If, therefore, such purchaser mortgages the ves-
sel while still at sea, neither the bill of sale nor the mortgage
being registered at the port of departure where the vessel was
registered, the vessel having lost her national character, she is not
subject to the provisions of the statute in respect to recording
sales and mortgages ; and the mortgage is good against attaching
creditors of the new owner who have levied upon her immediately
on her arrival in a port of the United States, if neither party take
the requisite steps to obtain a new registry. Registration is not
compulsory upon the owner. It is a privilege and advantage
which the law offers to him, but of which he may or may not avail
himself as he chooses.5

525. A mortgage of a registered vessel need not be re-
corded in pursuance of any state statute, in order to give the
mortgagee a preference over a subsequent purchaser or mortgagee,

1 Veazie v. Somerby, 5 Allen (Mass.), 3 D’Wolf v. Harris, 4 Mason, 515;
280. Winsor v. McLellan, 2 Story, 492.

2 Badlam v. Tucker, 1 Pick. (Mass.) *R. S. § 4166; Act March 2, 1803,
389; Portland Bank v. Stubbs, 6 Mass. § 3.
422; Goodenow v. Dunn, 21 Me. 86; and 5 Davidson v. Gorham, supra,
see Davidson v. Gorham, 6 Cal. 343.

421

.
§ 526.) MORTGAGES OF SHIPS.

if it be duly recorded according to the statute of the United
States in the office of the collector of the home port of the ves-
sel. The statute of the United States excludes all state legisla-
tion upon the subject, whether such legislation be prior or subse-
quent to the United States statute. Thus, such a mortgage made
in New York need not be filed and registered at the end of a year
according to the laws of that state. Such filing and refiling have
no effect whatever upon the security.! ‘¢ Previous to this Act of
1850, providing for the recording of bills of sale and mortgages
of vessels, they were required to be filed by the laws of many of
the states in the clerk’s office, or some place of public deposit in
the town or city where the vendor or mortgagor resided, in order
to protect the interest of the vendee or mortgagee against sub-
sequent bond fide purchasers or mortgagees. And this practice.
continued in many places after the passage of the Act of 1850, for
abundant caution, on account of a doubt as to the effect that
would or might be given to it as a recording act from the very
imperfect provisions of the law. There can be no doubt, however,
but that the system of recording these instruments in the collec-
tor’s office, at the home port of the vessel, furnishes a much readier
opportunity to persons dealing in this species of property, to ob-
tain'a knowledge of the condition of the title, than by the former
mode under the state law.” ?

526. A record under a state law of a mortgage of a vessel
not enrolled ceases to be effectual after enrolment.’ ‘ Before
the vessel is registered or enrolled, a mortgage of it will be valid
if recorded agreeably to the laws of the state. After it is regis-
tered or enrolled, a mortgage of it will not be valid unless recorded
as required by the laws of the United States. To hold otherwise
would go far to defeat the very object which the registry laws of
the United States were intended to secure.” 4

For

1 White’s Bank v. Smith, 7 Wall. 646;
Aldrich v. Zitna Co. 8 Wall. 491; reversing
S. C. 26 N.Y. 92; and overruling in part
Thompson v. Van Vechten, 5 Abb. (N. Y.)
Pr. 458; Folger v. Weber, 16 Hun (N. Y.),
512; Best v. Staple, 61 N. Y. 71; Cun-
ningham v. Tucker, 14 Fla. 251; Wood »v.
Stockwell, 55 Me. 76; Shaw v. McCand.-
less, 36 Miss. 296; Fontaine v. Beers, 19
Ala. 722; Robinson v. Rice, 3 Mich. 235 ;

422

The Grace Greenwood, 2 Biss. 131.
cases of registration according to state
laws prior to the Act of 1850 see Beau-
mont v. Yeatman, 8 Humph. (Tenn.) 542.

2 White’s Bank v. Smith, supra, per
Nelson J.

3 Perkins v. Emerson, 59 Me. 319.

4 Perkins v. Emerson, supra, per Wal-
ton, J.
LAWS OF UNITED STATES IN REGARD TO RECORDING. [§§ 527-529.

But while this seems to be the more reasonable interpretation
of the registry laws of the United States, a different construction
was adopted in Indiana, where it was held, that if before a vessel
is registered or enrolled as a vessel of the United States a mort-
gage thereof is executed and duly recorded according to the law
of the state where such vessel is, the mortgage will be valid against
one purchasing for value and without actual notice, after the ves-
sel has been enrolled in the office of the surveyor of a port, al-
though the mortgage has not been recorded in that office.}

527. As between the parties and as against persons having
actual notice a mortgage of a vessel is good without acknowledg-
ment and record.?

528. One holding the absolute legal title to a vessel,
though he be a mere agent or trustee for others, may make a
_ valid mortgage to one who takes it in good faith and without
notice, express or implied, that the making of it was an act out-
side of the authority of the apparent owner? If the nominal
owner of a vessel execute a mortgage upon a vessel, the title of
which is in his name, to secure money loaned to the real owner,
for the benefit of the vessel, he is not personally liable for the
debt, unless the mortgage contains a covenant on his part to pay,
or he gives some other personal obligation for the debt.*

If the owner of a vessel, after having given a bill of sale in the
nature of a mortgage, be allowed to remain in possession and act
as absolute owner without any change of her register, and he
afterwards sells or mortgages the vessel, or gives a bottomry
bond, to one who has no notice of the mortgage, the lien of the
latter will be preferred to the mortgage.5

529. A bill of sale of a vessel absolute in its terms, like

1 Stinson v. Minor, 34 Ind. 89. 8 Atherton v. Phoenix Ins. Co. 109 Mass.
2 Moore v. Simonds, 100 U. §. 145; 19 32.
Am. L. Reg. 394; Best v. Staple, 61 N. Y. # Jenkins v. Wheeler, 2 Abb. (N. Y.)
71; The John T. Moore, 3 Woods, 61; App. Dec. 445. See Richards v. Stephen-
Cape Fear Steamboat Co. v. Conner, 3 son, 57 Me. 51.
Rich. (S. C.) 335; Hobbs v. The Inter. 5 The Mary, 1 Paine, 671; The Romp,
change, 1 W. Va. 57; Merrick v. Avery, Olcott’s Adm. 196.
14 Ark. 370; Parker Mills v. Jacot, 8
Bosw. N. Y.161. See § 312.

423
§§ 530, 531.] MORTGAGES OF SHIPS.

such a bill of sale of any other chattels, may be shown by parol
evidence to be only a mortgage.1 Evidence that the bill of sale
was recorded ; that the vessel was reénrolled in the name of the
assignee ; that a policy of insurance was taken out in his name
as owner, and that no note or bond was taken by him, is insuffi-
cient to overcome positive evidence that the bill was taken as a
mere security fora loan? °

530. Equitable Mortgages. A bond, which is insufficient
as a bottomry bond, may be good as a mortgage if it be duly re-
corded as such.®

An indorsement on a ship’s register at the time of sale, that
“the vessel should not be sold until the notes given for the pur-
chase money are paid,” constitutes an equitable mortgage, espe-
cially if the ship’s register be left with the vendor.*

A deposit of a bill of sale of a vessel with a power of attorney
to sell her, as security for advances of purchase money, does not
constitute a mortgage. The creditor takes only a naked power
of sale without any present conveyance of the property in mort-
gage.or pledge.> But if one advances the purchase money and
takes the bill of sale in his own name as security, he is a mort-

gagee.

531. Secondary evidence may be given of a lost mortgage.
Thus the testimony of the owner of a vessel, after the decease
of the mortgagee, that on a certain day he mortgaged her to such
mortgagee for a particular sum, together with a memorandum
upon her register of such mortgage, are competent to prove that
there was a mortgage of the vessel, and, in connection with tes-
timony of the executor of the mortgagee that on a careful search
he cannot find the original instrument among the testator’s
papers, to prove the contents of the mortgage.’

1 Morgan v. Shinn, 15 Wall. 105. See * Welsh v. Usher, 2 Hill (S. C.) Ch.
Gould v. Stanton, 16 Conn. 12: question- 167.
able law. 5 The Perseverance, Blatch. & H. Adm.
2 Morgan v. Shinn, supra. 385.
8 Greely v. Smith, 3 Woodb. & M. 236. & The Panama, Olcott’s Adm. 343.
See Webb v. Walker, 7 Cush. (Mass.) 46. 7 Atherton v. Phoenix Ins. Co. 109

Mass. 82.
424
PRIORITY AS BETWEEN MORTGAGES AND LIENS. [§§ 582, 583.

II. Priority as between Mortgages and Liens.

532. A mortgage, though duly recorded, is inferior to any
strictly maritime lien. It is also inferior to a valid bottomry
bond, whether this be given before or after the mortgage. Such
bond is a contract of an extraordinary kind, whereby the mas-
ter under circumstances of positive emergency, or of the highest
degree of expediency, his own credit and that of the owners
being of no avail, borrows money on the keel or bottom of the
ship to enable him to prosecute and continue the voyage, and
engages to repay upon the safe arrival of the ship at its port of
destination. This contract confers a right which can be enforced
against the ship only. It does not transfer the title to the prop-
erty, as does a mortgage; neither does it confer the right of
possession, as does a pledge; but it more resembles a lien which
can be enforced against the res, the chattel itself.

The wages of the last voyage of a vessel have precedence of all
earlier liens and incumbrances, when these exceed her full value ;
and in such case one who pays the wages may be subrogated to
the rank of the seamen, on the ground that he has saved expense.
A part owner may have such subrogation as against the mort-
gagee of the share of another part owner.? Liens for necessary
repairs or supplies contracted for by the master in a foreign port
have priority of a recorded mortgage.? But material-men who
furnish repairs and supplies to a vessel in her home port do not
acquire a maritime lien upon a vessel.4 If any such lien exists
it is one provided by statute; and it is a question upon which
the courts are divided whether such a lien has priority of a duly
recorded mortgage.

533. Liens for advances made in a foreign port to pay
for necessary repairs and supplies have priority over existing
mortgages to creditors at home. Such advances being for the se-
curity and protection of the vessel, they are for the benefit of
the mortgagees as well as of the owners. “It is not necessary to
the existence of the hypothecation that there should be in terms

1 Baldwin v. The Bradish Johnson, winv. The Bradish Johnson, supra. See
8 Woods, 582; The Mary Ann,1 Adm. §§ 536-539.

& E.8; The Feronia, 2 Adm. & E. 65. 5 The Emily Souder, 17 Wall. 666;
2 The J. A. Brown, 2 Lowell, 464. The Acme, 2 Ben. 386; S. C. 7 Blatchf.
8 Fox v. Holt, 36 Conn. 558. 366.

4 The Lottawanna, 21 Wall. 558; Bald- 425
§§ 534, 535.] MORTGAGES OF SHIPS.

any express pledge of the vessel, or any stipulation that the credit
shall be given on her account. The presumption arises that such
is the fact from the necessities of the vessel, and the position of
the parties considered with reference to the motives which gener-
ally govern the conduct of individuals. Moneys are not usually
loaned to strangers, residents of distant and foreign countries,
without security, and it would be a violent presumption to sup-
pose that any such course was adopted when ample security in the
vessel was lying before the parties. ‘The presumption, therefore,
that advances in such cases are made upon the credit of the vessel
is not repelled by any loose and uncertain testimony as to the sup-
positions or understandings of one of the parties. It can be re-
pelled only by clear and satisfactory proof that the master was in
possession of funds applicable to the expenses, or of a credit of his
own or of the owners of his vessel; upon which funds could be
raised by the exercise of reasonable diligence, and that the pos-
session of such funds or credit was known to the party making
the advances, or could readily have been ascertained by proper
inquiry.” The fact that the person making the advances makes
drafts therefor upon the owner does not deprive him of his lien
on the vessel.?

534. A mortgage is subordinate to the ordinary obliga-
tions to which a master may subject ;{. vessel by his con-
tracts. The master is pro hae vice the agent of the mortgagee.
Thus if the mortgagee allows the mortgagor to use a vessel in the
general freighting business, and a part of the freight be feloni-
ously abstracted from the cargo with the knowledge and assent of
the master, and the vessel be libelled by the consignee to recover
the value of the goods not delivered, the mortgagee cannot suc-
cessfully interpose his prior mortgage; but the vessel is liable for
the goods feloniously abstracted.?

535. A mortgagor who is allowed to remain in posses-
sion of a vessel has an implied authority to create liens
for repairs, which will take priority of the mortgage. The
mortgagee having allowed the mortgagor to continue in the ap-

1 The Emily Souder, 17 Wall. 666, per affirmed 15 Blatchf. 188, per Waite, Ch.
Field, J. J.

2 The Acme, 7 Blatchf. 366. 4 Williams v. Allsup, 10 C. B. N. 8.417;

5 The E. M. McChesney, 8 Ben. 150; Scott v. Delahunt, 65 N. ¥.128; S. C.5
26 Lans, 372.
PRIORITY AS BETWEEN MORTGAGES AND LIENS.

[§ 536.

parent ownership of the vessel, making it a source of profit and a
means of earning wherewithal to pay off the mortgage debt, the
relation so created by implication entitles the mortgagor to do all
that may be necessary to keep her in an efficient state for that
purpose.! It is but reasonable to infer in such case that the mort-
gagor had authority to cause repairs to be made upon the usual
and ordinary terms; and these terms are that the shipwright shall
have a lien for the work done and the labor expended upon the

vessel.

This rule has been applied not only in case of vessels navigat-

ing.the ocean, but as well in case of a canal boat.

In such case

the shipwright is allowed to retain possession as security for re-
pairs made at the request of the mortgagor, or of one standing in

his place as owner?

But there is no maritime lien in favor of a shipwright, and
therefore he has no lien unless he retains actual possession?

536. It is competent for a state to determine the rank of
liens upon domestic vessels ;4 and courts of admiralty will en-
force liens given by the local law, by process in rem, where the
cause of action is maritime in its nature, and where the claim is
not maritime will recognize the lien, in the distribution of pro-

ceeds in the registry of the court.

In enforcing such liens courts

of admiralty are governed by the terms of the statutes creating
the liens, and not by the general doctrines of maritime law.®

1 Williams v. Allsup, 10 C. B. N. S.
‘417; S.C. 30 L. J. (C. P.) 353, 355, per
Erle, C. J.

In the same case Mr. Justice Willes
said: “The mortgagor is permitted by
the mortgagees to remain in possession of
the vessel for the purpose of using it in
the ordinary way, and he cannot use it in
the ordinary way unless it is repaired.
That seems to me to involve the permis-
sion of the mortgagees to get the vessel
repaired upon the ordinary terms, though
not to pledge the mortgagee’s credit.
Then the shipwright who does the repairs
is entitled to his lien as incidental to his
employment.”

2 Scott v. Delahunt, 65 N. Y. 128.

8 The Two Ellens, 4 L. R. P. C. 161;
S C.3L. R. Adm, & E. 345, 358.

4 The Granite State, 1 Sprague, 277;
The Wm. T. Graves, 14 Blatchf. 189;
Thorsen v. The J. B. Martin, 26 Wis.
488; The City of Tawas (Dist. Mich.
1880), 3 Fed. Rep. 170; The Harrison
(Dist. of Cal.), 2 Abb. (U. 8.) 74.

5 The Wm. T. Graves, supra; Weaver

‘vy. The S. G. Owens, 1 Wall. Jr. 359.

Liens depending upon state laws, under
the 12th rule of the admiralty, as amended
in 1859, are left to be dealt with by the
state tribunals. This rule takes from the
district courts the right of proceeding in
rem for supplies and repairs, for which a
state statute gives a lien. Maguire v.
Card, 21 How. 248. Otherwise under
new rule of 1872. The Circassian, 11
Blatchf. 472,

427
§ 536.) MORTGAGES OF SHIPS.

Therefore, where a statute of a state confers a lien for repairs
upon a vessel, and in terms gives such lien preference of all other
liens, except that for seamen’s wages, a court of admiralty will
enforce such lien against a prior mortgagee, and against the title
acquired by a purchaser under a foreclosure of the mortgage.
Judge Wallace rendering a decision of the District Court of the
United, States to this effect,! which was affirmed by the Circuit ,
Court, said: “ The legislation does not trench upon any of the
rules of the admiralty regulating priorities between liens, because
neither of the liens involved are maritime liens. As to other liens,
in dealing with questions of priority courts of admiralty are gov-
erned by equitable principles. .... But it is a controlling rule
in admiralty, that priority between claims depends not upon pre-
cedence in date, but upon the favor due to the nature of the claim ;
priority in time must yield to priority in rank; the claim of the
material-man must give way to that of the seaman, and both to
that of the salvor; and, as between holders of bottomry bonds,
the last in point of date is entitled to priority of payment; be-
cause the last loan furnished the means of preserving the ship,
and without it the former lenders would have entirely lost their
security. Applying this rule in determining the question of pri-
ority between a mortgage and a claim for repairs, it seems very
clear that the latter should be regarded with the highest favor,
and should outrank the mortgage. ....

“It remains to inquive whether the lien given by the state law
contravenes any legislation of Congress concerning ships and ves-
sels... .. The only statute of Congress bearing upon the pres-
ent question is that by which mortgages on vessels are requited to
be recorded in the office of the collector of customs where the
vessel is registered or enrolled, in order to be valid as against any
person having no notice of the mortgage. It has been held that
by force of this statute a mortgage is valid, notwithstanding
state legislation which requires additional formalities calculated to
give notice to creditors or subsequent purchasers.2 It has been
argued that the states can pass no laws which can affect the va-
lidity of mortgages so recorded. That Congress could invest
mortgages on vessels with such invulnerability is probably true,
but no such intent can fairly be implied from the language of the
act. It isa registration act, and as such excludes all state legis-

1 The Wm. T. Graves, 14 Blatchf. 189. 2 Aldrich v. ta Co. 8 Wall. 491.
428
PRIORITY AS BETWEEN MORTGAGES AND LIENS. [§ 537.

lation upon the same subject; and this was the only point de-
cided by the Supreme Court in Aldrich v. tna Company. It
has been held that liens given by the laws of a state for supplies
furnished a domestic vessel take precedence of a mortgage sub-
sequently recorded! This conclusion of necessity involved the
proposition that the states are competent to create liens which
will take preference to the lien of a mortgage recorded pursuant
to the act of Congress; and I see no reason to doubt their com-
petency to determine the conditions of priority, so long as they do
not infringe upon the legislation of Congress, by imposing addi-
tional requisites in the recording of mortgages.”

In Massachusetts a lien is given for labor and material used in
the construction or repair of a vessel, and for supplies furnished
her, in preference to all other liens except mariners’ wages.? This
lien is preferred to a prior mortgage, and may be enforced after
the mortgagee has taken possession.®

Liens for labor performed and materials used in the construe-
tion or repairing of a vessel have priority of a mortgage when
such priority is given by a state statute, whether the mortgage be
recorded under state laws before the vessel is registered as a ves-
sel of the United States, or it be recorded under the laws of the
United States.*

537. The state courts have jurisdiction to enforce a lien
created by its laws for supplies furnished, or repairs done, to a
vessel within such state.6 If the owner, who has exclusive pos-

1 The Harrison; 2 Abb. (U. S.) 74.

2G. S.¢. 151, § 12. ‘

8 The Granite State, 1 Sprague, 277;
Donnell v. The Starlight, 103 Mass. 227.

Under a contract to furnish labor and
materials for several vessels for a gross
sum, no lien can be enforced upon one of
them. Neither can such lien be main-
tained if the original contract by agree-
ment of the parties to it be destroyed after
the work is done, and «a new contract
applicable to one vessel only be made
and antedated as of the time of the origi-
nal contract. Jones v. Keen, 115 Mass.
170. The giving of notes by the builder
of a ship to » person who has furnished
materials used in her construction, merely

for his accommodation, and not to be cred-
ited on the bill, is not payment for the ma-
terials, and does not prevent the enforcing
of alien for them. Jones v. Keen, supra;
and see The Napoleon, 7 Biss. 393 ; Mer-
rick v. Avery, 14 Ark. 370.

4 Jones v. Keen, supra; The Norfolk
& Union, 2 Hughes, 123; Hatton v. The
Melita, 3 ‘Hughes, 494; Reeder v. The
George’s Creek, 3 Hughes, 584; The
Hiawatha, 5 Sawyer, 160; The Wm. T.
Graves, 8 Benedict, 568; The Granite
State, supra.

5 Maguire v. Card, 21 How. 248, 250;
Donnell v. The Starlight, supra; Fos-
ter v. The Richard Busteed, 100 Mass.
409 ; McMonagle v. Nolan, 98 Mass. 320;

429
§§ 538, 589.] MORTGAGES OF SHIPS.

session and control of her, resides at the port where the supplies
were furnished, or the repairs were made, it does not matter that
the vessel is registered in the port of another state in the name
of the mortgagee residing there.

538. A domestic vessel, within the meaning of the statutes
of a state giving liens thereon for repairs and supplies, is one
whose home port is within such state. A vessel owned in a port
of any other state is a foreign vessel, and would be liable for
repairs made or for necessaries supplied, under the general mari-
time law of the United States.1 ‘‘ The enrolment of a vessel is
for the purpose of establishing her national character, and to give
her the privileges of an American vessel. In a question of owner-
ship inter partes, it is but priméd facte evidence of title in the per-
son in whose name she is registered and liable to be rebutted by
proof of actual ownership in another, whether temporary or ab-
solute, as lessee or vendee. . . . . The formal bill of sale reciting
the registry may be necessary for the purpose of enrolment, but
as between the parties, and those who deal with the vessel, and
where the national character is not in dispute, the person right-
fully in possession, navigating the vessel for his own use and
profit by officers and mariners appointed and employed by him-
self, will be considered the special owner, whether he be lessee,
wortgagee, or parol vendee, notwithstanding some other person
may be the registered owner, and have the so-called legal title or
general ownership in himself.” Thus, if a vessel be leased by a
merchant in Philadelphia from a merchant in Baltimore, and it
be furnished and equipped by the lessee in the former port, it
would not be considered a foreign vessel by those who dealt with
the lessee in that port, although the legal title and general owner-
ship still remained in the lessor. For the purpose of any liens
under the laws of Pennsylvania, Philadelphia would be considered
the home port of the vessel.

539. But by other decisions a recorded mortgage has pre-
cedence of a lien founded upon a state statute, and not strictly

and see Thorsen v. The J. B. Martin, 26 Jr. 359; Ex parte Easton, 95 U. S. 68;
Wis. 488. The Albany, 4 Dill. 439.
1 Weaver v. The S. G. Owens, 1 Wall. 2 Weaver v. The S. G. Owens, supra,
per Grier, J.
430
PRIORITY AS BETWEEN MORTGAGES AND LIENS. [§ 539.

maritime in character. In one case! it was declared that inas-
much as the admiralty jurisdiction conferred upon the district
courts by the judiciary act is an exclusive jurisdiction,? a state
statute cannot create, upon property that is subject exclusively to
that jurisdiction, charges and incumbrances that in any way
partake of the character and force of maritime liens, that shall be
superior to other charges or incumbrances of an older date. Ac-
cordingly, it was held that while a lien for supplies and materials
created by a state statute may be recognized and enforced in a
court of bankruptcy, such a lien could not, like a maritime lien, be
made to relate back, and take priority over a mortgage recorded
prior to the creation of such lien.

In another case a recorded mortgage was held to be entitled to
preference to alien created by a state statute for supplies and
materials furnished at the home port, upon the ground that such
a lien is not within the exception of the United States statute as
to liens by bottomry.2 ‘ This would seem to mean a maritime
lien, and not a lien created solely by a law of one of the states.
It was intended that in all such cases as are referred to in the
proviso, the vessel should be bound independent of the mortgage ;
but as the lien in this case was not a maritime lien, it is not
strictly within the terms of the proviso.” 4

The cases are numerous which hold that a statutory lien for
supplies and materials furnished in the home port is subordinate
to a mortgage duly recorded. The legislation of Congress in re-
gard to recording mortgages is within its constitutional authority,
and it therefore overrides all state legislation upon the subject. A
state cannot, by its legislation, create a lien upon a vessel which
shall have priority over one already existing by virtue of an act
of Congress.5

1 Scott’s case, 1 Abb. (U. S.) 336.

2 The Hine v. Trevor, 4 Wall. 555; Bal-
lard v. Wiltshire, 28 Ind. 341; Stewart v.
Harry, 3 Bush (Ky.), 438; Griswold v.
The Otter, 12 Minn. 465; The General
Buell v. Long, 18 Obio St. 521; In re
The Josephine, 39 N. Y. 19.

% The Kate Hinchman, 7 Biss. 238.

* Per Drummond, J., in The Kate
Hinchman, supra.

5 Baldwin v. The Bradish Johnson, 3
Woods, 582; The John T. Moore, 3
Woods, 61; The Kate Hinchman, supra ;
The Skylark, 2 Biss. 251; The Lady
Franklin, 2 Biss. 121; The Grace Green-
wood, 2 Biss. 131; The Great West No.
2 v. Oberndorf, 57 Ill. 168; The Hilton
v. Miller, 62 Ill. 230; Merrick v. Avery,
14 Ark. 370. But see § 537.

431
§§ 540, 541.] MORTGAGES OF SHIPS.

Ill. Rights and Liabilities of the Parties.

540. A mortgagee in possession is personally liable for
supplies furnished upon his credit, or procured by the master
while acting as his agent. Such a mortgagee to whom supplies
for the use of the vessel have been furnished, under such circum-
stances that he is liable for them, is properly described as owner
in a declaration in an action to recover for the supplies! What-
ever be the subject matter of a mortgage the title vests in the
mortgagee, and unless there be an agreement to the contrary,
the right of possession follows the right of property.

But the mere legal ownership conferred by a mortgage though
accompanied by possession does not necessarily make the mort-
gagee liable for the ship’s debts.2 The question in each case is,
Were the repairs done or the goods supplied on the credit of the
mortgagee or on the credit of the actual owner ?

541. A mortgagee of a vessel not in possession is not
personally liable as owner for supplies or repairs, although he
holds a bill of sale of her absolute in terms, but intended only as
collateral security for a debt, and the vessel is registered in his
name.? Chief Justice Bigelow, delivering the decision of the Su-
preme Court of Massachusetts to this effect in the case of How-
ard v. Odell, said: ‘“* The real question in all such cases is, With
whom was the contract made, and was the person who made it
authorized to bind the mortgagee? If the mortgagee was not in

1 Luce v. Hadley, 119 Mass, 229.
2 The Troubadour, L. R.1 Adm. & E.

son, 6 Duer (N. Y.), 358; M’Intyre v.
Scott, 8 Johns (N. Y.), 159; Philips v.

302.

8 Myers v. Willis, 17 C. B. 77; S.C.
18 C. B.'886; Morgan v. Shinn, 15 Wall.
105; Howard v. Odell, 1 Allen (Mass.),
85; Cutler v. Thurlo, 20 Me. 218; Rice v.
Cobb, 9 Cush. (Mass.) 302; Wood ».
Stockwell, 55 Me. 76; Winslow v. Tar-
box, 18 Me. 132; Ring v. Franklin, 2
Hall (N. Y.), 1; Macy v. Wheeler, 30 N.
Y. 231; Birkbeck v. Tucker, 2 Hall (N.
Y.), 121; Duff v. Bayard, 4 W. & S.
(Pa.) 240; Lord v. Ferguson, 9 N. H.
880; Dugan v. Pentz, 2 Lughes, 66; Fox
v. Holt, 36 Conn. 558; Weber v. Samp-

482

Ledley, 1 Wash. 226; Hesketh v. Stevens,
7 Barb. (N. Y¥.) 488; Thorn v. Hicks, 7
Cow. (N. Y.) 697; Champlin v. Batler,
18 Johns. (N. Y.), 169; Miln v. Spinola,
4 Hill (N. ¥.), 177; S. C. 6 Ib. 218;
Bryan v. Bowles, 1 Daly (N. Y.), 171;
Jones v. Blum, 2 Rich. (S. C.) 475; Cor-
dray v. Mordecai, Ib. 518; Ring v. Frank-
lin, supra; Birkbeck cv. Tucker, supra;
Weber v. Sampson, supra; Delano v.
Wright, 1 Robt. (N. Y.) 298; Weston v.
Wright, 1 Robt. (N. Y.) 312; Baxter v.
Wallace, 1 Daly (N. Y.), 303; S. C. 24
How. Pr. 484,
RIGHTS AND LIABILITIES OF THE PARTIES. [§ 541.

possession of the vessel and did not receive the benefit of her earn-
ings, or exercise any control over her, but only held his title as
collateral security for his debt, then it is very clear that neither
the master nor the mortgagor could claim to act as his agent, or
bind him by their contracts. In such case there is no authority,
either express or implied, by which they can undertake to act in
his behalf. Doubtless the mortgagee may by his acts hold him-
self out as the real owner of the vessel in such way as to lead per-
sons to believe that the master or mortgagor is his agent, author-
ized to make contracts concerning the vessel. He would then be
bound by them, under the ordinary rule of law regulating the re-
lation of principal and agent. Such was the case in Tucker v.
Buffington,! where the mortgagees not only had the enrolment of
the vessel taken out in their names as owners, but also substi-
tuted Boston, their own place of residence, on the stern of the
vessel, instead of Portland, where the mortgagors resided. The
court, in stating their reasons for holding the mortgagees liable in
that case, give great weight to this circumstance. But this court
has since decided in Brooks v. Bondsey 2 that a mortgagee of a
vessel is not liable for supplies, if the vessel is not in his possession
or employment, although she was enrolled in his name as absolute
owner. Indeed, it would be giving altogether too much weight to
the registry and enrolment of vessels to hold that persons whose
names appeared therein as owners were thereby made liable
for repairs and supplies. Every one conversant with shipping
and commercial dealings knows that vessels are often employed
under charter-parties, by which even the real owners are ex-
empted from all charges incurred in their management and navi-
gation. Whenever the charterer is by the terms of his contract
deemed to be owner pro hac vice no liability for supplies or re-
pairs attaches to the actual owner of the vessel in whom the legal
title is vested. It is therefore well understood among all per-
sons engaged in the business of making repairs or furnishing sup-
plies, that their right to recover payment therefor does not depend
on the registry or enrolment, but on the right and authority of
the person with whom they deal to act as agent for the owners
and to bind them by his contracts. The real transaction between
the parties is to be looked at, in order to ascertain whether that
which appears by the registry to be a legal title in a particular
115 Mass. 477. 217 Pick. 441.
28 433
§§ 542-544.] MORTGAGES OF SHIPS.

person is or is not such an ownership as will authorize the person
making the contract to act as agent.”

542. A mortgagee by an absolute bill of sale of an un-
divided share of a vessel who has never taken possession, nor re-
ceived any part of her earnings, nor in any way interfered in her
management, is not personally liable for supplies ordered by the
master, although they were for her permanent advantage. In this
respect, the mortgagee of a vessel stands on the same ground as
the mortgagee of any other species of property. It is not a ques-
tion of maritime lien, but of personal credit.1_ The master has no
power to pledge the latter, any more than a mortgagor of any
other kind of property, or his agent, has to pledge the credit of
a mortgagee not in possession for repairs or improvements made
upon it.

But if a mortgagee of part of a vessel not in possession and not
originally liable for supplies furnished her ‘orally promise to pay
for them if the creditor will not attach the interest of the other
part owners, he is not bound by the promise, it being within the
statute of frauds.?

543. Wages of master. — A mortgagee in possession is lia-
ble to the master for his wages, if the voyage be performed for
the benefit of the mortgagee. But if the master make a special
agreement as to his wages with the real owner or mortgagor, with
full knowledge of the conveyance to the mortgagee, he cannot
waive his special agreement, and sue the mortgagee as owner.®

544, A mortgagee of a vessel has the right of immedi-
ate possession unless restrained by agreement. He has the
same right of possession that belongs to a mortgagee of any other
personal chattel* Being entitled to possession he may maintain
replevin against an officer who has attached the vessel as the
property of the mortgagor. If he has actual possession he may
use all the remedies that a legal owner has, and one of these is
the right to file a libel in rem for earnings from towage.®

1 Blanchard v. Fearing, 4 Allen (Mass.), * Foster v. Perkins, 42 Me. 168.
118. See §§ 472-480. 5 Esson v. Tarbell, 9 Cush. (Mass.) 407.
2 Ames v. Foster, 106 Mass. 400. © Kearney v. A Pile-Driver (Dist. of N.
8 Champlin v. Butler, 18 Johns. (N.Y.) J. 1880), 3 Fed, Rep. 246.
169; Fisher v. Willing, 8 S. & R. (Pa.) 118.
434
RIGHTS AND LIABILITIES OF THE PARTIES. [§§ 545, 546.

A purchaser of a part of a vessel from the mortgagor is liable
in ‘trover to the mortgagee for a conversion of it if he refuses to
surrender it upon demand, although he be not in possession ex-
cept through the agency of the master. But his voluntary par-
ticipation in the earnings of the vessel, before and after the de-
mand, is an assertion of his title, and an acknowledgment of the
authority of the master to manage the vessel as his agent.

545. A mortgagee has no lien upon the earnings of a
vessel which he allows to remain in the mortgagor’s possession
and use; and he cannot compel a specific appropriation of them
to the payment of the debt.2 If he has the right of immediate
possession, he has a right to receive all the earnings of the ship,
whenever he thinks fit to enter into possession; and if the ship
has earned money he has a right, before the goods are delivered
in respect of which the money is earned, to give notice to the con-
signee, or to the charterer, that he is a mortgagee, and that he
requires the freight to be paid to him.? The freight to be earned
passes to the mortgagee by the mortgage, unless the mortgagor is
entitled to the possession by agreement. To enable the mort-
gagee to establish his right to the freight, it is necessary that he
should do some act asserting his right of possession; but as soon
as he does any act to show that the mortgagor is not his agent, he
is immediately entitled to have the freight paid to him.t The
mortgagee must in effect, however, take possession before he can
claim the freight or charter hire from the mortgagor. He has no
absolute right to the freight as an incident to the mortgage; and
he cannot intercept the freight without taking actual or construc-
tive possession of the ship.®

546. A mortgagee of a ship is entitled to the freight
afterwards earned in preference to an assignee of the freight.
Thus, where the owner of a ship assigned the freight not yet
earned, and three days afterwards, with the knowledge of the
assignee, mortgaged the ship, and the mortgage was duly regis-

1 Wood v. Stockwell, 55 Me. 76. * Kerswill v. Bishop, 2 Cromp. & J.
2 Tenney v. State Bank of Wis. 20 Wis. 529.
152, 5 Liverpool Marine Credit Co. v. Wil-

* Wilson v. Wilson, L. R. 14 Eq. 32; son, L.R.7 Ch. App. 507. See this case,
Brown v. Tanner, L. R. 3 Ch. App. 597; also, as to the position of a second mort-
Rusden v. Pope, L. R. 3 Ex. 269. gagee with respect to freight.

435
§§ 547, 548.] MORTGAGES OF SHIPS.

tered, and the assignee neglected to give notice of his claim upon
the freight to the mortgagee, it was held that the assignee could
not set up any right to the freight after it was earned in opposi-
tion to the claim of the mortgagee.1 “It appears to me,” said
Vice-Chancellor Malins, “ perfectly clear that the mortgage of the
ship, without notice of any assignment of the freight, carries with
it the absolute right to receive the freight. It is in vain for
the mortgagee of the freight, who has allowed the mortgage of
the ship to take place without notice, to set up any claim; and
it appears to me in this case the mortgagees have done all they
possibly could. It is very true that the Master of the Rolls, in
the case of Lindsay v. Gibbs,? says that where there is a charter-
party inquiries should be made and notice should be given. I am
rather disposed to think that that is a dangerous doctrine, because
the mortgagee of a ship has a right to say, I am going to take
the ship; I am going to realize my security; I know nothing of
any one whatever besides, for nobody has given me any notice.
Iam rather disposed to think that if he takes a mortgage of a
ship and registers it, he is not bound to make any further in-
quiries.”’

547. The hand that takes the freight must pay the wages.
If the mortgagee takes possession and claims the freight he must
pay the wages. On the other hand, if the mortgagee allows the
mortgagor to remain in possession, he may be supposed to allow
the mortgagor to enter into all engagements for the proper em-
ployment of the ship; and the mortgagor may remain in pos-
session until the ship arrives at her destination in order to fulfil
engagements actually incurred before notice of the mortgagee’s
claim to possession. If the mortgagor receives the freight he
must deliver up the ship free from any charge in respect of
wages?

548. The owner of a ship which is mortgaged may char-
ter her before the mortgagee takes possession, and the mortgagee
cannot interfere to prevent the execution of the charter-party un-
less it will materially injure or impair the value of his security ;

1 Wilson v. Wilson, L. R. 14 Eq, 82, 43, 8 Johnson v. Royal Mail Steam Packet
2 92 Beay. 522. Co. L. BR. 3 C. P. 38.

436
REMEDIES FOR ENFORCING SUCH MORTGAGES.  [§§ 549, 550.

and if he does so interfere, the court will release her on the appli-
cation of the charterer, unless such injury be shown by the mort-

gagee.}

549. A mortgagee by absolute bill of sale may maintain
an action for a conversion of the vessel. Such bill of sale,
intended by the parties as a mortgage, transfers the legal title
with the right of maintaining an action against a wrong-doer for
the conversion of the property. The holder of such a bill of sale
may maintain an action for conversion of the vessel against a per-
son claiming under a barratrous sale by the master; although on
learning of the barratry he had abandoned her to the insurers, and
received payment from them as on a total loss. The right to
bring the action is a personal right of action, accruing to the
owner at the time of the conversion. The measure of damages is
the value of the property at that time, with interest thereon.”

One who has taken a bill of sale of a vessel, absolute in form,
but intended only as collateral security, and who has never taken
the control or management of her, can recover on a policy insuring
against “barratry of the master, unless the insured be owner of
the vessel,” although he has charged the premium to the real
owner, if such charge has been without the owner’s authority.®

IV. Remedies for enforcing such Mortgages.

550. There is no jurisdiction in admiralty to enforce a
mortgage upon a ship where the mortgagee is out of possession,
nor to enforce payment of freight to the mortgagee. A mort-
gage of a ship has nothing maritime in it. There is nothing in
it analogous to those contracts which are the subject of admiralty
jurisdiction. A failure to perform the condition of the mortgage
cannot make it maritime. ‘Courts of admiralty have always
taken the same view of a mortgage of a ship and of the remedies
for the enforcement of them, that courts of chancery have done of

1 The Fanchon, 42 L. T. Rep. (N. 8.) Deely v. The Ernest & Alice, 2 Hughes, 70;
483, Prob. & Adm. Div. Apr. 21,1880; Leland v. The Medora, 2 Woodb. & M. 92.

S. C.22 Alb. L. J. 77. Prior to the decision in Bogart v. The
2 Clark v. Wilson, 103 Mass. 219. John Jay, supra, admiralty jurisdiction
8 Clark v. Washington Ins. Co. 100 in such cases had been exercised in Mas-
Mass. 509. sachusetts and Pennsylvania. See The

4 Bogart v. The John Jay, 17 How.399; Granite State, 1 Sprague, 277.
438T
§ 551.] MORTGAGES OF SHIPS.

such a mortgage and of any other mortgaged chattel. But from
the organization of the former and their mode of proceeding, they
cannot secure to the parties to such a mortgage the remedies and
protection which they have in a court of chancery. They have,
therefore, never taken jurisdiction of such a contract to enforce its
payment, or by a possessory action to try the title, or a right to
the possession of a ship.” }

551. Upon default in a mortgage of a ship the legal title
of the mortgagee becomes absolute just as in the case of a mort-
gage of other personal property. But while he is thereupon en-
titled to take possession of the property, he must apply it to the
payment of the mortgage debt. As a general rule, to accomplish
this he must resort either to a court of equity, or to statutory
remedies when such exist, for foreclosure to bar the mortgagor’s
right of redemption?

A secret entry for possession amounts to nothing. Thus a part
owner of a vessel mortgaged his interest in her while at sea, and
after her return he mortgaged to another all his interest in the
vessel, her appurtenances, outfits, cargo, and catchings, stating in
this last mortgage that the hull was subject to the prior mort-
gage. The vessel was then, with the knowledge of the first mort-
gagee, fitted out by her owners for a whaling voyage. <A few days
before the vessel sailed, the first mortgagee took formal possession‘
of her, when no one who was interested in her was on board, but
he gave no notice to his mortgagor that he had done so. On the
return of the vessel from that voyage her cargo was sold by the
agent of her owners; and it was held that as between the two
mortgagees the second mortgagee was entitled to the mortgagor’s
share of the proceeds, and might recover such share from the
agent.? The secret entry was void and gave the mortgagee no
rights. He might have taken and retained possession. He might
then have insisted upon his right to codperate in fitting out the
vessel, and to participate in her earnings. But not having done
so, and having allowed the mortgagor to fit her out, the mortgage
of her earnings should take precedence.

1 Bogart v. The John Jay, 17 How. 399, respect of mortgages of ships was given to
per Wayne J. In England by St. 3&4 the admiralty courts.
Vic. ch. 65, a more ample jurisdiction in 2 Bogart v. The John Jay, supra.
8 Milton v. Mosher, 7 Met. (Mass.) 244.
438
REMEDIES FOR ENFORCING SUCH MORTGAGES. [§§ 552-554.

552. One holding a mortgage of an entire vessel can en-
force it without regard to any equities existing between the
several mortgagors owning undivided parts of such vessel. The
rule that is applied in the case of a mortgage of several parcels of
land, that they shall be sold in such order as will best carry out
the principles of equity, has no application. There is no instance
where an entire parcel of land, mortgaged as such, has been sold
in separate undivided shares. There would be no propriety in
selling an undivided interest of a vessel which is covered by one
mortgage.! :

553. If a mortgaged vessel be sold under execution and
the proceeds be brought into court, a mortgagee may apply by
petition for the payment of his claim out of the proceeds.2 A
mortgage of a steamboat or other water craft, already subject to
attachment under proceedings in a state court, does not withdraw
such craft from the operation of the law authorizing such pro-
ceedings. Upon a sale to satisfy the judgment in the suit, the
proceeds will be applied first to the satisfaction of the judgment
and the surplus to the mortgage. But it is to be observed that
the mortgage in this case was executed and recorded under a state
statute, prior to the present statute of the United States, which
provides for the recording of mortgages of vessels in the office of
the collector of customs in the district where the vessel is reg-
istered.3

554. If the mortgagor fraudulently sell the entire prop-
erty in a vessel without the mortgagee’s assent, the latter may
elect to enforce his right against the vessel, or he may waive the
tort and follow in equity the proceeds of the sale in the form of
the promissory notes taken by the mortgagor for the purchase
money. The law imputes a trust in the mortgagor, and that trust
follows the notes received by him.!

1 Dalrymple v. Sheehan, 20 Mich. 224. 2 Provost v. Wilcox, 17 Ohio, 359; Kel-

2 Schuchardt v. The Angelique, 19 How. logg v. Brennan, 14 Ohio, 72. See Scott’s

239. And see The Acme, 2 Ben. 386; S. case, 1 Abb. (U. 8S.) 336.
C.7 Blatchf. 366. 4 McLarren v. Brewer, 51 Me. 402.

439
CHAPTER XII.

ATTACHMENT AND EXECUTION.

I. Liability of the mortgagor’s interest | III. The statutory provisions and equita-
to attachment and execution, 555- ble rules in the several states, 567-
565. 600.

II. Liability of the mortgagee’s interest
to attachment and execution, 566.

I. Liability of the Mortgagor’s Interest to Attachment and Exe-
cution.

‘

555. At common law a chattel pawned. or mortgaged was
not liable to attachment in an action against the pawner or
mortgagor. A mere equitable interest could not be taken and sold
on execution ; for where there is no legal right there is no legal
remedy. This was settled with great deliberation by the Court
of King’s Bench,! and is supported by all the common law au-
thorities. It is only by statute that a creditor can reach such
property at law.? Equities and rights to redeem are not subject
to execution at common law, because where there is no legal right,
and therefore no legal remedy,’ a creditor could reach such an
interest of his debtor only by resorting to a court of equity, where
he could be let in to redeem the incumbrance, unless, perhaps, he
may first remove the incumbrance and then lay an attachment or
levy an execution.

In many states statutes have been enacted for the purpose of
enabling creditors to reach, by attachment or execution, the rights
of their debtors to redeem their mortgaged chattels. Where such

1 Scott v. Scholey, 8 East, 467; Metcalf Melody v. Chandler, 12 Me. 282; Barrows
v. Scholey, 5 B. & P. 461. v. Turner, 50 Me. 127; Wolfe v. Dorr, 24
2 Badlam v. Tucker, 1 Pick. (Mass.) Me. 104; Smith v. Smith, 24 Me. 555;
889; Prout v. Root, 116 Mass. 410, per Haven v. Low, 2 N. H. 13,16; Marsh v.
Colt, J.; Hunt v. Holton, 13 Pick. (Mass.) Lawrence, 4 Cow. (N. Y.) 461; Bacon z.
216; Evans v. Warren, 122 Mass. 303; Kimmel, 14 Mich. 201.
Holbrook v. Baker, 5 Me. 309; Sawyer 8 Thornhill v. Gilmer, 4 Sm. & M.
v. Mason, 19 Me. 49; Sargent v. Carr, 12 (Miss.) 153.
Me. 396; Deering v. Lord, 45 Me. 293;

440
LIABILITY OF THE MORTGAGOR’S INTEREST. [§ 556.

statutes exist, they afford the only means by which an attach-
ment can be made, or an execution levied upon such equities of
redemption.1

556. But this rule has been changed in many states through
the adoption of equitable principles, under which the mortgagor
is regarded as the real owner of the property mortgaged, except
as against the mortgagee ; and now in these states the interest of
a mortgagor in possession of chattels and entitled to possession for
a definite period, may be seized and sold on execution.” If the
debt be payable on demand, and the mortgage provides that the
mortgagor shall remain in possession until default in payment,
there is no default until demand of payment is made, and conse-
quently until that time the mortgagor has an interest subject to
execution and sale.®

But it is only when the mortgagor has a certain ascertained
right of possession for a definite period that an execution can be
levied upon his interest. A mere equity of redemption, or a mere
permissive possession, which the mortgagee may terminate at his
pleasure, whenever he considers it necessary for his security, is not
the subject of a levy and sale, except by virtue of some statute.*
After default, when the mortgagee or the trustee in a deed of
trust has the right to take possession and sell, the mortgagor’s
interest cannot be levied upon, although only a portion of the de-
mand is due, and the property greatly exceeds in value the amount
then due and payable.®

1 Evans v. Warren, 122 Mass. 303.

2 Hall v. Sampson, 35 N. Y. 274; Hull
v. Carnley, 11 N. Y. 501; S. C. 2 Duer,
99; Mattison v. Baucus, 1 N. Y. 295;
Randall v. Cook, 17 Wend. (N. Y.) 53;
Otis v. Wood, 3 Wend. (N. Y.) 498; Fair-
banks v. Bloomfield, 5 Duer (N. Y.), 434;
Hamill v. Gillespie, 48 N. Y. 556; Gel-
haar v. Ross, 1 Hilt. (N. Y.) 117; Nelson
uv. Ferris, 30 Mich. 497; Doughten v.
Gray, 10 N. J. Eq. 323; Curd v. Wunder,
5 Ohio St. 92; M’Gregor v. Hall, 3 St.
&P (Ala.)397; Williams v. Jones, 2 Ala.
314; Magee v. Carpenter, 4 Ala. 469;
Harbinson v. Harrell, 19 Ala. 753.

This is the rule in New York, § 592;

Iowa, § 579 ; Missouri, § 587 ; New Jersey,
§ 591; Ohio, § 593; Wisconsin, § 600.

8 Livor v. Orser, 5 Duer (N. Y.), 501;
Hall v. Carnley, supra ; Wisser v. O’Brien,
44 How. (N. Y.) Pr. 209; Newsam »v.
Finch, 25 Barb. (N. Y.) 175. But see con-
tra, Howland v. Willett, 3 Sandf. (N. Y.)
607; Brown v. Cook, 3 E. D. Smith (N.
Y.), 123.

4 Tannahill v. Tuttle, 3 Mich. 104;
Eggleston v. Mundy, 4 Mich. 295; Bacon
v. Kimmel, 14 Mich. 201; Hawkins v.
May, 12 Ala. 673; Hopkins v. Scott, 20
Ala. 179; Perkins v. Mayfield, 5 Port.
(Ala.) 182.

5 Thompson v. Thornton, 21 Ala. 808;
Tannahill v. Tuttle, supra.

441
§ 557.] ATTACHMENT AND EXECUTION.

After forfeiture there is not left in the mortgagor such a pos-
sessory right or interest as is capable of being seized and sold
under execution against him;} and the rule is the same although
the mortgagor be allowed to remain in possession after the de-
fault,? for in judgment of law he is in possession merely by suf-
ferance, and as the bailee of the mortgagee.? It does not mat-
ter that the value of the property greatly exceeds the amount of
the debt secured; or that the sheriff leaves enough to satisfy the
mortgage. He cannot levy after forfeiture.*

If the mortgaged goods be attached or be seized upon execution
while they are in the mortgagor’s possession, the mortgagee may,
whenever entitled to possession by the terms of the mortgage, re-
cover possession from the officer, just as he might recover posses-
sion of the mortgagor if he had retained possession ;> or may sue
him for the conversion.®

557. After a mortgagee has taken possession by virtue of a
power in the mortgage authorizing him to do so if he deems him-
self unsafe, or for other reasons, the mortgagor has no longer any
interest in the property which can be seized upon execution, al-
though the debt be not due.’ He has then no possessory right,
but merely an equity of redemption, which is not the subject of
seizure and sale on execution. Thus, if a mortgage be conditioned
for the payment of a debt in one year, and the mortgagee take
possession within that time under a provision allowing him to take
immediate possession and sell under restrictions as to price, the
mortgagor has afterwards no leviable interest in the property.®

After a mortgagee or trustee under a trust deed has reduced
the mortgaged property to possession, it is no longer subject to be
taken on execution against the mortgagor.2 The property cannot
be taken from the mortgagee without first paying or tendering
the amount of the mortgage debt.

1 Eggleston v. Mundy, 4 Mich. 295; 6 Worthington v. Hanna, 23 Mich. 5380.
Baltes v. Ripp, 3 Keyes (N. Y.), 210; Bax- 7 Nichols v. Mead, 2 Lans. (N. Y.) 222;

ter v. Gilbert, 12 Abb. Pr. 97. S. C.47 N. Y. 653; Mattison v. Baucus,
2 Porter v. Parmly, 34 N. Y. Superior 1 N.Y. 295; Galen v. Brown, 22 N. Y.
Ct. 398; 43 How. Pr. 445. 87; Hall v. Sampson, 35 N. ¥. 274; Gel-

3 Stewart v. Slater, 6 Duer (N. Y.),83; haar v. Ross,1 Hilt. (N. Y.) 117; Eggle-
Champlin v. Johnson, 39 Barb. (N. Y.) ston v. Mundy, 4 Mich. 295.

606. 8 Nichols v. Mead, supra.
4 Ford v. Williams, 13 N. Y. 577. ® Palmer v. Forbes, 23 Ill. 301.
5 Saxton v. Williams, 15 Wis, 292. 10 Worthington v. Hanna, supra.

442
LIABILITY OF THE MORTGAGOR’S INTEREST. [§§ 558-560.

558. If the mortgage contain a provision that the mort-
gagee may take possession at any time when he deems him-
self insecure, his exercise of this right at once invalidates any
attachment that may have been previously made while the prop-
erty was in the mortgagor’s possession ; and the sheriff becomes
liable in trespass if he does not surrender possession upon the
mortgagee’s demand.!

559. A sale of all the right, title, and interest of a judgment
debtor in chattels covered by a mortgage gives the purchaser
all the interest of the debtor in the property that is vendible on
execution, whether the mortgage be valid or void. The sale
transfers not merely all the debtor’s rights and remedies as
against the mortgagee, but all the creditor’s rights as well; and
the mortgage may be void as to the creditor when it would be
valid against the debtor.?

560. The officer making the seizure and sale is not liable
to the mortgagee, although he sell the entire property gener-
ally and deliver possession of it to the purchaser without in any
way recognizing the lien of the mortgage,? for such a sale con-
veys a title subject to the mortgage, if the mortgage be a valid
one.* It conveys the mortgagor’s right of possession until the
law day, and his equity of redemption. Judge Denio, delivering
the judgment of the Court of Appeals of New York to this effect»
said: “ The sheriff had a right to sell the interest of the mortgagor
and to deliver the property to the purchaser, and the purchaser
was warranted in taking it into his possession and in using it for
the purposes to which it was adapted, until the day of payment ;
and he had moreover a right to pay the mortgage debt and thus
extinguish the lien. Now, whether the sheriff assumed to sell the
whole interest, ignoring the existence of the mortgage, or limited
the sale to the mortgagor’s interest, expressly recognizing the
mortgage and selling subject to it, the rights of the purchaser and

1 Hall v. Sampson, 35 N. Y. 274, revers- 556. And see Gassner v. Patterson, 23
ing S. C. 23 How. Pr. 84. Cal. 299 ; Brown v. Cook, 3 E. D. Smith,

2 Porter v. Parmley, 52 N. Y. 185. 198, is also in effect overruled on this point.

8 Manning v. Monaghan, 28 N. Y. 585; 4 Manning v. Monaghan, supra; Gou-
Hull v. Carnley, 11 N. Y. 501, 506, Ed- let v. Asseler, 22 N. Y. 225; Hamill v. Gil-
wards, J., dissenting; overruling S. C.2  lespie, supra.
Duer, 99; Hamill v. Gillespie, 48 N. Y. 5 O’Neal v. Wilson, 21 Ala. 288.

443
§ 561.] ATTACHMENT AND EXECUTION.

of the mortgagee would in either case be precisely the same.
The mortgagee would not be deprived of his interest by a sale
which did not recognize the mortgage, nor would the purchaser
under such a sale acquire anything more than the interest which
was bound by the execution, to wit, the right of the mortgagor in
possession, and the equity of redemption ; and these would be the
respective rights of the parties if the sale was limited in terms to
the interest which could effectually be sold, that is, the title of
the mortgagor. The effect of the sale on execution against the
mortgagor would be the same as a voluntary transfer of the mort-
gaged articles by the mortgagor to a third person. Such a dis-
position of them would not oust the mortgagee, whether his in-
terest was repudiated or was recognized. Such sales, whether
judicial or private, pass such title as the vendor, or party against
whom the authority to sell exists, had to part with, and no other.
The mortgagee, it is true, may be in a worse position, in some
respects, by the property passing into other hands, for he must
keep sight of it, so as to be able to find and take possession of it
when his title shall become absolute by a default in payment.
But he is not legally prejudiced, for the mortgagor may, when
not restrained by the terms of the mortgage, remove it from place
to place at his pleasure. He has the same right to do so which a
purchaser on execution against him has. I do not therefore see
any reason why such a sale as was made in this case should be
considered a conversion of the property, or a disturbance of the
mortgagee’s title. That title was not divested or interfered with,
and there was no disposition of the corpus of the property which
was not authorized by law. When the mortgagee’s title became
absolute he could claim his goods in the hands of the purchaser,
or maintain an action if they should be withheld from him.” }

561. But other courts hold the contrary doctrine, that a
sale under execution of the entire property instead of the mort-
gagor’s interest is an illegal act, for which the writ furnishes no
justification.? Such act is in defiance of the mortgagee’s rights,
and is a trespass for which he may, if entitled to possession, main-
‘tain replevin or trespass against the officer.

1 Hull v. Carnley, 11 N. Y. 501. ton v. Marsh, 8 Wis. 221; Cotton v. Wat-
° McConeghy v. McCaw, 31 Ala. 4473 kins, 6 Wis. 629; Tannahill v. Tuttle, 3
Frisbee v. Langworthy, 11 Wis. 375; Cot- Mich. 104.

444
LIABILITY OF THE MORTGAGOR’S INTEREST. [§§ 562-565.

The interest of the mortgagor may be sold on execution, but
nothing more.t If the mortgage be a valid instrument and the
purchaser has either actual or constructive notice of it, he acquires
only an equity of redemption; but if the mortgage be fraudulent,
and the purchase be made adversely to the claim of the mortgagee,
the purchaser may contest the mortgage and acquire an unincum-
bered title.”

562. The creditor has no right to sell the mortgaged prop-
erty in parcels, but must sell it together, so that when the mort-
gage falls due, the mortgagee may, if his debt be not paid, find
the property and take possession of it.®

563. When goods under attachment are mortgaged, and the
mortgage is duly recorded, and notice of it given to the attaching
officer, the property in the goods, subject to the lien created by
attachment, passes to the mortgagee. If the officer sell the goods
on mesne process, under authority of statute, and the plaintiff in
the suit fail to maintain it, the proceeds of the sale, in the officer’s
hands, belong to the mortgagee. In a suit by the mortgagee
against the officer for such proceeds, the latter cannot show in
defence that he has received no money for the goods, nor any
equivalent therefor.*

564. If a mortgagee give an accountable receipt for the
mortgaged property, when it is attached as the property of the
mortgagor, he is precluded from setting up his own prior mort-
gage in defence to an action upon the receipt, and showing that
the mortgage debt exceeds the value of the property.

565. An attachment of the mortgaged property by the
mortgagee for the mortgage debt is a waiver of his lien under
the mortgage. A lien by attachment and a lien by mortgage

This would seem to be the better rule,
especially if the officer assumes to sell the
entire interest when he has notice of the
mortgage.

1 Cotton v. Watkins, 6 Wis. 629 ; White
v. Cole, 24 Wend. (N. Y.) 116; Hamill
v. Gillespie, 48 N. Y. 556.

2 White v. Cole, sipra.

8 Manning v. Monaghan, 1 Bosw. (N.
Y.) 459. See § 600.

# Appleton v. Bancroft, 10 Met. (Mass.)
231.

5 Drew v. Livermore, 40 Me. 266. As
to the liability of a receiptor, see Went-
worth v. Leonard, 4 Cush. (Mass.) 414.

6 Evans v. Warren, 122 Mass. 303;
Whitney v. Farrar, 51 Me. 418; Libby v.
Cushman, 29 Me. 429.

445
§ 566.] ATTACHMENT AND EXECUTION.

upon the same property cannot coexist, for they are essentially
different, and affect very differently the rights of third persons.
But a mortgagee waiving his claim under the mortgage may at-
tach the mortgaged property to secure the debt, if he chooses to
do so, without violating any of the mortgagor’s rights.1

A mortgagee, by attaching the property mortgaged, in an action
for another debt due to him from the mortgagor, and satisfying
his execution out of the property, thereby waives his right to set
up the mortgage against subsequent attaching creditors of the
same property.”

Il. Ldability of the Mortgagee’s Interest to Attachment and Exe-
cution.

566. A mortgagee’s interest in personal property is not
subject to attachment or execution, so long at least as he holds
this interest in good faith as security, and has not applied it to the
satisfaction of his debt by foreclosure or otherwise.? It makes no
difference in this respect whether there has been a breach of the
condition or not. This is the rule as to mortgages of real estate ; 4
and equal if not stronger reasons exist for maintaining it as re-
gards mortgages of personal property. These are well stated by
Mr. Justice Colt in a recent case in Massachusetts. ‘+The gen-
eral property technically passes, but it passes only as needed for
the security intended. It is in the nature of a pledge. If it be
for the payment of money, then it is treated but as an incident of
the debt. An assignment of the mortgage carries the title to the
property, and an assignment of the debt, without the mortgage,
by operation of law, carries with it, in the absence of any con-
trolling agreement or waiver of the right, an equitable lien on the
property which attaches to it in the possession of the mortgagee,
and all claiming title under him, with notice. Upon payment or
tender to the mortgagee of the debt secured, the title, without
further formality, is revested in the mortgagor, and he may main-

1 Buck v. Ingersoll, 11 Met. (Mass.) 323; Woodside v. Adams, 40 N. J. L.
226. 417, per Depue, J.; Jackson v. Willard, 4
2 Haynes v. Sanborn, 45 N. H. 429. Johns. (N. Y.) 41; Glass v. Ellison, 9 N.
3 Prout v. Root, 116 Mass. 410; Thorn- H. 69; Trapnall v. State Bank, 18 Ark.
ton v. Wood, 42 Me. 282; Morton v. 53.
Hodgdon, 32 Me. 127; Brown v. Bates, * See Jones on Mortgages, § 701.
55 Me. 520; Chapman v. Hunt, 13 N. J. 5 Prout v. Root, supra.
Eq. 370; Doughten v. Gray, 10 N. J. Eq. :

446
STATUTORY PROVISIONS AND EQUITABLE RULES. [§ 567, 568.

tain replevin for it, or recover damages for its detention.1 But
what is more to the point, under our statutes, the mortgagor’s in-
terest in the property, so long as his right to redeem remains, is
liable, as in the case of real estate, to be attached and taken on
execution, as well after as before condition broken; and whether
the property be in the possession of the mortgagee or not. Under
such an attachment, the property passes into the custody of the
sheriff; and there is only left to the mortgagee the right to re-
deem, after a demand, within a limited time, of the amount due
on his mortgage. If this be paid, the possession of the attaching
officer cannot be interfered with, and the mortgagee’s title is
ended. The rights thus given by statute are inconsistent with
the existence of a similar right at the same time to attach the
same property in favor of creditors of the mortgagee. It is im-
possible that two officers should have equal right of possession by
virtue of attachments against different parties in favor of different
creditors.” But after forfeiture, the title having become absolute
in the mortgagee, the property may be levied upon by virtue of
an execution against him, although it still remains in the hands
of the mortgagor.”

TI. Statutory Provisions and Equitable Rules in the several
States.

567. Alabama. — It is provided by statute that executions
may be levied on an equity of redemption in either land or per-
sonal property. When any interest less than the absolute title is
sold, the purchaser is subrogated to all the rights of the defend-
ant, and is subject to all his disabilities.?

Under this statute, the interest of one who has conveyed per-
sonal property by bill of sale absolute on its face, as a mere se-
curity for the payment of a debt, may be sold under execution,
and the sheriff has the right to take the property into his pos-
session.4

568. In Arkansas it seems that a mortgagor or a grantor
in a deed of trust to secure a debt has an equity of redemption

1G. S. of Mass. c. 151, § 5. Morrow, 26 Ala, 353; Anderson v. Hooks, .
2 Ferguson v. Lee, 9 Wend. (N. Y.) 9 Ala. 704.
258; Phillips v. Hawkins, 1 Fla. 262, 4 McConeghy v. McCaw, 31 Ala. 447.

8 Code 1876, § 3209. See Floyd v.
447
§ 569.] ATTACHMENT AND EXECUTION.

which is subject to seizure and sale under execution. But where
the grantor parts with his title absolutely, conveying it to the
trustee to sell for the purpose of raising a fund to pay debts, it is
properly a deed of trust, and no interest, legal or equitable, re-
mains in the grantor, and consequently there is nothing upon
which an execution against him can be levied.1

569. Arizona Territory.2— All mortgaged chattels may be
attached at the suit of the creditors of the mortgagor. If such
property be attached, the creditor shall pay or tender to the mort-
gagee the actual amount due him on such mortgage before the
officer making such attachment shall be entitled to the actual
possession of such property. When property thus situated and
thus redeemed shall have been sold by the officer by virtue of due
legal proceedings, out of the proceeds of the sale, he shall first
pay to the creditor the amount advanced by him to pay the mort-
gage, with legal interest thereon ; second, pay all legal costs and
fees appertaining to the judgment, execution, and sale; third,
pay the judgment creditor the amount of the judgment, and any
remaining surplus to the judgment debtor. If the creditor of the
mortgagor prefers, he may cause to be attached the right of re-
demption of said mortgagor, and cause the same to be sold, sub-
ject to the rights of the mortgagee.

Such attachment is made by leaving a copy of the writ of at-
tachment, with notice of the attachment, with the mortgagee.

When the sale of such equity is made on an execution obtained
by such attaching creditor, the sum realized shall be applied to
the payment of costs, fees, discharge of the execution, and any
remainder paid the judgment debtor.

When the interest of the mortgagee shall be attached, a copy of
the writ of attachment shall be left with the mortgagor, with
notice of the attachment, and any payment made by him to the
mortgagee after such notice shall not release the attachment or
affect the rights of the attaching creditor, but said mortgagor
may pay the amount due on said mortgage to the officer who made
the attachment, and thereupon said officer shall release said at-
tachment, and hold the money so paid him in the same manner
as if he had originally attached said money.

1 Turner v. Watkins, 31 Ark. 429; 2 Compiled Laws 1877, p. 615, § 5.

Pope v. Boyd, 22 Ark. 535.
448
STATUTORY PROVISIONS AND EQUITABLE RULES. [§§ 570-573.

570. California.! — Personal property mortgaged may be taken
under attachment or execution issued at the suit of a creditor of
the mortgagor. Before the property is so taken, the officer must
pay or tender to the mortgagee. the amount of the mortgage debt
and interest, or must deposit the amount thereof with the county
clerk or treasurer, payable to the order of the mortgagee. When
the property thus taken is sold under process, the officer must
apply the proceeds of the sale to the repayment of the sum paid
to the mortgagee, with interest from the date of such payment ;
and the balance, if any, in like manner as the proceeds of sales
under execution are applied in other cases.

571. Colorado.?— When it shall appear that the goods, chat-
tels, choses in action, or effects in the hands of a garnishee are
mortgaged or pledged, or in any way liable for the payment of a
debt to him, the plaintiff may be allowed, under an order of the
court or justice of the peace for that purpose, to pay or tender the
amount due to the garnishee; and he shall thereupon deliver the
goods, chattels, choses in action, and effects to the officer who holds
the execution. ,

572. Connecticut.? — When an execution debtor shall own the
whole or part of an equity of redemption in a mortgage of both
real and personal estate, the execution creditor may cause the
same to be levied upon the interest of the debtor, in both said real
and personal estates; and such interest shall be appraised, and
the whole or any part thereof may be set off to the creditor; and
appraisers shall be appointed, and all other proceedings shall be
had in the same manner as by law provided for the levy of exe-
cutions upon real estate.

573. Dakota Territory.*— Personal property mortgaged may
be taken under attachment or execution issued at the suit of a
creditor of a mortgagor. Before the property is so taken, the
officer must pay or tender to the mortgagee the amount of the
mortgage debt and interest, or must deposit the amount thereol
with the county treasurer, payable to the order of the mortgagee.

1 Civil Code, §§ 2968-2970; Codes and 8 G. S. 1875, p. 461, § 32. See Dyer v
Stats. 1876, §§ 7968-9. - Cady, 20 Conn. 563.

2 Laws 1879, p. 82, §§ 17, 18. * Rev. Codes 1877, §§ 1753-1755.

29 449
8§ 574, 575.] ATTACHMENT AND EXECUTION.

When the property thus taken is sold under process, the officer
must apply the proceeds of the sale as follows: 1. To the repay-
ment of the sum paid to the mortgagee, with interest from the
date of such payment; and 2. The balance, if any, in like man-
ner as the proceeds of sales under execution are applied in other
cases.

574. Georgia.! — Property mortgaged may be sold under other
process, subject to the lien of the mortgage. If the mortgage is
foreclosed the mortgagee may place his execution in the hands of
the officer of the law making the sale, and cause the title, unin-
cumbered, to be sold, and claim the proceeds according to the date
of his lien. Purchasers at public sales of property subject to the
lien of a mortgage shall give bond and security in double the value
thereof to the officer making the sale, conditioned not to remove
the property out of the state, and for its forthcoming to answer
to the said lien: provided the mortgagee or his agent files with
the officer prior to the sale an affidavit of the amount due on such
mortgage, and that he apprehends the loss of said property unless
such bond be taken. On failure to give such bond, the property
shall be resold at the risk of the purchaser.

575. Florida.? — Equities of redemption, or the legal right of
redemption in real and personal property, shall be subject to levy
and sale under executions, upon judgments at common law or
upon decrees in equity. Upon application made by the party
causing the levy the courts respectively rendering such judgment
or granting sueh decree shall cause the mortgagor, the mortgagee,
and all other persons whom the mortgagor, the mortgagee, or either
of them, shall state upon oath to be interested in said mortgaged
property so levied upon, to come into court and answer upon oath
what amount remains due and owing upon said mortgage, what
amount has been paid, and to whom and when paid, that the value
of said equity or legal right of redemption may be ascertained be-
fore the same shall be sold. It shall be the duty of the sheriff,
constable, or other officer, to require of the purchaser of such equity
or legal right of redemption in personal property as he may levy
upon and sell, a bond with two or more good and sufficient securi-

1 Code 1873, §§ 1967, 1968. 2 Bush’s Dig. 1872, p. 825, §§ 8, 9, 10. '
450
STATUTORY PROVISIONS AND EQUITABLE RULES. [§ 576

ties for the payment of a sum in double the amount of the value
of the personal property so levied upon and sold (which valuatior
it shall be the duty of the officer so selling to assess), to the mort
gagee, his heirs, executors, administrators, or assigns, conditionec
for the delivery of said property, on demand made by the prope:
officer of the court, in which said judgment or decree of foreclos
ure may be rendered, and that said property shall not be removec
beyond the limits of this state.

576. Idaho Territory.1 — All property duly mortgaged may bi
attached at the suit of the creditors of the mortgagor. Such cred
itor shall pay or tender to the mortgagee the actual payment duc
him on such mortgage before the officer making such attachmen:
shall be entitled to the actual possession of such property. Wher
the property thus situated and thus redeemed shall have been solc
by the officer, by virtue of due legal proceedings, out of the pro
ceeds of the sale, he shall: First, pay to the creditor the amount
advanced by him to pay the mortgagee, with legal interest thereon
Second, pay all legal costs and fees appertaining to the judg
ment, execution, and sale. Third, pay the judgment creditor the
amount of the judgment, and any remaining surplus pay to the
judgment debtor. If the creditor of the mortgagor prefers, he
may cause to be attached the right of redemption of the said mort
gagor, and cause the same to be sold subject to the rights of the
mortgagee. Such attachment shall be made by leaving a copy o:
the writ of attachment with notice of the attachment, with the
mortgagee. When a sale of such equity is made on execution, ob.
tained by such attaching creditor, the sum realized shall be appliec
to the payment of costs, fees, discharge of the execution, and any
remainder paid to the judgment debtor. When the interest o:
the mortgagee shall be attached, a copy of the writ of attachmeni
shall be left with the mortgagor, with notice of attachment. Any
payment made by him to the mortgagee, after such notice, shal.
not release the attachment or affect the rights of the attaching
ereditor, but such mortgagor may pay the amount due on said
mortgage to the officer who made the attachment, and thereupor
said officer shall release said attachment and hold the money sc
paid in the same manner as if he had originally attached money.

1 Rey. Laws 1875, p. 662, §§ 5, 6.
451
§ 577. ] ATTACHMENT AND EXECUTION.

577. Illinois. — The interest of a mortgagor of chattels is sub-
ject to execution, before default, where the mortgage authorizes
him to retain possession, and there is no provision enabling the
mortgagee to take possession in any other event than that of de-
fault in payment. The purchaser in such case succeeds to the
rights of the mortgagor and to nothing more.t Equity will not
enjoin a sale upon execution subject to the mortgage.”

Where by the terms of a mortgage the mortgagor has the right
to retain the possession and use of the property until default in
the payment of the debt at maturity, but the mortgagee has the
right to declare the debt due and to reduce the property to his
immediate possession on the happening of a certain contingency,
such as the levy of an execution upon the property, the mortgagor
in possession has such an interest in the property as may be seized
on execution against him; and in case of the non-exercise by the
mortgagee of any right he may have to take possession, all the
rights of the mortgagor, in the property and no more may be sold
under such execution. The mere levy of the execution does not
at once mature the notes, but only gives the mortgagee the right
to declare them due. Until that affirmative act is done, the rights,
duties, and obligations of all parties remain precisely the same as
if the mortgage had contained no such provision. Until such act
is done the attaching creditor may levy and sell subject to the
chattel mortgage.8 The case is the same where the terms of the
mortgage authorize the mortgagee to take possession if he shall at
any time feel unsafe or insecure. But in-all such cases the levy
of the execution before any action is taken by the mortgagee does
not defeat his right to reduce the property to possession. It is
only with the permission or non-action of the mortgagee that the
property under such mortgages can be sold on execution.*

But it seems that the mortgagee on taking possession may be
compelled to offer the property for sale at once. If the mortgagee
satisfy his mortgage by a sale of a part of the mortgaged property,
the execution creditor may levy upon and sell the remainder.’ If

1 Durfee v. Grinnell, 69 Ill. 371; Mer- 3 Beach v. Derby, supra; Simmons v.
ritt v. Niles, 25 Ill. 282; Beach v. Derby, Jenkins, 76 Ill. 479.

19 Ill. 617; Spaulding v. Mozier, 57 Ill. 4 Durfee v. Grinnell, sura; Simmons
148; Lewis v. D’Arcy, 71 Ill. 648; Prior v. Jenkins, supra. ‘
v. White, 12 Ill. 261. 5 Lewis v. D’Arcy, supra.

2 Spaulding v. Mozier, supra.

452
STATUTORY PROVISIONS AND EQUITABLE RULES. [§§ 578, 579

the mortgagee reduce,the property to possession before the levy
or take it from the officer after the levy, the execution creditor’:
only remedy is by garnishée process, by means of which he car
reach any surplus in the mortgagee’s hands after satisfaction o
his debt if all the property be sold.

A mortgagee who has just taken possession of the mortgagec
chattels is not subject to garnishee process, although the value o
the property be of greater value than the amount of the mortgage
In case the mortgagee had sold the mortgaged chattels, and hac
an excess in his hands after satisfying the debt secured, or in casi
he had refused to sell according to the terms of the mortgage
and converted the property to his own use, he might, perhaps, be
charged in such process.?

Where the mortgage gives the mortgagee the right to reduc
the property to his immediate possession upon the levy of an exe
cution or attachment, the mortgagee may or may not, at his elec
tion, exercise this right before the maturity of the debt; and i
he does not, but suffers the property to be sold under the writ o
execution or attachment, the purchaser simply succeeds to the
rights of the mortgagor, and acquires a mere equity of redemp
tion, the property in his hands being still subject to the mortgage.’

578. Indiana.4— Goods and chattels pledged, assigned, or mort
gaged as security for any debt or contract may be levied upor
and sold on execution against the person making the pledge, as:
signment, or mortgage, subject thereto, and the purchaser shal
be entitled'to the possession, upon complying with the condition:
of the pledge, assignment, or mortgage.

This provision gives the purchaser no right of possession of the
property, except upon his complying with the conditions of the
mortgage.®

579. Iowa.— A mortgagor in possession has an interes:
which can be levied on and sold under execution,® provided he
has the right of possession for a definite period.’ The effect of «

1 Pike v. Colvin, 67 Ill. 227.

° Dieter v. Smith, 70 Ill. 168. 42R. S. 1876, p. 207, § 436.

8 Durfee v. Grinnell, 69 Il. 371; Pike 5 Broadhead v. McKay, 46 Ind. 595.
v. Colvin, supra; Simmons v. Jenkins, 76 6 Gordon v. Hardin, 33 Towa, 550
Ill. 479; Cleaves v. Herbert, 61 Ill. 126; Campbell v. Leonard, 11 Ib. 489.

Prior v. White, 12 Ill. 261, 262. 7 Rindskoff v. Lyman, 16 Iowa, 260.

453
§ 580.] ATTACHMENT AND EXECUTION.

sale under execution in such case is the same as if it were made
by the mortgagor in the ordinary way: the purchaser obtains the
right of possession and use of the property until the day of pay-
ment, and the right to redeem. If it be objected that the rights
of the mortgagee may be imperilled through a sale to an irrespon-
sible person, who may waste or remove the property, the answer
is, there is no legal prejudice to the rights of the mortgagee.
“The mortgagor himself, if not restrained by the terms of the
mortgage, may use the property, or even remove it. His grantee,
whether by voluntary transfer or by sheriff’s sale, may, in the
absence of stipulation to the contrary, do the same. If waste or
removal is threatened under such circumstances as would give the
mortgagee the right to a receiver, or an injunction as against the
mortgagor, the same circumstances would also give a right to the
same relief as against his vendee, or the vendee of the sheriff.” 1

A mortgagee in possession may be garnished for the surplus
that may remain in his hands after satisfying his mortgage.”

A mortgagee not in possession of the mortgaged property can-
not be charged as trustee or garnishee in a suit by a creditor of
the mortgagor; and he cannot be compelled to take possession of
the property after garnishment, and cannot be held liable, though
the value of the property exceed the mortgage debt.

580. Kentucky.t — When the defendant in an execution owns
the legal title in any personal estate, and shall have created a
bond fide incumbrance thereon by mortgage, deed of trust, or
otherwise, before an execution has created a lien on the same, the
interest of the defendant in such property may be levied on and
sold subject to such incumbrance. The purchaser at the sale
shall acquire a lien on such property for the purchase money, and
interest at the rate of ten per centum per annum from the day
of sale until paid, subject to the prior incumbrances.

Any other creditor, whether by judgment or otherwise, may,
after such execution and sale, by equitable proceedings, subject
the incumbered property to sale, and, after satisfying prior liens,
have his demand satisfied out of the proceeds of the residue. The

1 Rindskoff v. Lyman, supra, per Dil- First Nat. Bank of Newton v. Perry, 92
lon, J. Towa, 266.

2 Doane v. Garretson, 24 Iowa, 351, * G. S. 1873, p. 435, §§ 1, 2.

8 Curtis v. Raymond, 29 Jowa, 52;

454
STATUTORY PROVISIONS AND EQUITABLE RULES. [§ 581.

proceedings in equity must be instituted before the purchaser has,
by suit, removed the incumbrance.

The defendant in the execution may redeem the property so
sold by paying the original incumbrance, with legal interest
thereon, and by paying the purchaser his purchase money, with
ten per centum per annum interest thereon.

The purchaser of incumbered movable property must, before
possession thereof is delivered to him, give an obligation, with
good surety, payable to the incumbrancer and the owner, stipu-
lating that the property shall not be removed out of the county,
and shall be preserved and forthcoming, unavoidable accidents
excepted, to answer the incumbrance and for redemption, and de-
liver the obligation to the officer, to be returned with the execu-
tion. Courts of equity shall have the control of all incumbered
property sold under execution, and the power to make all needful
orders for the preservation and forthcoming of all property and its
issues and profits, to satisfy the incumbrance, and to secure the
rights of others.

Under this statute the sheriff, by virtue of his authority to sell
the mortgagee’s interest under execution, may lawfully take pos-
session of the property as against the mortgagor, and sell the
equity of redemption; and a purchaser would have the right to
hold possession, although the latter may have failed to deliver or
the sheriff to take the bond required by the statute, for the secu-
rity of the mortgagee. But the mortgagee holding the legal title
has the right, after default, to recover possession of the property
from the mortgagor, and from any person holding under him by
private purchase, or on execution sale, unless the bond provided
by statute has been given to him.!

581. Maine.2— Personal property not exempt from attach-
ment, mortgaged, pledged, or subject to any lien created by law, and
of which the debtor has the right of redemption, may be attached,

1 Mercer v. Tinsley, 14 B. Mon. (Ky.) clearly stated, on performance of which
273. See Fugate v. Clarkson, 2 B. Mon, the property would be released. Fairfield
41; Dedman ». Bridges, 9 Ib. 474. Bridge Co. v. Nye, 60 Me. 372.

2 R. S. 1871, ch. 81, §§ 41, 44. The mortgagor’s interest may be at-

To render a mortgage or pledge valid, tached, although ‘the record title stands
as against attaching creditors of the absolutely in the mortgagee’s name.
mortgagor or pledgor, there must be a Perry v. Somerby, 57 Me. 552.
distinct and specific condition that can be See notes to § 583.

455
§ 581.] ATTACHMENT AND EXECUTION.

held, and sold as if it were unincumbered, if the attaching cred-
itor first. tenders or pays the,mortgagee, pledgee, or holder, the
full amount unpaid on the demand so secured thereon. When
personal property, attached on a writ or seized on execution, is
claimed by virtue of such mortgage, pledge, or lien, the claimant
shall not bring an action against the attaching officer therefor
until he has given him at least forty-eight hours’ written notice of
his claim and the true amount thereof ;1 and the officer or cred-
itor may, within that time, discharge the claim by paying or ten-
dering the amount due thereon, or restore the property. The
officer may give the claimant written notice of his attachment;
and if he does not, within ten days thereafter, deliver to the
officer a true account of the amount due on his claim, he thereby
waives the right to hold the property thereon ; and if his account
is false, he forfeits to the creditor double the amount of the excess,
to be recovered in an action on the ease. If the creditor redeems
such property, and it is subsequently sold by the officer, he shall,
from the proceeds, first pay to the creditor the amount with inter-
est paid by him to redeem, and apply the balance, if any, to the
debt on which it was attached or seized on execution.?

When a trustee? states in his disclosure that he had, at the time
the process was served on him, in his possession property not ex-
empted by law from attachment, mortgaged, pledged, or delivered
to him by the principal defendant to secure the payment of a sum

1 See Fairfield Bridge Co. v. Nye, 60
Me. 372. Such notice is not necessary
if the plaintiff claims under an absolute

bill of sale. Douglass v. Gardner, 63 Me.
462. A substantial performance of the

He is not chargeable under the statute
unless he has actual possession of the prop-
erty. Pierce v. Henries, 33 Me. 57;
Wood v. Estes, 35 Me. 145; Mace oe.
Heald, 36 Me. 136; Reggio v. Day, 37

requirements of the statute by the mort-
gagee is w condition precedent to the
maintenance of his action. Nichols v.
Perry, 58 Me. 29; Wolfe v. Dorr, 24 Me.
104.

2 A mortgagee not delivering such
statement within ten days waives his
right to hold the property by virtue of
his mortgage. Colson v. Wilson, 58 Me.
416.

8 R, S. 1871, ch. 86, §§ 50, 51.

Before the statute of 1835, ch. 188, a
mortgagee was not chargeable in trustee
process for the surplus, in the absence of
fraud. Howard v. Card, 6 Me. 353,

456

Me. 314; Stedman v. Vickery, 42 Me.
132.

A mortgagee is not chargeable in case
he has sold and transferred the debt and
mortgage prior to service upon him.
Wood v. Estes, supra. Nor is he charge-
able if, having had possession, he has sur-
rendered the property to the mortgagor
prior to service upon him. Wood »v. Es-
tes, supra. One holding the property as
agent of the mortgagee is not charge-
able therefor as the trustee of the mort-
gagor. Skowhegan Bank v. Farrar, 46
Me. 293.
STATUTORY PROVISIONS AND EQUITABLE RULES. [§§ 582, 583.

of money due to him, and that the principal defendant has an ex-
isting right to redeem it by payment thereof, the court or justice
before which the action is pending shall order that on payment
or tender of such money by the plaintiff to said trustee within
such time as the court orders, and while the right of redemption
exists, he shall deliver over the property to the officer serving the
process, to be held and disposed of as if it had been attached on
mesne process ; and in default thereof, that he shall be charged as
the trustee of the principal debtor. This order shall be entered
on the records of the court or justice. On the return of the scire
facias against such trustee, if it appears that the plaintiff has
complied with the order of the court or justice, and the trustee has
refused or neglected to comply therewith, the court or justice shall
enter up judgment against him for the amount due and returned
unsatisfied on the execution, if there appears to be in his hands
such an amount of the property mortgaged over and above the
sum due him; but if not, then for the amount of said property
exceeding that sum, if any; and this amount of excess shall, on
the trial of scire facias, be determined by the court or jury.

582. In Maryland although a mortgagor’s interest in personal
property cannot be seized and sold under execution, yet a creditor
may file a bill and obtain a decree for the sale of the property
absolutely to pay off the incumbrance, so as to satisfy his own
claim from the surplus. It would seem that to sustain such a
bill it should be alleged and proved that the mortgaged property
is more than sufficient to pay the mortgage debt.?

583. Massachusetts. — Personal property of a debtor that is
subject to a mortgage, pledge, or lien, and of which the debtor
has the right of redemption, may be attached and held in like
manner as if it were unincumbered;* provided the attaching
creditor pays or tenders to the mortgagee, pawnee, or holder of
the property, the amount for which it is so liable, within ten days
after the same is demanded.® Every such mortgagee, pawnee, or

1 Rose v. Bevan, 10 Md. 466; Harris cure future or contingent liabilities may

v. Alcock, 10 G. & J. (Md.) 226,251. —be attached. Haskell ». Gordon, 3 Met.
® Rose v. Bevan, supra. 268; Codman v. Freeman, 3 Cush. 306;
8 G. S. 1860, ch. 123, §§ 62-66. Hills v. Farrington, 6 Allen, 80.
* Property subject to a mortgage to se- 5 These provisions requiring a demand

457

i
§ 583.]

ATTACHMENT AND EXECUTION.

holder shall, when demanding payment of the money due to him,
state in writing a just and true account of the debt or demand for

by a mortgagee apply only to an attach-
ment of goods by actual seizure, and not
to an attachment by trustee process. Put-
nam v, Cushing, 10 Gray, 334, Neither
do they apply to attachments under a
process from a United States court. Howe
v. Freeman, 14 Gray, 566.

The demand should be made within a
reasonable time after the attachment.
Where a mortgagee, immediately after an
attachment of the goods, made a demand
and stated an account, which were infor-
mal and ineffectual, and brought an action
against the attaching officer, which he
prosecuted for more than a year and then
became nonsuit, and immediately after-
wards made another demand, this last de-
mand was held to be within a reasonable
time. Johnson v. Sumner, 1 Met. 172;
Brackett v. Bullard, 12 Met. 308; Tapley
v. Butterfield, 1 Met. 515. And so where
a mortgage was made subject to a prior
mortgage, and the goods were replevied
from the officer attaching them by the
first mortgagee, and after a litigation of
two years this mortgage was declared
void, and a judgment rendered for a re-
turn of the goods to the attaching officer,
a demand after such judgment by the sec-
ond mortgagee was held to be within a
reasonable time. Housatonic & Lee Banks
v. Martin, 1 Met, 294. A demand made by
a mortgagee four months after the attach-
ment, though after the sale of the prop-
erty attached, was held to be made within
a reasonable time, the officer having had
actual notice of the claim soon after the
attachment and before the sale. Legate
v. Potter, 1 Met. 325.

The mortgayee is not bound to notify
the attaching officer or the attaching cred-
itor of his mortgage at any time during
the course of the action, provided he gives
such notice before the property is taken
on execution. He does not by his silence
vacate or postpone his lien upon the prop-
erty. Canada v. Southwick, 16 Pick.
556.' The creditor parts with no money

458

or property in making his attachment, as
a vendee does in case of a sale. The case
might be otherwise if the mortgagee
should induce the creditor to attach the
mortgaged property, and not some other
property which otherwise he might have
attached, with the intent to aid the debtor
to dispose of the other property, or to en-
able other creditors to attach the same,
concealing all the time his mortgage lien.
Per Putnam, J., in Canada v. Southwick,
supra.

An infant mortgagee may make a valid
demand under the statute. Bradford v.
French, 110 Mass. 365. The demand is
clearly for his benefit, and necessary for
the protection of his rights. His father
or mother, as guardian by nature, has no
right to make it. A next friend, being in
theory of law appointed by the court to
conduct a suit, cannot act before suit
brought. If, therefore, an infant mort-
gagee cannot himself make the statute de-
mand, the necessary result would be to
oblige him to have a guardian appointed
by the Probate Court, whenever property
mortgaged to him is attached on a writ
against the mortgagor. The reasonable
conclusion is that infant mortgagees are
not to be excepted by implication out of
the general words of the statute which
apply to every mortgagee. Bradford v.
French, supra, per Gray, J.

One to whom a pledge of goods, with
the pledgor’s consent, has consigned them
for sale, can in his own name make de-
mand of the attaching officer for payment
of the amount for which the goods are
pledged, and, on refusal of the officer to
pay the amount or release the attachment,
he can in his own name maintain an ac-
tion for this conversion. Clark v. Dear-
born, 103 Mass. 335. The consignee
having the right of possession may main-
tain an.action for the possession of the
goods or for the injury to them.

The mortgagee may make demand and
receive from the attaching creditor the
STATUTORY PROVISIONS AND EQUITABLE RULES.

[§ 588.

which the property is liable to him, and deliver it to the attaching

creditor or officer.!

amount for which the property is liable to
him under the mortgage, although he has
taken the mortgaged goods from the at-
taching officer on a writ of replevin and
has removed them out of the state. The
bond the mortgagee is obliged to give to
the officer when taking the goods upon
such writ stands in place of the goods
themselves if these be not specifically re-
delivered upon a judgment in the replevin
suit for a return. Moore v. Quirk, 105
Mass. 49.

An attachment of property conveyed by
a billof sale absolute in form, but really
given as collateral security, can be dis-
solved only by a demand in accordance
with the statute Putnam v. Rowe, 110
Mass. 28.

The fact that the mortgage contains a
stipulation that, if the property is attached
by any other creditor, the mortgagee may
take immediate possession, does not take
the case out of the operation of the stat-
ute, and enable him to replevy the prop-
erty from the officer or maintain trover
against him without first making demand
as provided for by the statute. Hunt v.
Williams, 106 Mass. 114; Wing v. Bishop,
9 Gray, 223. See Alden v. Lincoln, 13
Met. 204. 7

The statute applies to attachments
made after the commencement of proceed-
ings to foreclose the mortgage, if made
before the foreclosure is complete. The
expiration of the time for foreclosure pend-
ing an attachment does not give the mort-
gagee any title or right of possession as
against the attaching creditor. He can
dissolve the attachment only by a demand
under the statute. Sullivan v. Lamb, 110
Mass. 167,

The property while in the custody of
the officer is liable to successive attach-
ments, and when they are made each
creditor has a right to notice and demand,
and to the full time of ten days within
which to pay it. Wheeler v. Bacon, 4
Gray, 550; Howe v. Bartlett, 1 Allen, 29;
Macomber v. Baker, 3 Allen, 241.

If the same is not paid or tendered to him

A mortgagee who has assigned his
mortgage and recorded his assignment
cannot make a valid demand. Granger v.
Kellogg, 3 Gray, 490; Horne v, Briggs,
98 Mass. 510.

1 A demand in the following form is

sufficient: To A. B., Deputy Sheriff.
Sir, I hereby demand of you dollars,
with interest thereon, at per cent, per

annum, from January Ist, 1881, which is
the amount due me on a mortgage given
to me by C. D., dated , and recorded
, which mortgage covers (describe
the property in general terms), now held
by you on attachment as the property of
said C. D. EF.

Boston, April 1, 1881.

The demand need not be formal. It
may be implied as well as expressed, if the
property be claimed under the mortgage,
and the amount due be stated. Moriarty
v. Lovejoy, 23 Pick. 321; Brewster v.
Bailey, 10 Gray, 37; Gassett v. Sanborn,
8 Gray, 218; Molineux v. Coburn, 6 Gray,
124,

A statement of account and demand
which does not describe the property mort-
gaged, nor allege that it is the same then
attached and in the hands of the officer,
nor demand payment either expressly or
impliedly of any sum due on the mort-
gage, is insufficient. Moriarty v. Love-
joy, supra.

Errors and inaccuracies in stating the
account which result from accident or mis-
take, and do not mislead or injuriously
affect the attaching creditor, do not inval-
idate the demand. Bicknell v. Cleverly,
125 Mass. 164; Folsom v. Clemence, 111
Mass. 273; Hills v. Farrington, 6 Allen,
80; S.C. 8 Allen, 427; Harding v. Co-
burn, 12 Met. 3833; Rowley v. Rice, 10
Met. 7.

But an inaccurate account will invali-
date the demand, unless it be shown not
only that it was made with honest inten-
tion, but also that no damage has accrued
to the other party by reason of the mis-

459
§ 583.]

ATTACHMENT AND EXECUTION.

within ten days thereafter, the attachment shall be dissolved and
the property shall be restored to him; and the attaching creditor

take. Rowley v. Rice, 10 Met. 7. A mis-
take in the account will not invalidate the
demand, if it can be shown that the at-
taching creditor could in no possible event
suffer by the error; as for instance, if the
amount due under the mortgage be inno-
cently overstated, and it appear that the
value of the property attached was less
than the just and true sum for which it
was pledged, and the attaching creditor
could have had no interest in any surplus,
and therefore was not injuriously misled
by the error, no objection can be taken
to the account. Rowley v. Rice, supra;
Harding v. Coburn, 12 Met. 333 ; Clark v.
Dearborn, 103 Mass. 335.

An overstatement of the amount due is
immaterial if the means of computing the
true amount are supplied by the demand
itself, as where the amount and date of
the debt and the amount and dates of the
indorsements are correctly given. Folsom
v. Clemence, 111 Mass, 273.

If the mortgage be one of indemnity the
formal and proper mode of stating the de-
mand is to describe the- liability which the
mortgage was given to indemnify against,
and the mortgagee cannot maintain an ac-
tion against the officer without first mak-
ing such demand. Putnam v. Rowe, 110
Mass. 28; Codman v. Freeman, 3 Cush.
306; Haskell v. Gordon, 3 Met. 268;
Buck v. Ingersoll, 11 Met. 226. But a de-
mand which simply states the amount of
the mortgage if that be the amount of
the liability against which the mortgagee
is indemnified, is sufficient. Bicknell v.
Cleverly, 125 Mass. 164; Degnan »v. Farr,
126 Mass. 297. And see Hanson v. Her-
rick, 100 Mass. 323; Johnson v. Sumner,
1 Met. 172; Barker v. Buel, 5 Cush. 519;
Varney v. Hawes, 68 Me. 442. And s0 if
the mortgage was given to secure future
advances, a demand of the aggregate of
the advances made under it is sufficient,
without any detailed account of such ad-
vances. Hills v. Farrington, 6 Allen, 80.

Parol evidence of the actual considera-

460

tion of the mortgage note is admissible to
establish the truth of the account stated
by him. “The actual consideration for a
written promise may always be shown by
parol, without violating the rule which
excludes such evidence when offered to
vary or contradict the writing. Hanson
v. Herrick, 100 Mass. 323.

A statement in a single sum of the
amount remaining due upon the mort-
gage is sufficient, when the original debt
was a single demand. Johnson v. Sum-
ner, 1 Met.172; Housatonic & Lee Banks
v. Martin, 1 Ib. 294; Jones v. Richardson,
10 Ib. 481. But if the mortgage be made
to secure several demands described in gen-
eral terms, a statement of the aggregate
of the several demands would probably
not be regarded as a just and true ac-
count. Per Shaw, C. J., in Johnson v.
Sumner, supra. Especially if the par-
ticular items were called for. Otherwise
the aggregate amount might be sufficient.
Hills v. Farrington, supra; S. C. 3 Allen,
427,

It seems that the mortgagee may de-
mand the whole amount due on the mort-
gage, although he be in possession of a
part of the mortgaged property. Rhode
Island Central Bank v. Danforth, 14 Gray,
123,

If the mortgagee has several mortgages,
and he specifies in his demand his claim
under one mortgage only, such demand
will not support a claim under either of
the other mortgages. Witham v. Butter-
field, 6 Cush, 217.

If interest be due under the mortgage,
it should be computed and added to the
principal of the debt, or interest upon the
debt should be demandcd in general terms,
the time for which interest is due and the
rate being given. Johnson v. Sumner, 1
Met. 172. The demand for the principal
debt is good, although no interest be de-
manded. Jones v. Richardson, 10 Met.
481. If the rate of interest reserved be
more than that provided for by law in case
STATUTORY PROVISIONS AND EQUITABLE RULES.

[§ 583.

shall moreover be liable to him for any damages he has sustained

by the attachment.

the parties make, no special contract, a de-
mand for interest without stating the rate
implies only the rate of interest established
by law. But no objection can be taken to
the demand on this account. Robinson v.
Sprague, 125 Mass. 582. An understate-
ment of the amount of interest, when the
securities are not in the hands of the mort-
gagee, and he has not the means of com-
puting the interest exactly, does not render
his account untrue. Johnson v. Sumner,
1 Met. 172. The date from which interest
is due should be stated, but the amount
need not be computed. Averill v. Irish, 1
Gray, 254.

It is not necessary for the mortgagee,
in his written demand, to designate the ar-
ticles included in his mortgages so as to
distinguish them from others of a like
character with which they may be com-
mingled. It is sufficient for him to be
ready to point them out, when called upon
todo so. Folsom v. Clemence, 111 Mass.
273; Morrill v. Keyes, 14 Allen, 222;
Harding v. Coburn, 12 Met. 333, Cod-
man v. Freeman, 3 Cush, 306. If the at-
taching officer does not call upon the
mortgagee to point out the goods claimed
by him under the mortgage, there is no
occasion for him to identify them. If
the officer refuses to comply with the
mortgagee’s demand for payment, and
sells the whole of the attached property,
he cannot afterwards resist payment of the
mortgage on the ground that the mort-
gagee is then unable to produce evidence
to distinguish the specific articles covered
by his mortgage. Morrill v. Keyes, supra,
If a mortgagee holding two mortgages
made by his debtor, each conveying differ-
ent articles, to secure different debts, makes
a demand of an officer, who has attached
all the property, sufficient as to one mort-
gage and insufficient as to the other, the
demand will avail in respect to the former
mortgage although it fail as to the other.
Simonds v. Parker, 3 Met. 144.

There is no occasion for a demand under

If he demands and receives more than the

the statute by a nominal mortgagee who
really holds his title by pledge from a per-
son other than the nominal mortgagor.
Thus a citizen of the United States having
built a vessel in Nova Scotia, executed,
without consideration, a builder’s certifi-
cate to a citizen of Nova Scotia declaring
him to be her first purchaser, and there-
upon she was registered in hisname. This
nominal purchaser never had any interest
in the vessel, and never took possession of
her. At the request of the real owner,
the nominal purchaser made a power of
sale mortgage of the vessel, and the mort-
gagee took possession of her under a de-
livery from the real owner, so that in fact
the mortgagee derived his title to the ves-
sel by pledge from the owner. The mort-
gage provided that in case the vessel
should be sold the mortgagor should have
no claim for any surplus, nor be liable for
any deficiency, in case she should bring
more or less than the sum secured by the
mortgage. It was held that as no debt
was ever due from such nominal mort-
gagor to the mortgagee, and the former in
fact by the mortgage released all his title

‘and claim to the vessel, he had no attach-

able interest in her, and there was no oc-
casion for the mortgagee to make a state-
ment under the statute. Spring v. Baker,
8 Allen, 267.

1. Failure to restore the property to the
mortgagee within the time limited, or to
pay the amount due on his mortgage, con-
stitutes a conversion of the property, and
the attaching officer thereupon becomes
liable for its value. The mortgagee’s
right to treat such failure as a conver-
sion is fixed by the expiration of the time
limited by the statute, and the fact that
after that time the property was returned
by the officer to the mortgagor, in whose
possession it was when the attachment was
made, cannot be considered in mitigation
of damages, unless it be shown that the
mortgagor was the agent of the mortgagee
for receiving the property. Alden v. Lin

461
§ 583.] ATTACHMENT AND EXECUTION.

amount due to him, he shall be liable for the excess, with interest
thereon at the rate of twelve per cent. a year, to be recovered by
the attaching creditor in an action of contract for money had and
received. When property attached and redeemed as aforesaid is
sold on mesne process or on execution, the proceeds thereof, after
deducting the charges of the sale, shall be first applied to repay
the attaching creditor the amount so paid by him, with interest.1
If the plaintiff after having redeemed the goods does not recover
judgment in the suit, he shall nevertheless be entitled to hold the
goods until the defendant repays to him the sum which he paid
for the redemption, or as much thereof as the defendant would

have been obliged to pay to the
the goods, if they had not been
time when the same is demanded

coln, 18 Met. 204; Robinson v. Sprague,
125 Mass. 582.

The measure of damages is the value of
the property at that time, not exceeding
however the amount of the mortgagee’s
claim against the mortgagor, with all the
damages the mortgagee has sustained in
the vindication of his rights. Forbes v.
Parker, 16 Pick. 462.

A pledgee is entitled to recover of an
officer who has unlawfully attached the
goods pledged, not merely the amount of
the debt secured by the pledge, but the
full value of the goods. ‘The rule is
founded upon the consideration, that for
all beyond the debt, for which the goods are
pledged, the pledgee is responsible to the
pledgor. Pomeroy v. Smith, 17 Pick. 85.

A mortgagee in an action of tort against
an officer, for attaching and selling the
mortgaged property, cannot properly join
an alternative count in contract for money
had and received, both counts being al-
leged to be for the same cause of action.
Clapp v. Campbell, 124 Mass. 50. The
counts are inconsistent with each other.
The count in tort proceeds upon the ground
that the defendant has unlawfully seized
and sold the property; while the count in
contract waives the tort and ratifies the
sale. The measure of damages is differ-
ent in the two cases: the defendant being
liable in tort for the value of the property

462

mortgagee, pawnee, or holder of
attached, with interest from the
of the defendant.”

at the time of the seizure; while in con-
tract only the proceeds of the sale can be
recovered.

1 A mortgagee does not waive his right
to demand and receive from the attach-
ing creditor the amount for which the
property is liable to him on the mortgage,
by having sued out a writ of replevin
against the officer attaching the property
and removing the property from the state.
The attaching creditor must look to the
replevin bond, which takes the place of
the goods themselves. Moore v. Quirk,
105 Mass. 49.

The attaching officer may defend a
suit brought by the mortgagee for con-
version of the property by setting up the
mortgagee’s want of title, or that the
mortgage is void. Thus the mortgagor
having been adjudged a bankrupt after an
attachment of the mortgaged property
was made, the officer surrendered it to the
assignee in bankruptcy; and he was al-
lowed to defend a suit by the mortgagee
for a conversion of the property by prov-
ing that the mortgage was void under the
bankrupt act asa fraudulent preference.
Hanson v. Herrick, 100 Mass. 323.

2 An attachment is dissolved by the
death of the debtor before the property is
seized upon execution, although his estate
be insolvent. Therefore if a mortgage be
made after an attachment of the property,
STATUTORY PROVISIONS AND EQUITABLE RULES. [§ 583.

The provisions authorizing the attachment of personal property
subject to a mortgage or pledge do not authorize the seizing of
such property on execution in the first instance. The remedy of
a judgment creditor is by attachment or trustee process. The
property cannot be taken on execution, unless it has been pre-
viously attached on mesne process.!

An attachment of the mortgaged property not made in the
manner, provided by statute entitles the mortgagee to maintain an
action against the attaching officer for the damages he has sus-
tained; and it does not matter that at the time of the attachment
the mortgagor was in possession under a provision in the mortgage
that he should remain in possession until default.”

It is further provided in Massachusetts,? that personal prop-
erty of a debtor, subject to a mortgage, and being in the posses-
sion of the mortgagor, may be attached in the same manner as
if it was unincumbered ; and the mortgagee or his assigns may.
be summoned in the same action in which the property is at-
tached, as the trustee of the mortgagor or his assigns, to answer
such questions as may be put to him or them by the court or their
order touching the consideration of the mortgage and the amount
due thereon.* If, upon such examination or verdict of a jury, it

2 Forbes v. Parker, 16 Pick. 462.
8 G.S. 1860, ch. 123, §§ 67-71. Aside

upon the death of the mortgagor, the
mortgage lien becomes paramount, and

the mortgagee upon default is entitled to
the possession of the property; and if the
attaching officer has delivered the prop-
erty to the mortgagor’s administrator upon
his paying the officer’s fees and charges,
the mortgagee, on the refusal of the ad-
ministrator to deliver the property, may
maintain replevin for it, without first pay-
ing or tendering the amount the admin-
istrator was paid for fees and charges of
attachment. Parsons v. Merrill, 5 Met.
356.

If an attachment of ‘mortgaged goods
be dissolved by the bankruptcy or insol-
vency of the mortgagor, it is the duty of
the attaching officer to deliver them to the
mortgagee, and not to the assignee of the
mortgagor. Howe v. Bartlett, 8 Allen,
20; Briggs v. Parkman, 2 Met. 258.

1 Lyon v. Coburn, 1 Cush. (Mass.)
278.

from the statute a mortgagee of personal
property, not in possession of it, is not
chargeable as the trustee of the mort-
gagor. He has in such case no credit to
be charged, and has no goods which could
be surrendered to an officer. Central
Bank v. Prentice, 18 Pick. 396.

* It has been suggested that the only
proper mode of attaching goods mortgaged
to secure the performance of any obliga-
tion other than the payment of money is
by summoning the mortgagee as trustee
of the mortgagor. Per Shaw, C. J., in
Johnson v. Sumner, 1 Met. 172. If a
mortgagee summoned as trustee, knowing
that the property was attached and that
he was summoned as trustee, enters no
appearance, files no answer, and is de-
faulted, he is estopped to maintain an ac-
tion against the officer for a conversion of
the mortgaged property by levying execu-

463
§ 583.]

ATTACHMENT AND EXECUTION.’

appears to the court that the mortgage is bond fide, the court,
having first ascertained the amount justly due upon it, may di-
rect the attaching creditor to pay the same to the mortgagee or
his assigns within such time as it orders; and if the attaching
creditor does not pay or tender the sum within the time pre-
scribed, the attachment shall be void and the property be restored.?
If the attaching creditor denies the validity of the mortgage, and
moves that the same may be tried by a jury, the court shall order
such trial: on an issue to be framed under the direction of the
court, and if, upon such examination or verdict, the mortgage is

adjudged valid, the mortgagee

tion upon it. All questions affecting the
interests of the mortgagee, the validity of
the mortgage, the consideration-for it, and
the amount due, are to be determined in
such suit. The amount being ascertained,
“the attaching creditor may be directed to
pay that sum to the mortgagee within a
certain time; and if he fails to do so the
attachment is dissolved. The mortgagee
must abide the final judgment as to the
validity of the mortgage. The mortgagee
can only be summoned as trustee when
the property attached is in the possession
of the mortgagor; and no property being
in the hands of the mortgagee as trustee,
no demand can be made upon him, and
consequently no scire facias can issue.
The judgment in the trustee process is
final. Flanagan v. Cutler, 121 Mass. 96.
The attaching creditor by this process
acquires the right to try the validity of
the mortgage, either by examining the
mortgagee under oath, or by a trial by
jury at his election, and this right is in-
consistent with and excludes the right of
the mortgagee to replevy the property
during the continuance of the attachment.
Furber v. Dearborn, 107 Mass. 122. But
the creditor must pursue his remedy in
the mode pointed out by the statute. If
he abandon the attachment he thereby
discharges the trustee, and the latter may
replevy the property, although the ques-
tion of the validity of the mortgage re-
mains undetermined. Boynton v. War-
ren, 99 Mass. 172. And so if the creditor

464

or his assigns shall recover his

discharges the trustee “he vacates the at-
tachment of the property, and entitles the
mortgagee to the possession of it. Martin
v. Bayley, 1 Allen, 381; Hayward v.
George, 13 Ib. 66. If the officer redeliver
the property to the mortgagor upon tak-
ing a receipt for it, the mortgagee is re-
stored to all his rights, and can enforce
his mortgage, as if no attachment had
been made. The officer can maintain no
action upon such receipt, for the attach-
ment is in fact dissolved. Hayward v.
George, supra.

1 The provisions of this statute are not
in conflict with article 15 of the Dec-
laration of Rights; on the ground that
the mortgagee is denied the right to have
the validity of the mortgage determined
by a jury; for the mortgage can be de-
clared invalid only by the examination of
the mortgagee as trustee, or upon the ap-
plication of the attaching creditor by the
verdict of a jury. Jackson v. Kimball,
121 Mass. 204. A mortgage given to se-
cure the mortgagee against liability, as
indorser for the mortgagor, is valid as
against an attaching creditor of the mort-+
gagor, although his liability does not be-
come absolute and has not been paid until
after the attachment by trustee process.
In such case the sum “justly due” upon
the mortgage, to be ascertained by the
court, is that sum which will secure the
mortgagee against all contingent future
liabilities covered by the mortgage. Rog-
ers v. Abbott, 128 Mass, 102.
STATUTORY PROVISIONS AND EQUITABLE RULES.  [§ 584.

costs.!_ When the creditor has paid to the mortgagee or his as-
signs the sum directed by the court, he shall be entitled to retain
out of the proceeds of the property attached, when sold, the sum
so paid, with interest, and the balance shall be applied to the
payment of his debt. If the attaching creditor, after having paid
the sum directed by the court, does not recover judgment in the
suit, he shall nevertheless be entitled to hold the property until
the debtor has repaid the sum so paid by order of court, with

interest.?

584. Michigan. — When goods or chattels shall be pledged

117f the plaintiff in such suit fails to
maintain his action, the original seizure
does not thereby become unlawful, and
the mere possession of the property by the
officer, after his action has failed, is not
a conversion. Jackson v. Kimball, 121
Mass, 204. It is only when he unreason-
ably neglects, or on demand refuses to
return the property after the failure of
the action, or when the attaching creditor
fails to pay the amount of the mortgage
when it is established according to the
‘order of the court, that the mortgagee can
Maintain an action for conversion. Jack-
son v. Colcord, 114 Mass. 60.

If, however, goods in possession of the
mortgagee are attached by an actual seiz-
ure of the property and the amount of the
mortgage is not paid upon demand, duly
made by him, and at the same time he is
summoned as trustee, the mortgagee may
at any time after the seizure of the prop-
erty maintain an action of tort for its
conversion ; or may recover it in an action
of replevin. The officer is in such case
« trespasser ab initio. Porter v. Warren,
119 Mass. 535. The attachment is ille-
gal, or is dissolved by failure to pay the
amount of the mortgage, and the mort-
gagee while in possession of the property
cannot be summoned as trustee. The at-
taching creditor cannot by a discontinu-
ance against the trustee turn the attach-
ment into one under G.S. ch. 128, § 62.
But the mortgagee alone can take advan-
tage of this irregularity. Neither the
mortgagor nor his assignee can maintain

80

an action against the officer making such
attachment for a conversion of the prop-
erty, for the reason that the property when
attached was in the hands of the mort-
gagee, who was at the same time sum-
moned as trustee without objection on his
part, the validity of his mortgage and the
amount of it fixed by the court, and the
same paid out of the proceeds of the prop-
erty. Bergin v. Hayward, 102 Mass. 414.

2 The provisions of G. 8. c. 123, § 73,
in relation to the sale of attached personal
property when it is of a perishable nature,
apply to mortgaged personal property,
and no notice in such case is required to
be given to the mortgagee summoned as
trustee. Jackson v. Colcord, 114 Mass.
60.

After the mortgaged property has been
attached and the mortgagee summoned as
trustee, he cannot give notice and fore-
close his mortgage. If he could he might
completely defeat the process duly com-
menced, and the rights acquired under it,
and thus render the statute wholly nuga-
tory and unavailing. Hobart v. Jouvett,
6 Cush. 105.

8 Compiled Laws 1871, § 6097. See
Bayne v. Patterson, 40 Mich. 658; Com-
stock v Hollon, 2 Mich. 355.

This statute does not allow the mort-
gaged property to be taken from a mort-
gagee in possession and sold in parcels; it
only allows the sale to be made subject to
the mortgage; and it is only upon pay-
ment or tender of the amount due that
the purchaser obtains any rights whatso-

465
§ 585.] ATTACHMENT AND EXECUTION.

by way of mortgage or otherwise, for the payment of money or
the performance of any contract or agreement, such goods or
chattels may be levied upon and sold on execution against the per-
son making such pledge, subject to the lien of the mortgage or
pledge existing thereon, and the purchaser at such sale shall be
entitled to pay to the person holding such mortgage or pledge the
‘ amount actually due thereon, or otherwise perform the terms and
conditions of the pledge, at any time before the actual foreclosure
of such mortgage or pledge, and on such payments or perform-
ances, or a full tender thereof, shall thereupon acquire all the
right, interest, and property of which the defendant in execution
would have had in such goods or chattels if such mortgage or
pledge had not been made.

585. Minnesota.!1— When goods or chattels are pledged for
the payment of money, or the performance of any contract or
agreement, the right and interest in such goods of the person
making such pledge may be sold on execution against him, and
the purchaser shall acquire all the right and interest of the de-
fendant, and be entitled to the possession of such goods and
chattels, on complying with the terms and conditions of the
pledge.

Whenever it appears that any property or effeets in the hands
of the garnishee, belonging to the defendant, are properly mort-
gaged, pledged, or in any way liable for the payment of any debt
due to said garnishee, the plaintiff may be allowed, under a spe-
cial order of court, to pay or tendér the amount due; and the

ever. He cannot sell in parcels without
first discharging the lien. Without first
redeeming he can sell only the right to
redeem the entire property. This right

When the mortgagee proceeds to sell,
there is no reason why he cannot, so far,
act in concert with the officer as to pro-
tect the rights of both. Haynes v. Lep-

is not divisible. Worthington v. Hanna,
223 Mich. 580; Cary v. Hewitt, 26 Mich.
228; Haynes v. Leppig, 40 Mich. 602.
And see Barber v. Smith, 41 Mich. 138.
The mortgagee and the officer may hold
concurrent possession before foreclosure.
The officer cannot sell in parcels so long
as the mortgage is in force, and must not
interfere with the mortgagee’s right of
sale, but can retain the chattels in his pos-
session until sale is made, and has a right
to know the amount and conditions of it.

466

pig, supra.

If a mortgagee takes possession in the
mortgagor’s behalf before foreclosure to
screen the property from execution, it is
fraud; and if having a mortgage he sets

up some other title, such as that by bill of |

sale, against creditors levying on a mort-
gaged interest, or if not in possession in
good faith under his mortgage, fraud may
be inferred. Haynes v. Leppig, supra.

1 Gen. Stat. 1878, ch. 66, § 309. See
Edson v, Newell, 14 Minn. 228,
STATUTORY PROVISIONS AND EQUITABLE RULES. [$§ 586, 587.

garnishee shall thereupon deliver the property or effects, as here-
inbefore provided, to the officer holding the execution, who shall
sell the same as in other cases, and out of the proceeds shall repay
the plaintiff the amount paid by him to the garnishee for the re-
demption of such property or effects, with legal interest thereon,
and apply the balance upon the execution.!

Under a statute which gives the mortgagor a right to redeem
after condition broken at any time before the property is sold, in
pursuance of a power in the mortgage, or under foreclosure pro-
ceedings, his right of redemption, until so extinguished, may gen-
erally be reached by garnishment or by levy of execution.?

586. In Mississippi it is declared that at common law rights
to redeem are not subject to execution ; and that inasmuch as this
rule has not been changed by statute, there can be no seizure upon
execution of a mortgagor’s equity to redeem chattels.? This rule
is the same whether the subject of the mortgage be realty or per-
sonalty, and it applies equally before condition broken and after-
wards. A levy on an equity of redemption of personalty should
be set aside on motion in the court from which the execution
was issued.

But if the mortgage debt has been fully paid and extinguished,
although there has been no reconveyance or entry of satisfaction
on record, the mortgagor then having a complete equity, his in-
terest is liable to execution.6 The proof is, of course, upon
the purchaser at the sheriff’s sale to show payment of the mort-

gage.”

587. In Missouri it seems that the interest of a mortgagor of
personal property can be sold on execution only when he has a
definite and determined right of possession. A mortgagor in
possession only by the consent of the mortgagee, so that his pos-
session is determinable at the mortgagee’s word, has no interest

1 Gen. Stat. 1878, ch. 66, § 183. ® Boarman v. Catlett, 13 8. M. & M.
2 Becker v. Dunham (Minn. 1880), 6 149; Henry v. Fullerton, supra.
N. W. Rep. 406. 7 Harmon v. James, 7 Sm. & M. 111.
8 Thornhill v, Gilmer, 4 Sm. & M. 153; 8 Yeldell v. Stemmons, 15 Mo. 443;
Wolfe v. Dowell, 13 S. & M. 103. Boyce v. Smith, 16 Mo. 317; Dean v.
# Henry v. Fullerton, 13 Sm. & M. 631. Davis, 12 Mo. 112.
5 Commercial Bank of Manchester v.
Waters, 10 Sm. & M, 559.

467
8§ 588-590.] ATTACHMENT AND EXECUTION.

that is subject to levy. Neither is his interest subject to sale
under execution when the mortgagee is in possession.?

588. In Nebraska it is said that a creditor may by proceed-
ings in attachment subject the interest of a mortgagor of chattels
in the hands of a mortgagee to the payment of his debt. The
plain, orderly course in such case is by garnishment, whereby
such interest may be ordered paid over to the attaching creditor.®

589. In Nevada‘ mortgages of all personal property excepting
growing crops are valid only when possession of the property is
delivered to and retained by the mortgagee. But mortgages of
growing crops are valid when recorded; and it is provided that
any growing crop mortgaged as aforesaid may be seized under
attachment or execution, and the surplus over and above the
mortgage debt gecured to any other creditor of the mortgagor by
serving upon the mortgagee, or, in his absence from the county,
upon his agent or other person in charge or possession of such
crop, a copy of the attachment or execution. But the actual pos-
session of such crop shall not be taken from the mortgagee unless
full payment of the mortgagee’s demand, with interest, be first
made, which, if done by a creditor of the mortgagor, shall entitle
him to hold such crop and possession thereof, under his levy,
for repayment to him of the amount so paid, with interest, as
provided in the mortgage, in addition to his own individual de-
mand.

590. New Hampshire.’ — Any personal property not exempt
from attachment, subject to any mortgage, pledge, or lien, may
be attached as the property of the mortgagor, pledgor, or general
owner, the attaching creditor or officer paying or tendering to the
mortgagee, pledgee, or holder, the amount for which said property
is holden, as ascertained in the mode provided by the following
section. Such creditor or officer may demand of the mortgagee,
pledgee, or holder an account, on oath, of the amount due upon

1 King v. Bailey, 8 Mo. 332. also, Hill v. Wiggin, 31 N. H. 292; Scott
2 Sexton v. Monks, 16 Mo. 156. v. Whittemore, 27 N. H. 309, 320; Clem-
8 Faulkner v. Meyers, 6 Neb. 414, ent v. Little, 42 N. H. 563; Putnam v.
* Compiled Laws 1873, § 294. Osgood, 52 N. H. 148.

5 G. L. 1878, ch. 224, §§ 17,18. See,
468
STATUTORY PROVISIONS AND EQUITABLE RULES.  [§ 590.

the debt or demand secured by such mortgage, pledge, or lien, and
the officer may retain such property in his custody until the same
is given without tender or payment, and if such account is not
given within fifteen days after such demand, or if a false account
is given, such property may be holden discharged from such mort-
gage, pledge, or lien.

The account provided for should be a direct and positive state-
ment of the amount of the debt secured. It should be something
more than the mortgagee’s supposition or opinion. For this rea-
son an account by the mortgagee, stating that ‘“‘I consider the
following claims or demands to be secured,” was regarded as in-
sufficient. The purpose of the statute is to enable the creditor
or officer to make a tender of the exact sum due upon the mort-
gage, and thus to preserve the attachment. An account which
does not in terms or by reasonable implication do this is insuffi-
cient.t 1

A mistake in the account rendered by the mortgagee whereby
he claims more than is due does not necessarily render it false
within the meaning of the statute, provided it was rendered in
good faith.?

If the mortgage be fraudulent the property may be attached
without regard to the mortgage and without calling for an ac-
count.8

It is also provided * that personal property subject to any mort-
gage, pledge, or lien, may be taken in execution in the same man-
ner it may be attached, and may be sold in the same manner as
other personal property, and the creditor and officer shall have
the same right to demand an account of the amount due, and to
hold the same, if no account or a false account is given, as in case
of an attachment. The proceeds of the sale shall be applied to
pay the sum paid or tendered to the mortgagee, pledgee, or
holder, and interest, and the residue to the satisfaction of the ex-
ecution on which the same is holden. The debtor’s right to
redeem such property may be taken on execution, and sold as in
other cases, without such payment or tender.

1 Page v. Ordway, 40 N. H. 253. See, 2 Putnam v. Osgood, 51 N. H. 192;
also, as to what is a proper demand, Gil- Melvin v. Fellows, 33 N. H. 401.
more v. Gale, 33 N. H. 410; Kimball v. 3 Angier v. Ash, 26 N. H. 99.
Morrison, 40 N. H. 117; and notes to 4 G. L, 1878, ch. 236, §§ 3-5.
§ 583, supra.
469
§§ 591, 592.] ATTACHMENT AND EXECUTION.

591. New Jersey.— The equity of redemption of a mortgagor
of chattels in possession before condition broken may be levied
upon and sold by virtue of an execution against the mortgagor.?
But his interest is not subject to seizure upon execution against
him when the mortgagee is in possession or is entitled to posses-
sion2 A court of equity, moreover, will not permit a creditor of
the mortgagor to levy upon and sell his equity of redemption,
when the exercise of this right will destroy or greatly impair the
rights of the mortgagee. This would be the case when the prop-
erty is such that it would be extremely difficult, if not impossible,
to follow the chattels sold into the hands of various purchasers.
To prevent such irreparable mischief and a multiplicity of suits to
recover the property, and to insure the lien of the mortgage from
being seriously imperilled, an injunction to restrain the sale will
be granted.8

A judgment creditor of a mortgagee may file a bill of discovery
against an alleged fraudulent assignee of the mortgage, and upon
proof of the fraudulent character of the assignment may have the
mortgage fund applied to the payment of the judgment.t

592. New York. — The mortgagor’s interest before forfeiture
is liable to attachment and to sale upon execution by his creditors.
The mortgagor in such case has a possessory right coupled with
an equity of redemption. His creditors may obtain a lien upon
these rights by attachment, and upon execution may sell them
subject to the mortgage. The purchaser acquires the mortgagor’s
interest in the property, and the same right he had to redeem it
upon payment of the amount due on the mortgage.5 But after
forfeiture the mortgagee’s title is absolute, and the mortgagor has
no interest in the mortgaged property which is liable to be sold
on execution against him.§

1 Doughten v. Gray, 2 Stock. 323, 328; Hull v.Carnley, 11 N. Y. 501; S. C.1 Abb.
Woodside v. Adams, 40 N. J. L. 417. Pr. 158; Bailey v. Burton, 8 Wend. 339 ;

2 Miller v. Pancoast, 29 N. J. L. 250, Otis v. Wood, 3 Wend. 498; Randall v.

8 Smithurst v. Edmunds, 14 N. J. Eq. Cook, 17 Wend. 53; Bank of Lansing-
408, 419. burgh v. Crary, 1 Barb. 542.

4 Doughten v. Gray, supra. 6 Champlin v. Johnson, 39 Barb. 606 ;

5 Porter v. Parmly, 43 How. (N. Y.) Hall v. Samson, 19 How. Pr. 481; Baltes
Pr. 445; S. C. 34 N. Y. Superior Ct.398; v. Ripp, 3 Keyes, 210; S. C. 1 Abb.
52 N. Y. 185; Hathaway v. Brayman, 42 Dec. 78 ; Fairbanks v. Broomfield, 5 Duer,
N. Y. 322; Manning v. Monaghan, 28 N. 4384,
Y. 585; Goulet v. Asseler, 22 N. Y. 225;

470
STATUTORY PROVISIONS AND EQUITABLE RULES. [§§ 598, 594.

593. In Ohio chattels in possession of the mortgagor may be
attached or taken upon execution, although the condition of the
mortgage has been broken. The creditor obtains a lien upon the
property subject to the rights of the mortgagee, and may redeem
the property from him.!. The subsequent recovery of the property
by the mortgagee in an action of replevin does not defeat the lien;
but the creditor may subject the surplus proceeds, after satisfying
the mortgage, to the payment of his judgment, although after the
attachment or levy, and before the creditor has commenced pro-
ceedings to reach the surplus, the mortgagor executed an assign-
ment of the surplus to another.? In such action of replevin by
the mortgagee against an officer holding the property under legal
process, the creditor may cause himself to be made a party defend-
ant, and may by counter-claim set up and enforce his right to
equitable relief or for an account.®

594. Rhode Island.4— Personal property when mortgaged and
‘in the possession of the mortgagor, and while the same is redeem-
able at law or in equity, may be attached on mesne process against
the mortgagor, or execution may be levied upon it in the same
manner as upon his other personal estate.

When attached, such mortgaged estate may be sold, upon the
application of the mortgagee, or of either of the parties to the suit
in the manner provided for the sale of perishable goods and chat-
tels when attached on mesne process.

Upon any such sale the attaching officer shall first apply so
much of the proceeds of the sale as may be necessary to pay the
amount for which the said property was mortgaged, with such
deduction for interest for the anticipated payment, or allowance
for damages for such anticipated payment, as may be allowed by
the court or judge directing the sale; and the officer shall hold
only the balance, for the purposes of the attachment.

The plaintiff in any such attachment may redeem the mortgaged
property in the same manner as the mortgagor might have done;
and in case of such redemption the plaintiff shall have the same

1 Carty v. Fenstemaker, 14 Ohio St. 8 Morgan v. Spangler, supra; Arm-
457; Morgan v. Spangler, 20 Ib. 38; strong v. McAlpin, 18 Ohio St. 184.
Kelly v. Purcell (Ohio 1880), 7 Am. L. 4G. S. 1872, p. 460, ce. 197, §§ 4-8; p.
Ree. 705. 495, c. 212, §§ 4-8.

2 Carty v. Fenstemaker, supra.

471
§§ 595-598. ] ATTACHMENT AND EXECUTION.

lien on the property for the amount paid by him, with interest, as
the mortgagee had.

_ If the mortgage be not redeemed by the plaintiff, or sold as
before mentioned, before the redemption expires, the attachment
shall become void.

595. In South Carolina it seems not to be clearly adjudged
whether the interest of a mortgagor of a chattel is subject to levy
and sale upon execution, but the practice has been to make levies
and sales in such cases, and the better opinion seems to be that
he has such an interest.!

596. In Tennessee equitable interests in chattels are not sub-
ject to execution.? A creditor of a pledgor cannot take upon an
execution or attachment the property held in pledge, without first
discharging the debt for which it is held.®

597. Texas. — Goods and chattels pledged, assigned, or mort-
gaged as security for any debt or contract, may be levied upon
and sold on execution against the person making the pledge, as-
signment, or mortgage subject thereto; and the purchaser shall
be entitled to the possession when it is held by the pledgee, as-
signee, or mortgagee, on complying with the conditions of the
pledge, assignment, or mortgage.

598. Vermont.>— Any personal property not exempt from
attachment, subject to any mortgage, pledge, or lien, may be at-
tached, taken on execution, and sold in the same manner as other
personal property, except as is herein otherwise provided, as the
property of the mortgagor, pledgor, or general owner.

The officer making such attachment, or taking such property on
an execution, may demand of the mortgagee, pledgee of such prop-
erty, or the holder of such lien, an account in writing and under
oath of the amount due upon the debt secured by such mortgage,
pledge, or lien, and the officer may retain such property in his

1 McKnight v. Gordon, 13 Rich. (S, C.) * R.S. 1879, art. 2296, p. 336.

Eq. 222. That mortgaged property may be taken
2 Carnes v. Apperson, 2 Sneed, 562. on execution subject to the mortgage,
* First Nat. Bank of Memphis v. Pettit, see Wooton v. Wheeler, 22 Tex. 338.
. 9 Heisk. (Tenn.) 447. 5 Laws 1880, p. 41, No. 33.

472
STATUTORY PROVISIONS AND EQUITABLE RULES.  [§ 598.

custody until the same is given, without tender or ppyment; and
if such mortgagee, pledgee, or holder resides in this state, he shall
render such account within fifteen days after such demand; and
if he resides without this state, he shall render such account within
thirty days after receiving a demand in writing to render such ac-
count; and if such account is not rendered within the time afore-
said, or if a false account is rendered, such property may be holden
and sold, discharged from such mortgage, pledge, or lien.

If such debt is due at the time of rendering such account, the
creditor so attaching or causing to be taken on execution such
property may, within ten days after such account is rendered, pay
or tender the amount so rendered to the mortgagee, pledgee, or
holder of such lien, and hold and sell such property free and clear
of such mortgage, pledge, or lien.

If such debt is not due at the time of rendering such account,
but becomes due before the time fixed by the officer making such
attachment or levy of execution for the sale of such property, such
creditor, within ten days after the debt becomes due and before
the sale, may pay or tender the amount thereof to such mort-
gagee, pledgee, or holder of such lien, and hold and sell such
property as is provided in the preceding section.

If such creditor shall pay or tender such debt as is provided in
the two preceding sections to the mortgagee, pledgee, or holder of
such lien, he shall be subrogated to all the rights of such mort-
gagee, pledgee, or holder, and may cause the same to be sold in
the same manner that unincumbered personal property may now
be sold on mesne or final process, and the proceeds of such sale
shall be applied first in payment of the sum paid by such creditor
to such mortgagee, pledgee, or holder; second, to satisfy such
execution.

If the debt secured by such mortgage, pledge, or lien is not due
at the time fixed by such officer for the sale of such property, such
creditor may offer to pay such debt to the mortgagee, pledgee, or
holder of such lien; and if such mortgagee, pledgee, or holder
shall refuse to receive the same, such property may be sold, sub-
ject to such mortgage, pledge, or lien, and the purchaser of such
property at such sale shall take by such sale all the right, title,
and interest that the mortgagor, pledgor, or general owner of said
property had in and to the same, and shall be subject to the same
duties and obligations in regard to such property as the mortgagor,

473
§ 598.] ATTACHMENT AND EXECUTION.

pledgor, or general owner was under at the time of such attach-
ment or taking on execution.

It is further provided in Vermont that when a mortgagor of
personal property is summoned in an action as trustee? of the
mortgagee of such property, the plaintiff may direct the officer
having the writ in such action to attach the interest of such mort-
gagee. The officer, when so directed, shall attach such interest
by leaving a copy of the writ in the town clerk’s office where the
mortgage is recorded, with his return thereon, describing the prop-
erty and the interest of the mortgagee therein; and the town
clerk shall enter upon the margin of the record of such mortgage
a statement that the interest of the mortgagee is attached, and
shall make such other record and entry of such attachment as he
is now required by law to make where property is attached by
copy.

The property so attached shall be holden to satisfy any execu-
tion issuing upon a judgment rendered against the trustee in the
original action, or in an action on a judgment rendered against
the trustee in the original action, in the same manner and to the
same extent that property attached as the property of the defend-
ant in an action, and taken into the actual possession of the officer
making the attachment, is held to satisfy an execution against
such defendant.

The mortgagee whose interest is so attached shall not sell or
dispose of such property while the attachment is in force, or while
the liability of. the trustee is undetermined or continues.

Property so attached may be sold upon any execution issuing
by reason of a judgment rendered against the trustee, either in
the original action or in an action on a judgment rendered in the
original action, and the title and interest of the mortgagor, mort-
gagee, or other person, to and in such property shall pass to the
purchaser of the property at such sale.

When any such action is pending in the county or Supreme
Court, if the trustee files with the clerk of such court a bond to
the plaintiff in such action in a penal sum equal to the amount
that the officer is directed to attach property in the writ, with suf-
ficient sureties to be approved by such clerk, conditioned that such
trustee will pay the judgment rendered against him in such action,
and that he will pay such sum as he may be ordered by the court

1 Laws 1880, p. 42, No. 34.

4T4
STATUTORY PROVISIONS AND EQUITABLE RULES.  [§ 599.

to pay the plaintiff at any future time or times, and also a bond
to the defendant in such action in a penal sum double the amount
of the mortgage debt, with such sureties to be approved of as
aforesaid, conditioned that he will pay the balance due upon such
mortgage after paying such judgment and making such payments ;
and that in case he is discharged as trustee, he will pay the
amount secured by mortgage, he may sell such property the same
as if it had not been mortgaged or attached; and the purchaser
of such property shall hold the same released from such mortgage
and attachment.

When any such action is pending in the county or Supreme
Court, if the mortgagee files with the clerk of such court a bond
in the penal sum equal to the amount that the officer is directed
to attach property to secure in the writ in such action, with suffi-
cient sureties to be approved by such clerk, conditioned that he
will pay the judgment that may be rendered against him in such
action, such trustees shall be discharged, and the attachment shall
be dissolved.

Personal property not exempt from attachment, which is incum-
bered by a chattel mortgage, may, notwithstanding such mort-
gage, be attached on mesne process and sold on execution in the
same manner as unincumbered personal property in any action
against the mortgagor and mortgagee for the recovery of a debt or
demand for which both mortgagor and mortgagee are adjudged
holden ; and the whole interest in such property shall pass to the
purchaser at such sale.

599. Washington Territory.1— The interest of the mort-
gagor, subject, however, to the lien of the mortgagee, may be sold
under any process of law issuing out of any district court or jus-
tice of the peace court in this territory: provided, however, that
if the party who has said mortgage reside in this territory, or has
an agent therein, and the same is known to the officer executing
such process, he shall serve upon him or his agent, personally or
by mailing to him, or to his agent, if their post-office is known, a
notification of the intended sale, at the time such mortgaged prop-
erty is seized under said process, or within five days thereafter.
Said property shall not be sold within less than thirty days after
its seizure, and the officer executing such process must post in

1 G. L. 1879, p. 105, § 5.
475
§ 600.] ATTACHMENT AND EXECUTION.

three public places, near the place where the said property is to
be sold, a notice of the time and place of such sale, at the time he
seizes said property under said process.

600. In Wisconsin a mortgagor’s creditor may levy upon his
interest in the mortgaged property, and sell it subject to the
rights of the mortgagee. He cannot levy upon the property it-
self, but only upon the mortgagor’s interest therein. He cannot
deprive the mortgagee of possession if he be in possession, nor can
he dispose of the property regardless of the mortgagee’s rights,
He cannot sell the property in parcels, but must sell it in bulk,
subject to the mortgage ; and the officer should retain possession
until the purchaser pays the mortgage, and then he may apply
the surplus upon the execution.! It is only when the mortgagor
has the right of possession for a definite period of time that his
interest may be attached or seized and sold upon execution sub-
ject to the mortgage.”

It is provided by statute® that whenever it shall appear upon
the trial of any action against a sheriff, coroner, constable, or
other officer for the recovery of the possession of personal prop-
erty or the value thereof, that the defendant obtained the posses-
sion of such property by virtue of an execution or writ of attach-
ment against the property of a person not a party to such action,
from whom the plaintiff claims to have derived his right by a
mortgage, and that such property was taken by the officer from
the possession of the defendant in such execution or attachment,
or from premises occupied or controlled by him, and it shall be
alleged in the answer of the defendant that such mortgage was
fraudulent as to the creditors of the mortgagor, then the burden
of proof shall be upon the plaintiff to show that such mortgage
was given in good faith and to secure an actual indebtedness and
the amount thereof.

1 Cotton v. Marsh, 8 Wis. 221; Frisbee 2 Saxton v, Williams, 15 Wis. 292.
v. Langworthy, 11 Wis. 375; Cotton v, 3 R. S. 1878, ch. 105, § 2319.
Watkins, 6 Wis. 629.

476
* CHAPTER XIII.

REMOVAL, CONCEALMENT AND SALE OF MORTGAGED PROP-
ERTY.

601. In general. — A provision against the sale of the mort-
gaged property is frequently inserted in mortgages to the effect
that, if the mortgagor shall attempt to sell the property, or any
part of it, or to remove it, without the written consent of the
mortgagee, he may take immediate possession of the property.
If such a provision be violated by a sale or mortgage of the prop-
erty the mortgagee may take possession, and may maintain it in
the absence of any payment or tender of the amount due on the
mortgage.?

Other similar provisions are frequently inserted in mortgages
with the same general purpose to protect the mortgagee and ena-
ble him to take possession, if his protection require it, before the
maturity of the mortgage debt. Such, for instance, is the pro-
vision enabling the mortgagee to take possession whenever he shall
deem himself insecure.

But in addition to any such provisions which may be made in
the contract itself for the protection of the mortgagee, it has been
found necessary to protect him by general enactments respecting
the removal, concealment, and sale of the mortgaged property by
the mortgagor. Accordingly, in most of the states and territories
there are statutes making the removal or sale of the mortgaged
property without the consent of the mortgagee a criminal offence,
punishable by fine or imprisonment. These statutes, however,
are so different in their provisions, and even in their scope, that
no general synopsis of them can be satisfactorily made; and there-
fore the statutes are stated in full.

602. Alabama.?— Any person who removes or sells any per-
sonal property, for the purpose of hindering, delaying, or defraud-

| Howard v. Chase, 104 Mass. 249. 2 Code 1876, §§ 4353, 4354.
ATT
§$ 603-605. ] REMOVAL, CONCEALMENT,

ing any person who has a claim thereto under any written instru-
ment, lien created by law for rent or advances, or any other law-
ful or valid claim, verbal or written, with a knowledge of the ex-
istence thereof ; or if any person buy, receive, or conceal any such
property with knowledge of the existence of any such claim, with
like intent, upon conviction thereof he shall be punished as though
he had stolen the same.

Any person who sells or conveys any personal property upon
which he has given a written mortgage, lien, or deed of trust, and
which is then unsatisfied in whole or in part, without first obtain-
ing the consent of the lawful holder thereof to such sale or con-
veyance, is guilty of a misdemeanor, and upon conviction shall be
fined not exceeding five hundred dollars, and may also be im-
prisoned in the county jail, or sentenced to hard labor for the
county not exceeding six months, one or both, at the discretion of
the jury.

603. Arkansas.!— Any person or persons who shall remove
beyond the limits of this state, or of any county wherein the lien
may be recorded, property of any kind upon which a lien shall
exist, by virtue of a mortgage, deed of trust, or by contract of par-
ties, or by operation of law, or who shall sell, barter, or exchange,
or otherwise dispose of any such property without the consent of
the person or persons in whose favor such lien shall have been
created, or exists by law, or who shall secrete the same or any
portion thereof, shall be deemed guilty of felony, and subject to
an indictment, and upon conviction thereof shall be sentenced to
hard labor in the jail and penitentiary house of this state for a
period of not less than one nor more than two years, at the dis-
cretion of the jury trying the same.

604. California.?— If a mortgagor voluntarily removes or per-
mits the removal of the mortgaged property from the county in
which it was situated at the time it was mortgaged, the mort-
gagee may take possession and dispose of the property as a pledge
for the payment of the debt, though the debt is not due.

605. Colorado2— A sale, transfer, or incumbrance of the

1 Acts 1874, p. 129, § 1. * Gen. Laws 1877, p. 123, §§ 129,131,
2 Codes & Stats. 1876, § 7966. 132,

478
AND SALE OF MORTGAGED PROPERTY.  [$§ 606, 607.

mortgaged property by the mortgagor during the existence of the
mortgage is deemed a larceny of such property, unless at the time
of making such sale, transfer, or incumbrance, such mortgagor
shall fully advise the person to whom it may be made of the fact
of the prior incumbrance and mortgage, and also first fully ap-
prise the mortgagee of the intended sale, giving him the name
and place of residence of the party to whom the sale, transfer, or
incumbrance is to be made. If the mortgagor transfers, conceals,
or carries away the mortgaged property without the written con-
sent of the mortgagee, he is deemed guilty of misdemeanor; and
may be punished by fine of not less than twice the value of the
property, or by imprisonment in the county jail not exceeding one
year, or both, at the discretion of the court.

Any person having conveyed any article of personal property to
another by mortgage, who shall, during the existence of the lien
or title created by such mortgage, sell the said personal property
toa third person for a valuable consideration, without informing
him of the existence and effect of such mortgage, shall forfeit and
pay to such purchaser twice the value of such property so sold,
which forfeiture may be recovered in an action of debt in any
court having jurisdiction thereof.

606, Connecticut.1— Whoever with a fraudulent intent to
place mortgaged personal property beyond the control of the
mortgagee, removes or conceals, or aids or abets in removing or
concealing the same, and any’ mortgagor of such property who
assents to such removal or concealment, shall be punished by a
fine not exceeding five hundred dollars, or by imprisonment in
jail not exceeding six months. If any mortgagor of personal
property sells or conveys the same, or any part thereof, without
the written consent of the mortgagee, and without informing the
person to whom he sells or conveys that the same is mortgaged,
shall be punished by a fine not exceeding one hundred dollars, or
by imprisonment in jail not exceeding six months.

607. Dakota Territory.2— Every mortgagor of personal prop-
erty or his legal representatives, who while his mortgage thereof
remains in force and unsatisfied wilfully destroys, removes, con-

1 Acts 1877, ch. 53. 2 B.C. 1877, p. 810, § 579, of Penal
Code.
479
§ 608, 609.] REMOVAL, CONCEALMENT,

ceals, sells, or in any manner disposes of or materially injures the
property or any part thereof covered by such mortgage, without
the written consent of the then holder of such mortgage, shall be
deemed guilty of felony, and shall, upon conviction, be punished
by imprisonment in the territorial prison for a period not exceed-
ing three years, or in the county jail not exceeding one year, and
by fine not exceeding five hundred dollars.

If the mortgagor voluntarily removes or permits the removal of
the mortgaged property from the county in which it was situated
at the time it was mortgaged, the mortgagee may take possession
and dispose of the property as a pledge for the payment of the
debt, though the debt is not due.?

608. Delaware.2 —If any mortgagor shall, without the con-
sent of the mortgagee, remove the mortgaged property from the
county where it is situated, or in which it was at the time of
making the mortgage, he shall be guilty of a misdemeanor, and,
upon conviction thereof, shall be fined in a sum equal to the value
of the property removed, and shall also be imprisoned for a term
not exceeding one year.

609. Florida.’ — If any mortgagor of personal property in this
state, or other person, shall, with fraudulent intent, make arrange-
ments, endeavor, or attempt to remove the same beyond the
limits of the judicial circuit in which the property was at the time
of the execution and delivery of the mortgage, so as to impair the
rights, interest, or remedies of the mortgagee, or the assignee of
such mortgage, it shall be competent for the mortgagee, or any
person interested in the said mortgage, upon making an affidavit
of the fact before a judge of the Circuit Court, or before any jus-
tice of the peace, or the clerk of the Circuit Court, to obtain a writ
of attachment, to be directed to any constable or sheriff, requir-
ing him to attach and take into his custody the property so re-
moved or attempted to be removed; or, if such constable or
sheriff cannot be had, then any other indifferent person specially
delegated under the hand and seal of the judge, justice, or clerk
issuing such attachment. Such writs of attachment, whether the
same be issued by a judge of the Circuit Court, or by a justice of

1 R. C. 1877 ; § 1752 of Civil Code. ® Bush’s Dig. ch. 122, §§ 11-14.
2 Laws 1877, ch. 477, § 4.

480
AND SALE OF MORTGAGED PROPERTY. [§ 609.

the peace, or by the clerk of the Circuit Court, shall run and have
full force and effect in every county of this state; but all such
writs of attachment, when the real sum in controversy may be fifty
dollars or more, shall be made returnable to the Circuit Court.
Such attachment, thus applied for, shall not be issued till after
the party applying shall have given bond, with two securities, in
double the amount of the debt claimed, to be approved of by the
judge, the clerk, or justice granting said attachment, to pay all
damages the defendant may sustain, if the said attachment should
be abated or dismissed for any cause whatever.

Upon application of the mortgagor, or person interested in the
mortgage, to the judge of the circuit in which the writ of attach-
ment was issued, it shall be his duty to order a venire to be issued
requiring the sheriff to summon a jury to be empanelled before
him, at such time and place as shall be specified in said writ, then
and there to try and determine the following facts: 1. Whether
the property attached was actually bond fide mortgaged. 2.
Whether the mortgagor, or other person claiming any interest in
such property, or any person acting under his or their authority,
or with his or their privity or consent, so fraudulently intended,
had made arrangements, or endeavored or attempted, to remove
beyond the limits of the judicial circuit, the property so mort-
gaged, without the consent or contrary to the wishes of the mort-
gagee, or other person interested in the said mortgage ; and if the
finding shall be in the affirmative, the jury shall then proceed to
ascertain the amount of the demand under the said mortgage,
and shall render a verdict for the same, whether the same shall
be due or not; and judgment shall thereupon be entered up, and
execution be issued and levied, as in other cases of execution.

It is further provided that it shall be unlawful for any mort-
gagor or assignee of a mortgagor, or any one in possession of any
personal property of any kind upon which there is an express lien,
he or she having notice of such lien, to remove the same from the
county where such property is situated, without the consent of
the mortgagee or his assignee, or of the person holding such ex-
press lien thereon, or in any way to conceal or dispose of the same
with the intent to defeat such lien; and any person so offending,
his or her aiders or abettors, shall be deemed guilty of a felony,

1 Laws 1877, ch. 3015.
a1 481
§§ 610, 611.] REMOVAL, CONCEALMENT,

and upon conviction shall be confined in the state prison at hard
labor for not less than three nor more than twelve months, or
fined not less than five nor more than one thousand dollars, at the
discretion of the judge.

610. Georgia.! — No person, after having executed a mortgage
deed to personal property, shall be permitted to sell or otherwise
dispose of the same with intent to defraud the mortgagee, unless
the consent of the mortgagee be first obtained, before payment of
the indebtedness for which the mortgage deed was executed; and
if any person shall violate the provisions of this section, and loss
thereby is sustained by the holder of the mortgage, the offender
shall be deemed guilty of a misdemeanor, and upon conviction
thereof shall be punished by a fine, in double the sum, or debt,
which said mortgage was given to secure; and upon failure to
pay said fine immediately, the person so convicted shall be impris-
oned in the common jail for a period of not less than six months
nor more than twelve. When the fine has been imposed and
collected, one half shall be paid to the holder of the mortgage,
and the payment shall extinguish the debt to secure which the
mortgage was executed, and the remaining half shall be paid
over to the county treasury of the county in which said conviction
was had.

611. Illinois.?— Any person having mortgaged any personal
property who shall, during the existence of the title or lien cre-
ated by such instrument, sell the same or any part thereof to
another person for a valuable consideration without informing him
of the existence of such conveyance, shall forfeit and pay to the
purchaser twice the value of the property so sold, which sum may
be recovered by such purchaser in an action of debt, in any court
of competent jurisdiction, or before a justice of the peace, if within
his jurisdiction. Any person having so conveyed any personal
property who shall, during the existence of such title or lien, sell,
transfer, conceal, take, drive, or carry away, or in any manner
dispose of such property or any part thereof, or cause or suffer
the same to be done without the written consent of the holder of
such incumbrance, shall be guilty of a misdemeanor, and on con-

1 Code 1873, §§ 4600, 4601. 2 R. 8.1874, and R. S. 1880, ch. 95,

§§ 6, 7.
482
AND SALE OF MORTGAGED PROPERTY. [§ 612-615.

viction may be fined in a sum not exceeding twice the value of
the property so sold or disposed of, or confined in the county jail
not exceeding one year, at the discretion of the court.

612. Indiana.1— Any person having mortgaged his personal
property, who shall, during the existence of the lien, sell or trans-
fer to any person without informing him of the lien, or who shall
take, drive, or carry away, in violation of his agreement contained
in the mortgage, and without the consent of the mortgagee, any
of the property, shall be guilty of a misdemeanor, and on convic-
tion thereof shall be fined in any sum not to exceed two hundred
dollars, in the discretion of the court or jury trying the cause.

613. Iowa.*— If any mortgagor of personal property, while
his mortgage of it remains unsatisfied, wilfully destroy, conceal,
sell, or in any manner dispose of the property covered by such
mortgage without the consent of the then holder of such mort-
gage, he shall be deemed guilty of larceny and be punished ac-
cordingly.

An indictment under this statute must aver that the mortgage
was unsatisfied at the time of the alleged offence.?

614. Kansas.t— Any mortgagor of personal property who
shall injure, destroy, sell, or dispose of such property, or any part
thereof, for the purpose of defrauding the mortgagee, or his or her
assigns, or shall conceal such property or any part thereof with
the intent to hinder, delay, or defraud such mortgagee, or his or
her assigns, shall be deemed guilty of a misdemeanor, and upon
conviction thereof shall be punished by imprisonment in the
county jail for a period not to exceed six months, or by a fine of
not less than fifty dollars or more than five hundred dollars, or by
both such fine and imprisonment.

615. Massachusetts.5 — Whoever, with a fraudulent intent to
place mortgaged personal property beyond the control of the

1 Acts 1879, p. 161, ch. 68. in the county where the mortgage was ex-
2 Code 1873, and Rev. Code 1880, § 3895. ecuted.
8 State v. Gustafson, 50 Iowa, 194. See 4 Dassler’s Compiled Laws 1879, §
also State v. Julien, 48 Iowa, 445, as to 2036.
circumstances under which aremoval and 5 G. §. 1860, ch. 161, §§ 61, 62.
sale do not constitute an offence indictable

483
§ 616.] REMOVAL, CONCEALMENT,

mortgagee, removes or conceals, or aids or abets in removing or
concealing the same, and any mortgagor of such property who
assents to such removal or concealment, shall be punished by a
fine not exceeding one thousand dollars, or by imprisonment in
the jail not exceeding one year. If a mortgagor of personal
property sells or conveys the same or any part thereof without
the written consent of the mortgagee, and without informing
the person to whom he sells or conveys that the same is mort-
gaged, he shall be punished by fine not exceeding one hun-
dred dollars, or by imprisonment in the jail not exceeding one
year.

An indictment under this statute is sufficient which describes
the property as a large quantity of dry goods of a certain value,
especially if it be alleged that a more particular description can-
not be given ; the punishment not depending upon the amount or
value of the property.!

Any person who participates in the offence is a principal, there
being no distinction in misdemeanors between principal and ac-
cessory before the fact. Therefore in an indictment for removing
and concealing mortgaged property an allegation of aiding and
abetting is superfluous.”

In order to justify a sale it is not necessary that the mortgagor
should both have the written consent of the mortgagee and shall
have informed the purchaser of the existence of the mortgage ;
but he may sell either with such consent, or after giving such in-
formation ® without incurring the penalty of the statute.

No action lies to recover the price of property sold in violation
of the statute and returned by the purchaser.* But the purchaser
may show that the sale was made with the oral consent of the
mortgagee, who is thus barred of his right to set up his mortgage
against the purchaser’s title.®

616. Michigan. — If any person who shall have made or exe-
cuted any mortgage or conveyance, intended to operate as a mort-

1 Commonwealth v. Strangford, 112 4 Bryant v. Pollard, 10 Allen (Mass.),

Mass. 289. 81.
2 Commonwealth v. Wallace, 108 Mass. 5 Stafford v. Whitcomb, 8 Allen (Mass.),
12, 518; Shearer v. Babson, 1 Ib. 486; Pratt
® Commonwealth v. Damon, 105 Mass. vy. Maynard, 116 Mass. 388; and see
580. Draper v. Saxton, 118 Mass. 427.

® Compiled Laws, p. 2092, § 7611.
484
AND SALE OF MORTGAGED PROPERTY.  [§§ 617, 618.

gage of goods and chattels, shall fraudulently embezzle, remove,
conceal, or dispose of any such goods and chattels, mortgaged or
conveyed as aforesaid, with intent to injure or defraud the mort-
gagee or assignee of said mortgage or conveyance, he shall be
guilty of a misdemeanor, and punished by fine not exceeding one
hundred dollars, or by imprisonment in the county jail not exceed-
ing three months, or both, in the discretion of the court.

617. Minnesota.! — If any person having conveyed any article
of personal property by mortgage shall, during the existence of
the lien or title created by such mortgage, sell, transfer, conceal,
take, drive, or carry away, or in any way or manner dispose of
said property, or any part thereof, with intent to defraud, or cause
or suffer the same to be done without the written consent of the
mortgagee of said property, he shall be deemed guilty of a mis-
demeanor, and shall be liable to indictment; and on conviction
thereof shall be punished by fine not less than twice the value of
the property so sold or disposed of, or confined in the county jail
not exceeding one year, or both, at the discretion of the court, and
until the fine and all costs of such prosecution are paid.

618. Mississippi.2— If any person shall move or cause to be re-
moved to any place beyond the jurisdiction of this state any per-
sonal property, which shall, at the time of such removal, be under
written pledge, or mortgage, or deed of trust, or lien by judgment
in this state, with intent to defraud the pledgee, mortgagee, trus-
tee, cestui que trust, or judgment creditor, said person shall be
deemed guilty of a misdemeanor ; and upon conviction thereof, be-
fore a court of competent jurisdiction, shall be fined not more than
one thousand dollars, or imprisoned in the county jail not more
than twelve months, or punished by both such fine and imprison-
ment at the discretion of the court.

Any person who shall remove or cause to be removed, or aid or
assist in removing, from the county in which it may be, any per-
sonal property which may be the subject of a pledge, mortgage,
deed of trust, lien of a lessor of lands, or lien by judgment or
otherwise, of which such party has notice, without the consent of
the holder of such incumbrance or lien, or who shall conceal or

1G. S. 1878, ch. 39, § 14; Stat. at 2 Code 1880, §§ 2908, 2909.
Large, ch. 54, § 133; ch. 41, § 220.

485
§§ 619, 620.] REMOVAL, CONCEALMENT,

secrete such property, and shall not immediately discharge such
incumbrance or lien, shall, upon conviction, be imprisoned in the
county jail not more than one year, or. be fined not exceeding the
value of such property, or both.

619. Missouri.! — Every mortgagor or grantor in any chattel
mortgage, or trust deed of personal property, who shall sell, con-
vey, or dispose of the property mentioned in said mortgage or trust
deed, or any part thereof, without the written consent of the mort-
gagee or beneficiary, and without informing the person to whom
the same is sold or conveyed that the property is mortgaged or
conveyed by such deed of trust; or who shall injure or destroy
such property, or any part thereof, or aid or abet the same, for
the purpose of defrauding the mortgagee, trustee, or beneficiary,
or his heirs or assigns, or shall remove or conceal, or aid or abet in
removing or concealing such property, or any part thereof, with
intent to hinder, delay, or defraud such mortgagee, trustee, or ben-
eficiary, his heirs or assigns, shall be deemed guilty of a misde-
meanor.

620. Montana Territory.?— Any mortgagor, or agent, servant,
or employee of any mortgagor of personal property, who shall, dur-
ing the time such mortgage remains in force and virtue, destroy,
conceal, sell, or otherwise dispose of the property mortgaged, or
who shall remove said property from the county in which said
mortgage is recorded, without the written consent of the mort-
gagee, or assignee of the mortgagee, shall be deemed guilty of a
misdemeanor; and on conviction thereof shall be punished by fine
of not less than fifty dollars nor more than five hundred dollars,
or by imprisonment in the county jail not less than thirty days
nor more than six months, or by both such fine and imprisonment,
at the discretion of the court.

Any person having conveyed goods or chattels, or any article of
personal property, to another, by mortgage, who shall, during the
existence of the lien or title created by such mortgage, sell the
said goods, chattels, or personal property, or any part thereof, to a
third person, for a valuable consideration, without informing him
of the existence and effect of such mortgage, shall forfeit and pay

1B. S. 1879, § 1341. 2 Laws 1876, p. 36, § 1.
486
AND SALE OF MORTGAGED PROPERTY. [8§ 621, 622.

to the purchaser twice the value of such property so sold, which
forfeiture may be recovered in an action of debt in any court hav-
ing jurisdiction thereof, or if the amount claimed do not exceed
one hundred dollars, before any justice of the peace.!

621. Nebraska.?—- Any person who, after having conveyed any
article of personal property to another by mortgage, shall, during
the existence of the lien or title created by such mortgage, sell,
transfer, or in any manner dispose of the said personal property,
or any part thereof, so mortgaged, to any persons or body cor-
porate, without first procuring the consent of the mortgagee of
the property to such sale, transfer, or disposal, or shall remove,
permit, or cause to be removed said mortgaged property, or any
part thereof, out of the county within which such property was at
the time such mortgage was given on it, with intent to deprive
the mortgagee of his security without first obtaining the consent
in writing of the mortgagee of such property to such removal,
shall be deemed guilty of a felony, and on conviction thereof
shall be imprisoned in the penitentiary for a term not exceeding
ten years, and be fined in a sum not exceeding one thousand
dollars.

622. New Hampshire. — No mortgagor of personal property
shall sell or pledge any property by him mortgaged, without the
consent of the mortgagee in writing upon the mortgage, and on
the margin of the record thereof, in the office where it is recorded.

No mortgagor shall execute any second or subsequent mortgage
of personal property while the same is subject to a previously
existing mortgage, given by such mortgagor, unless the fact of
the existence of such previous mortgage is set forth in the subse-
quent mortgage.

If any mortgagor shall be guilty of any offence against either
of the above provisions, he shall be fined double the value of the
property so wrongfully sold, pledged, or mortgaged, one half to
the use of the party injured, and the other half to the use of the
county.

In a prosecution for the sale of mortgaged property, the value
of the property sold, at the time of the sale, must be alleged in

1 Codified Stats. 1872, ch. 48, p. 52, ° Laws 1877, p. 5, § 1.

§ 6. 3 G. S. 1878, ch. 137, §§ 18-16.
487
§§ 623, 624.] REMOVAL, CONCEALMENT,

the indictment and found by the jury, just as in a prosecution for
larceny.

Under a statute requiring the written consent of the mortgagee
to justify a sale of the mortgaged property by the mortgagor, his
verbal consent is no answer to an indictment under tbe statute
against the mortgagor for making a sale contrary to statute.?

If the mortgagor sells the property with the mortgagee’s con-
sent in writing, but without its being indorsed upon the mortgage
or entered upon the record as required by statute, whether such
consent be sufficient to protect the mortgagor from liability under
the statute, or not, the mortgagee is thereby estopped, as against
a purchaser, from setting up any claim of title.®

623. New Jersey.t— Every chattel mortgage shall vest in the
mortgagee, or owner thereof, the right to the possession of the
ehattels therein described, so far as may be necessary for the pur-
pose of preventing the removal thereof out of the county wherein
they did lie at the time of the execution or delivery of such mort-
gage, and of recovering such chattels in case the same shall have
been removed out of such county.

When such chattels shall be so removed by any party and re-
covered by the mortgagee or owner of the mortgage by means of
legal proceedings, or when the removal thereof shall be prevented
by like proceedings, the court in which such proceedings are had
may regulate the disposition of such chattels, and prescribe such
terms for the possession thereof by the mortgagee or other person
interested therein as will protect the rights of such mortgagee or
owner of such mortgage.

624. New York. — Any mortgagor of personal property who
shall hereafter, with intent to defraud a mortgagee or purchaser
of such property, sell, assign, exchange, secrete, or otherwise dis-
pose of any personal property upon which he shall have given or
executed'a mortgage, or any instrument intended to operate as a
mortgage, which at the time is a lien thereon, shall be deemed
guilty of a misdemeanor; and upon conviction thereon shall be

1 State v. Ladd, 32 N. H. 110. * R. 8. 1877, p. 708, §§ 36-43.
2 State v. Plaisted, 43 N. H. 413. 5 3 R. S. 1875, p. 978, § 73.
® White Mountain Bank v. West, 46

Me. 15.
488
AND SALE OF MORTGAGED PROPERTY. _[§§ 625, 626.

punished by a fine not exceeding three times the value of such
property so sold, assigned, exchanged, secreted, or otherwise dis-
posed of, or by imprisonment in the county jail of the county in
which such offence is committed not exceeding one year, or by
both such fine and imprisonment.

625. North Carolina.!1— If any person who has executed a
chattel mortgage or deed in trust, or given a lien, shall, after the
execution of the same and while it is in force, make any disposi-
tion of any personal property embraced in said chattel mortgage,
deed in trust, or lien, with intent to hinder, delay, or defeat the
rights of the person or persons to whom the said chattel mortgage,
deed in trust, or lien was made, such person or persons so offend-
ing, and each and every person with a knowledge of the existence
of the lien buying the property embraced in said mortgage, deed
in trust, or lien, and every person assisting, aiding, or abetting the
mortgagor in disposing of such property with like intent to hin-
der, delay, or defeat the rights of the person or persons to whom
the said mortgage, deed in trust, or lien was made, shall be guilty
of a misdemeanor ; and upon conviction shall be punished by a fine
not exceeding fifty dollars, or imprisonment not exceeding one
month ; but the fact of the registration of such mortgage, deed in
trust, or lien shall not be evidence against the defendant upon any
trial of the knowledge of said defendant of the existence of the
same. Growing crops shall be considered personal property within
the meaning of this act.

An indictment under this statute is fatally defective, if it fails
to set forth the manner in which the property was disposed of,
and the name of the person who received it. The indictment must
particularly identify the transaction on which it is founded” The
indictment is also defective if it fails to set forth that the len
was in force at the time of the sale.

626. Ohio.t— A mortgagor of personal property, in possession
of the same, who, without the consent of the owner of the claim
secured by mortgage, removes any of the property mortgaged out

1 Laws 1873, ch. 81; Amended by Laws 3 State v. Burns, supra.

1875, ch. 215. 4 Laws 1877, p. 251, § 18; 2B. S.
2 State v. Pickens, 79 N.C. 652; State 1880, § 6849.

v. Burns, 80 N. C. 376.

489
§$ 627-629.] REMOVAL, CONCEALMENT,

of the county where it was situated at the time it was mortgaged,
or secretes or sells the same, or converts the same to his own
use, with intent to defraud, shall be fined not more than five hun-
dred dollars, or be imprisoned not more than three months, or
both.

627. Texas.1— If any person has given or shall hereafter give
any deed of trust, or other lien, in writing, upon any personal or
movable property, and shall remove the same or any part thereof
out of the state, or shall sell, or otherwise dispose of the same,
with intent to defraud the person having such lien, either origi-
nally or by transfer, he shall be punished by imprisonment in the
penitentiary not less than two nor more than five years.

In an indictment under this statute, it is essential to aver that
the mortgage was valid, subsisting, and unpaid at the time the
offence is alleged to have been committed. The fraudulent in-
tent is the gist of the offence, and must be sufficiently averred
and proved.?

628. Vermont.?— No mortgagor of personal property shall sell
or pledge any such property by him mortgaged without the con-
sent of the mortgagee in wr:ting upon the back of the mortgage,
and on the margin of the record thereof in the office where such
mortgage is recorded. No mortgagor shall execute any second or
subsequent mortgage of personal property while the same is sub-
ject to a previously existing mortgage or mortgages given by such
mortgagor, unless the fact of the existence of such previous mort-
gage or mortgages is set forth in the subsequent mortgage. If
any mortgagor shall be guilty of any offence against either of the
two sections preceding, he shall be punished by fine equal to
double the value of the property so wrongfully sold, pledged, or
mortgaged, one half to the use of the party injured, and the other
half to the use of the town where the mortgage is recorded.

629. Washington Territory.t— Any person having mortgaged
personal property, who shall remove the same from the county
where it was situated at the date of the mortgage, before it is
duly released, or witbout the consent in writing of the mortgagee,

1 Paschal’s Dig. § 2425. 5 Laws 1878, pp. 58, 59, §§ 8, 9, 10.
2 Satchell v. State, 1 Tex. App. 438. # G. L. 1879, p. 106, § 14.

. 490
AND SALE OF MORTGAGED PROPERTY. [§$ 630, 631.

or who shall sell or dispose of the same, or any interest therein,
where he parts with the possession thereof, or who shall secrete
the same, shall be deemed guilty of a misdemeanor, and on con-
viction shall be punished by imprisonment in the county jail for a
term not exceeding three years.

630. Wisconsin.!— Any person having conveyed any personal
property by mortgage, who shall, during the existence of the lien
or title created by such mortgage, sell, transfer, conceal, remove
or carry, or drive away said property, or any part thereof, or cause
the same to be done without the consent of the mortgagee or his
assigns, and with the intent to defraud, shall be punished by im-
prisonment in the county jail not more than six months, or by fine
not exceeding one hundred dollars.

631. Wyoming Territory.2— Any person who, after having
conveyed any goods, chattels, or personal property to another by
mortgage, or conveyance intended to operate as a mortgage, shall,
during the existence of the lien or title created by such mortgage
or conveyance, sell the said property or any part thereof so mort-
gaged to any person or persons or body corporate, without first
procuring the consent of the mortgagee of the property to such
sale, or shall remove said mortgaged property, or any part thereof,
out of the jurisdiction of the District Court of the county within
which such property was at the time such mortgage was given on
it, with intent to deprive the mortgagee of his security, without
first obtaining the consent of the mortgagee of such property to
such removal, shall be deemed guilty of a felony; and on convic-
tion thereof shall be imprisoned in the penitentiary for a term not
exceeding ten years, and be fined in a sum not exceeding five hun-
dred dollars.

1 R. S. 1878, ch. 182, § 4467. 2 Laws 1877, p. 22, § 14.
491
CHAPTER XIV.

PAYMENT AND DISCHARGE.

I. Tender before and after default, 632-
637.

II. Appropriation of payments, 638-641.
III. Changes in the form of the debt, 642—
645.

Payment of the debt and its effect,
646-657.

IV.

V. Merger and subrogation, 658, 659.
VI. Release or discharge otherwise than
by payment, 660-662.

VII. Statutory provisions for entire satis-

faction of record, 663-680.

I. Tender before and after Default.

632. At common law a tender made after forfeiture does
not operate to revest the title in the mortgagor, so as to enable

him to recover at law.!

The mortgagee is not at law bound to
receive the amount due and restore the property.

If the mort-

gagor has any right it is merely an equitable right of redemption.?
A tender of the debt after forfeiture does not revest the title in

the mortgagor.

Nothing short of acceptance of the tender will

have that effect and extinguish the legal title of the mortgagee

in the property mortgaged.3

If the property be lost or destroyed after the refusal of a proper
tender, the loss falls upon the mortgagee.*

The acceptance of a

tender after forfeiture is a waiver of the

forfeiture, and revests the title in the mortgagor.5
But the acceptance of a part of the money secured by the mort-
gage does not authorize such an inference.®

1 Patchin v. Pierce, 12 Wend. (N. Y.)
61; Charter v. Stevens, 3 Den. (N. Y.)
83; Stoddard v. Denison, 38 How. a Y.)
Pr. 296; Rogers v. Traders’ Ins. Co. 6
Paige (N. Y.), 583, 587, 594.

See 2 Jones on Mortgages, §$ 886-
903.

2 Hulsen v. Walter, 84 How. (N. Y.)

Pr. 385; Wheeler v. Miller, 2 Den. (N. .

Y.) 172; Boone v. Rains, 7 Mon. (Ky.)
384; Sims v. Canfield, 2 Ala. 555.

492

3 Blodgett v. Blodgett, 48 Vt. 32; Pat-
chin v. Pierce, supra; Brown v. Bement,
8 Johns. (N. Y.) 96; Langdon v. Buel, 9

‘Wend. (N. Y.) 80; Ackley v. Finch, 7 Cow.

(N. ¥.) 290; Heyland v. Badger, 35 Cal.
404; Brown v. Lipscomb, 9 Port, (Ala.)
472,

* Goodman v. Pledger, 14 Ala. 114.

5 Patchin v. Pierce, supra.

6 Patchin v. Pierce, supra; Charter v.
Stevens, 8 Den. (N. Y.) 33; Parks v.
TENDER BEFORE AND AFTER DEFAULT. [§§ 633-6385.

633. Payment of the debt after forfeiture revests the legal
title in the mortgagor, and he may assert this at law, although
before payment he could avail himself of his equity of redemption
only in chancery The mortgagee’s acceptance of payment is
considered as a waiver of the forfeiture, and as revesting in the
mortgagor the legal title to the property, without a redelivery or
resale and without a cancellation of the mortgage.?

And so if the mortgage be not given to secure the payment of
money, but the delivery of certain property at a stipulated time,
and the articles be not delivered at that time, but are afterwards
delivered and accepted, the lien created by the mortgage is thereby
discharged.®

634. A tender made after the mortgagee has taken pos-
session for a breach of the condition will not enable the mort-
gagor to maintain replevin for the property. The legal title of
the property vests in the mortgagee after condition broken, leav-
ing nothing but an equitable right to redeem in the mortgagor.
The mortgagee until he has demanded possession, or taken some
step to enforce the forfeiture, may, perhaps, be considered as
waiving his strict legal right; but after such demand or proceed-
ing to enforce his right, the mortgagor certainly has nothing but
an equitable right to redeem. The effect of a tender after this
cannot be to discharge the lien and reinvest the mortgagor with
the legal title.

635. But a tender made after forfeiture, and before the mort-
gagee has taken possession, or made a demand for possession, if
the tender be kept good by payment of the money into court, is a
good defence in an action by the mortgagee for possession. In such
case the acquiescence of the mortgagee in the continued possession

of the mortgagor after breach of

Hall, 2 Pick. (Mass.) 206, 210; Barry v.
Bennett, 7 Met. (Mass.) 354, 360.

1 West v. Crary, 47 N.Y. 423; Patchin
v, Pierce, 12 Wend. (N. Y.) 61; Harrison
v. Hicks, 1 Port. (Ala.) 423; Barry v.
Bennett, supra; Parks v. Hall, 2 Pick.
(Mass.) 206, 211; Moak v. Bourne, 13
Wis. 514; Thompson v. Van Vechten, 27
N. Y. 568.

2 Leighton v. Shapley, 8 N. H. 359;

the condition, without asserting

Sumner v. Bachelder, 30 Me. 35, 39;
Flanders v. Barstow, 18 Me. 357; Greene
v. Dingley, 24 Me. 131; West v. Crary,
supra ; Porter v. Parmley, 52 N. Y. 185,
188.

8 Butler v. Tufts, 13 Me. 302; and see
Moak v. Bourne, supra.

4 Smith v. Phillips, 47 Wis. 202. The
tender was not kept good by payment of
the money into court.

493
§§ 636, 637.] PAYMENT AND DISCHARGE.

his right under the forfeiture, is regarded as a waiver of the strict
legal forfeiture according to the conditions of the mortgage ; and
therefore a tender made before the mortgagee has taken any step
towards asserting his rights under the forfeiture is regarded as
having the same effect in law as though made on the day the
money became due. At all events these facts afford a good equi-
table defence; and under codes allowing such a defence in an
action at law this defence is sufficient to defeat a recovery of pos-
session by the mortgagee in an action at law.1 But where equi-
table defences are not allowed in actions at law such a defence
could not be made.

636. A tender not kept good by payment of the money
into court does not extinguish the lien. In New York and Mich-
igan it is held, in cases relating to mortgages of real property, that
it is not necessary to bring the money into court and keep the ten-
der good, in order to extinguish the lien of the mortgage, although
such a tender does not operate in the way of payment of the debt.2
In those and other states a mortgage of real property is not con-
sidered as vesting the legal title, but only a lien, in the mort-
gagee before foreclosure. But this rule in regard to the effect of
a tender does not in New York apply in case of a mortgage of
personal property, because in that state as well as in other states,
except Michigan and Oregon, such a mortgage vests the legal
title and not merely a lien in the mortgagee.®

637. In Michigan and Oregon a tender of the full amount
due upon a chattel mortgage destroys the lien, so that the
mortgagor may recover the property in an action of replevin, and
the mortgagor is not obliged, in order to keep the tender good, to
bring the money into court.t The lien is discharged by the
tender, and the mortgagee can thereafter rely only upon the per-

1 Musgat v. Pumpelly, 46 Wis. 660;
and see Archer v. Cole, 22 How. (N. Y.)
Pr. 414.

2 2 Jones on Mortgages, § 893; and see
Smith v. Phillips, 47 Wis. 202; Musgat
o. Pumpelly, supra.

* Patchin v. Pierce, 12 Wend. (N. Y.)
61; Halstead v. Swartz,1 T. & C. (N. Y.)
559.

494

4 Flanders v. Chamberlain, 24 Mich.
805 ; Bartel v. Lope, 6 Oregon, 321.

In these states a chattel mortgage does
not vest any title in the mortgagee, but
simply gives him a lien upon the property.
Kohl v. Lynn, 34 Mich. 360; Baxter v.
Spencer, 33 Mich. 325; Chapman ». State,
5 Oregon, 432.
APPROPRIATION OF PAYMENTS. [§ 688.

sonal responsibility of the debtor.1 The mortgagor is immedi-
ately entitled to the possession of the property, and in trover for
its value, the mortgagee is not entitled to the amount of his debt
by way of recoupment or otherwise.?

If a tender made by a mortgagor of the amount due upon the
mortgage be refused, because it does not include the amount of an
attorney’s fee claimed to be due, but the mortgagee afterwards
waives such fee and tenders a discharge, which the mortgagor
accepts, with the remark that he would take his own time to pay
in, he thereby waives his previous tender, and recognizes the
mortgagee’s right to demand and receive from him the amount
due on the debt; and he makes himself liable for such debt upon
the common counts in assumpsit.®

Il. Appropriation of Payments.4

638. In the absence of a special appropriation of a payment
by the mortgagor, the mortgagee may apply it to any debt
due him from the mortgagor. Although payments to a mort-
gagee be credited by him general y, he may, as against the mort-
gagor or his creditors, insist upon their appropriation to the re-
duction of unsecured accounts, if such an appropriation has been
agreed upon between the parties. Thus a debtor having given a
mortgage to secure a balance of account, continued to make fur-
ther purchases of his creditor, and being pressed by him for pay-
ment, told him that he would endeavor to pay him for the arti-
cles he had received after the mortgage was given, but that being
secured for the other part of the account he must wait for the pay-
ment of that. The debtor afterwards made payments from time to
time, which were credited to him severally on the creditor’s books,
and which exceeded the amount that was due when the mort-
gage was given, but were less than the amount of the articles
afterwards furnished to him by the creditor. The latter having
sold and appropriated the mortgaged property, he was summoned
as trustee of the mortgagor. It was held, that the payments

1 Moynahan v. Moore, 9 Mich. 9; Caru- tender, see Daugherty v. Byles, 41 Mich.
thers v. Humphrey, 12 Mich. 270; Van 61.
Husan v. Kanouse, 13 Mich. 303. 8 Fry v. Russell, 35 Mich. 229.

° Fuller v. Parrish, 3 Mich. 211. 4 See in general on this subject, 2 Jones
As to what is sufficient evidence of a on Mortgages, §§ 904, 912.

495
§§ 639-641.] PAYMENT AND DISCHARGE.

might be applied towards the payment of the subsequent accounts ;
and that he was not chargeable as trustee of the debtor.’

639. A court of equity will apply to the unsecured por-
tion of the mortgagor's indebtedness payments not specifically
applied by the parties or either of them. The debtor has, of course,
the right to direct the application of any payment he may make;
and in the absence of any specific appropriation by him, the cred-
itor may make such application as he may choose.? But if no
application has been made by either the debtor or the creditor, a
court of equity will make the application to that portion of the
debt which remains unsecured, without regard to the order of time
in which the indebtedness for the several items of account was
incurred.2 It has sometimes been contended, and sometimes ad-
judged, that the court should presume in favor of the debtor, that
he intended to extinguish that debt which bears most heavily
upon him; that he intended to extinguish the secured debt rather
than the unsecured. But such an application is not equitable.
“Tt being equitable that the whole debt should be paid, it cannot
be inequitable to extinguish first those debts for which the se-
curity is most precarious.” 4

640. Proceeds derived from the mortgage security must
be applied in payment of the mortgage debt, in the absence
of any agreement to the contrary with the mortgagor. The cred-
itor has no option in such case to apply the proceeds to any other
debt, as he has in case of a voluntary and general payment.®
Neither can the mortgagor direct the application of the proceeds
to the payment of another debt due the mortgagee.®

641. A creditor may apply at his option, to the payment
of any instalment of the mortgage debt then due, the pro-
ceeds of personal property mortgaged as collateral security, and
sold under a power to satisfy the debt, in the absence of any

1 Capen v. Alden, 5 Met. (Mass.) 268, 4 Field v. Holland, 6 Cranch, 8, 28, per
° Bird v. Davis, 14 N. J. Eq. 467. Marshall, C. J.
8 Schuelenburg v. Martin (C. C. for 5 Sanders v. Knox, 57 Ala. 80.
Kans. June, 1880), 2 Fed. Reporter, 747; 6 Masten v. Cummings, 24 Wis. 623.
S.C. 10 Rep. 280; Bell ». Radcliff, 32
Ark, 645.

496
CHANGES IN THE FORM OF THE DEBT. [§§ 642, 643.

right reserved to the debtor to make the appropriation. Such
payment is not considered as one made by process of law or in
invitum, like a payment made by levy of an execution, in which
case the several demands having been consolidated into one by
the judgment, all the demands or instalments embraced in it
must be taken to be satisfied proportionally.”

III. Changes in the Form of the Debt.

642. Although the evidence of the debt be changed from
a simple contract like a promissory note to a judgment, the
lien of a mortgage or pledge continues effectual until the debt
is paid or discharged.* If after judgment has been rendered upon
a note, the mortgagor brings a bill to redeem, alleging that the
mortgage secured the same debt, it is necessary that he should
identify the debt upon which the judgment was obtained as the
debt for which the mortgage was given. A similar identification
by the mortgagee is necessary in case he afterwards brings a bill
to foreclose the mortgage.®

If, however, the circumstances be such that it must be inferred
that the parties intended that the judgment should not be collat-
eral to the note and mortgage, but that the original debt should
be merged or extinguished by the judgment, such will be held to
be the effect of the judgment.’

643. The taking of a new note in exchange for the original
note does not ordinarily discharge the mortgage.’ It is, however,
a question of the intention of the parties, and therefore is a ques-
tion for the jury and not for the court.?

1 Saunders v, McCarthy, 8 Allen gage note extinguish the lien of the mort-

(Mass.), 42; Allen v. Kimball, 23 Pick.
(Mass.) 473.

® Blackstone Bank v. Hill, 10 Pick.
(Mass.) 129.

3 See generally on this subject 2 Jones
on Mortgages, §§ 924-942.

4 Fisher ». Fisher, 98 Mass. 303;
Thurber v. Jewett, 3 Mich. 295; Butler
v. Miller, 1 N. Y¥. 496, 497; Holmes v.
Hinkle, 63 Ind. 518; Burton v. Tannehill,
6 Blackf. (Ind.) 470. Much less does the
commencement of a suit upon the mort-

82

gage. Thurber v. Jewett, supra.

5 Hall v. Forqueran, 2 Litt. (Ky.) 329.

§ Holmes v. Hinkle, supra.

7 Butler v. Miller, 1 Den. (N. Y.) 407.

8 Watkins v. Hill, 8 Pick. (Mass.) 522;
Pomroy v. Rice, 16 Ib. 22; Smith v.
Prince, 14 Conn. 472; Hill v. Beebe, 13
N. Y. 556; Boyd v. Beck, 29 Ala. 703;
Cullum v. Branch Bank at Mobile, 23
Ala. 797; Packard v. Kingman, 11 Iowa,
219.

9 Cadwell v. Pray, 41 Mich. 307.

497
§§ 644, 645.] PAYMENT AND DISCHARGE.

The acceptance by the mortgagee of the mortgagor’s promis-
sory note for the mortgage debt is not a waiver of the mortgage
security.}

It has been held, that if one of several notes described in a
mortgage be given up to the maker, and a new note for a differ-
ent amount and payable at a different time be taken, without any
agreement that it is to be secured by the mortgage, it will not be
so secured as against the holders of other notes secured by the
same mortgage.?

644. The taking of a second mortgage for the same debt
upon the same or other property does not of itself extinguish
the first, or operate as a cancellation of it, so as to let in an in-
tervening mortgage to take precedence of the first, unless the
second mortgage either expressly or by direct implication from
its terms releases the first.2 The principle remains the same, al-
though a small additional account be included in the renewal note
and second mortgage. This may tend to show a motive for the
transaction, but it has no tendency to show that the prior security
was extinguished.* It is erroneous to leave to the jury the ques-
tion, whether the taking of such second mortgage merged or ex-
tinguished the first.6 “It may be conceded that if the acts of
the parties had been attended by an express agreement to receive
the second mortgage in satisfaction of the first one, the law would
give that effect to the transaction. But as the law does not give
such a construction to the simple acts themselves, it was improper
to leave it to the jury to infer an agreement and so find an ex-
tinguishment. The inference would be against the rule, and the
rule itself would have to be surrendered.” .

A mortgagee taking a new mortgage on the same and other
property for the same debt, extending the time of payment, im-
pliedly covenants not to proceed upon the first.®

645. But a new mortgage and note are payment.of the
old securities, when such is the agreement or understanding of

1 Wescott v. Gunn, 4 Duer (N. Y.), Packard v. Kingman, 11 Iowa, 219; and
107, see Drury v. Briscoe, 42 Md. 154.
2 Wilhelmi v. Leonard, 13 Iowa, 330. 4 Hill v, Beebe, supra; Boyd v. Beck,
5 Shuler v. Boutwell, 18 Hun (N. Y.), 29 Ala. 703.
171; Gregory v. Thomas, 20 Wend. (N. 5 Hill v. Beebe, supra.
Y.) 17; Hill ». ae 13 N. ¥. 556; 6 Billingsley v. Harrell, 11 Ala. 775.
CHANGES IN THE FORM OF THE DEBT. [§ 645.

the parties. If after default the mortgagee take a new note pay-
able at a later day than the first, and a new mortgage upon the
same property, with the understanding between himself and the
mortgagor that the new securities are a payment and satisfaction
of the old, then the first mortgage is thereby extinguished and
discharged, and any intermediate mortgage there may be upon
the property takes precedence of the new mortgage.!

And so where a mortgage upon a stock of goods together with
the note thereby secured were given up, because the mortgagor
had become embarrassed, and had added to the stock new goods
which the mortgage did not cover, and a new note secured by a
new mortgage of the stock as it existed at that time was taken
in place of the old, it was held that the first mortgage was extin-
guished by the second, and that upon the commencement of pro-
ceedings in insolvency against the mortgagor within six months
afterwards the latter mortgage was void, because given by the
mortgagor in contemplation of insolvency within that period; and
the mortgagee could not fall back upon the first mortgage because
that was extinguished.? “It is not a case, therefore,” said Mr.
Justice Bigelow, delivering the opinion of the court, “ where a new
and additional mortgage is given on a stock of goods, as cumula-
tive security in connection with previous mortgages on the same
property to the same person, which are still to continue in force.
Such might have been the legal effect of giving a new mortgage
if nothing had been said between the parties concerning the prior
mortgages. But it is a case where an old security is abandoned
and given up, and a new one taken as a substitute for that which
previously existed. Nor does this case resemble those in which it
has been held that a mortgage remains valid and in force after the
note or obligation secured by it has been given up and a new one
taken in its place. In such cases, only the evidence of the debt is
changed ; the debt still remains, and the security is not altered.
But in the case at bar the evidence of the debt and the security
were both changed under an agreement that the new should take
the place of the old.”

1 Daly v. Proetz, 20 Minn. 411. See 164; Butler v. Miller, 1 Den. (N. Y.) 407;
also Harper v. Neff, 6 McLean, 390; Paul v. Hayford, 22 Me. 234.
Chapman v. Jenkins, 31 Barb. (N. Y.) 2 Paine v. Waite, 11 Gray (Mass.), 190.

499
8§ 646, 647.] PAYMENT AND DISCHARGE.

IV. Payment of the Debt and its Effect.

646. Payment of the debt secured by a mortgage oper-
ates as a satisfaction of the mortgage and extinguishes the
title conveyed by the mortgage.1 The lien cannot be retained
after payment for the benefit of other parties, under a secret
trust, to the prejudice of junior incumbrances.?

Payment of the debt, by whomsoever made, discharges the
lien of the mortgage held as security for it, and the holder of such
security has afterwards no authority to transfer the security.’

A bill of sale absolute in form but given as security is rendered
null and void by payment of the debt secured equally as if the
bill of sale had contained such a condition.*

647. Payment of the principal debt discharges a mortgage
given to a surety of that debt. Thus a mortgage conditioned
to save the mortgagee harmless against liability, as indorser or
surety on a note given by the mortgagor to a third person, is ex-
tinguished when the mortgagor procures the cancellation of the
note, and the substitution of a new note in its stead with a differ-
ent surety ; and the mortgagee cannot afterwards, or even con-
temporaneously, make a valid assignment of the mortgage to the
new surety. But the mortgage may be kept alive as between the
parties by means of a verbal agreement between the mortgagor,
the mortgagee, and the surety on the new note, made contempo-
raneously with the cancellation and substitution of the notes, to
the effect that the mortgage shall stand as security for the new
note.®

If the mortgage secure the mortgagee from a contingent liability
as indorser or surety upon negotiable paper, the lien is discharged
by the payment of such paper.®

A release of a surety by the creditor discharges a mortgage
given to the surety by the debtor. Thus where a debtor gave his
surety a mortgage to secure him against his liability upon a

1 Shiver v. Johnston, 62 Ala. 37; Bel- evidence of payment, see Chapman v.
lamy v. Doud, 11 Iowa, 285; Butler v Hunt, 18 N. J. Eq. 414.
Tufts, 13 Me. 302. * Wallard v. Worthman, 84 Ill. 446.

2 Hunt v. Daniels, 15 Iowa, 146. 5 Brooks v. Ruff, 37 Ala. 371.

8 Bowditch v. Green, 3 Met. (Mass.) 6 Franklin Bank o. Pratt, 31 Me. 501;
360; Harrison v. Hicks, 1 Port. (Ala.) Hill v. Beebe, 13 N. Y. 556; Packard v.
423. As to what constitutes sufficient Kingman, 11 Iowa, 219.

500
PAYMENT OF THE DEBT AND ITS EFFECT. [§ 648.

note, and the surety assigned the mortgage to the creditor for his
indemnity, taking from the latter a discharge under seal, it was
held that the mortgage was paid, and therefore was no longer in
force. The design of the mortgage was merely to protect the
surety against his liability upon the note, and that protection hav-
ing been given by the debtor’s discharge, the condition of the
mortgage was fulfilled.

648. But there is no discharge if the surety himself ad-
vance the money to pay the debt for which he is bound.
Thus an indorser for accommodation does not discharge a mort-
gage taken for his security by advancing the money to pay the
note at maturity, unless the parties intended that the mortgage
should be thereby discharged? Neither does the payment of such
note out of the proceeds of a new note made by the mortgagor
and indorsed by the mortgagee for that express purpose dis-
charge the mortgage, but this continues in force, as a security to
the mortgagee for his liability upon the second note. There is
in such case no payment of the original debt, but a substitution
of a new note for the old, the mortgagee remaining under the
same liability. It is proper in such case to show by parol evi-
dence that the payment of the original note with the proceeds of
the second was not designed to extinguish the mortgage.®

But if a subsequent mortgagee purchase the equity of redemp-
tion at an execution sale and pay off the prior mortgage, his own
mortgage is extinguished, for he cannot subject the property in
his own hands to its payment. He cannot foreclose against
himself, or sell the property to pay himself. He is paid by oper-
ation of law.

If a purchaser of chattels at an execution sale pay off an exist-
ing mortgage it is thereby extinguished, and he cannot enforce it
against any other property embraced in it. If he does not pay it
off, but takes it by purchase and assignment, it is an operative
and valid lien in his hands.é

1 Sumner v. Bachelder, 30 Me. 35. See 8 Pond v. Clarke, 14 Conn. 334; Smith
Rainbow v. Juggins, L. R. 5 Q. B. Div. v, Prince,-14 Conn. 472; Chapman v. Jen-
138. kins, 31 Barb. (N. Y.) 164.

° Bryant v. Pollard, 10 Allen (Mass.), 4 Merritt v. Niles, 25 Ill. 282.

81; Davis v. Maynard, 9 Mass, 242; ® Brown v. Rich, 40 Barb. (N. Y.) 28.
Packard y. Kingman, 11 Iowa, 219. See
Draper v. Saxton, 118 Mass. 427,

501
§§ 649-651.] PAYMENT AND DISCHARGE.

649. A mortgage is extinguished by a payment made, with
the mortgagor's money, by one who purchased the chattel at a
sherifi’s sale to aid the debtor in defrauding his creditors. It is
in effect the case of a debtor whose property is subject to succes-
sive liens, paying out of his own means the debt for which the
earliest lien was created, and attempting to keep the security
outstanding in the name of a third person, in order to resume
it at his pleasure or convenience, upon a new transaction. Pay-
ment of the mortgage debt by the party indebted releases the
mortgage. There can be no subrogation of the purcbaser of the
equity of redemption to the mortgage security through such a
payment. Neither is there any merger of the mortgage in the
equity of redemption upon an assignment of it to such purchaser,
for there is in such case no union in him of the property in the
chattel and the charge upon it, because the charge was extin-
guished by payment before it was in form assigned to the pur-
chaser. The mortgage was in fact paid by the actual debtor
whose duty it was to pay it.}

If a mortgagor furnish money to another with which to pur-
chase the mortgage, and an assignment of the mortgage is ac-
cordingly taken to such other person, it is as against the mort-
gagor pro tanto discharged ; and if such assignee seek a foreclos-
ure, the mortgagor is entitled to a credit for the money thus
advanced by him.?

650. A conversion of the mortgaged property by the mort-
gagee to his own use is a payment of the mortgage debt pro
tanto8

651. Neither default nor foreclosure constitutes payment.
The absolute title which vests in the mortgagee upon the mort-
gagor’s default does not operate as payment of the debt secured.
This vesting of the title in the mortgagee is for certain purposes
only, the chief of which is the giving the mortgagee control of the
property, so as to enable him with more ease and facility to col-
lect the debt secured by applying the property for that purpose.
This title amounts to payment only when it is perfected by

1 Thompson v. Van Vechten, 27 N, Y. 3 Davis v. Rider, 5 Mich. 423; Place
568. v. Grant, 9 Mich. 42. See Clark v. Grif-
2 McLemore v. Pinkston, 31 Ala. 266. _fith, 2 Bosw. (N. Y.) 558.

502
PAYMENT OF THE DEBT AND ITS EFFECT. [§§ 652-654.

foreclosure ; and even then it is only payment pro tanto. If with-
out the mortgagee’s fault the property is lost or destroyed before
his proceedings to apply the property to the payment of the debt
are consummated, the loss does not fall upon him but upon the
mortgagor. Thus, a mortgage having been made of slaves, the
emancipation of the slaves by act of the government of the United
States occurred after default and before the mortgagee had by
foreclosure applied them to the payment of the debt, and it was
held that the loss fell upon the mortgagor; and the mortgagee,
while losing his security, is not obliged to give credit on the mort-
gage debt for the value of the property thus destroyed.

’ But the mortgagee’s absolute title will operate as payment, if
he take it after default with the full understanding of the parties
that he should take it in full discharge of the mortgage debt. In
such case his title is perfect, and the debt is cancelled. The
mortgagor can regain the property only by a repurchase.?

652. Possession of the mortgaged property after the matu-
rity of the mortgage is not presumptive evidence of satisfac-
tion of the mortgage debt, without proof that the property had
once been delivered to the mortgagee; in which case the re-de-
livery of the property by the mortgagee would raise a strong pre-
sumption that the debt had been satisfied.?

653. A discharge of the debtor under proceedings in bank-
ruptcy or insolvency does not deprive the creditor of his right to
enforce his mortgage security, although it relieve the debtor from
personal liability.‘

Neither is the mortgage lien discharged by the debt’s becoming
barred by the statute of limitations.®

654. Proof of a debt against the estate of a deceased
mortgagor and receipt of a dividend from the assets do not
extinguish a mortgage given to secure a part of such debt. But

1 Tucker v. Toomer, 36 Ga. 138. See 504; Roden v. Jaco, 17 Ala. 344; Cham-
Moody v. Haselden, 1 S. C. 129. berlain v. Meeder, 16 N. H. 381.
2 Greene v. Dingley, 24 Me.-131. 5 Crain v. Paine, 4 Cush. (Mass.) 483.
% Carpenter v. Bridges, 32 Miss. 265. See Almy v. Wilbur, 2 Woodb. & M.
* Hamilton v. Bredeman, 12 Rich. (S. 371.
2.) 464; Stewart v. Anderson, 10 Ala.

503
§§ 655-657.] PAYMENT AND DISCHARGE.

in such case the payments should be applied pro rata upon the
secured and unsecured parts of the debt.!

Neither does the taking of administration by a mortgagor upon
the estate of his mortgagee necessarily operate as payment of the
mortgage debt.?

655. A bequest of money by the mortgagee to the mort-
gagor does not extinguish the mortgage debt pro tanto, unless
there is something in the terms of the bequest to show that such
was the purpose of the bequest.

656. An agreement by a mortgagee to release a part of
the property upon the payment of a sum specified operates
to release the mortgage lien upon that part of the property upon
the payment of that sum; but the payment of any part of that
sum has no effect in releasing any of the mortgaged chattels.*

657. A recital of payment in a recorded release of a mort-
gage is not necessarily conclusive of the fact as against the mort-
gagee. Thus, after a large part of a mortgage debt had been
paid, the mortgagor, who was a merchant, requested the mortgagee
to discharge the mortgage upon his stock because it affected his
credit with the mercantile agency. Several months afterwards he
purchased other merchandise in Paris, and added it to his stock,
and afterwards, being in failing health, at the request of the
former mortgage creditor he executed a new mortgage of all his
stock of merchandise to secure the payment of the balance of the
debt due at the time of the release of the former mortgage. There
was no evidence of fraud or corrupt dealing in this transaction.
The seller of the goods which the merchant bought in Paris
claimed that the mortgage was invalid so far as it affected the
merchandise bought of him; but it was held that there was no
ground of objection to the validity of the mortgage, either on ac-
count of the recital in the release of the former mortgage or on the
ground of fraud.®

1 Schuelenburg v. Martin (C. C. for 8 Harrington v. Brittan, 23 Wis. 541.
Kansas, June, 1880), 2 Fed. Reporter, * Clark v. Griffith, 2 Bosw. (N. Y.) 558.

747. 5 Homer v. Grasholz, 38 Md. 520.
2 Miller v. Donaldson, 17 Ohio, 264.

See 2 Jones on Mortgages, § 919.
504
MERGER AND SUBROGATION. [§§ 658, 659.

V. Merger and Subrogation.

658. A surety who has been compelled to pay the debt
of the principal is entitled for his indemnity to a mortgage given
by the principal debtor to the creditor.2 This is a familiar and
well established rule of equity. The surety is entitled to every
remedy which the creditor has against the principal debtor, and
is entitled to stand in his place. But to entitle a surety to be
substituted in place of the creditor, he must pay the whole of the
debt he is bound to pay. If he pays only a part, the creditor still
has a right to retain the pledge for his own security and benefit.*

In New York the surety is entitled in such case to receive an
assignment of a mortgage held by the creditor. He has then the
same right to enforce the mortgage that the mortgagee had; and
he has the samesright of action against one who has wrongfully
converted the mortgaged property.®

But a surety does not, by paying the debt of his principal, be-
come entitled to the benefit of collateral security for the payment
of the debt given by his co-security.® .

659. If a mortgagee for the protection of his interests
pays or purchases a prior lien upon the property, he thereby
acquires an equitable lien for the money thus expended, as against
the mortgagor and subsequent lien-holders, although such prior
lien be an attachment which, by the enforcement of the mort-
gage, is extinguished.”

If a purchaser of personal property be obliged for his own pro-
tection to pay off an existing mortgage, he is entitled to set off
the amount so paid against the vendor’s claim for purchase money ;
and the fact that such mortgage had been filed or recorded before

1 The general principles governing 2 Richardson v. Washington Bank, 3

merger and subrogation are the same,
whether the subject matter of the mort-
gage be real property or personal prop-
erty; and inasmuch as these have been
stated somewhat fully by the author in his
treatise upon Mortgages of Real Prop-
erty, vol. i. §§ 848-885, they are not re-
peated here. In the following sections
are given only those cases which relate to
chattel mortgages, and which, therefore,
are not included in the former treatise.

Met. (Mass.) 536.

8 Hayes v. Ward, 4 Johns. (N. Y.) Ch.
123, 130.

4 Ex parte Rushforth, 10 Ves. Jr. 409,
420, per Lord Eldon.

6 Lewis v. Palmer, 28 N. Y. 271.

6 Bowditch v. Green, 3 Met. (Mass.)
360.

7 Armstrong v. McAlpin, 18 Ohio St.
184; Walker v. Stone, 20 Md. 195.

505
§§ 660, 661.] PAYMENT AND DISCHARGE.

the purchase does not prevent the set-off, the sale not having
been made expressly subject to the mortgage.!

A third person paying the mortgage debt is not subrogated to
the mortgagee’s interest in the property unless he has an interest
in it which entitles him to redeem ; and although he take posses-
sion of the property upon paying the mortgage, it is liable to at-
tachment and execution in his hands upon the suit of a creditor
of the mortgagor.2— But if a third person has such an interest
in the property, and he is under no obligation to pay the debt,
payment by him does not operate as a satisfaction of the debt,
unless it is manifestly the intention or interest of the person
making the payment that it should so operate ;? but such pay-
ment subrogates him to the benefit of the security.

VI. Release or Discharge otherwise than by Payment.

660. A mortgage of personal property may be released by
a sufficient parol contract on the part of the mortgagee, al-
though the‘mortgage itself be under seal, and the debt be un-
paid.t

661. A sale of the mortgaged property by the mortgagor
with the mortgagee’s consent discharges the mortgage lien
thereon.’ But where the parties to a mortgage indorsed thereon
an agreement, that if the mortgagor should sell any of the prop-
erty, the mortgagee should discharge all claim on the same upon
the receipt of the money therefor, it was held that this agreement
was conditional, and gave no authority to the mortgagor to divest
the mortgagee’s interest in the property by a sale, except upon a
performance of the condition of paying the purchase money to
him. The purchaser in such case, if he knew of the agreement,
knew all its qualifications and conditions precedent, and was prop-
erly bound by them. If he had no such knowledge, and the mort-
gage was duly recorded, he bought the property subject to the

1 Lane v. Romer, 2 Chand. (Wis.) 61. | Adams, 50 Mo. 475 ; Howard v. Gresham,
2 Woods v. Gilson, 17 Til. 218, 27 Ga. 347.
8 Walker v. Stone, 20 Md. 195, 5 Conkling v. Shelley, 28 N. Y. 360;
4 Wallis v. Long, 16 Ala. 738; Acker Brandt v. Daniels, 45 Ill. 453; Rickerson
v. Bender, 33 Ala. 230. See Stevenson v. v. Raeder, 4 Abb. App. Dee. (N. Y.) 60;
S. C. 1 Keyes, 492. See § 465.
506
RELEASE OR DISCHARGE OTHERWISE THAN BY PAYMENT. [§ 662.

mortgage, and was bound to know that the mortgagor had no
right to sell.

And so where a mortgagee executed a release and sent it to an
agent to be delivered on payment of the amount due on the mort-
gage, and a subsequent purchaser procured the same upon his
promise to pay in a few weeks the sum due, and he neglected to
do this, it was held, on a bill to foreclose the mortgage, that the
release was inoperative and could not take effect until the mort-
gage debt had been paid.? If a release be executed to take effect
upon the performance of a condition precedent, and the release be
by mistake placed upon record without the consent of the mort-
gagee, the mortgage is not discharged even as against the credit-
ors of the mortgagor.

A mortgagee having made an agreement with the mortgagor
to discharge the mortgage for the benefit of a purchaser, subse-
quently signed and sent to the mortgagor a written instrument,
agreeing to discharge the mortgage, and to hold the purchaser
harmless in relation to it. The mortgagor delivered this agree-
ment to the purchaser, by whom it was carried to the town clerk,
in whose office the mortgage was recorded, who thereupon made
an entry, signed and attested by him, on the margin of the rec-
ord of the mortgage, in the following terms: “ This mortgage
having been duly cancelled by the mortgagor, and an order for
discharge given by the mortgagee, therefore this record is made.”
It was held that the facts authorized the jury to find that there
had been a bond fide discharge of the mortgage, not only as
against the purchaser who had acted upon the faith of discharge,
but as against any others who derived title from him.*

662. If a mortgagee authorize the mortgagor to withdraw
the mortgage from the files and destroy it, this amounts to a
discharge of the lien, especially as against one who afterwards in
good faith purchases the property.®

1 Whitney v. Heywood, 6 Cush. (Mass.) # Stowell v. Goodale, 6 Cush. (Mass.)

82. 452.
2 Hale v. Morgan, 68 IIl. 244. 5 Gruner v. Star Printing Co. 40 Wis.
3 Stanley v. Valentine, 79 Ill. 544. 523.

507
§ 663.] PAYMENT AND DISCHARGE.

VII. Statutory Provisions for entering Satisfaction of Record.

663. In general.—In many states it is provided that mort-
gages of personal property, which have been recorded or filed as
provided by statute, shall, upon payment, be discharged or satis-
fied by a release or entry upon record, and penalties are imposed
upon mortgagees who neglect or refuse to make such discharge.
Such a provision for the discharge of mortgages of real estate is
to be found upon the statute books of almost every state and ter-
ritory ; but in only a part of the states is there such an enact-
ment in relation to chattel mortgages. This difference in legisla-
tive enactments in regard to the discharge of real estate mort-
gages and those relating to the discharge of mortgages of personal
property, arises from the fundamental distinction between real
and personal property. The title to real property can be trans-
ferred only by deed; and the policy of the recording acts requires
that every deed of such !property shall appear of record, so that
a purchaser who takes a conveyance in good faith ‘shall be pro-
tected in the title that appears of record. But no deed in writ-
ing is necessary for the transfer of title to personal property. A
purchaser takes the title of his vendor, and must rely upon his
possession or upon his warranty. ‘ A mortgage duly recorded,”
said Mr. Justice Hoar, of Massachusetts, ‘ gives certain rights to
the mortgagee, created and defined by the statute, but the statute
does not change the nature of the property, nor require that all
subsequent changes in title shall be shown upon the record. An
assignment or release of the mortgage is not required to be re-
corded.”

The states, therefore, which require the recording of a release
or satisfaction of a chattel mortgage do not make the require-
ment because the same necessity exists as in the case of mortgages
of real property, but because there is a certain convenience in
having the record made clear upon payment of the debt.

In the following sections only those statutes requiring the re-
cording of discharges are quoted which relate in direct terms, or
necessary implication to chattel mortgages. In a few of the states
the same statute applies to the recording of discharges of both
mortgages of real estate and mortgages of personal property?

1 Bigelow v. Smith, 2 Allen (Mass.), 2 It is possible that statutes in a few
264. States, which relate in general terms to

508
STATUTORY PROVISIONS, ETC. [§§ 664, 665.

But generally these statutes are different; and in those states
in which filing of chattel mortgages is substituted for recording
them, the statutes are necessarily different in terms.

664. Alabama.1— Any mortgagee who has received satisfac-
tion of the amount secured by such mortgage must, if the same
has been recorded, at the request of the mortgagor, enter satisfac-
tion upon the margin of the record thereof, which operates as a
release of such mortgage, and a bar to all actions thereon. Any
mortgagee who fails, either in person or by attorney, for three
months after such payment and request, to make such entry, for-
feits to the party aggrieved two hundred dollars; unless at the
time of such request, or within said three months, there shall be a
pending suit between said parties involving the question whether
such mortgagee has received satisfaction of said mortgage. Any
mortgagee who has received any part of the amount secured by a
mortgage must, if the same has been recorded, at the request of
any bond fide creditor of the mortgagor or of the mortgagor him-
self, in writing, enter upon the margin of the record the amount
or amounts received by him, and the dates thereof. Any mort-
gagee who fails, either in person or by attorney, for thirty days
after such request, to make such entry, forfeits to the party mak-
ing the request two hundred dollars.

665. Arkansas. — When any mortgage, or trust deed of per-
sonal property, shall have been fully paid off or satisfied, it is the
duty of the mortgagee or beneficiary, his assignee or personal rep-
resentative, to enter satisfaction, or cause satisfaction thereof to be
entered of record under the head of “ Remarks.”? If any person
thus receiving satisfaction do not, within sixty days after being re-
quested, acknowledge satisfaction, he shall forfeit to the party ag-
grieved any sum not exceeding the amount of the mortgage money,

the recording of releases of mortgages,
may by construction apply to chattel mort-
gages as well as mortgages of real prop-
erty. It is apparent, for instance, that the
statute of California upon this subject ap-
plies to both kinds of mortgages; and
therefore that statute is quoted. It may
be that some statute which really applies
to both kinds of mortgages has been

omitted, because it could not be made out
whether it did so apply. For such doubt-
ful statutes see those of Arizona, Com-
piled Laws 1877, §§ 2281-2284; Colorado,
Gen. Laws 1877, §§ 1847-1849; and
Florida, Laws 1877, p. 56, ch. 3013.

1 Code 1876, §§ 2222, 2293;
1878-9, p. 70, and 192.

2 Acts 1877, No. 76, § 6.

509

Acts
§§ 666-668. ] PAYMENT AND DISCHARGE.

to be recovered by civil action in any court of competent jurisdic-
tion.!

666. California.2— A recorded mortgage may be discharged
by an entry in the margin of the record, signed by the mortgagee,
or his personal representative or assignee, acknowledging satisfac-
tion in the presence of the recorder, who must certify the acknowl-
edgment substantially as follows: “Signed and acknowledged
before me, this day of , in the year . A.B. Re-
corder.” If not discharged in this manner, it must be discharged
upon the record by the officer, on presentation of a certificate
signed by the mortgagee, his representative, or assign, acknowl-
edged or proved, stating that the mortgage has been paid or dis-
charged. The certificate is recorded at length with reference to
and upon the record of the mortgage. The mortgagee must im-
mediately upon request enter satisfaction or make a discharge of
the mortgage in such form as to entitle it to be recorded, and.
upon his neglect or refusal to do so is liable for all damages which
the mortgagor or his grantee may sustain by reason of such re-
fusal, and also forfeits to him the sum of one hundred dollars,
to be recovered in a civil action.

667. Dakota Territory.’ — Every mortgage of personal prop-
erty may be cancelled by the register of deeds upon the presenta-
tion to him of a receipt for the sum, money, or property secured, or
an acknowledgment of satisfaction thereof signed by the mortgagee.

668. Ilinois.‘— Every mortgagee of real or personal property,
his assignee of record, or other legal representative, having received
full satisfaction and payment of all such sum or sums of money
as are really due to him from the mortgagor, shall, at the request
of the mortgagor, his heirs, legal representatives, or assigns, enter
satisfaction upon the margin of the record of such mortgage, in
the recorder’s office, which shall forever thereafter discharge and
release the same, and shall bar all actions or suits brought or to
be brought thereupon. All releases of mortgages and deeds of
trust which have heretofore been made in accordance with these

1 Dig. of Stat. 1874, § 4291. 8 Rev. Codes 1877; § 1750 of Civil Code.
2 Civil Code, §§ 2938-2941; Codes & 4 R,S, 1874 & B.S. 1880, ch. 95, §§ 8-
Stats. 1876, §§ 7938-7941. 10.

510
STATUTORY PROVISIONS, ETC. [§§ 669-671.

provisions shall be held legal and valid, and have the same force
and effect as if made under the provisions of this act. A mort-
gage or trust deed of real or personal property may be released
by an instrument in writing executed by the mortgagee, trustee,
or his executor, administrator, heirs, or assigns of record, and such
instrument may be acknowledged or proved in the same manner
as deeds for the conveyance of land.

If any mortgagee or trustee, in a deed in the nature of a mort-
gage of real or personal property, or his executor or administrator,
heirs or assigns, knowing the same to be paid, shall not, within
one month after the payment of the debt secured by such mort-
gage or trust deed, and request and tender of his reasonable
charges, release the same, he shall, for every such offence, forfeit
and pay to the party aggrieved the sum of fifty dollars, to be re-
covered in an action of debt before a justice of the peace.

669. Kansas.1— When any mortgage of personal property
shall have been fully paid or satisfied, it shall be the duty of the
mortgagee, his assigns, or personal representatives, to enter satis-
faction, or cause satisfaction thereof to be entered of record, in the
same manner, as near as may be, and under the same penalty for
neglect or refusal, as provided in case of the satisfaction of mort-
gages of real estate. The entry of satisfaction shall be made in
the book in which the mortgage is entered, as hereinbefore pro-
vided ; and any instrument acknowledging satisfaction shall not
be recorded at length, but shall be referred to under the head of
“Remarks,” and filed with the mortgage or copy thereof, and
preserved therewith in the office of the register.

670. Kentucky.?— Liens by deed or mortgage may be dis-
charged by an entry acknowledging satisfaction of the same on
the margin of the record thereof, signed by the person entitled to
the same, or his personal representative, and attested by the clerk
or his deputy, which, in the case of a mortgage or deed of trust,
shall have the effect to reinvest the title in the mortgagor or
grantor, or person entitled thereto.

671. Maryland.? — A mortgage of personal property may be

1 Dassler’s Compiled Laws 1879, § 3253. 3 Code 1860, art. 24, §§ 33-38, 50;
2G, S. 1873, p. 256, ch. 24, § 12. R. Code 1878, art. 44, §§ 39-44, 53.
511
§$ 672, 6738.] PAYMENT AND DISCHARGE.

released in the same manner as a mortgage of real property.
Such release may be made in the following form, or to like
effect : ‘I hereby release the above (or within) mortgage. Wit-
ness my hand and seal this day of . (Seal).” This may
be written by the mortgagee or his assignee upon the record, in
the office where the mortgage is recorded, and attested by the
clerk of the court; or it may be indorsed on the original mort-
gage by the mortgagee or his assignee ; and upon such mortgage,
with the release, being filed in the office in which the mortgage is
recorded, the clerk is required to record the release at the foot of
the mortgage. When the mortgage, with the release, is filed for
this purpose, the clerk retains it in his office, and does not per-
mit it to be again withdrawn. A release may be made by an
executor or assignee in the same manner and with like effect as
by the mortgagee.

672. Minnesota.!— Whenever any mortgage of personal prop-
erty filed under the provisions therefor has been paid, or the con-
ditions thereof satisfied, the mortgagee, or his assignee or personal
representatives, shall give a certificate in writing under his hand,
stating the date of the mortgage and a description of the prop-
erty thereby mortgaged, and that the same has been discharged
in full, and on delivering said certificate in writing to the officer
with whom such mortgage is filed, the said officer shall deliver
said mortgage to the person producing said certificate, and shall
file said certificate in his office, and shall keep and preserve said
certificate among the records in his office, and shall write the
word * satisfied,” with the date, opposite to such mortgage, in the
book in which such mortgages are entered.

673. Mississippi.2— Any mortgagee or cestut que trust of real
or personal estate, having received full payment of the money
due by such mortgage or deed of trust, shall, at the request of
the mortgagor or grantor, enter satisfaction upon the margin of
the record of such mortgage or deed of trust, in the clerk’s office,
which entry shall discharge and release the same, and shall bar all
actions or suits brought thereon, and the title shall thereby revest
in the grantor. And if such mortgagee or cestui que trust, by him-
self or his attorney, shall not, within three months after request

1 G. S. 1878, ch. 39, § 13. 2 Code 1880, §§ 1206, 1207.
512
STATUTORY PROVISIONS, ETC. [§§ 674, 675.

and tender made for his reasonable expenses, repair to the proper
office, and there make acknowledgment of satisfaction as afore-
said, the person so neglecting or refusing shall, for such offence,
forfeit and pay to the party aggrieved, any sum not exceeding the
mortgage money, to be recovered by action in any court of com-
petent jurisdiction ; but such entry of satisfaction may be made by
any one authorized to do it, by the written authorization of the
mortgagee or beneficiary, and shall have the same effect as if done
by the mortgagee or beneficiary ; and where the entry of satisfac-
tion is made under the written authorization aforesaid, the mort-
gagor or grantor, or his heirs or assigns, shall be entitled to the
custody of the writing conferring the authority, unless it shall be
duly acknowledged and recorded in the office in which the mort-
gage or deed of trust is recorded.

Payment of the money secured by any mortgage or deed of
trust shall extinguish it, and revest the title in the mortgagor as
effectually as a reconveyance would.

674, Missouri.1—If any mortgagee, trustee, or cestui que
trust, his executor, or administrator, or assignee, receive full sat-
isfaction of any mortgage or deed of trust, he shall, at the request
and cost of the person making the same, acknowledge satisfaction
of the mortgage or deed of trust, on the margin of the record
thereof, or deliver to such person a sufficient deed of release of
the mortgage or deed of trust; provided, that whenever any
trustee shall acknowledge such satisfaction, or execute such deed
of release, he shall be joined therein by the cestui que trust.

If any such person thus receiving satisfaction do not, within
thirty days after request and tender of costs, acknowledge satis-
faction on the margin of the record, or deliver to the person
making satisfaction a sufficient deed of release, he shall forfeit to
the party aggrieved ten per cent. upon the amount of mortgage or
deed of trust money, absolutely, and any other damages he may
be able to prove he has sustained, to be recovered in any court
of competent jurisdiction.

675. Nebraska.?-— A mortgage of personal property filed as
provided by statute, when satisfied, may be discharged by an

1 R. S. 1879, §§ 3311, 3312. 2 Laws 1879, p. 107.
83 5138
§$ 676-678. ] PAYMENT AND DISCHARGE,

entry by the mortgagee or his agent on the margin of the index |
required to be kept by the county clerk, which entry shall be
attested by the clerk without fee, and the original instrument
or copy so filed shall be returned to the mortgagor.

676. New York.!— Whenever any mortgagor, or any person
obtaining title to mortgaged property, shall present to any re-
corder, county or town clerk, in whose office a chattel mortgage
executed by said mortgagor on such property may be filed, a cer-
tificate from the mortgagee therein named, or the holder or owner
thereof, that such mortgage is paid or satisfied, it shall be the duty
of such recorder, or either of the clerks above mentioned, to file
such certificate in his office and discharge such mortgage, by writ-
ing in the book kept by such recorder or either of such clerks,
and opposite the entry therein of such mortgage, the word “ Dis-.
charged ” with the date thereof.

677. New Mexico.?— When any mortgage of personal prop-
erty shall have been fully paid and satisfied, it shall be the duty
of the mortgagee, his assignee, or personal representative, to enter
satisfaction, or cause satisfaction thereof to be entered of record,
under the head of “ Remarks,” on the record of mortgages; and any
mortgagee, or assignee of such mortgagee, who shall neglect or re-
fuse to enter satisfaction of such mortgage, as is provided by this
act, shall be liable in damages to such mortgagor, his grantee or
heirs, in the sum of one hundred dollars, to be recovered in a
‘civil action before the District Court; and the sum of one hundred
dollars aforesaid shall be regarded as fixed and liquidated dam-
ages in any such case.

678. North Carolina.3— Any deed of trust or mortgage,
which has been registered in the manner required by statute, may
be discharged and released in the following manner, to wit: the
trustee or mortgagee, or his or her legal representative, or the
duly authorized agent or attorney of such trustee, mortgagee, or
legal representative, may, in the presence of the register of
deeds, acknowledge the satisfaction of the provisions of such trust
or mortgage, whereupon it shall be the duty of the register forth-

1 Laws 1879, ch. 171, § 1. 8 Battle’s Revisal 1873, ch. 35, § 29.
2 Laws 1876, ch. 36, § 9.

514
STATUTORY PROVISIONS, ETC. [§§ 679, 680.

with to make, upon the margin of the record of such trust or mort-
gage, an entry of such acknowledgment of satisfaction, which
shall be signed by the said trustee, mortgagee, legal representa-
tive, or attorney, and witnessed by the register, who shall also
affix his name thereto; and every such entry thus acknowledged
and witnessed shall operate and have the same effect to release
and discharge all the interest of such trustee, mortgagee, or rep-
resentative in such deed or mortgage, as if a deed of release or
reconveyance thereof had been duly executed and recorded.

679. Pennsylvania.'— Any mortgagee of any real or per-
sonal estates, having received full satisfaction and payment of all
such sum and sums of money as are really due to him by such
mortgage, shall, at the request of the mortgagor, enter satisfaction
upon the margin of the record of such mortgage recorded in the
said office, which shall forever thereafter discharge, defeat, and re-
lease the same, and shall likewise bar all actions thereupon. If
he does not by himself or his attorney, within three months after
such request and a tender of his reasonable charges, repair to the
office for recording deeds and there make such acknowledgment,
he shall forfeit and pay to the party aggrieved any sum not ex-
ceeding the mortgage money, to be recovered by suit.

680. Texas.2— When the debt secured by chattel mortgage
shall have been paid or satisfied, it shall be the duty of the mort-
gagee, his assignee, or personal representative, to enter or cause to
be entered satisfaction thereof. Such entry of satisfaction shall be
made in the book in which the instrument is entered, which may
be done under the head of ‘“‘ Remarks ;” and any instrument ac-
knowledging satisfaction need not be recorded at length, but it
shall be sufficient for the mortgagee or clerk to make an appropri-
ate entry under the head of ‘‘ Remarks,” showing that the same
has been paid; and if there is a separate instrument acknowledg-
ing satisfaction, it may be filed with the original instrument or
copy thereof, and preserved therewith in the office of the county
clerk.

11 Brightly’s Purdon’s Dig. 1872, p. 2 R.S. 1879, Appendix, p. 15, § 5.
480, § 115.

515
CHAPTER XV.
REDEMPTION.

681. By the old common law, a mortgage of personal prop-
erty gave an absolute title to the mortgagee on breach of the
condition. No process of foreclosure was necessary, and there
was no right of redemption.’ It is true that some authorities
held that the mortgagor might, within a reasonable time after for-
feiture, maintain a bill in equity to redeem ; but this right was
neither clearly settled as a rule nor generally admitted ; or, at
least, it was not generally so admitted until after the equitable
right to redeem mortgaged real estate had become fully estab-
lished. But the same reasons that induced courts of equity to
interfere to relieve a mortgagor of realty after forfeiture have
operated to induce a like interference to relieve a mortgagor of
chattels. The hardship and injustice of allowing the mortgagee
to insist upon a forfeiture in the case of a mortgage of chattels
are just as obvious as in the case of a mortgage of real estate.
The principles of equity, therefore, upon which the right of re-
demption should be allowed are the same in both cases.”

1 Taber v. Hamlin, 97 Mass. 489, per
Foster, J.; Burtis v. Bradford, 122 Mass,
129, per Endicott, J.

In New Hampshire, prior to the statute
of July 4, 1834, conferring general chan-
cery powers in relation to the redemption
and foreclosure of mortgages, there was no
provision fora redemption of mortgaged
personal property after forfeiture, and the
authorities show that upon non-perform-
ance of the condition the property became
absolute in the mortgagee. Wendell v.
N. H. Bank, 9 N. H. 404, 420, per Parker,
C.J.

Whether a mortgagor of chattels has an
equity of redemption after forfeiture was
left as an unsettled question in a recent
case before the Supreme Court of In-

516

diana ; with an intimation, however, that
such 4 ‘Tight exists, inasmuch as it has
been held in that state that a mortgagee
of chattels may maintain an action to
foreclose the equity of redemption. Side-
ner v. Bible, 43 Ind. 230. For if there is
an equity of redemption which may be
foreclosed, it would seem to follow that
there is an equity of redemption by
virtue of which the mortgagor may re-
deem. Woodward v. Wilcox, 27 Ind. 207 ;
Trittipo v. Edwards, 35 Ind. 467; Blake-
more v. Taber, 22 Ind. 466; Broadhead v.
McKay, 46 Ind. 595.

2 Flanders v. Chamberlain, 24 Mich.
805, 313, per Christiancy, J.; Davis v.
Hubbard, 38 Ala. 185, 189, per Walker,
C.J.
REDEMPTION. [§§ 682, 688.

The mortgage vests the legal title to the property in the mort-
gagee, defeasible at law upon the performance of the condition ;
but upon default, the mortgage becomes indefeasible at law, and
defeasible only in equity, where the mortgage is considered only
as a security for the debt, and the mortgagor is permitted to
redeem, notwithstanding his default.

682. A mortgagor cannot debar himself of his equitable
right to redeem by an agreement in the mortgage deed to
give up all claim to the mortgaged property upon his failure to
pay the debt secured at maturity.?

A delivery of the mortgaged property by the mortgagor to the
mortgagee, in pursuance of a provision in the mortgage that upon
default the mortgagor shall so deliver up the property, does not
vest the absolute ownership of the property in the mortgagee, or
free the property from the equity of redemption.®

683. The only right of the mortgagor after forfeiture is an
equitable right to redeem. He has no legal right to redeem
except where such a right is given by statute. A statute which
converts the equitable right of the mortgagor into a legal right, of
course gives the mortgagor a remedy at law for an infringement
of his rights. But this remedy at law must be sought agreeably
to the ordinary rules affecting other actions at law. The mort-
gagor cannot maintain trespass against the mortgagee, in case he
sells, disposes of, injures, or destroys the mortgaged property in
such a manner as to destroy or impair his right to redeem, be-
cause the mortgagor has neither the property nor any right of
possession; but he may in such case maintain an action on the
case; and in that form of action he would be entitled to recover
damages justly proportionate to the injuries sustained.*

It has been held by some courts, however, that a court of
equity has jurisdiction after forfeiture to enjoin an action at law
by the mortgagee for the mortgaged property when the mortgagor
alleges that the debt has been paid, but it appears that the mort-

1 Evans v. Merriken, 8 Gill & J. (Md.) Y.) 236; Laigne v. Naramore, 52 Vt. 267.
39. See 2 Jones on Mortgages, § 1045.
2 Bunacleugh v. Poolman, 3 Daly (N. * Landers v. George, 49 Ind. 309,
4 Leach v. Kimball, 84 N. H. 568.

O17
§ 684.] REDEMPTION.

gagee has not accepted the payment and has not released his
title.

684. The fact that the property is no longer in the mort-.
gagee's possession, and that he cannot restore it upon a decree
in favor of the mortgagor, does not enable the latter to recover
damages at law for a wrongful sale of the property, instead of
pursuing his remedy in equity. This is certainly the case if the
mortgagee has received from the sale less than the whole mortgage
debt. “Relief in equity can be granted, ex equo et bono, only
upon payment or tender of payment, of the whole mortgage debt.
That must be averred and proved ; and it lays the foundation of
the only remedy of the plaintiff in this case. Had the sale of the
mortgaged property realized sufficient to have satisfied the debt
together with the costs and expenses of sale, then, perhaps, a ten-
der would not be necessary. But it was not so in this case.
There remains, after applying the proceeds of the sale, a consider-
able amount of the mortgage debt still unpaid; and before the
defendant can be prosecuted in any form of ‘action, whether for
unfairly disposing of the property or otherwise, he must be paid
or have tendered to him the balance due.” ?

Although the mortgagee has disposed of the property a court
of equity can give complete relief by decreeing damages. Such
damages would be assessed under issues properly framed and sent
to a jury tobe tried.2 But the mortgagee, in case he has disposed
of a portion of the property, cannot be compelled, in an action to
redeem, to become a purchaser of such portion, or to account for
it as upon a purchase at a valuation fixed by the court. If on
accounting it appears that he has received sufficient from the pro-
ceeds of the goods sold by him to pay the mortgage debt, the
goods remaining in his possession should be adjudged to belong to
the plaintiff.+

If the mortgagee has disposed of the mortgaged property so
that he cannot redeliver it upon a decree in favor of the mort-
gagor, the latter may have a decree for the amount or value of his
interest in the property.®

1 Davis v. Hubbard, 88 Ala. 185; and Superior Ct. 54; S.C.7 Abb. Pr. N. S.
see Smith v. Quartz Mining Co. 14 Cal. 309.

242. 8 Stoddard v. Denison, supra.
2 Stoddard v. Denison, 38 How. (N. Y.) # Bragelman v. Daue, 69 N. Y. 69.
Pr. 296, per Monell, J.; S.€. 32 N.Y. © Blodgett v. Blodgett, 48 Vt. 32.
518
REDEMPTION. [8§ 685, 686.

685. Generally the right to redeem is enforced in equity
without the aid of any statute. The established equitable
doctrine is, that although upon the breach of the condition of a
mortgage the title at law becomes absolute in the mortgagee, the
mortgagor may come into a court of equity to redeem within a
reasonable time, if the mortgagee has not barred the equity of re-
demption by foreclosure or sale. This may be regarded as a
settled rule in every state whose courts have full equity powers,
and which in redemption has not been specially provided for by
statute.

686. A bill in equity to redeem a mortgage cannot be
maintained in states in which a remedy is provided by stat-
ute, as is the case in Massachusetts, unless a case is disclosed
where, from the nature of the property mortgaged, the pecul-
iar relation of the parties, or the difficulty of ascertaining the
amount to be paid or tendered, it is apparent that the mode spe-
cifically provided by statute for redemption will not fully protect
the mortgagor’s rights.2- Ordinarily, where the debt or duty of
the mortgagor is ascertained and fixed, and. the property mort-
gaged will pass by delivery, the statutory provisions furnish
an effectual mode of protecting the rights of the mortgagor, and
there is no occasion for the intervention of a court of equity.
The fact that the mortgage was given for a very much larger sum
than was actually due, and was made to secure the property to
the mortgagor in fraud of his creditors, may be availed of as
effectually at law as in equity; and, indeed, if there be any rem-
edy at all, it is at law, because a party cannot be heard to allege
his own turpitude as ground for relief in equity.*

1 Flanders v. Barstow, 18 Me. 357;
West v. Crary, 47 N. Y. 423; Charter v.
Stevens, 3 Den. (N. Y.) 33; Pratt v,

Wis. 410; Smith v. Coolbaugh, 12 Wis.
427; Saxton v. Williams, 15 Wis. 292;
Wilson v. Brannan, 27 Cal. 258; Heyland

Stiles, 17 How. (N. Y.) Pr. 211; S.C.9
Abb. Pr. 150; Stoddard v. Denison, 38
How. (N. Y.) Pr. 296; Hinman v. Jud-
son, 13 Barb. (N. Y.) 629; Patchin v.
Pierce, 12 Wend. (N. Y.) 61; Bragelman
v. Daue, 69 N. Y. 69; Dupuy v. Gibson,
36 Ill. 197; Hammers v. Dole, 61 Ill. 307 ;
Wylder v. Crane, 53 Ill. 490; Waite v.
Dennison, 51 Ill. 819; Foster v. Ames,
1 Lowell, 313; Flanders v. Thomas, 12

1

v. Badger, 35 Cal. 404; Blodgett v. Blod-
gett, 48 Vt. 32; Van “Brant v. Wakelee,
11 Mich. 177; Tannahill v. Tuttle, 3
Mich. 104; Flanders v. Chamberlain, 24
Mich. 305.

2 Gordon v. Clapp, 111 Mass. 22.

3 Boston & Fairhaven Iron Works v.
Montague, 108 Mass. 248, per Morton, J.

4 Gordon v. Clapp, supra.

519
§ 687. ] REDEMPTION.

When, however, it is impossible for the mortgagor to-ascertain

the amount due upon the mortgage, as he must at his peril tender
a sufficient sum, the remedies provided by the statute may not
afford the full relief to which he is entitled, and he may have
the amount determined in equity.
When, moreover, the mortgaged property is of such a nature that
the statutory provisions do not apply, resort to a bill in equity
may be had to protect the mortgagor. Thus, if the property con-
sist in part of an interest in patent rights, which is incorporeal
property, incapable of transfer by delivery, an action of replevin
is inapplicable to it, and the mortgagors can only be reinstated in
the possession of the property by a reconveyance; and this can
be decreed only in equity.?

687. How long the mortgagor's right of redemption in
equity continues after the mortgagee has taken possession of the
property is a question upon which the cases are not clear. It
is stated in general terms that a bill to redeem must be brought
within a reasonable time.2 What constitutes such reasonable
time must either be determined by a court of equity or by a stat-
ute of limitations specially applicable to the case.* There is a
difference in this respect between a redemption from a mortgage
of real estate and a mortgage of personalty, growing out of the
transitory nature of personal property as compared with realty.
The time within which a mortgage of realty may be redeemed is
determined from analogy with the statutory period within which
a right of entry may be made upon lands.’ But a different con-
sideration must determine the time within which a mortgage of
personalty must be redeemed after the mortgagee has taken pos-
session ; and that consideration is found in the nature of the prop-
erty. It is not fixed in place. It may be readily sold and re-
moved, and possession enables the mortgagee to give good title

1 Boston & Fairhaven Iron Works v. 5 2 Jones on Mortgages, 1144. From
Montague, 108 Mass. 248; Bushnell v. analogy, would not the statute limiting ac-
Avery, 121 Mass. 148. P tions of trover hold the same relation to

2 Boston & Fairhaven Irox Works v. the redemption of chattel mortgages that
Montague, supra. the statute enacting the right of entry

8 2 Story Eq. § 1031. holds to the redemption of mortgages of

4 Stoddard v. Denison, 38 How. (N. real estate ?

Y.) Pr. 296; Hatfield v. Montgomery, 2
Port. (Ala.) 58.

520
REDEMPTION. [§ 688, 689.

to it by sale. It is, moreover, in general, liable to be consumed
in use or in some way destroyed. Therefore, if the mortgagor
wishes to redeem, it is reasonable that he should be required to
assert his right within a reasonable time. That reasonable time
may well be determined by analogy to the statute of limitations
applicable to actions at law for the recovery of personal prop-
erty.

688. The time within which redemption must be made is
to be counted from the beginning of the mortgagee’s adverse
possession. Therefore, if there be no adverse possession on the
part of the mortgagee, as for instance where he holds possession
under an agreement whereby the property is left in his possession,
and he is to continue to have the use and receive the earnings of
it until the debt is paid, no length of time will bar the right of
redemption.2 If a mortgagee waive a forfeiture by accepting a
partial payment of the debt, the time for redemption commences
to run again from the time when such partial payment was made.®

The possession of the mortgagor is not adverse to the mortgagee
until a forfeiture, and not then if the mortgagor recognizes the
mortgage as a subsisting obligation, by making payments or oth-
erwise.* If the mortgagor has his whole lifetime within which to
pay, there is no forfeiture until his death.®

What is a reasonable time within which to bring a bill to re-
deem must be determined in each particular case according to
the attendant circumstances.®

689. In some states a right of redemption after forfeiture
is provided for by statute, and where that is the case, redemp-
tion must be made within the time so allowed, or the title of the
mortgagee becomes absolute.’

In Maine,’ Massachusetts,® and Minnesota, it is provided by
statute that redemption may be had only within sixty days after

1 Byrd v. McDaniel, 33 Ala. 18; Perry 5 Joyner v. Vincent, supra.
v. Craig, 3 Mo. 516. And see Baker v. 8 Laigne v. Naramore, 52 Vt. 267.

Baker, 13 B. Mon. (Ky.) 406. 7 Winchester v. Ball, supra; Clapp v.
° Bartlett v. Thynes, 2 Hill (S. C.) Eq. Glidden, 39 Me. 448.

171. ; 8 § 780.
8 Winchester v. Ball, 54 Me. 558. 9 § 732.
4 Joyner v. Vincent, 4 Dev.& Bat.(N. 10 § 734.

C.) 512.

521
§ 690.] REDEMPTION.

notice has been given by the mortgagee of his intention to foreclose.
In Rhode Island it is provided that the mortgagor may redeem
at any time within sixty days after forfeiture. In New Hamp-
shire? and Vermont? the mortgagee may sell the property at
any time after thirty days from the time of condition broken,
upon giving, in the former state, four days’ notice of the sale,
and in the latter state, ten days’ notice. In Delaware the mort-
gagee may proceed at law for the enforcement of his mortgage
after default for the space of sixty days.4 In Florida the petition
for foreclosure must be filed in the office of the clerk of court at
least two months before the term of the court at which judgment
of foreclosure shall be demanded or rendered.®

In Missouri sixty days’ notice must be given of an intended
foreclosure of a mortgage of chattels, and there must also be given
thirty days’ notice of the time and place of sale.6 In Pennsylva-
nia’ thirty days’ notice of the sale must be given, and in South
Carolina fifteen days’ notice must be given.®

In Kentucky it is provided by statute that after a mortgagee
of personal property, or any person claiming under him, has had
five years’ continued adverse possession, no action shall be brought
by the mortgagor, or any one claiming under him, to redeem it.9

690. A bill to redeem must in substance make a tender of
the amount due upon the mortgage. It need not offer in express
words to pay what may be found due, but it must in substance
do this. A bill which sets forth the facts upon which the right
to redeem depends, and alleges that an amount stated was due
upon a certain day, and that the complainant had offered to pay
that amount, is held to contain all that is requisite in a bill to re-
deem, when the question arises upon the merits of the case with-
out a demurrer.” If a tender be not made in the bill, a tender or
payment of the whole debt prior to bringing the bill must be
proved.

1 § 748. 10 Flanders v. Chamberlain, 24 Mich.
2 § 740. 305 ; and see Laigne v. Naramore, 52 Vt.
8 § 753. 267.

4 § 721. See also 2 Jones on Mortgages, § 1095.
5 § 722. i Halstead v. Swartz, 1 T. & C. (N. Y.)
6 § 736. 559; Tallon v. Ellison, 3 Neb. 63, 74;
7 § 747. Adams v. Nebraska City Nat. Bank, 4
8 § 749. Neb. 370.

9 R. S. 1873, p. 635.
522
REDEMPTION. [§§ 691-698.

In New York, in order to redeem, the mortgagor must pay or
tender the whole debt in good faith before suit is brought.! Such
payment or tender must be averred and proved as the foundation
of the mortgagor’s remedy.”

691. Any one may redeem who has a substantial interest
in the property, or a lien upon it. An attaching creditor may
redeem as soon as his attachment or execution becomes a lien ;.
and an execution creditor has the right to redeem as soon as he
has acquired a lien by levy of his execution.2 A second mort-
gagee may redeem until his right is cut off by the foreclosure of
the first mortgage. A purchaser from the mortgagor acquires
his right of redemption.®

692. Acceptance of part payment of the mortgage debt,
after the expiration of the time allowed by statute for redemption,
is a waiver of the forfeiture; and the time for redemption com-
mences to run again from the time when the last partial payment
was made and accepted. The time of payment may also be ex-
tended by parol agreement, and redemption may be had within
such ‘extended time.7

A mortgagee may waive a forfeiture after the time of redemp-
tion allowed by statute has expired, and thereby éxtend the time
of performance. He may make such waiver even after he has
sold the property, and thereby entitle the mortgagor to recover of
him the surplus proceeds over the amount due upon the mort-
gage.6

693. Foreclosure is a bar to redemption. After a mortgage
upon which anything was due has been legally foreclosed, the

1 Hall v. Ditson, 55 How. (N. Y.) Pr. See 2 Jones on Mortgages, §§ 1055-
19; S.C. 5 Abb. (N. C.) 198; Stoddard 1069.
v. Denison, 38 How. (N. Y.) Pr. 296; * Treat v. Gilmore, 49 Me. 34; Smith
S.C. 82 N. Y. Superior, Ct. 54; S. C.7  v. Coolbaugh, 21 Wis. 427.
Abb Pr. (N.§.) 309; Halstead v. Swartz, _ > Scott v. Henry, supra.
46 How. (N. Y.) Pr. 289, 291. 6 Winchester v. Ball, 54 Me. 558;

2 Stoddard v. Dennison, supra. Flanders v. Barstow, 18 Me. 357.

® Lucking v. Wesson, 25 Mich. 443; 7 Deshazo v. Lewis, 5 Stew. & P. (Ala.)
Hinman v. Judson, 13 Barb. (N. Y¥.) 629; 91.
Scott v. Henry, 13 Ark. 112, 128. 5 Thompson v. Moore, 36 Me. 47.

523
§ 694, 695.] REDEMPTION.

mortgagor has no right to bring a bill to redeem, and have the
exact amount due on the mortgage determined.!

A foreclosure sale under a first mortgage, not shown to be
fraudulent, bars the equity of redemption, not only of the mort-
gagor, but of any junior mortgagee.?

A sale under a power in a prior mortgage bars and forecloses
the equity of redemption of the mortgagor, and also of the mort-
gagee under a junior mortgage.3

694. Upon a foreclosure suit by a junior mortgagee, he can
sell nothing more than the equity of redemption, or the mort-
gagor’s interest which passed to him, unless the prior mortgagee
is in a condition to foreclose and consents to a sale of the entire
property. In a proper case he is entitled to a decree declaring
his right to redeem, and to sell, in order to repay the redemption
money, as well as to satisfy his own debt. Thus, where the prior
mortgage secures rent for a term of years, falling due quarterly,
some of the instalments being past due, the junior mortgagee may
make the prior mortgagee a party to ascertain the. status of his
mortgage, to redeem as to past due instalments, and to sell the
property to meet the debt to be redeemed, in which event the
whole property may be sold to repay the redemption money, as
well as the second mortgage debt, enough of the proceeds being
held to meet the subsequent instalments of the first mortgage.
But if there are no past due instalments, the sale must be made
subject to the prior mortgage.!

695. What effect the mortgagee'’s taking possession after
forfeiture has upon the mortgagor’s equity of redemption is
left very uncertain in some of the cases. In a case in Michigan:
it was said that a mortgagor, notwithstanding a forfeiture of the
condition, may redeem in equity at any time before the mortgagee
has foreclosed by a reduction of the property into possession, or
by a sale pursuant to a power conferred by the mortgages But

1 Burtis v. Bradford, 122 Mass. 129. court below it is said that so little author-

See 2 Jones on Mortgages, § 1048. ity is there on the subject, that the Circuit
2 Wylder v. Crane, 53 Ill. 490. Court could only decide the case upon
* Wylder v. Crane, supra. general principles and the analogy of

* Hays v. Cornelius, 3 Tenn. Ch. 461. _—_ chattel mortgages to mortgages of lands.
5 Van Brunt v. Wakelee, 11 Mich. 177. Several cases were cited and referred to;
In a note referring to the decree of the but in none of them does the court under-

524
REDEMPTION. [§§ 696, 697.

in a later case in that state it was justly said, that the principle
upon which a bill for redemption is allowed at all is one which
applies as well after the mortgagee may have taken possession as
before, if the bill be brought within a reasonable time! His
taking possession of the mortgaged chattels no more cuts off the
mortgagor’s right of redemption, than the like taking of posses-
sion of mortgaged real estate interferes with the mortgagee’s
right to redeem.?

696. A mortgagee in possession, while the right of redemp-
tion exists, is liable to account for the income or profits of the
mortgaged chattels.? It is immaterial whether the possession be
before or after breach of the condition. But the mortgagor can-
not recover for the use of the property in an action of assump-
sit. If he redeems, he is entitled to an account and to an allow-
ance in the decree for the use had by the mortgagee. But if the
mortgagee has sold the property under a power, or by virtue of
any proceeding for foreclosure, the mortgagor may recover the
surplus money received from the sale, after payment of the debt
and charges, —the value of the use first being applied as part
payment.®

An accounting for the rents and profits of chattels of which
the mortgagee has had the possession and use is incident to the
mortgagor’s right to redeem, and is part of the relief ordinarily
given in the suit. Most of the rules governing the matter of ac-
counting by a mortgagee of real property are equally applicable
to accounts by a mortgagee of chattels.’

697. A mortgagee in possession is responsible for ordinary

take to define precisely what acts of the
mortgagee, short of actual sale of the
property, will be sufficient to bar the
equity of redemption.

1 Flanders v. Chamberlain, 24 Mich.
805, per Christiancy, J.

2 Flanders v. Chamberlain, supra, per
Christiancy, J.

8 Covell v. Dolloff, 31 Me. 104; Craft
v. Bullard, Sm. & M. (Miss.) Ch. 366 ; and
see Moore v. Aylett, 1 Hen. & M. (Va.)
29.

£ Osgood v. Pollard, 17 N. H. 271, per
Parker, C. J.

5 Osgood v. Pollard, supra.

® Pratt v. Stiles, 17 How. (N. Y.) Pr.
211; S.C. 9 Abb. Pr. 150; Davis v.
Hubbard, 38 Ala. 185, 188, per Walker, C.
J.; Downing v. Palmateer, 1 Mon. (Ky.)
64,

7 See 2 Jones on Mortgages, §§ 1114-
1143.

As to annual rests, see 2 Jones on Mort-
gages, §§ 1139-1143, and Morrow v. Tur-
ney, 35 Ala. 131, 140.

525
§ 698.] REDEMPTION.

diligence in the management and preservation of the prop-
erty, after condition broken, and while the right of redemption
exists, and is liable for ordinary neglect. If the property be de-
stroyed without fault on his part, he cannot, while thus hold-
ing it as security, be held to account for its value.!

698. A mortgagee in possession is not answerable for
property tortiously removed without his agency or consent,
either to the mortgagor or his suroties; nor is he answerable if
the property be removed with his consent, when the mortgagor
and his sureties concur in such consent.?

1 Covell v. Dolloff, 31 Me. 104; Mor- 2 Savings Bank v. Downing, 16 N. H.
row v, Turney, 35 Ala. 131. 187.

526
CHAPTER XVI.
THE MORTGAGEE’S RIGHTS AND REMEDIES AFTER FORFEITURE.

699. Upon default the title to the mortgaged property
becomes absolute in the mortgagee.1_ This was the ancient rule
in regard to mortgages of real property. Upon forfeiture the
land was wholly lost to the mortgagor. But even after a right
in equity to redeem had been established in respect to mortgages
of real property, forfeiture upon default continued to be the rule
in respect to mortgages of personal property.2 Forfeiture upon
default is still the rule in respect to chattel mortgages, in a man-
ner that it is not in respect to real estate mortgages. In nearly
half the states a mortgage of real property has come to be re-
garded as merely a lien, and not a conveyance of the legal title.
But a chattel mortgage is a transfer of the title to the mortgaged
property, and not a lien upon it, even in those states in which a
mortgage of real property is regarded as merely a lien upon it,
and not a title to it in the mortgagee. Since the title of a mort-
gagee to real estate only becomes absolute after a strict foreclos-
ure, or after a conveyance to him upon a foreclosure sale, while
his title to personal property becomes absolute upon the mort-
gagor’s default, a mortgage of personal property is in this respect
a higher security than a mortgage of land.? All legal claim on
the part of the mortgagor is gone after forfeiture, and he cannot
at law compel the mortgagee to receive the debt and restore the
property.*

Upon a breach of the condition of a chattel mortgage an ab-

1 Langdon v. Buel, 9 Wend. (N. Y.) 8 Anderson v. Hunn, 5 Hun (N. Y.),
80; Brown v. Bement, 8 Johns. (N. Y.) 96; 79; Fuller v. Acker, 1 Hill (N. Y.), 473.
Ackley v. Finch, 7 Cow. (N. Y.) 290; 4 Wood v. Dudley, 8 Vt. 480; Porter
Butler v. Miller, 1 N. ¥. 496; Fox v. v. Parmly, 34 N.Y. Superior Court, 398;
Burns, 12 Barb. (N. Y.) 677; Talman v. 8S. C. 43 How. Pr. 445; Charter v. Stevens,

Smith, 39 Barb. (N. Y.) 390. 3 Denio (N. Y.), 33; Hulsen v. Walter, 34
2 Byron v. May, 2 Chand. (Wis.) 103; How. (N. Y.) Pr. 385; Bunacleugh v.
Flanders v, Thomas, 12 Wis. 410. Poolman, 3 Daly (N. Y.), 236.

527
§ 700.] MORTGAGEE’S RIGHTS AND REMEDIES

solute title to the property thereupon vests in the mortgagee,!
though equity may interfere to compel a redemption. If the
mortgage debt be payable in instalments the title of the mort-
gagee becomes absolute upon default in payment of the instalment
that first falls due.?

700. No provision in the mortgage in regard to a sale or
the payment of the surplus to the mortgagor prevents the
title becoming absolute upon default without a sale. Although
the mortgage provide that upon default of payment, the mort-
gagee may sell the property at auction or private sale and pay the
debt out of the proceeds, his title becomes absolute at law upon
default in payment without any sale being made. The power of
sale does not debar him of his common law rights under the
mortgage ; nor does it extend the time of payment, nor in any
way reinvest the mortgagor with title to the property. Nor
does any irregularity in an attempted sale of the property by the
mortgagee under a power, or otherwise, deprive him of his right

1 Alabama: Brown v. Lipscomb, 9 Port.
472; Mervine v. White, 50 Ala. 388.

California: Heyland v. Badger, 35 Cal.
404; Moore v. Murdock, 26 Cal. 514;
Wright v. Ross, 36 Cal. 414; Inre Haake,
2 Sawyer, 231.

Illinois ; Rhines v. Phelps, 3 Gilm. 455;
Larmon v. Carpenter, 70 Ill. 549; Con-
stant v. Matteson, 22 Ill. 546; McConnell
v. People, 84 Ill. 583; Simmons c. Jen-
kins, 76 Ill. 479; Durfee v. Grinnell, 69
Ill. 371; Pike v. Colvin, 67 Ill. 227; Fikes
v. Manchester, 43 Ill. 379.

Iowa: Bean v. Barney, 10 Jowa, 498.

Kentucky: Brown v. Phillips, 3 Bush,
656.

Maine: Winchester v. Ball, 54 Me. 558;
Flanders v. Barstow, 18 Me. 357.

Minnesota: Merchants’ Nat. Bank of
St. Paul v. McLaughlin (C. C. Dist. Minn.
Apr. 1880), 2 Fed. Rep. 128.

Mississippi: Volney Stamps v. Gilman,
43 Miss. 456; Thornhill v. Gilmer, 4 8. &
M. 153.

Missouri: Robinson v. Campbell, 8 Mo,
365; S.C. Ib. 615; Bowens v. Benson, 57
Mo. 26,

528

Nevada: Bryant v. Carson River Lum-
bering Co. 3 Nev. 313.

New Hampshire: Leach v. Kimball, 34
N. H. 568.

New Jersey: Hall v. Snowhill, 2 Gr.
(N. J. L.) 8

New York: Ackley v. Finch, 7 Cow.
290; Langdon v. Buel, 9 Wend. 80; Ful-
ler v. Acker, 1 Hill, 478; Patchin v.
Pierce, 12 Wend. 61; S. C. 1 Hill, 473;
Hulsen v. Walter, 34 How. Pr. 385.

South Carolina: Moody v. Haselden, 1
8. C. 129.

Vermont: Blodgett v. Blodgett, 48 Vt.
32.

Wisconsin : Nichols v. Webster, 1 Chand.
203 ; Smith v. Phillips, 47 Wis. 202; Mus-
gat v. Pumpelly, 46 Wis. 660; Flanders
v. Thomas, 12 Wis. 410; Smith v. Cool-
baugh, 21 Wis. 427.

2 Flanders v. Barstow, 18 Me. 357;
Marray v. Erskine, 109 Mass. 597; Hal-
stead v. Swartz, 1T.& C. (N. Y.) 559; Pul-
ver v. Richardson, 3 Ib. 436; Burton v.
Tannehill, 6 Blackf. (Ind.) 470.

3 Burdick v. McVanner, 2 Den. (N. Y.)
170; Jefferson v. Barkto, 1 Bradw. (IIl.)
568 ; Durfee v. Grinnell, 69 Ill. 371.
AFTER FORFEITURE. [§§ 701, 702.

to take possession of the property.1_ Nor does a stipulation that
the mortgagee shall pay over to the mortgagor the proceeds of
any sale of the goods, after satisfying the mortgage debt, bind the
mortgagee to foreclose his mortgage.?

7Ol. In Michigan, however, it is settled that the title of the
mortgagee does not become absolute until he has done some act
equivalent to a foreclosure, which must usually be by sale. He
does not become the absolute owner of the property by a breach
of condition. Upon a foreclosure sale of the property, the pro-
ceeds are to be treated as moneys collected to apply on the secu-
rity, and do not belong to the mortgagee beyond the extent of his
lawful claim as a creditor.

702. The mortgagee is not bound, upon taking possession
for condition broken, to foreclose his mortgage by a sale,
although the mortgage contain a stipulation that he shall pay over
to the mortgagor the proceeds of the sale, after satisfying the
mortgage debt.t His failure to sell the property does not make
his possession wrongful.6 He may keep the goods, and if he has
other security for the debt, such, for instance, as a mortgage upon
real estate, he will be required to account for their value.6 If he
sell a portion of the mortgaged property, and the mortgagor is
entitled to redeem, the latter may require him to account for the
value of the property.’

The mortgagee’s possession after default does not become
wrongful through his failure to sell the property.® If the mort-
gagor wants the property he must redeem.

A mortgagee cannot be charged as for a wrongful conversion of
the mortgaged property upon taking possession after default,
although on taking possession he made no claim to the property
under the mortgage, but said that he took possession to prevent

1 Jefferson v. Barkto, 1 Bradw. (Ill.) lawin Oregon. Chapman v. State, 5 Ore-
568. gon, 432.
2 Nichols v. Webster, 1 Chand. ( Wis.) * Nichols v. Webster, supra.
203; Durfee v. Grinnell, 69 Ill. 371; Mc- > Bradley v. Redmond, 42 Iowa, 452.
Connell v. Scott, 67 Il. 274. 8 Craig v. Tappin, 2 Sandf. (N. Y¥.) Ch.
3 Kohl v. Lynn, 34 Mich. 360; Baxter 78. i
v. Spencer, 33 Mich. 325; Lucking v. 7 Craft v. Bullard, Sm. & M. (Miss.)
Wesson, 25 Mich. 443; Cary v. Hewitt, Ch. 366.
26 Mich. 228. Such also is doubtless the 8 Bradley v. Redmond, supra.

34 529

’
§§ 703, 704.] | MORTGAGEE’S RIGHTS AND REMEDIES

the owner from running off with it, and although the sale subse-
quently made was not in accordance with the terms of the mort-
gage deed.!

703. When the mortgagee’s title becomes absolute. —If the
mortgage secures a debt already due, and specifies no time of
payment, it is payable immediately, and the mortgagee becomes
the absolute owner from the moment of a demand and refusal or
neglect of payment. The mortgagor has then merely an equita-
ble right to pay off the mortgage, and his possession is that of a
bailee.?

Under a provision that the mortgagee may take possession of
the property and sell it at public or private sale whenever he
shall deem himself unsafe, it seems that the mortgage debt is re-
garded as becoming due upon his taking possession for this rea-
son, and that he thereupon acquires an absolute title to the prop-
erty, subject only to the mortgagor’s right to redeem in equity.®

In a mortgage given to secure two promissory notes, one past
due and the other not due, a condition that if the mortgagor
should pay “according to the terms of the notes’ whenever pay-
ment should be demanded, the mortgage should be void, but if
default should be made in the payment “at the time limited”
the mortgagee might take possession, was construed to have con-
templated an extension of credit, so that the mortgagee was not
entitled to possession until the maturity of both notes, and could
not until that time maintain replevin for the property.t

704. The time of payment may be extended by parol agree-
ment, so that the condition will be saved, and the title will not
become absolute in the mortgagee until the expiration of the ex-
tended time, although the mortgage be under seal.5 When the
time of payment has been so extended, the mortgagee is not justi-
fied in seizing the property without cause before the day desig-
nated for payment arrives.®

1 Murray v. Erskine, 109 Mass. 597. 5 Flanders v. Barstow, 18 Me. 357.

2 Baltes v. Ripp, 1 Abb. App. Dec. (N. See, however, Bowens v. Benson, 57 Mo.
Y.) 78. 26, that the debt may be extended with-

® Huggans v. Fryer, 1 Lans. (N. Y.) out affecting mortgagee’s right of posses-
276, sion.

* Carpenter v. Town, Hill & Den.  * Baxter v. Spencer, 33 Mich. 325.
Supp. (N. Y.) 78.

530
AFTER FORFEITURE. [§ 705.

But parol evidence of an agreement that a mortgage specifying
no time of payment should not be immediately payable is not
admissible.+

A promise by a mortgagee to give further time, in order to be
effectual, must be either a promise made for a consideration so
that it is a binding contract, or it must be such a promise as the
mortgagor might properly rely upon, and would make a sale by
the mortgagee within the extended time wrongful. A bill of sale,
by which goods were assigned as security for a loan, contained a
proviso for redemption on payment by weekly instalments, and
gave the grantee power to seize the goods at any time, and to sell
them on default in payment of any instalment. Just before one
of the instalments became due, the grantor asked for time, and
the grantee said he “ would not look for a week.” Within that
time, however, he seized and sold the goods. The Court of Ap-
peal of England held there was no evidence of a wrongful seizure,
nor of waiver of the right of seizure and sale.?

705. Upon default the mortgagee is entitled to take peace-
able possession. But the law will not allow him to commit, or
to threaten, a breach of the peace, and then to justify his conduct,
by a trial of the right of property. Instead of using force the
mortgagee must resort to his legal remedies. The mortgagee be-
comes a trespasser by going upon the premises of the mortgagor,
accompanied by a deputy sheriff having no legal process and tak-
ing possession without the active resistance of the mortgagor. To
obtain possession under such a show and pretence of authority
tion contended for, the defendant could
not sell when a distress was on the point
of being put in, or when there was a
threat of distress. As to the case of Al-
bert v. Grosvenor Investment Co. L. R.
3 Q. B. 123, with all deference I cannot

accede to it; I have the greatest doubt as
to the correctness of the decision. No

1 Baltes v. Ripp, 1 Abb. App. Dec. (N.
Y.) 78.

2 Williams v. Stern, 42 Law Times Rep.
N.S. 719; S.C. L. R. 5 Q. B. Div. 409.
Bramwell, L. J., as reported in the first
named report, said: “It has been urged
that there was something to prevent the
defendant from selling, but what he said

to the plaintiff was not a binding under-
taking on his part not to sell; it only
means this: My present intention is not
to take any steps for a week. Such an
expression ought not to mislead aman,
and the reasonableness of this view is
shown from this, that on the construc-

doubt in that case there was a difference
in the terms of the bill of sale, because the
right to seize accrued only on default ;
but I think that makes no difference in
principle. In the present case I think
there was a default which justified the de-
fendant in acting as he did.”

631
§ 706.] MORTGAGEE’S RIGHTS AND REMEDIES

is to trifle with the obedience of citizens to the law and its
officers.

The remedy of a mortgagee for a conversion of the mortgaged
property is at law and not in equity. A trustee or cestui que
trust in a deed of trust of personal property cannot maintain a
suit in equity against a purchaser of the property under execution
issued against the grantor, to recover the property, for there is
no obstacle in the way of proceeding at law.?

706. After forfeiture, a mortgagee being entitled to pos-
session may maintain replevin or detinue for the mortgaged
property against one who has tortiously taken it from the mort-
gagor,® or against a creditor who has levied upon it. He may
also bring replevin or detinue for the goods against the mortgagor
himself.6 He may maintain this action, provided any portion of
the indebtedness secured by the mortgage is still due and owing
to him; and it is no defence to the action to show that a portion
of the indebtedness has been paid either before or after the bring-
ing of the suit;® but proof that the entire indebtedness has been
discharged is such a defence.’ He may maintain the action after
he has advertised and sold the property under a power in the
mortgage; for he is entitled to possession so that he may deliver
the property to the purchaser.’

Under the system of administering law and equity in New
York and other states which have abolished the distinction be-
tween law and equity, or admit equitable defences in suits at law,
a mortgagor of personal property, or any one standing in his place,
can, when sued for the mortgaged property, claim the right to re-

1 Thornton v. Cochran, 51 Ala. 415.

2 Sheppards v. Turpin, 3 Gratt. (Va.)
373. :

8 Fuller v. Acker, 1 Hill (N. Y.), 473;
Welch v. Sackett, 12 Wis. 243; Hopkins
v. Thompson, 2 Port. (Ala.) 483.

4 Spriggs v. Camp, 2 Speers (S.C.), 181;
Stringer v. Davis, 35 Cal. 25; Swift v.
Hart, 12 Barb. (N. Y.) 530; Frisbee v.
Langworthy, 11 Wis. 375; Kelly v. Pur-
cell (Ohio 1880), 7 Am. L. Rec. 705; Nel-
son v. Wheelock, 46 Ill. 25; Mobley ov.
Letts, 61 Ind. 11; Hendrickson v. Walker,
82 Mich. 68; Macomber v. Saxton, 28
Mich. 516; Cary v. Hewitt, 26 Mich. 228,

5382

5 Mervine v. White, 50 Ala. 388; Mor-
rison v. Judge, 14 Ala. 182; Brookover v.
Esterly, 12 Kans. 149; Brown v. Phillips,
3 Bush (Ky.), 656; Bates v. Wilbur, 10
Wis. 415.

8 Machette v. Wanless, 1 Colo. 225;
Morrison v. Judge, supra; and see Bell
v. Pharr, 7 Ala. 807.

* Bellamy v. Dowd, 11 Iowa, 285. The
mortgagee’s production of the note and
mortgage primé facie shows his right to
the possession. Fikes v. Manchester, 43
Ill. 379,

8 Lacey v. Giboney, 36 Mo. 320.
AFTER FORFEITURE. [§ 707.

deem, in his defence to that suit; and where he has not been fore-
closed, he may mitigate the recovery against himself, by reducing
the judgment to the amount actually due on the mortgage.!

The fact that the mortgaged chattels are exempt from attach-
ment is no defence to an action by the mortgagee for their recov-
ery from the mortgagor’s widow to whom they had been set off by
order of the proper court. But in such case the widow might re-
deem the property by paying the debt, or she might probably ob-
tain an order for the sale of the property and the payment to her
of the proceeds in excess of the mortgage debt.?

707. A mortgagee may sell the property after forfeiture
and possession taken without any formal foreclosure. Inas-
much as the mortgagor’s title becomes absolute upon forfeiture, he
may sell the property at private sale and confer upon the purchaser
a good title to it, although the mortgage contain provisions for the
selling of the property at auction and the payment of the surplus
to the mortgagor.? More than this, the mortgagee may, in the ab-
sence of any statutory requirement upon the subject, cut off the
right of redemption by a sale of the property, upon reasonable
notice to the mortgagee ; just as a pledgee may sell property held

in pledge upon giving reasonable

1 Hinman v. Judson, 13 Barb. (N. Y.)
629,

2 Recker v. Kilgore, 62 Ind. 10.

3 Flanders v. Chamberlain, 24 Mich.
805; Dane v. Mallory, 16 Barb. (N. Y.)
46; Talman v. Smit, 39 Ib. 390; Robin-
son v. Campbell, 8 Mo. 365; S. C. Ib.
615; Freeman v. Freeman, 17 N. J. Eq.
44, See §§ 773-775.

’ 4 Patchin v. Pierce, 12 Wend. (N. Y.)
61, 63; Hart v. Ten Eyck, 2 Johns. Ch. (N.
Y.) 62, 100; Charter v. Stevens, 3 Den.
(N. Y.) 33; Stoddard v. Denison, 38 How.
(N. Y.) Pr. 296; S.C. 7 Abb. Pr. N.S.
809; Craig v. Tappan, 2 Sandf. (N. Y.)
Ch. 78, 90; Long Dock Co. v. Mallery, 12
N. J. Eq. 93; Johnson v. Vernon, 1
Bailey (S. C.) 527; Bryan v. Robert, 1
Strobh. (S. C.) Eq. 334; Bryant v. Carson
River Lumbering Co. 3 Nev. 313; Hall v.
Bellows, 11 N. J. Eq. 333; Chapman »v.
Hunt, 13,N. J. Eq. 370; Runyon v. Gro-

notice to the mortgagee ;* and it

shon, 12 N. J. Eq. 86; Bird v. Davis, 14 N.
J. Eq. 467; Denny v. Faulkner, 22 Kans.
89, 100; Hall v. Ditson, 55 How. (N. Y.)
Pr. 19; Chamberlain v. Martin, 43 Barb.
(N. Y.) 607; Ballou v. Cunningham, 60
Ib. 425 ; Huggans v. Fryer, 1 Lans. (N. Y.)
276; Hulsen v. Walter, 34 How. (N. Y.)
Pr. 385; Talman v. Smith, 39 Barb. (N.
Y.) 890; Broadhead v. McKay, 46 Ind.
595; Wilson v. Brannan, 27 Cal. 258. In
the latter case the court say: “ The mort-
gagee has two remedies, either of which
he may pursue at his election. He may
resort to w court of equity to compel a
redemption or to foreclose the mortgagor’s
right to redeem, or he may obtain the
same object by a fair public sale of the
property after due notice to the mort-
gagor. Whether the iron and bonds de-

. livered be regarded as « pledge or mort-

gage can make no practical difference, as
in either case the mode of subjecting the

5383
§ 708.] MORTGAGEE’S RIGHTS AND REMEDIES

is even declared that the mortgagee after default may effectually
foreclose the mortgagor’s right to redeem by a private sale, with-
out notice to the mortgagor.! But this statement of the law is
correct for only a very few states, except in cases in which the
mortgage itself provides for such a sale. In Michigan, how-
ever, it was declared that the main difference between the fore-
closure of a mortgage of real estate and a foreclosure of a chat-
tel mortgage is, that while the former must be effected by decree
in a bill in equity, or by sale in a mode prescribed by statute or
provided for in the mortgage itself, a chattel mortgage may be
foreclosed without suit, provided the mortgage contains no pro-
vision as to notice or the mode of sale; it may be foreclosed
by the mortgagee’s own act by selling after due notice.? But if
the mortgage contains a power of sale which specially provides
how and upon what notice the mortgagee may sell, such express
provision precludes any implication upon the subject, and the
mortgagee cannot cut off the equitable right to redeem, if this be
asserted in a reasonable time, by a sale in any other mode.

The Supreme Court of Nevada in a recent case declared that
the entire current of authorities supports the proposition that the
mortgagee may sell either at public or private sale.2 ‘ Indeed,
the law authorizing the mortgagee to sell is, in our opinion, so
thoroughly settled that it cannot now admit of a question. Such
being the right of the mortgagee, it follows as a necessary con-
sequence, that the purchaser from him obtains an absolute legal
title as complete, perfect, and indefeasible as can exist or be ac-
quired by purchase ; and a sale upon due notice to the mortgagor,
whether at public or private sale, forecloses all equity of redemp-
tion as completely as a decree of court.”

708. What is a reasonable notice to the mortgagor of the
time and place of a sale made by virtue of the mortgagee’s title,
without judicial procedure or special power, must be determined
from all the circumstances of each particular case, and he who

security to sale for the payment of the
‘debt may be the same, and hence we have
made no reference to the distinction to be
found in the books between a pledge and
mortgage, and we deem it unnecessary in
disposing of the case before us to do so.”
1 Chamberlain v. Martin, 43 Barb. (N.

5384

Y.) 607; Patchin v. Pierce, 12 Wend. (N.
Y.) 61, per Nelson, J.; Hall v. Ditson, 55
How. (N. Y.) Pr. 19; S.C. 5 Abb. N. C. 198.
2 Flanders v. Chamberlain, 24 Mich.
305, 314, per Christiancy, J.
3 Bryant v. Carson River Lumbering
Co. 3 Nev. 313.
AFTER FORFEITURE. [§§ 709, 710.

alleges the insufficiency of such a notice must assign some reason
for his allegation.!

The creditor will be held, at his peril, to deal fairly and justly
with the property, both as to the time of the notice and the man-
ner of the sale. Although it appears that he took pains to secure
the best price practicable for the goods, and that they were sold
for their value, and that the mortgagor assented to the prices ob-
tained, yet if he can prove that they were sold unfairly or at an
under price, he will be permitted to do so, and will be allowed
their full value.?

709. A sale of the property by the mortgagee after for-
feiture with the mortgagor’s consent, is equivalent to a formal
foreclosure of the equity of redemption. The title of the pur-
chaser in such case can be assailed neither by the mortgagor nor
by his creditors unless they had a lien upon the mortgaged prop-
erty at the time of the purchase.3

A sheriff by virtue of an execution against the mortgagor, hav-
ing advertised the property for sale upon a certain day, the mort-
gagee directed him to sell the property under the mortgage at the
same time, and he sold it free of incumbrance, without giving fur-
ther notice of such sale, and applied the proceeds to the satisfac-
tion both of the execution and the mortgage debt. The mortgagor
had notice of the mortgagee’s intention to have the property thus
sold, and was present at the sale, and afterwards inquired whether
there was any balance’ after paying the mortgage debt, and said
if there was that he wanted it. It was held that his conduct in
not making objection amounted to an acquiescence in, or assent
to, the payment of the mortgage debt out of the proceeds of the
sale, and that he was estopped from calling it in question.‘

710. A sale of chattels by a mortgagee without foreclos-
ure proceedings is always attended with some difficulty and
embarrassment. "The conduct and fairness of the sale, and the
rights acquired under it, are always open to investigation at the
instance of the mortgagor. A sale under judicial sanction is

1 Wilson v. Brannan, 27 Cal. 258. £ McConnell v. People, 71 Ill. 481.
2 Bird v. Davis, 14 N. J. Eq. 467. 5 Freeman v. Freeman, 17 N. J. Eq,
3 Talman v. Smith, 39 Barb. (N. Y.) 44, 47.

390,

585
§ 711.] MORTGAGEE’S RIGHTS AND REMEDIES

therefore safer ; and there are many good reasons why one hold-
ing a mortgage for a large amount should not incur the risk of
selling it without a decree of court. Such a decree will always
remain a record for his protection ; it settles all equities between
the parties. If he undertakes to enforce the mortgage, and raise
the money without such decree, he is liable to be called upon at
any time to account for the execution of his trust. Where the
property is out of the possession of the mortgagee there seems a
necessity for his coming to a court of equity ; otherwise he must
first resort to his action at law to recover possession of the
property.

711. Recovery of a deficiency. — Another reason for fore-
closing in equity is that the mortgagee may thus in the same suit
have a decree for any deficiency there may be. Indeed, Chan-
cellor Harper, of South Carolina, said: “The ground on which
equity entertains such a bill is, that the property may be sold
under the direction of the court; that if it falls short of satisfy-
ing the debt, the mortgagee may have a decree for the residue ;
or, if there should be a surplus, that it may be awarded to the
mortgagor, and so put an end to litigation. If the mortgagee him-
self should sell, there would be, in case of deficiency, an action at
law to recover the remainder of the debt; or, if there should be a
surplus, the mortgagor might sue for it. Equity makes an end
of these matters.” ?

A mortgagee, in order to secure a claim for any deficiency that
may arise against the mortgagor, must foreclose his mortgage in
equity, or in a manner provided by statute. By selling in any
other mode he waives all claim for a deficiency.? '

If a mortgagee take possession of the mortgaged property after
default, and retains it or sells it without foreclosure, the mort-
gage debt is regarded as satisfied. If the samt debt be secured
by a mortgage of land as well as by a mortgage of chattels, and
the mortgagee seize the latter upon default, a subsequent pur-
chaser of the land from the mortgagor has an equity to compel
the mortgagee to apply the value of the chattels seized to the

1 Long Dock Co. v. Mallery, 12 N. J. * Porter v. Parmly, 34 N. Y. Superior

Eq. 93. Ct. 398; S. C. 43 How. Pr. 445, per
2 Bryan v. Robert, 1 Strobh. (S.C.) Eq. Freedman, J.

384, ;
586
AFTER FORFEITURE. [§ 712.

mortgage debt. The mortgagee in such case must account for
the value of the chattels, although they be lost or destroyed after
such seizure. A mortgagee of slaves under such circumstances
was held liable to account for their value, where after such seizure
he allowed them to go into the possession of the mortgagor on a
forthcoming bond, where they remained uncalled for until they
were lost under the general emancipation act. The slaves were
in the legal possession of the mortgagee, the mortgagor holding
them as his bailee.

712. The mortgagor is entitled to any surplus that may
arise from such a sale. When a mortgagee rightfully recov-
ers possession of the mortgaged property, and disposes of it upon
due notice within a reasonable time and fora fair and reason-
able price, he is chargeable with no greater amount than that
for which the property sold.? He is liable, however, to refund
any excess he may receive over the amount of the mortgage debt.?
But the mortgagor cannot recover such surplus in an action for
money had and received.t His proceeding for this purpose should
be by bill in equity in the nature of a bill to redeem. Whena
court of equity has established the right to redeem, but the mort-
gagee has consumed or disposed of the property, so that it can-
not be redeemed in kind, it may enter a personal decree against
the mortgagee for the excess of the value of the property over
the amount found due on the mortgage.®

1 Moody v. Haselden, 1 S. C. 129. Chamberlain, 24 Mich. 305, 314; Denny
2 Armstrong v. McAlpin, 18 Ohio St. v. Faulkner, 22 Kans, 89. And see Ash-
184. worth v. Dark, 20 Tex. 825.

8 Pratt v. Stiles, 17 How. (N. Y.) Pr. # Flanders v. Barstow, 18 Me. 357.
211; S. 0.9 Abb. Pr. 150; Flanders v. 5 Flanders v. Chamberlain, supra.
5387
CHAPTER XVII.

STATUTORY PROVISIONS RELATING TO FORECLOSURE AND RE-
DEMPTION.

713. In general. — In nearly all the states and territories there
are statutory provisions specially applicable to the foreclosure of
mortgages of personal property. In a few states the same statute
applies to the foreclosure of mortgages of both real and personal
property; and in a few states there are no statutory provisions
relating to the foreclosure of chattel mortgages, but the holders
of these securities are left to seek their remedy either under the
general jurisdiction of courts of equity, or to take the remedy
into their own hands by ‘selling the property at public sale, in
very much the same way that a pledgee may upon default sell
property which he holds in pledge.

It is to be observed, however, that in nearly all the states
chattel mortgages usually contain a power authorizing the mort-
gagee to sell the property upon default after giving such notice
as the mortgage itself may provide for; or else trust deeds with
a similar power in a trustee are used instedd of such mortgages.
In many states, mortgages with a power of sale, or trust deeds,
are used to the exclusion of all other forms. For this reason, the
cases which have arisen under equitable actions for the foreclos-
ure of chattel mortgages, or under statutory forms of procedure
for this purpose, are not very numerous.

The statutory methods of foreclosing chattel mortgages are
quite unlike in the various states. They agree in hardly any-
thing except in providing fora sale of the mortgaged property
after notice, and for the payment of any surplus there may be
after satisfying the mortgage debt to the mortgagor.

Very little provision is made by statute for the redemption of
chattel mortgages. Redemption is commonly left to the general
equity jurisdiction of the courts. It correlates foreclosure. The
former exists until the latter is complete.

588
STATUTORY PROVISIONS, ETO. [§§ 714, 715.

714. Alabama.! — Foreclosure is by a bill in equity. Where
bills are filed in any of the chancery courts for the foreclosure of
personal’ mortgages, and in all cases where an account is taken
between the parties, and the amount of indebtedness between
them ascertained by the decree of such chancery court, such de-
crees have the force and effect of judgments, and executions
thereon may be issued by the registries against the goods, chat-
tels, lands, and tenements of the parties against whom such de-
crees may have been rendered; but no execution can issue on
decrees for the foreclosure of mortgages, or the enforcement of
equitable liens, until the property ordered to be sold shall have
been sold, and the sale confirmed, and the balance due ascertained
by the decree of such court; when execution must issue for the
balance which may be found due.

715. Arizona Territory.? — In an action for the foreclosure or
satisfaction of a mortgage or lien upon personal property, the
court shall have power by its judgment to direct a sale of the
property, or any part of it, and to direct the application of the
proceeds to the payment of the amount due on the mortgage, lien,
or incumbrance, with costs and execution for the balance. If
there be surplus money remaining after payment of the amount
due on the mortgage, lien, or incumbrance, with costs, the court
may cause the same to be paid to the person entitled to it, and,
in the mean time, may direct it to be deposited in court. If the
debt for which the mortgage, lien, or incumbrance is held to be
not all due, so soon as sufficient of the property has been sold to
pay the amount due with costs, the sale shall cease, and after-
ward, as often as more becomes due for principal or interest, the
court may, on motion, order more to be sold. But if the prop-
erty cannot be sold in portions without injury to the parties, the
whole may be ordered to be sold in the first instance, and the en-
tire debt and costs paid, there being a rebate of interest where
such rebate is proper. .

A right of redemption shall remain in the mortgagor until the
same shall have been foreclosed by due process of law, or by
agreement between the parties to the mortgage, which agreement
shall be entered on the record of the mortgage.

~ 1 Code 1876, § 3908. 2 Compiled Laws 1877, §§ 2684-2686,

3647,
5389
§ 716.] STATUTORY PROVISIONS RELATING TO

716. Arkansas.! — Mortgages are foreclosed by a complaint in
the nature of a proceeding in equity. It is not necessary to enter
an interlocutory judgment, or give time for the payment of money,
or for doing any other act; but final judgment may be given in
the first instance. In the foreclosure of a mortgage, a sale of the
mortgaged ‘property shall in all cases be ordered. In an action
on a mortgage or lien, the judgment may be rendered for the sale
of the property, and for the recovery of the debt against the de-
fendant personally.”

Sales of personal property made by order of court are required
to be on a credit of three months. In all sales on credit, the pur-
chaser must execute a bond, with good surety, to be approved by
the person making the sale, which bond shall have the force of a
judgment. If the whole of the mortgaged property does not sell
for a sum sufficient to satisfy the amount due, an execution may
be issued against the defendant, as on ordinary judgments.

At all sales of personal or real property under mortgages and
deeds of trust in this state, such property shall not sell for less
than two thirds of the appraised value thereof.2 ‘This provision
does not apply to sales of property for the purchase money there-
of. If the property shall not sell at the first offering for two
thirds of the amount of the appraisement, then, in case of personal
property, another offering may be made sixty days thereafter, and
in case of real property, another offering may be made twelve
months thereafter, at which offerings the sale shall be to the
highest bidder, without reference to the appraisement. When
such sales are to be made, the mortgagee, trustee, or other person ,
authorized to make the same, shall, before the day fixed therefor,
apply to the nearest justice of the peace of the township in which
such sale is made, or if there be no justice in said township, then
to the nearest justice of an adjoining township, for the appoint-
ment of appraisers ; and such justice shall thereupon appoint three
disinterested householders of the county, who shall take and sub-
scribe an oath before such justice that they will well and truly
view and appraise the property that may be shown them, and
such appraisers shall proceed to view and appraise such property,
and they, or any two of them, shall make a report of their ap-
praisement in writing, which report shall be attached to the oaths

1 Dig. of Stat. 1874, §§ 4705-4709. 8 Acts 1879, p. 94, §§ 1, 2.
‘2 See Price v. State Bank, 14 Ark. 50.

540
“

FORECLOSURE AND REDEMPTION. [§ 717.

taken as aforesaid, and shall be delivered to the person making
the sale, and held by him subject to inspection by all parties in-
terested. For their services the appraisers shall receive one dol-
lar each, to be paid from the proceeds of the sale of the prop-
erty. :

717. California.1— A mortgagee of personal property, when
the debt to secure which the mortgage was executed becomes due,
may foreclose the mortgagor’s right of redemption by a sale of
the property, made in the manner and upon the notice prescribed
for the foreclosure of a pledge, which is as follows:

When performance of the act for which a pledge is given is due,
in whole or in part, the pledgee may collect what is due to him by
a sale of property pledged. Before the property can be sold, and
after performance of the act for which it is security is due, the
pledgee must demand performance thereof from the debtor. He
must give actual notice to the pledgor of the time and place at
which the property pledged will be sold, at such a reasonable
time before the sale as will enable the pledgor to attend. Notice
of sale may be waived at any time; but is not waived by a mere
waiver of demand of performance. A debtor or, pledgor waives a
demand of performance as a condition precedent to a sale of the
property pledged by a positive refusal to perform, after perform-
ance is due; but cannot waive it in any other manner except by
contract. :

The sale by a pledgee must be made by public auction, in the
manner and upon the notice to the public usual at the place of
sale, in respect to auction sales of similar property ; and must be
for the highest obtainable price. A pledgee cannot sell any evi-
dence of debt pledged to him, except the obligations of govern-
ments, states, or corporations ; but he may collect the same when
due. Whenever the property can be sold for a price sufficient
to satisfy the claim of the pledgee, the pledgor may require it to
be sold, and its proceeds applied to such satisfaction when due.
After a pledgee has lawfully sold property pledged, or otherwise
collected its proceeds, he may deduct therefrom the amount due
under the principal obligation, and the necessary expenses of the
sale and collection, and must pay the surplus to the pledgor on
demand. When property pledged is sold before the claim of the

1 Codes & Stats. 1876, §§ 7967, 8000-8011, 7933.
541
§ 717.] STATUTORY PROVISIONS RELATING TO

pledgee is due, he may retain out of the proceeds all that can
possibly become due under his claim, until it becomes due, with
the proper rebate of interest. A pledgee or pledge-holder can-
not purchase the property pledged, except by direct dealing with
the pledgor.

Instead of selling property pledged in the manner provided, a
pledgee may foreclose the right of redemption by a judicial sale,
under the direction of a competent court; and in that case may
be authorized by the court to purchase at the sale.

A power of sale may be conferred by a mortgage upon the
mortgagee or any other person, to be exercised after a breach of
the obligation for which the mortgage is a security.

A personal mortgage may also be foreclosed by proceedings
under the Code of Civil Procedure,! which provides that there
shall be but one action for the recovery of any debt, or the en-
forcement of any right secured by mortgage upon real or personal
estate. In such action the court may by its judgment direct a
sale of the incumbered property, or so much thereof as may be
necessary, and the application of the proceeds of the sale to the
payment of the costs and expenses of sale and the amount due to
the plaintiff ; and if it appear from the sheriff’s return that the
proceeds are insufficient, and a balance still remains due, judg-
ment can then be docketed for such balance against the defend-
ant or defendants personally liable for the debt, and it becomes a
lien on the real estate of such judgment debtor, as in other cases
on which execution may be issued. Subsequent parties in in-
terest not appearing of record need not be made parties to the
action ; and judgment is conclusive against them. Any surplus
there may be the court may cause to be paid to the person en-
titled to it, and in the mean time may direct it to be deposited in
court. When the debt is not all due, so soon as sufficient prop-
erty has been sold to pay the amount due, with costs, the sale
must cease; and afterwards, as often as more becomes due for
principal or interest, the court may on motion order more to be
sold. But if the property cannot be sold in portions, without in-
jury to the parties, the whole may be ordered to be sold in the
first instance, and the entire debt and costs paid, there being a
rebate of interest where such rebate is proper.

1 §§ 726-728 of Codes & Stats. 1876, §§ 10726-10728.
542 ,
FORECLOSURE AND REDEMPTION. [§§ 718, 719.

718. Colorado.! — There shall be but one action for the recov-
ery of any debt, or the enforcement of any right secured by mort-
gage upon real estate or personal property. In actions for the
foreclosures of mortgages, the court shall have the power, by its
judgment, to direct a sale of the incumbered property, or as much
as may be necessary, and the application of the proceeds of the
sale to the payment of the costs of the court and expenses of the
sale, and the amount due to the plaintiff ; and if it appear from
the sheriff’s return that the proceeds are insufficient, and a bal-
ance still remains due, judgment shall be dacketed for such bal-
ance against the defendant or defendants personally liable for the
debt, and shall then become a lien on the real estate of such
judgment debtor, as in other cases in which execution may be
issued. No person holding a conveyance from or under the mort-
gagor, or of the property mortgaged, or having a lien thereon,
which conveyance or lien does not appear on record in the proper
office at the time of the commencement of the action, need be
made a party to such action; and the judgment therein rendered,
and the proceedings therein had, shall be as conclusive against the
party holding such unrecorded conveyance or lien, as if he had
been made a party to said action, and shall in all respects have
the same force and effect. If there be surplus money remaining
after payment of the amount due on the mortgage, lien, or in-
cumbrance, with costs, the court may cause the same to be paid
to the person entitled to it, and in the mean time may direct it to
be deposited in court. If the debt for which the mortgage, lien,
or incumbrance is held be not all due, so soon as sufficient of the
property has been sold to pay the amount due, with costs, the
sale shall cease, and afterwards, as often as more becomes due for
principal or interest, the court may, on motion, order more to be
sold. But if the property cannot be sold in portions, without
injury to the parties, the whole may be ordered to be sold in
the first instance, and the entire debt and costs paid, there being
a rebate of interest where such rebate is proper.

719. Connecticut.2? — When personal property is mortgaged
without the real estate, the mortgagee, upon breach of the con-
dition of the mortgage, may bring a petition in equity for the sale
of the mortgaged property ; and upon said petition the court may

1 Civil Code 1877, §§ 229-231. 2 Gen. Stats. 1875, p. 359, §§ 7, 8.
548
§ 720.] STATUTORY PROVISIONS RELATING TO

order the same, or so much thereof as may be necessary to satisfy
such debt and the costs of the prosecution, unless such debt and
costs shall be paid within such time as it shall limit, to be sold
free of all subsequent incumbrances, by some proper officer, in such
manner and with such notice as said court shall direct ; and after
satisfying said debt and costs out of the avails of such sale, the
excess, if any, shall be by said officer paid to the parties entitled
thereto.

No such mortgage shall be held invalid as to any item of per-
sonal property included therein, by reason of its being described
as consisting of less than its true number or quality ; but if fore-
closed, the court may make a just order of division in its final
decree.

When personal property is mortgaged, together with the real
estate upon which it is situated, the mortgage may be foreclosed
as if wholly of real estate.

720. Dakota Territory.2 — A mortgagee of personal property,
when the debt to secure which the mortgage was executed be-
comes due, may foreclose the mortgagor’s right of redemption by
a sale of the property, made in the manner and upon the notice
prescribed for enforcing a pledge, or by proceedings under the
Code of Civil Procedure.?

When performance of the act for which a pledge is given is
due, in whole or in part, the pledgee may collect what is due to
him, by a sale of property pledged, subject to the rules and excep-
tions hereinafter prescribed. Before property pledged can be
sold, and after performance of the act for which it is security is
due, the pledgee must demand performance thereof from the
debtor, if the debtor can be found. A pledgee must give actual
notice to the pledgor of the time and place at which the property
pledged will be sold, at such a reasonable time before the sale as
will enable the pledgor to attend. Notice of sale may be waived
by a pledgor at any time; but is not waived by a mere waiver
of demand of performance. A debtor or pledgor waives a de-
mand of performance as a condition precedent to a sale of the
property pledged by a positive refusal to perform, after perform-

1 Gen. Stats. 1875, p. 359, § 7, 3 For provisions for proceedings for
2 Rev. Codes 1877, p. 463; § 1748 of foreclosure in the latter method, see 2 Jones
Civil Code. on Mortgages, § 1327.

544
FORECLOSURE AND REDEMPTION. [§ 721.

ance is due, but cannot waive it in any other manner except by
contract. The sale by a pledgee of property pledged must be
made by public auction, in the manner and upon the notice to
the public usual at the place of sale, in respect to auction sales of
similar property ; and must be for the highest obtainable price.
A pledgee cannot sell any evidence of debt pledged to him, except
the obligations of governments, states, or corporations ; but he
may collect the same when due. Whenever property pledged
can be sold for a price sufficient to satisfy the claim of the pledgee,
the pledgor may require it to be sold, and its proceeds to be ap-
plied to such satisfaction, when due. After a pledgee has law-
fully sold property pledged, or otherwise collected its proceeds, he
may deduct therefrom the amount due under the principal obli-
gation, and the necessary expenses of sale and collection, and must
pay the surplus to the pledgor, on demand. When property
pledged is sold by order of the pledgor before the claim of the
pledgeee is due, the latter may retain out of the proceeds all that
can possibly become due under his claim until it becomes due. A
pledgee or pledge-holder cannot purchase the property pledged,
except by direct dealing with the pledgor.?

Instead of selling property pledged as hereinbefore provided, a
pledgee may foreclose the right of redemption by a judicial sale
under the direction of a competent court; and in that case may
be authorized by the court to purchase at the sale.

The sale of any property on which there is a lien, in satisfaction
of the claim secured, or, in case of personal property, its wrong-
ful conversion by the person holding the lien, extinguishes such
lien.?

721. Delaware.? — If default, for the space of sixty days, be
made in the payment of a mortgage of personal property, or of
an instalment thereof (if it be payable by instalments), the mort-

1 Rev. Codes, 1877; §§ 1771-1782 of
Civil Code.

% Rev. Codes, 1877; § 1718 of Civil
Code. ‘

Consequently, a mortgagee who takes
possession of the chattels mortgaged and
sells them at private instead of public sale,
as the statute requires, loses his lien.
The mortgagee’s wrongful conversion of

35

the property is held to work a forfeiture
of his lien; but the mortgage debt is not
thereby extinguished or released. Such
sale is treated just as a wrongful or un-
authorized sale of a pledge by the pledgee
is treated. Everett v. Buchanan (Dak.
1880), 6 N. W. Rep. 439.
8 Laws 1877, ch. 477, § 2.

545
§ 722.] STATUTORY PROVISIONS RELATING TO

gagee shall have the right to proceed at law for the enforcement
of his lien and the collection of the mortgage money by the same
process and means as are used in the case of mortgages of real
estate, and judgment may be obtained as well for default of. ap-
pearance or want of affidavit of defence as upon trial. The pro-
ceeds of the sale shall be paid to liens upon the property in the
order of their priority, and any surplus to the mortgagor, or his
executors, administrators, or assigns.

722. Florida.1—The person or persons entitled to the foreclos-
ure of any mortgage may file his, her, or their petition in the Cir-
cuit Court of the county in which the mortgaged personal prop-
erty may be, which petition shall describe and set forth the names
of the original parties to the mortgage; and if the mortgage has
been assigned, the assignments thereof, the debt or demand which
the mortgage was given to secure, the amount actually due upon
the same, together with a description of the property mortgaged ;
and shall also contain a prayer that the mortgagor or mortgagors,
and all persons claiming, or to claim by, through, or under him,
her, or them, may be forever foreclosed and barred of and from
his, her, or their rights, or equity of redemption in the said mort-
gaged property; and the said petition, together with the original
mortgage, shall be filed in the office of the clerk of the court to
which the application for foreclosure shall be made, at least two
months before the term of the court at which the judgment of
foreclosure shall or can be demanded or rendered; and upon such
petition and mortgage, and exhibition to the said court of any
bond, note, or other evidence of the debt, to secure which the
mortgage was executed, which it shall appear was given by the
mortgagor or mortgagors, an affidavit being also made by the
party or parties, or any of them, petitioning for such foreclosure,
or by his, her, or their agent or attorney, of the amount of the
principal and interest claimed as due at the time of making such
affidavit, the court shall, at the first term after the filing of such
petition, unless good cause be shown to the contrary, give judg-
ment for the petitioner or petitioners, for the amount of the prin-
cipal sum of money, and the interest thereon due to him, her, or
them upon said mortgage, together with the costs and charges of
the proceedings; and shall also, by its said judgment, forever

1 Bush Dig. 1872, ch. 122, §§ 3, 4, pp. 606-608.
546 ;
FORECLOSURE AND REDEMPTION. [§ 722.

foreclose and debar the mortgagor or mortgagors, and all persons
claiming, or to claim by, through, or under him, her, or them, of
and from all right and equity of redemption, of or in the said
mortgaged property, and every part thereof. Whenever any
mortgagor, or any person or persons having a right or interest in
the equity of redemption of any mortgaged property, shall have
any objection or cause to show against the foreclosure of such
equity of redemption, such objection or cause shall be shown and
filed by way of plea to the petition of foreclosure fifteen days be-
fore the first day of the term next following the expiration of the
aforesaid respective periods prescribed for the publication or ser-
vice of the notice, of the substance of the petition for foreclosure;
and such plea, or the matters of fact therein contained, shall be
verified by the oath of the party filing the same, or of some other
credible person; and the petitioner or petitioners for foreclosure
may take issue on the plea, reply, or demur thereto; and the
right and justice of the case shall be decided by the court and
jury, or the court alone, as the case may be, at the same time, if
the petitioner or petitioners shall require such decision, unless
good and sufficient cause be shown by the opposite party for a
continuance. The judgment of the court, on the foreclosure of a
mortgage, shall, in all cases, be entered up and filed, and execu-
tion shall issue thereon, as in other cases.

Upon application of any person entitled to the foreclosure of a
mortgage of personal property remaining in the possession of the
mortgagor or mortgagors, for an attachment against the property
mortgaged, it shall be the duty of the judge of the court to which
application for the foreclosure of the mortgage shall be made, to
direct the issuing of a writ of attachment, which the clerk of the
said court shall accordingly issue, directed to the ministerial or
executive officer of the said court, commanding him to attach, levy
upon, and take into possession and custody the said mortgaged
property, or so much thereof as will be sufficient to satisfy the
debt or demand of the petitioner or petitioners, and the costs and
charges of the proceedings; and the said officer shall execute such
writ without delay, and shall retain the said property attached in
his custody and possession, until the judgment of foreclosure shall
be obtained, when he shall dispose of it according to law, or until
the further order of the court in the premises, unless it shall be
replevied in the manner hereinafter pointed out; but no such writ

547
§ 723.] STATUTORY PROVISIONS RELATING TO

of attachment shall issue unless the petitioner or petitioners for
foretlosure, or any of them, or his, her, or their agent or attorney,
shall make oath of the sum really and truly due upon the mort-
gage to be foreclosed ; and that he has reason to fear that the
property mortgaged will be concealed, so that the ordinary proc-
ess of law cannot reach it, or that it will be removed beyond
the jurisdiction of the court; and shall exhibit to the judge the
original mortgage, or any other evidence, and an acknowledg-
ment of the debt or demand secured by it, which shall appear to
have been given by the mortgagor or mortgagors at the time the
‘application for such writ of attachment was made. The demand
of the said attachment, if made at the time of filing the petition
for foreclosure, must be contained in the said petition, but the
same attachment may be applied for by petition, and obtained, on
a compliance with the aforesaid requisitions, at any time before
the judgment of foreclosure. It shall and may be lawful for the
mortgagor or mortgagors, or any other person or persons having an
interest in the equity of redemption of any personal property
which may be attached under the last preceding section of this
act, to replevy the same by giving bond, with at least two good
and sufficient securities, in a sum sufficient to cover the amount
of the debt sworn to be due upon the mortgage, payable to the
ministerial officer of the court to whom the writ of attachment
shall have been directed and conditioned, to return to the said
officer, or his successors in office, the said property, whenever the
mortgage of it shall be foreclosed by the judgment of the court, or
to pay such sum of money as shall, by the said judgment, be ad-
judged to be due to the petitioner or petitioners for foreclosure,
and all the costs and charges of the proceedings, whenever the
same shall be demanded ; but no replevy shall be made but upon
the payment of all costs of issuing the attachment, and of the pro-
ceedings consequent thereon, and the bond so given on replevy,
by the provisions of this section, shall have the force and effect of
a judgment; and nothing herein contained shall be so construed
as to release the mortgaged property from the lien created by said
mortgage.

723. Georgia.1—Mortgages on personal property shall be fore-
closed in the following manner, namely: Any person holding a

1 Code 1873, §§ 3971-3979.
548
FORECLOSURE AND REDEMPTION. [§ 723.

mortgage on personal property, and wishing to foreclose the same,
shall, either in person, or by his agent or attorney in fact or at
law, go before some officer of this state who is authorized by law
to administer oaths, or a commissioner for this state residing in
some other state, and make affidavit of the amount of principal
and interest due on such mortgage, which affidavit shall be an-
nexed to such mortgage, and when such mortgage with such affi-
davit annexed thereto shall be filed in the office of the clerk of
the Superior Court of the county wherein the mortgagor resides
at the date of the foreclosure, if a resident of this state, or where
he resided at the date of the mortgage, if not.a resident of this
state, it shall be the duty of such clerk to issue an execution di-
rected to all and singular, the sheriffs and coroners of this state,
commanding the sale of the mortgaged property to satisfy the
principal and interest, together with the costs of the proceedings
to foreclose the mortgage.!

When the execution before mentioned shall be delivered to the
sheriff or coroner, as the case may be, it shall be his duty to levy
on the mortgaged property wheresoever the same may be found,
and after advertising the same in one or more of the public ga-
zettes of the state, weekly, for eight weeks, before the day of sale,
the said sheriff or coroner shall put up and expose said property
to sale at the time and place, and in the same manner as govern
in case of sheriffs’ sales. ‘

If other executions are levied on the mortgaged property, and
the same is sold after an advertisement of only thirty days, the
mortgage execution may nevertheless claim the proceeds of the
sale if its lien is superior.

If a mortgage on personalty is not foreclosed, and the equity of
redemption is levied on by other execution by consent of the
mortgagor and mortgagee, and the plaintiff in the execution, the
entire estate may be sold, and the mortgagee claim under his lien,
in the same manner as if his mortgage was foreclosed.?

When an execution shall issue upon the foreclosure of a mort-

_1 An affidavit upon which to base the v. Marshall, 45 Ga. 549. If the original

foreclosure of a chattel mortgage must al-
lege that the defendant resides in the
county of such proceeding. Callaway v.
Walls, 54 Ga. 167. See further, as to the
county in which proceedings should be
had, Brown v. Greer, 13 Ga. 285; Griffin

mortgage has been lost or destroyed, the
foreclosure may be made on a certified copy
from the record of the mortgage. Holt v.
Holt, 23 Ga. 5.

2 Such consent need not be in writing.
Goode v. Rawlins, 44 Ga. 593.

549
§ 723.] STATUTORY PROVISIONS RELATING TO

gage on personal property, as hereinbefore directed, the mort-
gagor or his special agent may file his affidavit of illegality to
such execution, in which affidavit he may set up and avail himself
of any defence which he might have set up according to law, in
an ordinary suit upon the demand secured by the mortgage, and
which goes to show that the amount claimed is not due.’ The
judge who passed the order of foreclosure may order the levying
officer to postpone the sale of the mortgaged property, upon the
mortgagor, or his special agent or attorney, giving bond, with
good and sufficient security, in double the amount of such execu-
tion, conditioned for the return of such property when called for
by the levying officer, which bond shall be made payable to the
plaintiff, who may sue and recover thereon when the condition is
broken ; and when such affidavit of illegality is filed, and such
order of postponement is passed, and such bond has been given,
the levying officer shall postpone the sale of said property, and
return all the proceedings and papers to the next term of the
court whose clerk issued the execution, where the questions and
issues shall be tried as other cases of illegality ; and the jury shall
be sworn to give at least twenty-five per cent. damages to the
plaintiff on the principal sum, in case it shall appear that the afli-
davit of illegality was filed for a delay only. Jf the mortgagor
fails to set up and sustain his defence as hereinbefore authorized,
the mortgaged property shall be sold, and the proceeds of the
sale shall be applied to the payment of said mortgage execution,
unless such proceeds are claimed by some other lien in the hands
of the officer entitled in law to priority of payment; and if, after
the satisfaction of such execution or other lien, there may be any
surplus, the same shall be paid to the mortgagor or his agent.

When the holder of a mortgage on personal property is dead,
the affidavit and proceedings to foreclose may be made and pros-
ecuted by his executor or administrator ; and if the mortgagor be
dead, his legal representative may set up the same defence which
he could do if living.

If any creditor of the mortgagor, whether his debt be in judg-
ment or not, desires to contest the validity or fairness of the
mortgage lien or debt, he may make an affidavit of the grounds
upon which he relies to defeat such mortgage, and upon filing
the same with the levying officer, together with a bond and good

1 Alston ne 47 Ga. 646. See Mell v. Moony, 30 Ga. 413.
FORECLOSURE AND REDEMPTION. [§ 724.

security, payable to the mortgagee, and conditioned to pay all
costs and damages incurred by the delay, if the issue be found
against the contestant, it shall be the duty of such officer to re-
turn the same to the court to which the mortgage execution is
made returnable, to be tried in the manner prescribed above for
an affidavit of illegality by the mortgagor. .

724. Idaho Territory.! — There can be but one action for the
recovery of any debt, or the enforcement of any right secured by
mortgage upon real estate or personal property. In such action
the court may, by its judgment, direct a sale of the incumbered
property, or so much thereof as may be necessary, and the appli-
cation of the proceeds of the sale to the payment of the costs of
the court and the expenses of the sale, and the amount due to the
plaintiff ; and if it appears from the sheriff’s return that the pro-
ceeds are insufficient, and a balance still remains due, judgment
can then be docketed for such balance against the defendant or
defendants personally for the debt, and it becomes a lien on the
real estate of such judgment debtor, as in other cases on which
execution may be issued. No person holding a conveyance from
or under the mortgagor of the property mortgaged, or having a
lien thereon, which conveyance or lien does not appear of record
in the proper office at the time of the commencement of the ac-
tion, need be made a party to such action; and the judgment
therein rendered and the proceedings therein had are as conclu-
sive against the party holding such unrecorded conveyance or lien
as if he had been made a party to the action. If there be sur-
plus money remaining after payment of the amount due on the
mortgage, lien, or incumbrance, with costs, the court may cause
the same to be paid to the person entitled to it, and in the mean
time may direct it to be deposited in court. If the debt for which
the mortgage, lien, or incumbrance is held be not all due, so soon
as sufficient of the property has been sold to pay the amount due,
with costs, the sale shall cease, and afterwards as ‘often as more
becomes due for principal or interest, the court may, on motion,
order more to be sold. But if the property cannot be sold in por-
tions without injury to the parties, the whole may be ordered to
be sold in the first instance, and the entire debt and costs paid,
there being a rebate of interest where such rebate is proper.

1 Rev. Laws 1875, p. 144, §§ 267-269.
551

 
§§ 725, 726.] STATUTORY PROVISIONS RELATING TO

A right of redemption! remains in the mortgagor until the
same shall have been foreclosed by due process of law, or by
agreement between the parties to the mortgage, which agreement
shall be entered on the record of the mortgage.

In all cases of mortgages of mining interests, the mortgagee.
shall have the right to perform the same acts that the mortgagor
might have performed for the purpose of preventing a forfeiture
of the same under the said rules, regulations, or customs, and
shall be allowed such compensation therefor as shall be deemed
just and equitable by the court ordering the sale upon a fore-
closure ; provided, that such compensation shall in no case exceed
the amount realized from the claim by a foreclosure and sale.

725. Mlinois.2— A mortgagor of personal property may in-
sert in his mortgage a clause authorizing the sheriff of the county
in which the property, or some part thereof, is situated, to execute
the power of sale therein granted to the mortgagee or his assigns
or legal representatives, in which case the sheriff of such county,
at the time of such sale, may advertise and sell the mortgaged
premises pursuant to such power, and may execute all proper con-
veyances of the property so sold, in the name of and as the attor-
ney in fact of the mortgagor ; and at any sale made as aforesaid
the mortgagee, his assigns or legal representatives, may fairly and
in good faith purchase the property, or any part thereof.

726. Indiana.— There is no statute which in terms applies to
the foreclosure of mortgages of personal property. Yet it appears
that such a mortgage may be foreclosed by suit. In a case before
the Supreme Court of the state in 1864 it was insisted, in defence
to such a suit, that a suit by foreclosure would not lie upon a
chattel mortgage.’ But the court in reply said: “ As our statute
places chattel mortgages on the footing of mortgages of real estate
in this, that it recognizes the legal title, the equity of redemption,
as remaining in the mortgagor, and the mortgagee as having but

* Rev. Laws 1874 & 1875, pp. 662, 663, sale. But this statute does not apply to

§§ 4, & 6.

2 BR. S. 1874 & R. S. 1880, ch. 95, § 11.
By statute of 1879, Laws, p. 211, it is pro-
vided that all mortgages and trust deeds
of real estate shall be foreclosed by action,
notwithstanding they contain powers of

552

chattel mortgages.

8 Blakemore v. Taber, 22 Ind. 466;
quoted with approval in Broadhead v.
McKay, 46 Ind. 595. See Whitehead v.
Pitcher, 13 Ind. 141.
FORECLOSURE AND REDEMPTION. [§ 727.

a lien, it follows that a foreclosure is the proper mode of proced-
ure to enforce the lien and extinguish the equity of redemption.”

The suit is equitable in its nature.! All distinction between
law and equity is removed by statute in this state.

In a suit by a mortgagee of personal property against the mort-
gagor and. a junior mortgagee of the same property, to foreclose
the mortgage, and compel the junior mortgagee to account for a
portion of the property which he had conveyed to his own use, no
demand for the property, or for an accounting, is necessary before
suit.”

Although a chattel mortgage may be foreclosed by action, yet
the mortgagee may take possession of the property and sell it,
without extinguishing the mortgagor’s equity of redemption by
action. The statutory provision, that ‘unless a mortgage spe-
cially provides that the mortgagee shall have possession of the
mortgaged premises he shall not be entitled to the same,” applies
to mortgages of real estate, and not to mortgages of personal prop-
erty.*

727. Iowa.5— Any mortgage of personal property to secure
‘the payment of money only, and where the time of payment is
therein fixed, may be foreclosed by notice and sale as hereinafter
provided, unless a stipulation to the contrary has been agreed
upon by the parties, or may be foreclosed by action in the proper
court. The notice must contain a full description of the property
mortgaged, together with the time, place, and terms of sale.

Such notice must be served on the mortgagor, and upon all
purchasers from him subsequent to the execution of the mortgage,
and all persons having recorded liens upon the same property
which are junior to the mortgage, or they will not be bound by
the proceedings. The service and return must be made in the
same manner as in the case of the original notice by which civil
actions are commenced, except that no publication in the news-

1 See 2 Jones on Mortgages, § 1334. 6 The mortgagee of chattels is confined
2 Woodward v. Wilcox, 27 Ind. 207. to a foreclosure by notice and sale. He
As to parties see Trittipo v. Edwards, may foreclose in equity; and that is the
35 Ind. 467. proper course when « third party has a
8 Broadhead v. McKay, 46 Ind. 595. conflicting claim. Packard v. Kingman,
4 Broadhead v. McKay, supra. 11 Iowa, 219.
5 Code 1873, and Rev. Code 1880, §
3307.

5538
§ 728.] STATUTORY PROVISIONS RELATING TO

papers is necessary for the purpose, the general publication di-
rected herein being a sufficient service upon all the parties in
cases where service is to be made by publication. After notice
has been served upon the parties, it must be published in the
same manner, and for the same length of time, as required in
cases of the sale of like property on execution, and the sale shall
be conducted in the same manner.

The purchaser shall take all title and interest on which the
mortgage operated. The sheriff conducting the sale shall execute
to the purchaser a bill of sale of the personal property, which ~
shall be effectual to carry the whole title and interest purchased.

Evidence of the service and publication of the notice and of the
sale made in accordance therewith, together with any postpone-
ment or other material matter, may be perpetuated by proper
affidavits thereof. Such affidavits shall be attached to the bill of
sale, and shall then be receivable in evidence to prove the facts
they state. ;

Sales made in accordance with the above requirements are valid
in the hands of a purchaser in good faith, whatever may be the
equities between the mortgagor and mortgagee.

The right of the mortgagee to foreclose, as well as the amount
claimed to be due, may be contested by any one interested in so
doing, and the proceedings may be transferred to the district or
circuit court, for which purpose an injunction may issue if neces-
sary.

Deeds of trust of real or personal property may be executed as
securities for the performance of contracts, and shall be considered
as and foreclosed like mortgages.!

728. Kansas.” — After condition broken, the mortgagee or his
assigns may proceed to sell the mortgaged property, or so much
thereof as may be necessary to satisfy the mortgage and costs of
handbills, posted up in at least four public places in the township
or city in which the property is to be sold, at least ten days pre-
vious to the sale. If the mortgagee or his assignee shall have
obtained possession of the mortgaged property, either before or
after condition broken, the mortgagor, or any subsequent ‘mort-
gagee, may demand, in writing, a sale of such property. In such

1 See Newman v. De Lorimer, 19 Iowa, 2 Dassler’s Compiled Laws 1879, §§

244, 3254-3256.
504
FORECLOSURE AND REDEMPTION. [§§ 729, 730.

case the mortgagee shall proceed to sell the property, having first
given the same notice as provided in the preceding section. If,
after satisfying the mortgage and costs of sale, there be any sur-
plus remaining, the same shall be paid to any subsequent mort-
gagee entitled thereto, or to the mortgagor or his assigns.

729. Kentucky.!— In an action to enforce a mortgage of, or
lien upon, personal property, if it satisfactorily appear from a
verified petition, or from affidavits or the proofs in the cause, that
the plaintiff has a just claim, and that the property is about to be
sold, concealed, or removed from the state, or if the plaintiff state
on oath that he has reasonable cause to believe and does believe
that, unless prevented by the court, the property will be sold, con-
cealed, or removed from the state, an attachment may be granted
against the property. In an action to enforce a mortgage or lien,
judgment may be rendered for the sale of the property and for the
recovery of the debt against the defendant personally. Every sale
made under an order of court must be public, upon reasonable cred-
its to be fixed by the court, not less, however, than three months
for personal property ; and shall be made after such notice of the
time, place, and terms of sale as the order may direct ; and unless
the order direct otherwise, shall be made at the door of the court-
house of the county in which the property, or the greater part
thereof, may be situated ; and the notice of sale must state for
what sum of money it is to be made. The purchaser of property
sold under an order of court shall give a bond for the price,
with- good surety approved by the officer making the sale, pay-
able to him or to the person entitled to receive the money, as the
court may direct ; or, if the court make no order on the subject,
it shall be made payable to the officer. It shall bear interest
from date at the rate the judgment bears. It shall have the force
of a judgment ; and on executions issued upon it no replevy shall
be allowed, and sales shall be for cash. The purchaser of per-
sonal property sold under an order of court shall be entitled to
it, upon complying with the terms of sale.

730. Maine.2— When the condition of a mortgage of personal

1 Bullitt’s Codes 1876; Civil Code, §§ by Laws 1880, ch. 193; Laws 1876, ch.
249, 376, 695-698. 63.
2 R. S, 1871, ch. 91, §§ 3-6, as amended
555
§ 730.] STATUTORY PROVISIONS RELATING TO

property is broken the mortgagor, or any person lawfully elaim-
ing under him, may redeem it at any time before it is sold, by vir-
tue of a contract between the parties or on execution against the
mortgagor, or before the right of redemption is foreclosed, as
hereinafter provided, by paying or tendering to the mortgagee or
the person holding the mortgage by assignment thereof, recorded
where the mortgage is recorded, the sum due thereon, or by per-
forming or offering to perform the conditions thereof, when not
for the payment of money, with all reasonable charges incurred ;
and the property, if not immediately restored, may be replevied,
or damages for withholding it recovered in an action of the case.

The mortgagee or his assigns, after condition broken, may give
to the mortgagor or his assigns when his assignment is recorded
where the mortgage is recorded, written notice of his intention to
foreclose the same, by leaving a copy thereof with the mortgagor
or such assignee, or if the mortgagor is out of the state, though
resident therein, by leaving such copy at his last and usual place
of abode, or by publishing it once a week, for three successive
weeks, in one of the principal newspapers published in the town
where the mortgage is recorded. When the mortgagor or his as-
signee of record is not a resident of the state, and there is no
newspaper published in such town, such notice may be published
in any newspaper printed in the county where the mortgage is
recorded.

The notice, with an affidavit of service or a copy of the publica-
tion, with the name and date of the paper in which it was last
published, shall be recorded where the mortgage is recorded, and
the copy of such record shall be evidence that the notice has been
given. If the mortgagee or his assignee is not a resident of the
state, he shall at the time of recording such notice record there-
with his appointment of an agent resident in the same town, to
receive satisfaction of the mortgage; and payment or tender
thereof may be made to him. If he does not appoint such agent,
the right to redeem shall not be forfeited. The right to redeem
shall be forfeited, except as provided in the preceding sections,
if the money to be paid or other thing to be done is not paid or
performed, or tender thereof made, within sixty days after such
notice is recorded ; but nothing in the preceding sections shall de-
feat a contract of bottomry, respondentia, transfer, assignment, or

556
FORECLOSURE AND REDEMPTION. [§ 731.

hypothecation of a vessel or goods at sea, or abroad, if possession
is taken as soon as may be after arrival in the state.!

The mortgagee’s title becomes absolute by operation of law in
sixty days after the condition is broken. The sixty days after
which the right to redeem is forfeited commence to run from the
time the notice provided for in the statute commences to run.”

731. Maryland.’ — In all mortgages there may be inserted a
clause authorizing the mortgagee or any other person to be named
therein to sell the mortgaged premises, whether lands or goods
and chattels, upon such terms and on such contingencies as may
be expressed therein; and when the interests in any mortgage are
held under one or more assignments, or otherwise, the power of
sale therein contained shall be held divisible, and he or they
holding any such interest who shall first institute proceedings to
execute such power shall thereby acquire the exclusive right to
sell the mortgaged premises. Before any person so authorized
shall make any such sale, he shall give bond to the state in such
penalty and with such security as shall be approved by the judge
or clerk of a court of equity of the city or county in which the
goods or chattels may be, to abide by and fulfil any order or de-
cree which shall be made by any court of equity in relation to the
sale of such mortgaged property, or the proceeds thereof, and
such bond shall be and remain as an indemnity to and for the
security of all persons interested in such mortgaged property or
the proceeds thereof, and be subject to be sued as other bonds
taken in the name of the state, and subject to the same limita-
tions and disabilities as such other bonds. In all sales made in
pursuance of such authority, there shall be given such notice as
may be stated in such mortgage, or if there be no agreement as
to notice, then the party offering the same for sale shall give
twenty days’ notice of the time, place, and terms thereof by ad-
vertisement in some newspaper printed in the county where the
mortgaged premises lie, if there be one so published, and if not,
in a newspaper having a large circulation in said county, and also
by advertisement set up at the court-house door of said county.
All such sales shall be reported under oath to the court having

1 Clapp v. Glidden, 39 Me. 448; Win- 3 Laws 1878, ch. 483, § 5; Code 1860,
chester v. Ball, 54 Me. 558, vol. i. art. 64, §§ 6-11; Rev. Code 1878,
2 Trask v. Pennell, 59 Me. 419. art. 66, §§ 47-53.
5oT
§ 7382.] STATUTORY PROVISIONS RELATING TO

chancery jurisdiction where the sale is made, and there shall be
the same proceedings on such report as if the same were made by‘
a trustee under a decree of said court, and the court shall have
full power to hear and determine any objections which may be
filed against such sale by any person interested in the property,
and may confirm or set aside said sale. If said sale be set aside
by the court, a resale may be ordered to be made by the party
who made the previous sale, or the court. may, if justice requires
it, appoint a trustee to sell the same. All such sales, when con-
firmed by the court and the purchase money is paid, shall pass all
title which the mortgagor had at the time of the recording of the
mortgage. Upon a sale of such mortgaged premises, any person
claiming an interest in the equity of redemption may apply to the
court confirming the sale to have the surplus of the proceeds of
the sale, after payment to the mortgagee of his claim and ex-
penses, paid over to such person, or so much thereof as will satisfy
his claim, and the court shall distribute such surplus equitably
among: the claimants thereto.

When any suit is instituted to foreclose a mortgage, the court
may decree that, unless the debt and cost be paid by a day fixed
by the decree, the property mortgaged, or so much thereof as may
be necessary for the satisfaction of said debt and cost, shall be
sold, and such sale shall be for cash, unless the complainant shall
consent to a sale on credit, and if upon the sale, under such de-
cree of the whole mortgaged property, the net proceeds thereof,
after the costs allowed by the court are satisfied, shall not suffice
to satisfy the mortgage debt and accrued interest, as this shall be
found by the judgment of the court upon the report of the audi-
tor thereof, the court may, upon the motion of the complainant,
enter a decree in personam against the mortgagor or other party
to the suit who is liable for the payment thereof; provided, the
mortgagee would be entitled to maintain an action at law upon
the covenants contained in said mortgage for said residue of the
said mortgage debt, so remaining unsatisfied by the proceeds of
such sale, which decree shall have the same effect as a judgment
at law, and may be enforced only in like manner by a writ of ex-
ecution in the nature of a writ of fiert facias, or otherwise.

732. Massachusetts.? — When the condition of a mortgage of

1 Rey. Code 1878, art. 66, § 65. 2 @.S.u. 151, §§ 4-8.
508
FORECLOSURE AND REDEMPTION. [§ 782.

personal property is broken, the mortgagor, or any person law-
fully claiming or holding under him, may redeem the mortgaged
property at any time before the property is sold in pursuance of
the contract between the parties, or the right of redemption is
foreclosed as hereinafter provided.

The person entitled to redeem shall pay or tender to the mort-
gagee, or to the person holding under him, the sum due on the
mortgage, or shall perform or offer performance of the thing to be
done, and shall pay all reasonable and lawful charges incurred in
the care and custody of the property, or otherwise arising from
the mortgage ; and if upon such payment or performance or ten-
der thereof the property is not forthwith restored, the person en-
titled to redeem may recover it in an action of replevin, or may
recover such damages as he may have sustained by the withhold-
ing thereof, in any action adapted to the circumstances of the
case.

The mortgagee or his assigns may, after condition broken,
give to the mortgagor, or to the person in possession of the prop-
erty claiming the same, written notice of his intention to foreclose
the mortgage for breach of the condition thereof, which notice
shall be served by leaving a copy with the mortgagor, or person
in possession of the property claiming the same, or by publishing
it at least once a week, for three successive weeks, in one of the
principal newspapers published in the town or city where the
mortgage is properly recorded, or where the property is situated,
or if there is no such paper, in one of the principal newspapers
published in such county.

The notice, with an affidavit of the service, shall be recorded
wherever the mortgage is recorded, and when so recorded, the

The first regulation of this subject is
found in R. S. 1836, c. 107, § 40, by
which the mortgagor is allowed to redeem
at any time within sixty days after condi-
tion broken. The present statute is sub-
stantially that first enacted in 1843, «.

ing any demand whatever, give notice, of
his intention to foreclose. Southwick v.
Hapgood, 10 Cush. 119, 121; Goodrich v.
Willard, 2 Gray, 203, 204.

A policy of insurance conditioned to be-
come void “ if the title of the property is

72, § 1.

1 If the mortgage note is payable on de-
‘mand, such a note being in law payable
immediately, no demand is necessary to
constitute a breach of condition, and the
mortgagee may, immediately after the
giving of the mortgage and without mak-

transferred or changed,” and which pro-
vides that “the entry of a foreclosure of a
mortgage shall be deemed an alienation,”
is avoided by giving and recording such
notice of intention to foreclose the mort-
gage. McIntire v. Norwich F. Ins. Co.
102 Mass. 230.
559
§ 783.] STATUTORY PROVISIONS RELATING TO

same, or a copy of the record, shall be admitted as evidence of the
giving of such notice.}

If the money to be paid, or other thing to be done, is not paid
or performed, or tender thereof made, within sixty days after such
notice is so recorded, the right to redeem shall be foreclosed.”

Whether a bill in equity can be sustained under any circum-
stances to foreclose a chattel mortgage seems to be an undecided
question; but it has been decided that sych a bill does not lie to
foreclose a mortgage of patent rights of which the mortgagee
already holds an assignment absolute in form, made as a part of
the transaction of the mortgage. The statute remedy is suffi-
cient.8

The owner of personal property, of which he is in possession, is
not entitled to relief in equity on the ground that a mortgagee is
about to foreclose a mortgage which the owner of the property
alleges has been paid, by reason of which a cloud would rest on
his title. He has full opportunity to contest the validity of the
mortgage in the proceedings to foreclose it.*

733. In Michigan a mortgagee of chattels is not bound to file
a bill in equity to foreclose the mortgagor’s right of redemption ;
but he may foreclose it by his own act, by proceeding to sell the
property after due notice, or to sell it in accordance with a power
of sale contained in the mortgage ; and in such case any surplus
remaining after payment of the mortgage debt is held by the
mortgagee in trust for the mortgagor.

There is no general statute in terms applicable to the foreclos-
ure of chattel mortgages; but it would seem that: there is juris-
diction in equity to foreclose such mortgages.6 It is provided by
a recent statute that at any sale of property upon foreclosure of a

1 When aw mortgage is valid without
being recorded, a notice of intention to
foreclose is valid without registration.
The statute requiring the recording of
such notice is inapplicable in such case.
Taber v. Hamlin, 97 Mass. 489.

The failure of the town clerk to index
the notice and affidavit does not affect the
rights of the mortgagee. Burtis v. Brad-
ford, 122 Mass. 129,

2 A mortgage given by one who has af-
terwards become insolvent may, in certain

560

cases, be redeemed by his assignee in in-
solvency within sixty days after his ap-
pointment. Stat. 1862, c. 172, § 7.

8 Boston & Fairhaven Iron Works v.
Montague, 108 Mass. 248.

+ Bushnell v. Avery, 121 Mass. 148,

5 Flanders v. Chamberlain, 24 Mich.
805, 314, per Christiancy, C. J.

® For provisions for the foreclosure of
mortgages in chancery, see 2 Jones on
Mortgages, § 1342,
FORECLOSURE AND REDEMPTION. [§ 734.

chattel mortgage, the mortgagee or his assigns, or his or their rep-
resentative, may fairly and in good faith purchase the property so
offered for sale, or any part thereof.1

734. Minnesota.?—— When the condition of a mortgage of per-
sonal property is broken, the mortgagor, or any person lawfully
claiming or holding under him, may redeem the same at any
time before the property is sold, in pursuance of the contract be-
tween the parties, or the right of redemption is foreclosed as
hereinafter provided. The person entitled to redeem shall pay
or tender to the mortgagee, or person holding under him, the
sum due on the mortgage, or offer performance of the thing to
be done, and shall pay all reasonable and lawful charges and ex-
penses incurred in the care and custody of the property, or other-
wise arising from the mortgage; and if, upon such payment or
performance or tender thereof, the property is not forthwith re-
stored, the person entitled to redeem may recover it in a civil
-action, with such damages as he may have sustained by the with-
holding thereof.

The mortgagee or his assigns, after condition broken, may give
to the mortgagor, or the person in possession of the property
claiming the same, written notice of his intention to foreclose the
mortgage for breach of the condition thereof, which notice shall
be served by leaving a copy with the mortgagor, or a person in
possession of the property claiming the same, or by publishing it
at least once a week, for three successive weeks, in a newspaper
printed and published in the county or city where the mortgage is
properly recorded, or where the property is situated, or if there
be no such paper, in a newspaper printed and published at the
capital of the state. But the mortgagee is not deprived of his
remedy by sale, in cases where such sale is authorized by the
mortgage. The notice, with an affidavit of service, shall be filed
wherever the mortgage is filed, and when so filed, the same, or a
copy thereof, shall be admitted as evidence of the giving of such
notice. If the money to be paid, or other thing to be done, is not
paid or performed, or tender thereof made within sixty days after
such notice is so filed, the right to redeem shall be foreclosed.?

1 Laws 1877, p. 45, No. 57. 3 G. S. 1878, ch. 39, §§ 10-12; Stat. at
2 G, S. 1878, ch. 39, §§ 8, 9, 13. Large, ch. 38, §§ 18, 19, 20.
3% 561
§§ 735, 736.] STATUTORY PROVISIONS RELATING TO

735. Mississippi.! — Foreclosure is under the general juris-
diction of courts of equity.2 It is provided by statute that when
any mortgage or deed of trust shall be given on any real or per-
sonal estate, or when any lien shall be given by law to secure the
payment of any sum of money specified in any writing, no action
or suit or other proceeding shall be brought or had upon such lien,
mortgage, or deed of trust, to recover the sum of money so se-
cured, but within the time that may be allowed for the com-
mencement of an action at law, upon the writing in which the
sum of money secured by such mortgage or deed of trust may be
specified ; and in all cases where the remedy at law to recover the
debt shall be barred, the remedy in equity on the mortgage shall
be barred.

736. Missouri.2— All mortgagees of real estate or personal
estate, including leasehold interests, when the debt or damages
secured amounts to fifty dollars or more, may file a petition in the
office of the Circuit Court against the mortgagor and the actual
tenants or occupiers of such real estate, or persons in possession
of personal property, setting forth the substance of the mortgage
deed, and praying that judgment may be rendered for the debt
or damages, and that the equity of redemption may be foreclosed,
and the mortgaged property sold to satisfy the amount due.

Deeds of trust, in the nature of mortgages, may, at the option
of the cestut que trusts, their executors, or administrators, or as-
signees, be foreclosed by them, and the property sold in the same
manner, in all respects, as in case of mortgages. If any part of
the property be real estate, the petition may be filed in any county
where any part of the mortgaged premises is situated ; if it be
exclusively personal estate, it may be filed and proceeded with as
in other civil actions.

In all mortgages in which personal estate alone is conveyed,‘
and the debt secured thereby, exclusive of interest, shall not exceed
one hundred dollars, the mortgagee or his personal representa-
tives, upon default being made in the payment of the mortgage
debt by the mortgagor or his legal representatives, may sell the
mortgaged property, or so much thereof as will satisfy his debt,

1 Code 1880, § 2667. 3 2 Wagner’s Stat. ch. 99, §§ 1-3; 1 R.
2 See 2 Jones on Mortgages, § 1344. S. 1879, §§ 3297, 3298.

4 BR. S. 1879, vol. 1, §§ 3309, 3310.
562 :
FORECLOSURE AND REDEMPTION. [§ 7387.

giving the mortgagor, after default in the payment of the debt,
sixty days’ previous notice, in writing, that the mortgaged prop-
erty will be sold unless the debt secured by it is paid, and giving
thirty days’ notice of the time and place of sale; the notice to be
published in the same manner as a sheriff’s notice of the sale of
real estate. All mortgages of real or personal property, or both,
with powers of sale in the mortgagee, and all sales made by such
mortgagee or his personal representatives, in pursuance of the
provisions of such mortgages, shall be valid and binding, by the
laws of this state, upon the mortgagors and all persons claiming
under them, and shall forever foreclose all right and equity of
redemption of the property so sold.

737. Montana Territory.1 — All actions for the foreclosure of
chattel mortgages, or enforcement of any lien against personal
property of whatever nature, shall be commenced and conducted
in the same manner as provided in the Civil Practice Act for fore-
closure of mortgages and liens against real property.

There is but one action for the recovery of any debt, or the en-
forcement of any rights, secured by mortgage upon real estate or
personal property. In actions for the foreclosure of mortgages,
the court shall have the power, by its judgment, to direct a sale
of the incumbered property, or as much as may be necessary, and
the application of the proceeds of the sale to the payment of the
costs of the court and expenses of the sale, and the amount due to
the plaintiff; and if it appear from the sheriff's return that the
proceeds are insufficient, and a balance still remains due, judg-
ment shall be docketed for such balance against the defendant or
defendants personally liable for the debt, and shall then become a
lien on the real estate of such judgment debtor, as in other cases
in which execution may be issued. No person holding a con-
veyance from or under the mortgagor, or of the property mort-
gaged, or having a lien thereon, which conveyance does not ap-
pear on record in the proper office at the time of the commence-
ment of the action, need be made a party to such action ; and the
judgment therein rendered, and the proceedings therein had, shall
be as conclusive against the party holding such unrecorded con-

1 Codified Stat. 1872, p. 527, ch. 46, § Laws 1877, p. 185; §§ 346-348 of Code
9; Codified Laws 1872, p. 92, § 295; of Civil Procedure.
563
§ 738.] STATUTORY PROVISIONS RELATING TO

veyance or lien as if he had been made a party to said action,
and shall in all respects have the same force: and effect.

If there be surplus money remaining after payment of the
amount due on the mortgage, lien, or incumbrance, with costs, the
court may cause the same to be paid to the person entitled to it,
and in the mean time may direct it to be deposited in court.

If the debt for which the mortgage lien or incumbrance is held
be not all due, so soon as sufficient of the property has been sold
to pay the amount due, with costs, the sale shall cease; and after-
wards, as often as more becomes due for principal or interest, the
court may, on motion, order more to be sold.. But if the prop-
erty cannot be sold in portions without injury to the parties, the
whole may be ordered to be sold in the first instance, and the en-
tire debt and costs paid, there being a rebate for interest where
such rebate is proper.

738. Nebraska.!— Every mortgage of personal property con-
taining and giving to the mortgagee or any other person a power
to sell the property described therein, upon default being made in
any condition of such mortgage, may be foreclosed in the cases
and in the manner hereinafter specified. To entitle any person to
foreclose a chattel mortgage it shall be requisite :

First. That some default in a condition of such mortgage shall
have occurred, by which the power to sell becomes operative.
Second. That if no suit or proceeding shall have been instituted
at law to recover the debt then remaining secured by such mort-
gage or any part thereof, or if any suit or proceeding has been
instituted that the same has been discontinued, or that an execu-

-tion upon the judgment rendered thereon has been returned un-
satisfied in whole or in part. Third. That such mortgage, con-
taining the power of sale, has been duly recorded.

Notice that such mortgage will be foreclosed, by a sale of the
mortgaged property or some part thereof, shall be given as fol-
lows: By advertisement published in some newspaper printed in
the county in which such sale is to take place, or in case no news-
papers are printed therein, by posting up notices in at least five
public places in said county, two of which shall be in the precinct
where the mortgaged property is to be offered for sale, and

1 GS. 1873, ch. 46, §§ 1-8.
564
.FORECLOSURE AND REDEMPTION. [§ 739.

such notice shall be given at least twenty days prior to the day of
sale.

Every such notice shall specify: First. The date of the mort-
gage and where recorded. Second. The name of the mortgagor
and mortgagee, and the assignee of the mortgage, if any. Third.
The amount claimed to be due thereon at the time of the first
publication or posting of such notice. Fourth. A description of
the mortgaged property conforming substantially with that con-
tained in the mortgage. Fifth. The time and place of sale.

Such sale may be postponed from time to time, by inserting a
notice of such postponement, as soon as practicable, in the news-
paper in which the original advertisement was published, and
continuing such publication until the time to which the sale shall
be postponed ; or in case no newspaper is published in the county
in which such sale is to be had, by posting a notice of such ad-
journment in some conspicuous place at the place designated in
the original notice posted for the sale to be had.

Such sale shall be at public auction in the daytime, between
the hours of ten A. M. and four P. M., in the county where the
mortgage was first recorded, or in any county where the prop-
erty may have been removed by consent of parties and in which
the mortgage was duly recorded, and in view of said property.

The mortgagee, his assigns, and his or their legal representa-
tives, may fairly and in good faith purchase any of the mortgaged
property at such sale. When a mortgage shall have been fore-
closed as herein provided, any and all right of equity of redemp-
tion which the mortgagor may or might have had shall be and
become extinguished.

739. Nevada.1— There shall be but one action for the recoy-
ery of any debt, or the enforcement of any right secured by
mortgage or lien upon real estate or personal property. In such
action, judgment shall be rendered for the amount found due the
plaintiff, and the court shall have power, by its decree or judg-
ment, to direct a sale of the incumbered property, or such part
thereof as may be necessary, and the application of the proceeds
of the sale to the payment of the costs and expenses of the sale,
the costs of the suit, and the amount due to the plaintiff. If it
shall appear from the sheriff’s return that there is a deficiency

1 Compiled Laws 1873, §§ 1809-1311. See § 707.
565
§ 740.] STATUTORY PROVISIONS RELATING TO

of such proceeds and a balance still due to the plaintiff, the judg-
ment shall then be docketed for such balance against the defend-
ant or defendants personally liable for the debt, and shall, from
the time of such docketing, be a lien upon the real estate of the
judgment debtor, and an execution may thereupon be issued by
the clerk of the court, in like manner and form as upon other
judgments, to collect such balance or deficiency from the prop-
erty of the judgment debtor. If there be surplus money remain-
ning after payment of the amount due on the mortgage, lien, or
incumbrance, with costs, the court may cause the same to be paid
to the person entitled to it, and in the mean time may direct it to
be deposited in court.

If the debt for which the mortgage, lien, or incumbrance is
held be not all due, so soon as sufficient of the property has been
sold to pay the amount due, with costs, the sale shall cease; and
afterwards, as often as more becomes due for principal or inter-
est, the court may, on motion, order more to be sold. But if the
property cannot be sold in portions without injury to the parties,
the whole may be ordered to be sold in the first instance, and the
entire debt and costs paid, there being a rebate of interest where
such rebate is proper.

740. New Hampshire.!— When the condition of any mort-
gage of personal property has been broken, the mortgagor may
redeem the same by paying or tendering to the mortgagee the
amount due on such mortgage, with all reasonable expenses in-
curred by reason of such breach of condition, at any time before a
sale thereof as provided by statute.

The mortgagee may, at any time after thirty days from the
time of condition broken, sell the mortgaged property or any part
thereof at auction, notice of the time, place, and purposes of such
sale being posted at two or more public places in the town in
which such sale is to be, four days at least prior thereto.

The mortgagee shall notify the mortgagor of the time and place
of sale, either by notice in writing delivered to the mortgagor, or,
if a corporation, to the person on whom legal process may be
served, or left at his abode, if within the town, at least four days
previous to the sale. If the mortgagor does not reside in the
town, such notice sent by mail shall be sufficient.

1 GS. 1878, ch. 128, §§ 18-21.
566
FORECLOSURE AND REDEMPTION. [§§ 741, 742.

The mortgagee may be a purchaser at such sale, and the pro-
ceeds of such sale shall be applied by him to the payment of the
demand secured by such mortgage, and the expenses of keeping
and sale; and the residue shall be paid to the mortgagor on
demand.

741. New Jersey.1— The foreclosure of chattel mortgages is
under the general jurisdiction of courts of chancery ; and the pro-
ceedings are the same as those had for the foreclosure of mort-
gages of real estate. It is specially provided that in any suit for
the foreclosure of a mortgage upon or which may relate to real
or personal property, all persons claiming an interest in or an in-
cumbrance or lien upon such property, by or through any convey-
ance, mortgage, assignment, lien, or any instrument which, by any
provision of law, could be recorded, registered, entered, or filed in
any public office in this state, and which shall not be so recorded,
registered, entered, or filed at the time of filing the bill in such
suit, shall be bound by the proceedings in such suit, so far as the
said property is concerned, in the same manner as if he had been
made a party to and appeared in such suit, and the decree therein
made against him as one of the defendants therein; but such per-
son, upon causing such conveyance, mortgage, assignment, lien,
claim, or other instrument to be recorded, registered, entered, or
filed as provided by law, may cause himself to be made a party to
such suit by petition, in the same manner as is provided in the
case of persons acquiring an interest in the subject matter of a
suit after its commencement; the petition in such case must set
forth such instrument at length, and the title and interest of such
party in such a manner as to show that he has an interest in the
subject matter, and is a proper party in that suit.

742. New Mexico Territory.? — After condition broken, the
mortgagee or his assignee may proceed to sell the mortgaged
property, or so much thereof as shall be necessary to satisfy the
mortgage and costs of sale; having first given notice of the time
and place of sale, by written or printed handbills, posted up in at
least four public places in the township in which the property is
to be sold, at least ten days previous to the day of the sale. If

1 R. S. 1877, p. 118, § 78. 2 Laws 1876, ch. 36, §§ 10-12; Gen.
Laws 1880, p. 65.

567
8$ 743, 744.] STATUTORY PROVISIONS RELATING TO

the mortgagor or his assignee shall have obtained possession of
the mortgaged property, either before or after condition broken,
the mortgagee, or any subsequent mortgagee, may demand in
writing a sale of the property. In such case the mortgagee shall
proceed to sell the property, having first given the notice as pro-
vided. If after satisfying the mortgage and costs of sale there
shall be any surplus remaining, the same shall be paid to any
subsequent mortgagee entitled thereto, or to the mortgagor or his
assignee.

743. New York.— There is no statute specially applicable
to the foreclosure of mortgages of personal property. After de-
fault the mortgagee’ may sell the property at public sale without
suit, although the mortgage contains no power of sale. Such a
power is usually invested in chattel mortgages; but when such
mortgages are made without a power of sale, the common method
of foreclosing them is by sale without action, or judicial decree.
An action should be resorted to if the mortgagee desires to re-
cover any deficiency there may be after applying the proceeds of
the property to the payment of the debt. The proceeding for
this purpose is in equity, or by an equitable action under the
code.?

744, North Carolina.? — In actions to foreclose mortgages the
court shall have power to adjudge and direct the payment by the
mortgagor of any residue of the mortgage debt that may remain
unsatisfied after a sale of the mortgaged premises, in cases in
which the mortgagor shall be personally liable for the debt secured
by such mortgage; and if the mortgage debt be secured by the
covenant or obligation of any person other than the mortgagor,
the plaintiff may make such person a party to the action, and the
court may adjudge payment of the residue of such debt remaining
unsatisfied after a sale of the mortgaged premises, against such
other person, and may enforce such judgment as in other cases.

It is provided ® that a debt not exceeding three hundred dollars
in amount may be secured by a deed of trust of personal property
containing a power to sell said property or so much thereof as
may be necessary, by public auction, for cash, first giving twenty

1 See § 707. 8 Battle’s Revisal 1873, ch. 35, §§ 31-
2 Battle’s Revisal 1878, ch. 17, § 126, 383.

568
FORECLOSURE AND REDEMPTION. [8§ 745, 746.

days’ notice at three public places, and apply the proceeds of such
sale to the discharge of said debt and interest on the same, and
pay the surplus to the mortgagor.

Where any trustee of a deed of trust has died, removed from the
county where the deed was executed, or from the state, or in any
way become incompetent to execute the said trust, the judge of
probate of the county wherein the said deed of trust was exe-
cuted is authorized and empowered to appoint some discreet and
competent person to act as trustee, and execute the deed of trust
according to its true intent and meaning, and as fully as if ap-
pointed by the parties to the deed.

745. Ohio.1— There is no statute specially applicable to the
foreclosure of chattel mortgages. Courts of equity have general
jurisdiction of the subject. When the court has jurisdiction of
the parties in interest, it is not necessary to a decree of foreclosure
that the property should be within the territorial jurisdiction of
the court. The object of the suit is to foreclose the equity of
redemption. This can as well be done on a failure to redeem
within the specified time, by ordering a sale through a master, as
by compelling a release or cutting off the equity by absolute de-
cree. The nature of the suit is not that of a proceeding in rem,
but in personam ; and the court, as a court of equity, has full au-
thority acting upon the parties, to deal and adjudicate in respect
to the rights of the parties in the property, without regard to
where the property itself is located, as the ends of justice may
require. c

Courts of equity, in ordering a sale of property, follow the rules
regulating sales on execution, when they are applicable. But
where the subject with which the court is dealing is such that
these rules cannot be applied without defeating the ends of jus-
tice, they will be disregarded.”

746. Oregon.?— A lien upon real or personal property, other
than that of a judgment or decree, whether created by mortgage
or otherwise, shall be foreclosed, and the property adjudged to be
sold to satisfy the debt secured thereby, by a suit. If a promis-
sory note or other personal obligation for the payment of the debt

1 Means v. Worthington, 22 Ohio St. 2 Means v. Worthington, supra.
622. 8 G. L. 1872, pp. 196, 197.

569
§ 746.] STATUTORY PROVISIONS RELATING TO

has been given, the court also decrees a recovery of the amount of
such debt. Any person having a lien subsequent to the plaintiff
upon the same property, and any person who has given a promis-
sory note or other personal obligation for the payment of the debt,
must be made a defendant in the suit; and any person having a
prior lien may be made defendant at the option of the plaintiff.
Any defendant having a lien may have a decree in the same man-
ner as if he were plaintiff. When a decree is given foreclosing
two or more liens upon the same property or any portion thereof,
in favor of different persons not united in interest, such decree
must determine and specify the order of time, according to their
priority, in which the debts secured by such liens shall be satisfied
out of the proceeds of the sale of the property.

The decree may be enforced by an execution, as an ordinary
decree for the recovery of money, except that when a decree of
foreclosure and sale is given, an execution may issue thereon
against the property adjudged to be sold. If the decree is in favor
of the plaintiff only, the execution may issue as in ordinary cases ;
but if it be in favor of different persons, not united in interest, it
shall issue upon the joint request of such persons, or upon the
order of the court or judge thereof on the motion of either of
them ; when the decree is also against the defendants or any one
of them in person, and the proceeds of the sale of the property
upon which the lien is foreclosed is not sufficient to satisfy the
decree, as to the sum remaining unsatisfied the decree may be
enforced by execution as in ordinary cases. When in such case
the decree is in favor of different persons, not united in interest, it
shall be deemed a separate decree as to such persons, and may be
enforced accordingly.

During the pendency of an action of law, for the recovery of a
debt secured by any lien, a suit cannot be maintained for the fore-
closure of such lien, nor thereafter, unless judgment be given in
such action that the plaintiff recover such debt or some part
thereof, and an execution thereon against the property of the de-
fendant in the judgment is returned unsatisfied in whole or in
part. When a suit is commenced to foreclose a lien, by which a
debt is secured, which debt is payable in instalments either of in-
terest or principal, and any of such instalments is not then due,
the court shall decree a foreclosure of the lien, and may also decree
a sale of the property for the satisfaction of the whole of such

570
FORECLOSURE AND REDEMPTION. [§ 746.

debt, or so much thereof as may be necessary to satisfy the in-
stalment then due, with costs of suit; and in the latter case the
decree of foreclosure as to the remainder of the property may be
enforced by an order of sale, in whole or in part, whenever default
shall be made in the payment of the instalments not then due.

If before a decree is given the amount then due, with the
costs of suit, is brought into court and paid to the clerk, the
suit shall be dismissed; and if the same be done after decree
and before sale, the effect of the decree as to the amount then
due and paid shall be terminated, and the execution, if any have
issued, be recalled by the clerk. When an instalment not due is
adjudged to be paid, the court shall determine and specify in the
decree what sum shall be received in satisfaction thereof, which
sum may be equal to such instalment, or otherwise, according to
the present value thereof.

It is also provided in Oregon! that whenever the condition of
any mortgage of goods and chattels shall be broken, the mort-
gagee shall be entitled to the immediate possession of the mort-
gaged property; and when after the breach of condition of any
such mortgage, the possession of the mortgaged property shall not
be delivered up to the mortgagee, upon demand by him or by
any person duly authorized by him to make such demand of the
person or persons having such mortgaged property in possession,
the mortgagee may recover the possession of such mortgaged prop-
erty.

Whenever in any mortgage of goods and chattels the parties
to such mortgage shall have provided the manner in which such
mortgage may be foreclosed, such mortgage, upon breach of the
condition thereof, may be foreclosed in the manner therein pro-
vided, and not otherwise; and if in any such mortgage the man-
ner in which the same may be foreclosed shall not be provided,
then upon breach of the conditions thereof, in case the consider-
ation of such mortgage shall not exceed the sum of five hundred
dollars, the same may be foreclosed, and the mortgaged property
sold by the sheriff, or any constable of the county in which such
mortgage has been filed, upon the written request of the mort-
gagee, his agent or attorney, upon such notice, and in the manner
provided by law for the sale of personal property upon execution ;
and if the consideration of such mortgage shall exceed the sum of

1 G. L, 1872, p. 688, §§ 1, 2, 3.
571
§$ 747, 748.] STATUTORY PROVISIONS RELATING TO

five hundred dollars, the same may be foreclosed by an action at
law in the Circuit Court of the county in which such mortgage
may have been filed.

Upon the sale of any mortgaged property, as above provided,
the sheriff or constable making the same shall forthwith make
his return of his proceedings to the clerk of the county in which
such sale shall have been had, and after deducting the costs and
expenses of sale, and satisfying such mortgage in full, he shall
deposit the balance of the proceeds, if any, with such clerk, sub-
ject to the order of the mortgagor.

747, Pennsylvania.! — Only certain specified articles of per-
sonal property are subject to mortgage. In case the sum secured
by any such mortgage, or any part thereof, shall remain unpaid,
after the time specified therein for the payment thereof, it shall
be lawful for the mortgagee, or his agent duly constituted, after
having given said mortgagor or his legal representative thirty days’
notice, either personally or by public advertisement, inserted four
times, at intervals of one week each, in some daily newspaper, if
any, and if not, in a weekly paper published in the county wherein
the mortgage is recorded, to cause the said chattels to be sold at
public auction. In case the proceeds of sale shall more than repay
the debt or balance due and the costs of sale, the remainder shall
be paid forthwith to the mortgagor, or his agent duly constituted,
or to the legal representatives of the mortgagor. When the con-
dition of a mortgage of personal property is broken, the mort-
gagor, or any person lawfully claiming or holding under him, may
redeem the same at any time before the property is sold, by the
payment of the debt, interest, and costs.

748. Rhode Island.?—- Whenever the condition of any mort-
gage of personal property has been broken, the mortgagor, or any
person lawfully claiming or holding under him, may redeem the
same at any time within sixty days thereafter, unless the prop-
erty shall in the mean time have been sold in pursuance of the
contract between the parties.

The person entitled to redeem ‘the property shall pay or tender
to the mortgagee, or to the person holding under him, the sum due

1 Purdon’s Ann. Dig. p. 2005, §§ 14, 2 R. S. 1872, ch. 165, §§ 11-15; Laws
15. 1878, ch. 719,

572
FORECLOSURE AND REDEMPTION. [§ 749.

on the mortgage, with all reasonable and lawful charges and ex-
penses incurred in the care and custody of the property, or other-
wise arising from the mortgage thereof ; and if the property is not
forthwith restored, the person entitled to redeem the same may
recover it in an action of replevin, or may recover such damages as
he may have sustained by the withholding thereof in any proper
action.

Any person entitled to foreclose the equity of redemption in
any mortgaged estate, whether real or personal, may prefer a bill
to foreclose the same to the Supreme Court sitting in the county
in which such premises are situated, if such premises are real
estate, and if personal, then in the county in which the mortgagor
may reside, if in this state, and if not, then in any county in this
state ; which bill may be heard, tried, and determined by said
court, according to the usages in chancery and the principles of
equity.

At any sale by public auction, made under and according to the
provision of any deed of mortgage, mortgage bill of sale, or other
conveyance by way of mortgage, or of any power of sale contained
therein or annexed thereto, the mortgagee in such deed of mort-
gage or other conveyance, his or their assigns, or his or their legal
representatives, or any person’ for him or them, may fairly and
in good faith bid for and purchase such estate or property so put
up for sale, or any part thereof, in the same manner as the same
may be bid for and purchased by any other persons ; provided,
that notice in writing of the mortgagee’s intention to bid shall
be given to the mortgagor, or left at his last-and usual place of
abode, twenty days prior to the time of sale at which he proposes
to bid as mortgagee, and that proper evidence that such notice has
been given shall be in the possession of the auctioneer at the time
the sale takes place; or that such mortgagee shall in his public
advertisement of sale give notice that it is his intention to bid
upon such property as advertised for sale.

749. In South Carolina mortgages are foreclosed by suit in the
nature of a suit in equity.1 The court shall have power to ad-
judge and direct the payment, by the mortgagor, of any residue
of the mortgage debt that may remain unsatisfied after a sale of
the mortgaged premises, in cases in which the mortgagor shall be

1 R. S. 1878, p. 610, § 190; Acts 1879, No. 189, § 3.
573
§$ 750, 751.] STATUTORY PROVISIONS RELATING TO

personally liable for the debt secured by such mortgage; and if
the mortgage debt be secured by the covenant or obligation of
any person other than the mortgagor, the plaintiff may make
such person a party to the action, and the court may adjudge
payment of the residue of such debt remaining unsatisfied after
a sale of the mortgaged premises against such other person, and
may enforce such judgment as in other cases.

When any personal property under pledge, mortgage, or hypothe-
cation is sold for the purpose of satisfying the loan or debt secured
by such pledge, mortgage, or hypothecation, the pledgee, mort-
gagee, or person holding the instrument showing the hypotheca-
tion shall advertise the same for fifteen days unless the person
making such pledge, mortgage, or hypothecation, or his legal rep-
resentative, shall consent to a sale in some other mode, or on some
other notice, such consent to be expressed in writing.

750. Tennessee. — Foreclosure is by bill in chancery and a
sale under decree, unless the mortgage contain a power of sale, or
be in the form of a trust deed with such power, which is the more
usual form. There are no statutory provisions relating to fore-
closure, except as regards notice of the sale when sale is made
under decree of a court of chancery.

751. Texas.2— Judgments for the foreclosure of mortgages
and other liens shall be that the plaintiff recover his debt, dam-
ages, and costs, with a foreclosure of the plaintiff’s lien on the’
property subject thereto, and (except in judgments against ex-
ecutors, administrators, and guardians) that an order of sale shall
issue to the sheriff or any constable of the county where such
property may be, directing him to seize and sell the same as
under execution, in satisfaction of the judgment; and if the
property cannot be found, or if the proceeds of such sale be in-
sufficient to satisfy the judgment, then to make the money, or any
balance thereof remaining unpaid, out of any other property of
the defendant, as in case of ordinary executions.

Courts of justices of the peace have jurisdiction to foreclose
mortgages and enforce liens on personal property, when the

1.See 2 Jones on Mortgages, § 1358, 2B. S. 1879, art, 1340, p. 210; Art.
1539, p. 232.
574
FORECLOSURE AND REDEMPTION. [§ 752.

amount in controversy is two hundred dollars or less, exclusive of
interest.

Any creditor of a deceased person holding a claim secured by
mortgage or other lien, which claim has been allowed and ap-
proved or established by suit, may obtain at a regular term of the
court, from the county court of the county where the letters testa-
mentary or administrative were granted, an order for the sale of
the property upon which he has such mortgage or other lien, or
so much of said property as may be required to satisfy such claim,
by making his application in writing and having the executor or
administrator of such deceased person cited to appear and answer
the same.!

752. Utah Territory.2— There shall be but one action for the
recovery of any debt, or the enforcement of any right secured by
mortgage or lien upon real estate or personal property. In such
action judgment shall be rendered for the amount found due the
plaintiff, and the court shall have power, by its decree or judg-
ment, to direct a sale of the incumbered property, or such part
thereof as may be necessary, and the application of the proceeds
of the sale to the payment of the costs and expenses of the sale,
the costs of the suit, and the amount due to the plaintiff. If it
shall appear from the return of the marshal or the sheriff of the
county that there is a deficiency of such proceeds, and a balance
still due to the plaintiff, the judgment shall then be docketed for
such balance against the defendant or defendants personally lia-
ble for the debt, and shall, from the time of such docketing, be
a lien upon the real estate of the judgment debtor, and an execu-
tion may thereupon be issued by the clerk of the court, in like
manner and form as upon other judgments, to collect such bal-
ance, or deficiency, from the property of the judgment debtor.
If there be surplus money remaining after payment of the amount
due on the mortgage, lien, or incumbrance, with costs, the court
may cause the same to be paid to the person entitled to it, and in
the mean time may direct it to be deposited in court. If the debt
for which the mortgage, lien, or incumbrance is held be not all
due, so soon as sufficient of the property has been sold to pay the
amount due, with costs, the sale shall cease, and afterwards, as

1 BR. S. 1879, art. 2067, p. 304. 2 Compiled Laws 1876, §§ 1471, 1472,

1473.
575
§§ 753, 754.] STATUTORY PROVISIONS RELATING TO

often as more becomes due for principal or interest, the court
may, on motion, order more to be sold. But if the property can-
not be sold in portions without injury to the parties, the whole
may be ordered to be sold in the first instance, and the entire
debt and costs paid, there being a rebate of interest where such
rebate is proper.

753. Vermont.!— When the condition of any mortgage of per-
sonal property has been broken, the mortgagor, or any person
holding under him, or person holding a subsequent mortgage,
may redeem the same by paying or tendering to the mortgagee
the amount due on such mortgage, with all reasonable costs and
expenses incurred by reason of such breach of condition, at any
- time before a sale thereof, or foreclosure and time of redemption
expired, as hereinafter provided. The mortgagee may at any
time, after thirty days from the time of condition broken, cause
the mortgaged property, or any part thereof, to be sold at public
auction by some public officer, at some public place in the town
where the mortgagor resides or where said property is situate,
notice of the time, place, and purpose of such sale being posted at
two or more public places in such town at least ten days prior
thereto. The mortgagee shall notify the mortgagor, or person
holding under him, and persons holding subsequent mortgages, of
the time and place of sale, either by notice in writing delivered to
him, or left at his abode, if within the town, or sent by mail if he
does not reside in such town, at least ten days previous to the sale.
The proceeds of such sale shall be applied to the payment of the
demand secured by such mortgage, and the costs and expenses of
keeping and sale, and the residue, if amy, shall be paid to persons
holding subsequent mortgages, in their order, which shall be ap-
plied to liquidate the claims secured by such mortgage or mort-
gages, and if there be no subsequent mortgage, then to the mort-
gagor or person holding under him, on demand.

754. Virginia and West Virginia. —In these states foreclos-
ure is under the general jurisdiction of a court of chancery. Mort-
gages, however, are seldom used, deeds of trust with power of sale
being substituted in their place. There are no provisions of stat-
ute relating specifically to the foreclosure of mortgages. There

1 Laws 1878, p. 59, §§ 13, 14, 15, 16.
576
FORECLOSURE AND REDEMPTION. [§ 755.

are provisions relating to deeds of trust, and although these are
generally executed without the intervention of the courts, yet
courts of equity may be invoked in any case to supervise the en-
forcing of them. ‘These provisions, however, relate to the form
of such trust deeds and authorize sales as therein provided.

755. Washington Territory.2— Any mortgage of personal
property, when the debt to secure which the mortgage was given
is due, may be foreclosed by notice and sale as herein provided; or
it may be foreclosed by action in the District Court having juris-
diction in the county in which the property is situated. The no-
tice must contain a full description of the property mortgaged
together with time and place of sale, also a statement of the
amount due, and must be signed by the mortgagee or attorney.
Such notice’ shall be placed in the hands of the sheriff or other
proper officer, and shall be personally served in the same manner
as is provided by law for the service of a summons; provided, that
if the mortgagor cannot be found in the county where the mort-
gage is being foreclosed, it shall not be necessary to advertise the
notice or affidavit in a newspaper, but the general publication
hereinafter directed shall be sufficient service upon all the par-
ties interested, and such notice shall be sufficient authority for
the officer to take such property into his immediate possession.
After notice has been served upon the mortgagor, it must be pub-
lished in the same manner, and for the same length of time, as
required in cases of the sale of like property on execution, and
the sale shall be conducted in the same manner. The purchaser
shall take all interest which the mortgagor had in the said mort-
gaged property upon which the said mortgage operated. The
officer conducting the sale shall execute to the purchaser a bill
of sale of the property, which bill of sale shall be effectual to carry
the whole title and interest purchased; and if any balance of the
purchase price remain it shall be disposed of in the same man-
ner as surplus proceeds of sales are on execution.

The right of the mortgagee to foreclose, as well as the amount
claimed to be due, may be contested by any person interested in
so doing, and the proceedings may be transferred to the District
Court, for which purpose an injunction may issue if necessary.

1 See 2 Jones on Mortgages, §§ 1362, 2 Gen. Laws 1879, pp. 105, 106, §§ 6, 7,
gag »

1364, 1761, 1762. 8, 9, 10, 11, 12, 18.
37 57T
§ 755.] STATUTORY PROVISIONS RELATING TO

Where the debt is not due for which the mortgage is given, and
the mortgagee has reasonable cause to believe that the mortgaged
property will be destroyed, lost, or removed, he shall have the
right to an immediate action in the District Court of the county
having jurisdiction where the property is situated, for the recovery
of his debt, and the court may make any order it may deem fit,
in order to secure said property so as to make the same available
for the satisfaction of said debt.

It is also provided in Washington Territory! that the provi-
sions relating to actions for the foreclosure of mortgages of real .
estate may be applied, so far as, they can be, to actions for the
foreclosure of chattel mortgages or bills of sale creating liens on
personal property.2- The mortgagee or holder of the lien may pro-
ceed upon his mortgage or lien, and if there be a separate obliga-
tion in writing to pay the same secured by said mortgage or lien,
he may bring suit upon such separate promise. When he proceeds
on the mortgage, if there be a specific agreement therein contained
for the payment of a certain sum, or there is a separate obligation
for said sum, in addition to a decree of sale of mortgaged prop-
erty, judgment shall be rendered for the amount due upon said
mortgage or other instrument, the payment of which is secured
thereby. The order of sale shall direct the sale of the mortgaged
property, and if the proceeds of said sale be insufficient under
such order of sale, the sheriff is authorized to levy upon and sell
other property of the mortgage debtor, not exempt from execu-
tion, for the sum remaining unsatisfied.

In all actions of foreclosure, where there is a decree for the
sale of the mortgaged premises or property, and a judgment over
for any deficiency remaining unsatisfied after applying the pro-
ceeds of the sale of mortgaged property, further levy and sales
upon other property of the judgment debtor may be made under
the same order of sale. In such sales it shall only be necessary
to advertise notice for two weeks in a newspaper published in the
district or county where the said property is located, and if there
be no newspaper published therein, then in the most convenient
newspaper having a circulation in such county. Nothing here-
in contained shall prevent the issue of an execution, as in ordi-
nary cases, either for the whole mortgage debt, or such deficiency,

1 Gen. Laws 1877, pp. 128, 129, §§ 622, 2 See 2 Jones on Mortgages, § 1363.
623, 625.
578
FORECLOSURE AND REDEMPTION. [8$ 756, 757.

after applying the proceeds of the sale of mortgaged property.
When, however, an execution shall issue upon a judgment re- -
covered for a debt secured by mortgage, a schedule of the mort-
gaged property, real or personal, shall be indorsed upon such an
execution, and the sale thereof under such order shall foreclose
the equity of redemption or the mortgage therein. Judgments
over for any deficiency remaining unsatisfied after application of
the proceeds of sale of mortgaged property, either real or per-
sonal, shall be similar in all respects to other judgments for the
recovery of money, and may be made a lien upon the property
of a judgment debtor as other judgments, and the collection
thereof enforced in the same manner.

756. Wisconsin. — There are no statutory provisions appli-
cable to the foreclosure of chattel mortgages. The mortgagee
upon default is invested with the entire right in the chattels and
may reduce them to possession. He is not bound to make a sale
in order to perfect his claim. He is not bound to foreclose the
mortgage by sale, although the mortgage contains a stipulation
that he shall pay over to the mortgagor the proceeds of the sale
after satisfying the mortgage debt.1_ If he does sell under a power
contained in the mortgage he is accountable to the mortgagor for
the surplus, whether the mortgage provide for the payment over
of such surplus or not.?

Mortgages of chattels are usually made with powers of sale. It
would seem that such mortgages, when not containing such powers,
might be foreclosed by action in the nature of a bill in equity.

757. Wyoming Territory. — Every mortgage or conveyance,
containing and’ giving to the mortgagee or any other person a
power to sell the property described therein, upon default being
made in any condition of such mortgage or conveyance, may be
foreclosed in the cases and in manner hereinafters pecified. To
entitle any person to foreclose such mortgage or conveyance, it
shall be requisite: First. That some default in a condition of
such mortgage or conveyance shall have occurred, by which the
power to sell became operative. Second. That no suit or proceed-
ing shall have been instituted at law to recover the debt then re-

1 Nichols v. Webster, 1 Chand. 203; S. 2 Flanders v. Thomas, 12 Wis. 410,
C. 2 Pinn. 234, oe : ® Laws 1877, p. 21, §§ 8-13.
579
§ T57.] STATUTORY PROVISIONS, ETC.

maining secured by such mortgage or conveyance or any part
thereof, or if any suit or proceeding has been instituted that the
same has been discontinued, or that an execution upon the judg-
ment rendered thereon has been returned unsatisfied, in whole or
in part. Third. That such mortgage or conveyance, containing
the power of sale, has been duly recorded, as required by this act.

Notice that such mortgage or conveyance will be foreclosed by
a sale of the mortgaged property, or some part thereof, shall be
given as follows: By advertisement, published in some newspaper
printed in the county in which such sale is to take place, or in case
no newspapers are printed therein, by posting up notices in at least
three public places in said county, one of which shall be at the
place designated in said notices for the sale to be had, and such
notices shall be given twenty days prior to the’ day of sale. Every
such notice shall specify: First. The date of the mortgage or
conveyance, and when recorded. Second. The names of the mort-
gagor and mortgagee, and the assignee of the mortgagee if any.
Third. The amount claimed to be due thereon at the time of the
first publication or posting of such notice. Fourth. A description
of the mortgaged property, conforming substantially with that con-
tained in the mortgage. Fifth. The time and place of sale.

Such sale may be postponed from time to time, by inserting a
notice of such postponement as soon as practicable in the news-
paper in which the original advertisement was published, and
continuing such publication until the time to which the sale shall
be postponed ; or in case no newspaper is published in the county
in which such sale is to be had, by posting a notice of such ad-
journment in some conspicuous place at the place designated in
the original notice posted for the sale to be had. Such sale shall
be at public auction in the daytime, between the hours of ten A.
M. and four P. M., in the county where the mortgage was first
recorded, or in any county where the property may have been
removed by consent of parties, and in which the mortgage was
duly recorded, and in view of said property.

The mortgagee, his assignees, and his or their legal represen-
tatives, may fairly and in good faith purchase any of the mort-
gaged property offered at such sale.

When a mortgage or conveyance shall have been foreclosed as
herein provided, any and all rights of equity of redemption, which
the mortgagor may have had, shall become extinguished.

580
CHAPTER XVIII.

FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

I. Personal remedy upon the mortgage
debt, 758-765.
IL. When the right to foreclose arises,
766-770.
When the right to foreclose is barred,
771, 772.

In.

the mortgagee without formal fore-
closure, 773-775.

V. Foreclosure by suit in equity, 776-
788,

VI. Power of sale mortgages and trust
deeds, 789-821.

IV. Sale of the mortgaged property by

I. Personal Remedy upon the Mortgage Debt.

758. A mortgagee of chattels may pursue all his rem-
edies concurrently.1 He has the same right that a mortgagee
of real property has to pursue all his remedies at the same time.
He may maintain a suit on the mortgage note, and at the same
time carry on proceedings to foreclose the mortgage.”

A creditor may hold any number of collaterals, and so long as
the debt is unpaid he may avail himself of any or all of them.

A mortgagee may pursue his remedy upon the mortgage at
law and in equity at the same time. The pendency of a bill to
foreclose a mortgage is no bar to an action of replevin or deti-
nue for the property, or to trover for a conversion of it.*

Under a mortgage which provides not only for the reimburse-
ment of the. expenses of foreclosure, but also those incurred by
the mortgagee in obtaining possession of the property, he is enti-
tled to be reimbursed all necessary expenditures made by him to
regain possession by replevin.®

But without the aid of such a provision if the mortgagee first

1 See 2 Jones on Mortgages, §§ 1215-
1219,

2 Burtis v. Bradford, 122 Mass. 129;
Pettibone v. Stevens, 15 Conn. 19; Thur-
ber v. Jewett, 3 Mich. 295; Johnson v.
Marphy,17 Tex. 216 ; Satterwhite v. Ken-

nedy, 3 Strobh. (S. C.) 457; Downing »v.
Palmateer, 1 Mon. (Ky.) 64.

3 Ayres v. Wattson, 57 Pa. St. 360;
Chapman »v. Clough, 6 Vt. 123.

4 Jones v. Henry, 3 Litt. (Ky.) 47;
Ambler v. Warwick, 1 Leigh (Va.), 195.

5 Morris v. Tillson, 81 Ill. 607, 621.

581
§§ 759-761.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

brings a suit at law upon the mortgage debt and afterwards fore-
closes in equity, the costs of the suit at law become a part of the
mortgage debt.1 So if the mortgagor brings a suit to restrain
the mortgagee from foreclosing, and judgment is rendered for the
defendant in such suit upon his answer, treating this as a suit to
foreclose and determine the amount due on the mortgage debt,
the costs become a lien upon the mortgaged property, as in ordi-
nary cases of foreclosure.?

759. The mortgagee may enforce the personal obligation
of the debtor, although the mortgage security prove to be de-
feated by a title paramount; or if the mortgage prove to be fraud-
ulent as to creditors, and be set aside by the mortgagor’s assignee
in insolvency.® .

But if there be no separate obligation, and no covenant or
agreement in the mortgage to pay the sum secured, and no recital
or declaration of indebtedness from the mortgagor to the mort-
gagee, there is no personal liability, and no action will lie by the
mortgagee upon the mortgage to recover the debt secured.‘

760. That a mortgage is fraudulent and void as against
creditors does not affect the right of the mortgagee to en-.
force it against the mortgagor. A debtor having made such a
mortgage of his household furniture, went into bankruptcy, and
a part of the furniture, exempt by law from being taken by his
creditors, was separated from the rest by an agreement to which
the mortgagee was a party, and duly set off to the bankrupt by the
assignee. ‘The mortgage having been decreed invalid as against
the creditors, the rest of the furniture was disposed of by the as-
signee. The mortgagee not having waived his mortgage by prov-
ing his debt in the bankruptcy proceedings was held to be entitled
to the furniture set off to the debtor.®

761. An acknowledgment of indebtedness in a mortgage is
sufficient to sustain an action for the mortgage debt, and the

1 Pettibone v. Stevens, 15 Conn. 19. foreclosure, see 2 Jones on Mortgages, §§

2 Reiner v. Schlitz, 5 N. W. Rep. 4938. 1220-1228. ra

8 Whitney v. Willard, 13 Gray (Mass.), 4 Weed v. Covill, 14 Barb. (N. Y.) 242. ¢\
203. 5 Tuesley v. Robinson, 103 Mass. 558.

As to personal remedies before and after

582
PERSONAL REMEDY UPON MORTGAGE DEBT. _[§§ 762, 768.

‘ creditor is not bound in the first instance to resort to the mort-
gage security... The acceptance of a mortgage of chattels to
secure the purchase money of the same does not destroy the right
of action to recover the purchase money, and it is immaterial that
no note or other personal obligation was taken for the price.?
But an action of debt will not lie to recover a sum of money se-
cured by a chattel mortgage, unless the instrument contains an
express agreement to pay the sum, or a distinct acknowledg-
ment of an existing debt. Thus, if there be no express covenant
to pay the money, and no acknowledgment except that the in-
strument is executed for the purpose of securing the payment of
a certain sum, although there be a proviso that the instrument
should cease and be void on payment of that sum, and in case of
default the mortgagee is authorized ‘to sell the goods and apply
the proceeds in payment, rendering the overplus to the mortgagor,
no action of flebt will lie upon the instrument.?

762. A mortgagee may release his security by mortgage
without affecting his personal claim for the debt. Where a
partnership has been dissolved, and a new firm has agreed with
retiring members to assume the partnership debts, and has accord-
ingly secured a creditor by mortgage, the mortgagee may, with
the assent of the retiring partners, release the mortgage without
impairing his rights against all the members of the old firm, al-
though he had notice of the agreement of the new firm to assume
the debts of the old, and his mortgage was ample security for the
debt to him.*

763. It is competent for a mortgagee to absolve his debtor
from personal obligation, and agree to have recourse to the secu-
rity alone for payment.®

But a waiver of the mortgage security is not necessarily or
usually a waiver of the debt secured. A mortgagee is not, in the
absence of fraud, precluded from recovering upon the mortgage
debt, because he permits the property to be sold upon an inferior
claim or lien.®

1 Elder v. Rouse, 15 Wend. (N. Y.) 218. 4 Rawson v. Taylor, 30 Ohio St. 389.
2 Sterling v. Rogers, 25 Wend. (N. Y.) 5 Ball v. Wyeth, 99 Mass. 338.
658. 6 Jones v. Turck, 33 Iowa, 246.
8 Culver v. Sisson, 3N. Y. 264.
583
§§ 764-766.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

764. A mortgagee is not confined to the special security
taken, but in the absence of any agreement to the contrary may
attach or levy execution upon other property of the debtor.

If, however, a mortgagee attach the mortgaged property, he
waives his claim under the mortgage; but he can make such at-
tachment without violating any rights of the mortgagor” He
may make such attachment even after he has taken possession of
the property by virtue of his mortgage. And so if the mort-
gagee causes the mortgaged goods to be sold upon execution he
will be considered as having abandoned his mortgage.* If, how-
ever, he himself purchase the mortgaged property upon such exe-
cution sale, he will generally be considered as holding the prop-
erty under the mortgage, and subject to redemption.®

765. A mortgagee is under no obligation to resort to a
surety upon the mortgage note; and if the surety has also given
a mortgage of his property as additional security, no obligation is
imposed upon the mortgagee to resort to the surety or his mort-
gage for the relief of the general creditors of the principal debtor.®

Il. When the Right to Foreclose arises.

766. The right to foreclose usually arises upon the breach
of any one of the conditions named in the mortgage, whether
the condition be to pay the principal sum secured, or interest upon
it, or to keep the property insured, or to do any other act.’ Of
course the right might by express provision be made to arise only
upon a breach of all or any number of Ake covenants contained in
the mortgage. Where covenants to keep up the stock and to
insure it were united, and it was provided that “a breach of
these two covenants shall cause the whole sum secured to become
due and payable,” but the defeasance expressly authorized a fore-
closure on a breach of either, it was held, construing the mortgage

1 Cornwall v. Gould, 4 Pick. (Mass.) * Kimball v. Marshall, 8 N. H. 291;
444; Beckwith ». Sibley, 11 Ib. 482; Swett v. Brown, 5 Pick. (Mass.) 178.
Whitwell v. Brigham, 19 Ib. 117; Taylor 5 Dabney v. Green, 4 Hen. & M. (Va.)
v. Cheever, 6 Gray, 146. 101.

2 Buck v. Ingersoll, 11 Met. (Mass.) 5 Thompson v. Spittle, 102 Mass. 207.
226; Whitney v. Farrar, 51 Me. 418. See 7 Leland v. Collver, 34 Mich. 418; Cas-
§ 565. sel v. Cassel, 26 Ind. 90.

8 Libby v. Cushman, 29 Me. 429. See, in general on this subject, 2 Jones

on Mortgages, §§ 1174-1191.
584
WHEN THE RIGHT TO FORECLOSE ARISES. [§§ 767, 768.

as a whole, that a double breach was not essential to the right to
foreclose.!

767. But whether upon a default in payment of a first in-
stalment, the mortgagee can sell the entire property covered
by the mortgage is a different question, and one upon which there
is a difference of opinion. In some states it is provided by statute
that only so much of the mortgaged property shall be sold as
shall be sufficient to satisfy the instalment upon which default has
been made, in case the property is capable of division without
injury; and the courts in some states enforce the same rule in
the absence of any legislative enactment of it.

On the other hand, other courts allow a sale of the entire prop-
erty upon a default in the payment of any instalment, though
other instalments be not then due and payable; and powers of
sale usually contain a provision authorizing the sale of the entire
property upon any default.

Under a power in a mortgage of a vessel to secure the payment
of a sum in instalments, “ to take possession of and sell her in case
the amount of the loan and interest, or any part thereof, shall re-
main due and unpaid, after the time named for the payment
thereof,” the mortgagee may take possession of and sell her upon
a failure to pay the first instalment, and may apply the proceeds
of the sale so made towards the whole of the debt, including
that which has not become payable at the time of the sale.2_ No
action for conversion would lie against the mortgagee in such
case, although on taking possession he made no claim to take the
vessel under the mortgage, but said that he took her to prevent
the owner running off, and although the sale was not in accord-
ance with the mortgage deed. By the terms of the mortgage, the
mortgagee having the right to take possession of the vessel, he
cannot be charged as for a wrongful conversion of it while the
mortgage remains unredeemed.?

768. The prevailing rule is, that the mortgagee may sell
the entire mortgaged property upon default in payment of
the first instalment, whether the mortgage contains a special
provision to this effect or not; for even when such sale is not

1 Leland v. Collver, 34 Mich. 418. 8 Murray v. Erskine, supra.

° Murray v. Erskine, 109 Mass. 597.
. 585
§§ 769, 770.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

specially provided for, the entire mortgaged property, though
severable, may be sold upon the first default, because the mort-
gagee’s title then becomes absolute. The right to take possession
of the property and sell it upon a default in payment of any part
of the sum secured follows as an incident to the relation of the
parties.1

When there has been a sale of the mortgaged property upon a
breach of the condition of a mortgage in the payment of interest,
or of one instalment of the principal debt, the mortgagee has the
right to retain the proceeds to meet the instalments which have
not matured.?

But it is optional with a mortgagee to take possession upon de-
fault in payment of a first instalment, or to await the maturity of
the entire debt. A provision in the mortgage authorizing the
mortgagee to take possession upon any default imposes no obliga-
tion to do so.3

769. But an exceptional rule in this respect prevails in
Michigan, for in that state a chattel mortgage is only a security,
and the mortgagee has no absolute title upon default. Upon de-
fault in payment of a first instalment of a debt, the mortgagee
can take possession of all the mortgaged property and sell enough
to pay the amount due with interest and costs; but if the prop-
erty be such that it may be divided without injury, the mort-
gagee can sell only so much as may be necessary to make good
the instalment then due. By statute in this state the entire
property may be sold upon a default under a real estate mortgage,
and the proceeds may be applied to the instalments not then due ;
but there is no such statute applicable to chattel mortgages; and
there is no way of doing this upon a sale of mortgaged chattels
for default in one instalment of the debt, however advantageous
this course might be to either or both the parties unless they have
in the mortgage or otherwise agreed that this may be done.+

770. A mortgage which specifies no time of payment is due
immediately, and may be foreclosed without a previous demand

1 Bragelman v. Daue, 69 N. Y. 69; bour v. White, 37 Ill. 164; Cleaves ov.
McConnell v. Scott, 67 Ill. 274. Herbert, 61 Ill. 126.
2 Flanders v. Barstow, 18 Me. 357. 4 Brink v. Freoff, 40 Mich. 610; S.C.
8 Chapin v. Whitsett, 3 Col. 315; Bar- again before the court, 6 N. W. Rep. 94.
586
WHEN THE RIGHT TO FORECLOSE IS BARRED. [§ 771.

of payment.! A mortgage given to secure a note payable on de-
mand is payable immediately, and may be foreclosed without a
previous demand; and parol evidence is not admissible to show
that the mortgage and note were given as collateral security, to
indemnify the mortgagee against certain liabilities for the mort-
gagor, which had not matured when notice to foreclose was given.?
A foreclosure suit is a sufficient demand of payment; and so is a
notice of intention to foreclose the mortgage given in pursuance
of a statute which provides for a foreclosure by means of such
notice and the lapse of a certain time thereafter.?

If a mortgage be given to secure the performance of any act or
contract other than the payment of money, and no time of per-
formance is specified, the omission does not vitiate the contract,
but the law will require the performance of it within a reasonable
time.*

A provision in a trust deed, that upon default, or as soon
thereafter as requested by the cestut que trust, the trustee shall
sell the property, does not have the effect of postponing the law
day named in the deed until such request be made, but the trus-
tee after such default may sell at his discretion.®

III. When the Right to Foreclose is barred.

771. Statutes of limitation are strictly applicable only to
proceedings at law, yet by analogy they are adopted in courts
of equity as fixing the time within which rights may be there
enforced. Following this analogy, the right of a mortgagee to
foreclose a mortgage of real property is presumed to be barred
after the lapse of such a period as is prescribed for enforcing a
right of entry upon lands. Following the same analogy, the right
to foreclose a chattel mortgage is barred after the lapse of the
period within which an action at law may be brought for the pos- .
session of the property.’

Under a statute of New Hampshire actions upon notes secured
by mortgage may be brought so long as the plaintiff is entitled

1 Dikeman v. Puckhafer, 1 Abb. (N. 8 Goodrich v. Willard, 2 Gray (Mass.),

Y.) Pr. N. S. 32; Howland v. Willett, 3 203.
Sandf. (N. Y.) 607; Farrellv. Bean, 10 4 Byram v. Gordon, 11 Mich. 531.

Md. 217. 5 Brock v. Headen, 13 Ala. 370.
2 Southwick v. Hapgood, 10 Cush. & 9 Jones on Mortgages, § 1192.
(Mass.) 119. 7 Ewell v. Tidwell, 20 Ark. 136; Sul-

livan v. Hadley, 16 Ark. 129.
587
§§ 772, 778.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

to bring an action upon the mortgage.! This statute applies to
mortgages of personal property as well as to those of real estate,
so that if the mortgage be under seal an action upon the mort-
gage note may be brought within twenty years after the cause of
action accrued.”

In North Carolina it is presumed that a mortgagee of chattels
has abandoned the right to foreclose his mortgage when he has
permitted the mortgagor to remain in possession more than ten
years without making any payment of interest or of principal.

772. The statute of limitations does not begin to run
against a mortgagee until a forfeiture has occurred. If, for
instance, a mortgagor has, by the terms of the mortgage, his
whole lifetime within which to pay the debt, the mortgage does
not become forfeited until the mortgagor’s death, and the statute
does not begin to run against the mortgagee until that time.t
But the fact that the mortgage contains a provision that the mort-
gagor may remain in possession until the debt is paid, and this is
payable ata fixed time, does not exempt the mortgage from the
operation of the statute of limitations, but this will begin to run
from the time of the forfeiture.

Although the debt secured has become barred by the statute,
the remedy upon the mortgage is not necessarily barred ; but this
continues until a suit or bill as to the property is barred under
the statute applicable to that.

IV. Sale of the Mortgaged Property by the Mortgagee without
Formal Foreclosure. .

773, A mortgagee is not bound to foreclose his mortgage
in any way. He may, as has already been noticed,’ after acquir-
ing the absolute title to the mortgaged chattels by forfeiture and
taking possession of them, retain the property; and if the mort-
gagor has any right to redeem he must assert it in equity.8 The

1 G. S. 1867, c. 202, §§ 1,5; G. L. 1878, Crain v. Paine, 4 Cush. (Mass.) 483. See

ce. 221, §§ 1, 5. 2 Jones on Mortgages, § 1204.
2 Demerritt v. Batchelder, 28 N. H. 7 See § 707.
533. 8 Olcott v. Tioga R. R. Co. 40 Barb.

8 Blake v. Lane, 5 Jones (N.C.) Eq. 412, (N. Y.) 179; Hulsen v. Walter, 34 How.
4 Joyner v. Vincent, 4 Dev. & B. (N. (N. Y.) Pr. 885; Freeman v. Freeman, 17

C.) 512. N. J. Eq. 44; Bradley v. Redmond, 42
5 Byrd v. McDaniel, 33 Ala. 18. Towa, 452; Sheppard v. Earles, 13 Hun,
6 Almy v. Wilbur, 2 Wood. & M.371; (N. Y.) 651.

588
SALE WITHOUT FORMAL FORECLOSURE. [§ 773.

mortgagee’s taking and retaining possession in such case consti-
tutes payment of the mortgage debt.! If the property be of in-
sufficient value to satisfy the debt, and he desires to recover a
deficiency, he must sell the property either under foreclosure pro-
ceedings or by virtue of a power in the mortgage, or possibly by
private sale at a fair price. And, on the other hand, if the prop-
erty be of greater value than the amount of the mortgage debt,
and the mortgagee retain the property without sale, the mort-
gagor has no legal claim for the excess of. such value.”

The mortgagee, after taking possession, must sell the property
by virtue of his title, or under foreclosure proceedings, within a
reasonable time, or he will be deemed to have taken the property
to the extent of its value at that time in satisfaction of the debt;
and especially if the property be of a perishable nature, like a
ship or a horse, it would seem that the mortgagee can have no
right to retain it for an indefinite period after condition broken,
and when the property has diminished in value by use or age,
sell it, and demand of the mortgagor payment of’ the deficiency.

Even in Massachusetts, where a mode of foreclosure is pre-
scribed by statute, a sale of the entire property by the mortgagee
at private sale, although not authorized by any power in the
mortgage, is not a conversion for which the mortgagor or any one
claiming under him can maintain an action. A mortgagee has
the legal title to the property, and also the right of possession,
unless this is expressly or by necessary implication given to the

1 Case v. Boughton, 11 Wend. (N. Y.)
106 ; Stoddard v. Denison, 38 How. (N.
Y.) Pr. 296; S. C. 7 Abb. Pr. N.S. 309;
Freeman v. Freeman, 17 N. J. Eq. 44; In
re Haake, 2 Sawyer, 231; S. C. 7 N.
Bank Reg. 61.

% Olcott v. Tioga R. R. Co. 40 Barb.
(N. Y.) 179.

8 Inre Haake, supra.

4 Landon v. Emmons, 97 Mass. 37.
In an earlier case (Spaulding v. Barnes, 4
Gray (Mass.), 330), a decision apparently
in conflict with the above decision was
made. The reasons of decision are not
fully given, and the sale by the mortgagee,
against whom the mortgagor was allowed
to maintain an action in the nature of
trover, was of a part only of the mortgaged

property, which might perhaps be held
to be inconsistent with the mortgagor’s
rights of redemption. In Landon v. Em-
mons the court say: “ Whether a sale by
the mortgagee of part only of the mort-
gaged property would amount to a con-
version, give the mortgagor an immediate
right of possession, and enable him to
maintain an action in the nature of trover,
is a question which does not arise in the
present case. It is sufficient to say that
such an action by the mortgagor, because
of a sale of the entire property by a mort-
gagee who is entitled to the possession,
cannot be supported consistently with the
authorities already cited, or with princi-
ple.”

589
§§ 774, 775.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

mortgagor. Having title and possession he necessarily has the
right of disposal, subject only to the mortgagor’s right of redemp-
tion, and the mortgagor, having neither the title nor the right of
possession, cannot maintain any action at law for the recovery of
the property or of its value.

774. The rule is otherwise in Michigan where a chattel
mortgage is regarded as giving the mortgagee a mere lien upon
the property, and not as conferring a title upon him. A sale of
the mortgaged property by him after taking possession for con-
dition broken otherwise than by foreclosure sale, is a conversion
of the property. And so if the mortgagee, after condition broken,
takes possession of a part of the property, and, retaining the same,
assigns the mortgage to a third person, it is said that he may well
be held to have converted the same to his own use, and tliat the
value of it should be applied in payment of the mortgage. A
mere taking possession of the property alone would not have this
effect, as the mortgagee has a right to take and retain possession
for the purpose of making sale of the property in accordance
with the terms of the mortgage.}

775. A sale of the mortgaged property after foreclosure by
consent of the parties is equivalent to a formal foreclosure of
the equity of redemption, and neither the mortgagor nor any
creditor of his having no lien upon the property can assail the title
of the purchaser.”

The mortgage lien is waived by an agreement between several
mortgagees and the mortgagor, that the mortgaged property with
other property should be sold at auction, and that the proceeds
should be applied in a certain way to the payment of the mort-
gage debts. For the purposes of the sale the mortgage security
upon the property is waived, and the purchaser takes a good title
free from the mortgage liens. There is sufficient consideration
to support the agreement on the part of a prior mortgagee in
the necessary waiver of the mortgage security by the subsequent
mortgagee. To permit the prior mortgagee afterwards to insist
that there was no sufficient consideration to support his promise

1 Brong v. Brown (Mich. Oct. 30, 1879), 2 Talman v. Smith, 39 Barb. (N. Y.)
3.N. W. Rep. 291. 390.
590
FORECLOSURE BY SUIT IN EQUITY. [§§ 776, 777.

would work an injury to the subsequent mortgagee which would
be a sufficient consideration for his promise.}

V. Foreclosure by Suit in Equity.

776. A bill in equity is the proper and ordinary mode of
foreclosing a chattel mortgage, except in case some other mode
is provided by statute.? The foreclosure of mortgages is one of
the matters of which all courts having full equity powers, unre-
stricted by statute, have general jurisdiction. This jurisdiction is
the same as regards chattel mortgages that it is in case of mort-
gages of real property. The form of the bill and the mode of
proceeding is substantially the same, whether the subject matter
of the mortgage be personal property or real estate.?

777. That the mortgage contains a power of sale does not
preclude a foreclosure in equity.4 In a recent case in New
York, where a foreclosure of a chattel mortgage by action is very
unusual, the Court of Appeals asserted the right to proceed in
equity for this purpose.6 ‘ That an action in equity lies to fore-
close a chattel mortgage,” said Judge Andrews, “admits, we
think, of no doubt. The remedy by sale under the power, with-
out resort to judicial proceedings, is in most cases a more speedy

1 Bradshaw v. McLoughlin, 39 Mich. 480. J., said: “It was settled that » power

2 Charter v. Stevens, 3 Den. (N. Y.) 33; of sale in a mortgage or deed of trust does
Hall v. Bellows, 11 N. J. Eq. 333; Free- notin any way affect the jurisdiction of a
man v. Freeman, 17 N. J. Kq. 44; Dupuy court of chancery to enforce the rights of
v. Gibson, 36 Ill. 197; Wylder v. Crane, parties thereto, nor abridge in the slightest
53 Ill. 490; Hammers v. Dole, 61 Ill. 307; degree the right of a person secured by
Aldrich v. Goodell, 75 Ill. 452; Morris v. such instrument to resort to a court of
Tillson, 81 Ill. 607; Packard v. Kingman, chancery, as he might do if no such pro-
11 Iowa, 219; Broadhead v. McKay, 46 vision had been made for enforcing the se-
Ind. 595; Blakemore v. Taber, 22 Ind. curity without the aid of a court. All the
466; Brown v. Greer, 13 Ga. 285. powers conferred by such an instrument

3 For those reasons, and because the are additional to what the law grants, and
author has quite fully treated of foreclos-, neither affect the jurisdiction of a court
ure by equitable suit in his treatise on of chancery nor the option the holder has
Mortgages, §§ 1443-1450, he has deemed to invoke its jurisdiction as if the instru-
it unnecessary to treat of the subject here ment contained no such provision. A
except in the briefest manner, merely to power to sell, or to appoint a trustee, or
cite the cases which have arisen upon the like, enlarges the right of the person
chattel mortgages. to whom it is given, but does not dimin-

4 Packard v. Kingman, supra; Green v. ish it.”
Gaston, 56 Miss. 748; McDonald v. Vin- 5 Briggs v. Oliver, 68 N. Y. 336.
son, 56 Miss. 497. In this case Campbell,

591
§ 778.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

and effectual means of extinguishing the equity of redemption,
and has to a great extent superseded a resort to an action of fore-
closure. But the right to foreclosure by action has not been
taken away. In case of a pledge, the right of a pledgee to come
into equity to obtain a decree for the sale of the pledge exists, al-
though a valid sale may be made without judicial action or de-
cree. The same rule applies in respect to a mortgage of chat-
tels.” Neither does the fact, that the mortgagee may sue at law
for the recovery of the mortgaged property, preclude a foreclos-
ure in equity.) The remedy at law is inadequate, because it
can only settle the right of possession.?

778. A power of sale in a mortgage is a cumulative rem-
edy, and does not in any way interfere with the mortgagee’s right
to take possession upon default, or before default, if the mortgage
contain no clause expressly authorizing the mortgagor to retain
possession until default.?

Under a statute which provides that when the parties have pro-
vided in the mortgage the manner in which it shall be foreclosed,
it shall not be foreclosed otherwise,* either party may insist
that the foreclosure shall be in the manner provided; but the
party insisting upon such foreclosure must comply with the mort-
gage stipulation on his own part. Therefore, ina mortgage which
provided that upon default the mortgagor should deliver the
property to the mortgagee, who might sell the property accord-
ing to the stipulations thereof, it was held if the mortgagor in-
sisted that the foreclosure should be in the manner stipulated, it
was his duty in the first place to deliver possession to the mort-
gagee so as to enable him to sell it. The mortgagor could not
refuse to give up the goods, and at the same time insist upon a
sale under the power. Having refused to fulfil the agreement on
his part, or having put it out of his power to fulfil it by transfer-
ring the property to another, the mortgagee may foreclose by a
bill in equity.®

779. A bill in equity is proper in case of successive in-
cumbrances, although the mortgage contain a power of sale and

1 Marx v. Davis, 56 Miss. 745. 3 Rich v. Milk, 20 Barb. (N. Y.) 616.
2 Long Dock Co. v. Mallery,12 N. J, _* Gen. Laws of Oregon, 1872, p. 688,
Kq. 93. ch. 39, § 2.

592 & Jacobs v. McCalley, 8 Oregon, 124.
FORECLOSURE BY SUIT IN EQUITY. [§ 779.

although the bill alleges that all the mortgages and liens except

‘that of the complainant are void; for such an allegation would
necessarily compel the court to determine the validity of the dif-
ferent liens; and if this allegation should be proved, it would be
inequitable then to dismiss the bill and remit the complainant to
his remedy at law.) ‘That an action in equity lies to foreclose
a chattel mortgage,” says the Court of Appeals of New York,?
“admits, we think, of no doubt. The remedy by sale under the
power without resort to judicial proceedings is, in most cases, a
more speedy and effectual means of extinguishing the equity of
redemption, and has to a great extent superseded a resort to an
action of foreclosure. But the right to foreclose by action has
not been taken away. In the case of a pledge, the right of a
pledgee to come into equity to obtain a decree for the sale of the
pledge exists, although a valid sale may be made without judicial
action or decree. The same rule applies in respect to a mortgage
of chattels.”

If there are successive liens or incumbrances, it is eminently
proper and promotive of justice that the mortgage should be fore-
closed in a court of equity, where the accounts of all the parties
in interest can be readily adjusted, and the trust fund equitably
distributed among all the claimants. But a bill in equity cannot
be maintained in every case. If the amount due rests in simple
computation, and there are no other claims or other mortgages
or liens, it is not necessary to foreclose by suit in equity, as the
remedy by notice and sale is sufficient, and, therefore, a court
of equity might in such a case withhold its aid.®

Other reasons for resorting to equity instead of exercising the
power of sale may exist; such, for instance, as the impossibility of
giving the notices of sale prescribed by the mortgage, in conse-
quence of a removal of the property or for other cause.*

It is a ground for maintaining a bill in equity, to foreclose a
mortgage instead of selling under a power, that the mortgage se-
cures sundry creditors whose shares or interests are not defined,
and could only be ascertained by a court of equity.®

1 Hammers v. Dole, 61 Ill. 307. 85; Bryan v. Robert, 1 Strobh. (S. C.)

2 Briggs v. Oliver, 68 N. Y. 336. Kq. 334.

® Dupuy v. Gibson, 36 Ill. 197; Ham- 4 Sullivan v. Hadley, 16 Ark. 129.
mers v. Dole, supra; Ricks v. Pinson, 21 5 Norton v. Ladd, 22 Conn. 203.

Tex. 507; Hannah v. Carrington, 18 Ark.
38 593
§§ 780-782.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

780. A mortgage to secure the payment of a debt in spe-
cific articles should be foreclosed in equity, because it cannot
be foreclosed by sale under a power until the amount due under
the mortgage has been liquidated. But if the mortgage itself
provides that the mortgagee may upon sale retain a specified sum,
the damages are liquidated and the mortgage may be foreclosed by
sale under the power.! And so if there have been mutual deal-
ings between the parties, and several mortgages have been given,
and the balance secured by mortgage is in dispute, a sale adver-
tised under a power may be enjoined until the balance due the
mortgagee is ascertained.?

781. Foreclosure in equity cannot be had in states where
a statutory mode of foreclosure is provided, and where the
courts have not general jurisdiction in equity, but their jurisdic-
tion is created and limited by statute. Such is the case in Massa-
chusetts. In case the mortgagee has an adequate and complete
remedy by the statutory mode of procedure, he cannot resort to
equity to foreclose his mortgage. Whether a bill to foreclose a
chattel mortgage in any case can be sustained in Massachusetts
is a question which the Supreme Court of the state in a recent
case left undecided, because in the case before the court it was
declared that the remedy furnished by the statute was adequate.3

782. Where the suit should be brought.— A suit to fore-
close a chattel mortgage should be brought in a court having
jurisdiction of the defendant.t It is a transitory and not a local
"action, and it is immaterial where the property may be.

When the property is within the jurisdiction of the court, but
has been taken beyond such jurisdiction by another person who
refuses to surrender it, the court may, instead of ordering a sale
of the property, decree that the person in possession shall pay its
value. This was done in a case where the mortgage was of a
part interest in a portable engine, which the other joint owner
had removed to another state for the purpose of defeating the
rights of the mortgagee.®

1 Jackson v. Turner, 7 Wend. (N. Y.) 8 Boston & Fairhaven Iron Works v.
458, Montague, 108 Mass. 248,
2 Purnell v. Vaughan, 77 N. C. 268, * Brown v. Greer, 13 Ga. 285,
® Gaar v. Hard, 92 Ill. 315.
594
FORECLOSURE BY SUIT IN EQUITY. [§§ 783-786.

783. Parties to the bill.1— Every person secured by a mort-
gage should be made a party to a bill to foreclose it, although he
be not one of the mortgagees.2 A person entitled to a part only
of the mortgage money cannot file a bill to foreclose a mortgage
as to his own part. Every beneficiary should be made a party as
well as the trustee.?

The mortgagor and every other person having an interest in the
mortgaged property should be made defendants to the bill, so
that their claims and equities in the property may be cut off.4
Junior mortgagees may be made parties to the suit upon their
own application. A purchaser of the mortgaged property, or of
any part of it, from the mortgagor, should be made a party de-
fendant with the latter. Of course the personal representative of
a deceased mortgagee should bring the bill.”

784. No demand by the mortgagee is necessary before
bringing a bill to foreclose a mortgage. Although a junior mort-
gagee be joined in the suit in order to compel him to account
for a portion of the property which he had converted to his own
use, no demand upon him for an accounting is necessary.®

785. A personal decree against the mortgagor cannot be had
unless prayed for in the bill; and if the mortgagee fail to estab-
lish his right against the property, his only remedy is by suit at
law upon the mortgage debt.®

In an action to foreclose a mortgage and to obtain a personal
judgment for the debt, a subsequent purchaser of the mortgaged
property cannot avail himself of a demand in favor of the mort-
gagor against the mortgagee as a counter-claim.”

786. The measure of damages for the refusal of the mort-
gagor to surrender the property upon a-decree to that effect,
ina suit in equity to foreclose a mortgage, is the value of the
property at the time of the failure to obey the decree. The dam-

1 See 2 Jones on Mortgages, §§ 1368- 7 Harrison v. Harrison, 1 Call (Va.),
1442. 419.

2 Chapman v. Hunt, 14 N. J. Eq. 149. 8 Woodward v. Wilcox, 27 Ind. 207.

8 Chapman v. Hunt, supra. 9 Wylder v. Crane, 53 Ill. 490.

4 Greither v. Alexander, 15 Iowa, 470. 10 Beers v. Waterbury, 8 Bosw. (N. Y.)
5 Parrott v. Hughes, 10 Iowa, 459. 396.

§ Trittipo v. Edwards, 35 Ind. 467.
595
§§ 787, 788.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

ages are given in place of the specific property. In this respect
the measure of damages is different from that given in an action
of trover or trespass for the conversion of the mortgaged prop-
erty, for the injury consists in the former case in not giving up
the property when called for by the decree, while in the latter
case it consists in unlawfully taking the property at some former
time and not paying its value at that time.} .

A decree foreclosing a chattel mortgage, so long as the prop-
erty has not been seized or sold under it, does ‘not affect the
rights of third persons in the goods.”

787. The right to have a receiver of the property appointed
pending a foreclosure suit arises under very much the same cir-
cumstances that authorize the appointment of a receiver in a suit
to foreclose a mortgage of real property.2 The general rule is
that a receiver may be appointed, although the mortgagee has
the legal title and might enforce his possession at law, whenever
equitable grounds for such relief can be shown, among which are
the inadequacy of property to secure the debt, the insolvency of
the mortgagor, and danger that the property will be lost or mate-
rially injured. A receiver will not be appointed when the mort-
gaged chattels are adequate to meet the debt, especially if the
mortgagor is willing to give a bond with good security for the
forthcoming of the property to answer the decree.4

788. Marshalling securities.’ — On a bill to foreclose a prior
mortgage of property upon which there are subsequent mort-
gages of a part of the same property, or the first mortgagee holds
other security, to which the subsequent mortgagees have no claim,
they may insist upon the just and faithful application of such
other security before resorting to the property which also secures
the subsequent mortgagees. But if a person has any equities

* Fowler v. Merrill, 11 How. 375; S. an undivided interest in a number of
C. Merrill v. Dawson, Hemp. 563. horses, mules, and wagons.

2 Catlin v. Currier, 1 Sawyer, 7. 5 See 2 Jones on Mortgages, §§ 1628,

8 2 Jones on Mortgages, §§ 1516-1534; 1629.
Rose v. Bevan, 10 Md. 466; Clagett v. 8 Pettibone v. Stevens, 15 Conn. 19;
Salmon, 5 G. & J. (Md.) 314; Bayaud»v. High »v. Brown, 46 Iowa, 259; Lee v.
Fellows, 28 Barb. (N. Y.) 451. Buck, 18 8. C. —; S. C.10 Rep. 412,

# Williams v. Noland, 2 Tenn. Ch. 151. In this case certain mules, including one
The mortgaged property in this case was named Kit, were mortgaged to A. The

596
POWER OF SALE MORTGAGES AND TRUST DEEDS. [§§ 789-791.

which entitle him to insist upon the application of other property
to the payment of the mortgage debt in exoneration of the prop-
erty which he holds, he must take seasonable measures to assert
his equities before a sale of such property is made under the prior
mortgage. If he fails to do this, and has no sufficient excuse for
his failure, he cannot assert his claim after a fair sale has been
made.}

VI. Power of Sale Mortgages and Trust Deeds.

789. General statement. — In most parts of the country it is
usual to provide for a sale of mortgaged chattels by a power in
the mortgage authorizing the mortgagee to sell upon default in
the manner provided in the instrument; or else to provide for a
similar power in a third person, in which case the instrument is
called a deed of trust. In many states this form of mortgage is
used almost exclusively ; and everywhere this form seems to be
more generally used for mortgages of personal property than for
mortgages of real estate.?

790. Under a power in the mortgagee to sell at public or
private sale, he is not bound to give the mortgagor personal no-
tice of the sale, or even to demand payment of the debt, before
selling at private sale. Upon proof that the sale was fairly made,
he may recover of the mortgagor the remainder of the debt due
after applying the proceeds of sale.®

791. A private sale, when authorized by the mortgage, is
effectual in foreclosing the mortgagor’s equity of redemption.

and that A. was liable to account to B.
for the value of Kit out of the surplus
which he paid to C.

1 Richards v. Spicer, 23 Minn. 212.
And see Johnson v. Williams, 4 Minn.

mortgagor afterwards sold Kit to B., and
after such sale he mortgaged to C. all of
the mules included in the first mortgage
except Kit. After default A. and C.,
acting in concert, seized all of these mules

and sold and appropriated them; A., realiz-
ing more than enough to satisfy his mort-
gage, paid over the surplus to C. In an
action by B. against A. to recover the
value of Kit to the extent of such surplus,
it was held that A. was bound, to exhaust
the proceeds of the mules other than Kit,
before he could subject Kit, which had
been sold, to the payment of his debt;

260.

2 See 2 Jones on Mortgages, §§ 1722-
1940, where the subject of powers of sale
in mortgages of real property are fully
treated.

8 Huggans v. Fryer, 1 Lans. (N. Y.)
276; Ballou v. Cunningham, 60 Barb.
(N. Y.) 425; Chamberlain v. Martin, 43
Ib. 607. See § 793.

597
§§ 792, 793.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

Thus, under a mortgage containing a power to the mortgagee in
case of default, to take the property and “ to sell the same,” and
apply the avails in payment of the debt; and in case he shall at
any time deem himself unsafe, to take possession of the property
previous to the day of payment, and “sell the same at public or
private sale,” the mortgagee may, in case of default in payment
at the day, sell the property at private sale, without notice to the
mortgagor, and such sale if fairly made forecloses the mortgagor’s
equity of redemption.! It was deemed that no distinction was
intended as to the mode of sale whether the sale was made on
default or before default.

792. If a power of sale does not require the giving of any
notice of the sale, the mortgagee can make a valid sale either at
public or private sale, and need not give any notice of it unless he
choose so to do. But nevertheless the sale to be binding must be
a fair one.?

793. A mortgagee may lawfully sell and transfer the mort-
gaged property at private sale after taking possession of it upon
default, for he has then the absolute legal title? Under a power
of sale, which does not require notice of sale to be given, the mort-
gagee has the option to give notice or not as he niay choose, and
he may sell at public or private sale ; only to make the sale bind-
ing it must be fair. But he is, however, liable to the mortgagor
for any injury sustained by him through the omission of the mort-
gagee to comply with the terms of a power of sale contained in
the mortgage. The mortgagor cannot recover the property by
reason of the mortgagee’s failure to comply with the terms of the
power; as where the latter sells without advertising, under a
power authorizing him to take possession, advertise, and sell. In
an action to recover the property, the mortgagor must rely upon
the strength of his own title, and not on the weakness of that of
his adversary. The mortgagee having the right to take possession,

1 Chamberlain v. Martin, 43 Barb. (N. 2 Wylder v. Crane, 53 Ill. 490, 493.
Y.) 607. 8 McConnell v. People, 84 Ill. 583;

A like decision upon a similar mortgage Wylder v. Crane, supra; Waite v. Den-
was made in Ballou v. Cunningham, 60 nison, 51 Il. 319; Hungate v. Reynolds,
Barb, 425. A dissenting opinion of Mul- 72 Ill. 425,
lin, J.,is printed in 4 Lans. 74. And see * Wylder v. Crane, supra. See § 790.
Huggans v. Fryer, 1 Lans. (N. Y.) 276.

598
POWER OF SALE MORTGAGES AND TRUST DEEDS. [§$ 794, 795.

this cannot be taken from him so long as the debt remains unpaid.
The proper remedy of the mortgagor is a bill to redeem.!

794. A power of sale confers no right to barter or ex-
change the mortgaged property for other property. It neces-
sarily implies a contract to be made by the holder of the mort-
gage to pass the property for money, or for a promise to pay
money, if the seller be willing to take the risk of giving credit.
The mortgagor is entitled to the excess of the proceeds of the
sale over the amount of the debt secured, and he cannot be com-
pelled to take this in anything but money. He is, moreover, en-
titled to a sale for money so that he may know whether there be
any surplus.”

A mortgagee holding property with power to sell or manufact-
ure is liable for any loss which may occur through his exceeding
the power conferred upon him, unless the mortgagor subsequently
ratify his unauthorized acts.’

795. The notice provided for by the mortgage must be
given in the manner and for the length of time therein specified.*
Where a mortgage provided for a sale at public auction to the
highest bidder after giving ten days’ notice of the time, place, and
terms of sale, with a description of the property, or that the mort-
gagee might sell at private sale, and notice was given for ‘“* Mon-
day, Nov. 25th at 10 o’clock at 46, 48 & 50 Dearborn Street, op-
posite Tremont House,” it was held that the notice was sufficient
in respect to the time of sale, notwithstanding it omitted to state
the year in which it would be made. Having been given in the
early part of the month of November, all persons seeing it would
infer that the sale would take place on the 25th of the same
month$ :

The omission to state in the notice of sale whose property is to
be sold will not invalidate the sale. ®

1 Whitaker v. Sigler, 44 Iowa, 419. bought and sold.” Followed in Bigley v.
2 Edwards v. Cottrell, 43 Iowa, 194. Risher, 63 Pa. St. 152.
“Sale,” said Mr. Justice Wayne, in Wil- ® Beckley v. Munson, 22 Conn. 299.
liamson v. Berry, 8 How. 495, 544, “is a 4 See 2 Jones’on Mortgages, §§ 1821-
word of precise legal import in law and in 1856.
equity. It means at all times a contract 5 Waite v. Dennison, 51 Ill. 319. See
between parties to pass rights of property also Finch v. Sink, 46 Ill. 169.

for money which the buyer pays or prom- 6 McConnell v. Scott, 67 Ill. 274; Waite
ises to pay to the seller, for the thing v. Dennison, supra.

599
§§ 796, T97.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

Under a power authorizing the mortgagee, his agent, attorney,
or assignees, to execute the power of sale, the sale may be ad-
vertised and made by an agent.!

796. Conduct of sale. —It is no objection to a sale of such
property as books that other books belonging to other persons are
put upon the catalogue and sold with the books named in the
mortgage. It works no injury to the mortgagor.?

797. Sale in parcels. —If the property consists of many dif-
ferent articles, which can easily be offered for sale separately or
in lots or parcels suited to the convenience of bidders, a sale of
the whole in a lump might properly be regarded as an unfair
mode of sale ;% especially if it were shown that a larger sum
would probably have been obtained from a sale in parcels. A
sale of ten horses in one lot, when there are persons present at the
sale who wish to buy a part of them, is irregular, and makes a
mortgagee who sells in this way under a power liable for the sum
which the horses would have brought if sold separately.*

Where a mortgage was made of a growing crop of wheat, which
the mortgagor afterwards harvested and stored in his granary, and
the holder of the mortgage afterwards seized and sold a much
larger quantity of wheat than was sufficient to satisfy his mort-
gage, and it appeared that he did this for the purpose of convert-
ing the property into money and of applying this to the payment
of an unsecured claim he held against the mortgagor, and that to
accomplish this end he evaded the exemption laws of the state, it
was held that he was liable to the owner of the right of redemp-
tion for the damages caused by his seizure of the grain which was
not needed to satisfy the mortgage. The claim of the owner of
the equity is not in such case the subject of levy upon execution.®
Chief Justice Gilfillan, delivering the judgment of the court, said:
“Where the mortgagee forecloses under the power of sale in the
mortgage, he stands, with respect to the mortgagor’s rights in the
property, in the position of a trustee, and is held to the exercise
of good faith and proper care and diligence to avoid any sacri-
fice of those rights, not necessary to the reasonable enforcement

1 Waite v. Dennison, 51 Ill. 319. * Hungate v. Reynolds, 72 Ill. 425.
2 Thid. 5 Stromberg v. Lindberg, 25 Minn. 513.
* Hannah v. Carrington, 18 Ark. 85.

600
POWER OF SALE MORTGAGES AND TRUST DEEDS. [§§ 798, 799.

of his own. Although the mortgage cover much more property
than is necessary to his security, he may, under his mortgage, for
his security, take possession of the whole; but where, without
prejudice or great inconvenience to himself, he can satisfy his debt
by a sale of part, he is, if the interests of the mortgagor require
it, bound so to sell. If he unnecessarily sell the whole, and es-
pecially if he do so, not in good faith to satisfy his debt, but as
the court below in this case has found, in order to secure, by use
of the power of sale, some further advantage, —to effect some
purpose not contemplated by the mortgage, — he ought to be, and
is liable to the mortgagor for the damages sustained by him
through such oppressive use of the power of sale. The claim of
the mortgagor in such a case is not a debt which is the subject of
levy. The levy by defendant upon the surplus in his hands after
the sale and satisfaction of the mortgage debt did not affect the
plaintiff’s cause of action against him.”

798. The sale should stop when sufficient property has
been sold to satisfy the debt. If a mortgagee sell part of the
mortgaged property by virtue of a power contained in the mort-
gage, and receive a sum sufficient to pay the mortgage debt with
costs and expenses, his title to the mortgaged chattels remaining
unsold is extinguished. The power to sell thereupon becomes
tpso facto void, and cannot be exercised upon the remainder of the
property. Inequity the mortgagee, after satisfying the mortgage
debt, becomes a trustee of the residue of the property, and must
account for it to the mortgagor. A sale by the mortgagee of the
residue is a conversion of the property, for which he is liable to
the mortgagor in trover.!

799. The mortgagee may,in the exercise of a reasonable
discretion, adjourn a sale under the power, without doing so
through the agency of a licensed auctioneer, or giving any new
notice to the mortgagor.2. “ The right of a sheriff or other pub-
lic officer to adjourn a sale, as being incident to the power to
sell at auction, is settled in Maine, New York, and in Massachu-
setts. And if a public officer not appointed by the party and

1 Charter v. Stevens, 3 Den. (N. Y.) 33. See 2 Jones on Mortgages, §§ 1873,
2 Hosmer v. Sargent, 8 Allen (Mass.), 1874. 7

97; citing Richards v. Holmes, 18 How.
143. 601
§§ 800, 801.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

acting independently of him has such power, there is no reason
why a trustee appointed by the party and acting under his ex-
press authority should not have it also. In both cases the reasons
for its exercise are the same. It enables the seller to prevent the
property from being sacrificed, and at the same time to prevent
the loss of the labor and expense already incurred in giving no-
tice of the sale.” }

800. A mortgagee may sell upon credit, although the mort-
gage itself provides that the property shall be sold for cash; for
the provision is for the mortgagee’s benefit, and he may waive it
if he chooses to do so, and to take the risk of the credit given ;
and if he delivers the property to the purchaser at the foreclos-
ure sale without requiring payment, he thereby waives the con-
dition, and the title to the property vests in the purchaser.?

801. A sale under a power must be fair and bond fide to
have the effect of extinguishing the equity of redemption. The
mortgagee has no right, by any unfairness, to sacrifice the prop-
erty, and deprive the mortgagor of a surplus over the debt, which
might arise from a sale properly conducted ; or make him liable
for a deficiency greater than there would be under a sale fairly
conducted.® But the mortgagor has no remedy at law, however
wrongfully or unfairly the mortgagee may have acted in dispos-
ing of the property. His only remedy is a’ bill in equity to re-
deem the property. So far as legal rights or obligations are con-
cerned, a mortgagee may, after forfeiture, treat the property as
his own, and deal with it as he may choose without incurring any
liability at law to any one.*

A mortgagor who has by his own interference prevented a fair
sale at a full price cannot have it set aside. Thus, if the mort-
gagee has made reasonable and fair efforts to sell the property at
a fair price, and the mortgagor has by his acts, statements, and
notices at the time of the sale, discouraged biddings, so that the
property did not bring a full price, a court of equity will not set
aside the sale on his application.6

1 Hosmer v. Sargent, 8 Allen (Mass.), 8 Stoddard v. Denison, 38 How. (N. Y.)

97, per Chapman, J. Pr. 296.
2 Williams v. Hatch, 38 Ala, 338. See 4 Stoddard v. Denison, supra.
2 Jones on Mortgages, § 1868. 5 Hall v. Ditson, 55 How. (N. Y.) Pr.

19; S. C.5 Abb. N, C. 198.
602 .
POWER OF SALE MORTGAGES AND TRUST DEEDS. [§§ 802-805.

802. Fraud and collusion, participated in by the mort-
gagee and purchaser, whereby the mortgaged property is sold for
an inadequate price, is ground for invalidating the sale. Upon
the issue whether there was such fraud and collusion the mort-
gagor’s assignee in bankruptcy in possession of the property may
show by parol evidence that he had a valuable interest in the prop-
erty, by proof of the real amount and character of the incum-
brance to which it was subject.1

803. Sale under power in fraud of creditors. — A sale under
a power may undoubtedly be valid although made at the request
of the mortgagor, when in fact insolvent, with a view to keeping
the property within his control. The sale would certainly be
valid if it was simply the fair exercise of a legal right to collect
an honest debt according tothe terms of the mortgage. But a
promissory note given to the mortgagee, to induce him to exer-
cise the power of sale for the purpose of delaying the mortgagor’s
creditors and preventing the property coming to their use, is
fraudulent and void.?

804. A mortgagee is probably not liable to a prior lien-
holder for so exercising a legal right of sale as to reduce the value
of the prior lien, and he is certainly not so liable if he merely ex-
ercises his legal right to foreclose his mortgage, and sell the inter-
est of the mortgagor in the property; and the fact that he sells
the property for its full value is insufficient to establish the con-
clusion that the sale was hostile to the prior lien-holder, and was
inconsistent with his right to enforce his lien.?

805. An administrator is liable personally for a loss occa-
sioned by an illegal and fraudulent sale of the mortgaged
property made by him, although the sale was made through an
agent, and the administrator was not himself guilty of any wilful
default or fraud. The proceeding in such case is properly cogniz-
able in equity, and a decree may be made in favor of the mort-
gagor for the difference between the mortgage debt and the value
of the property illegally sold. Such recovery is instead of the

* Robinson v. Bliss, 121 Mass. 428. ® Hale v. Omaha Nat. Bank, 64 N. ¥
2 Gordon v. Clapp, 113 Mass. 335. 550.
603
§ 806.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

property itself, which has been placed beyond reach through the
illegal sale.1

806. The mortgagee cannot legally, by himself or agents,
become a purchaser at his own sale under a power, unless spe-
cially authorized by the agreement of the parties, for the purpose
of barring the mortgagor’s equity of redemption. If he becomes
a purchaser at his own sale either by himself or his agent, in
the absence of a special agreement in the mortgage permitting it,
such sale to the extent of the purchase so made is illegal, and does
not bar the mortgagor of his equity of redemption; and if the
mortgagee appropriates the property so purchased to his own use,
he becomes liable to account for its value.2 A purchase of the
property by the mortgagee through a third person, who bids it off
and transfers it to the mortgagee in pursuance of an arrangement
previously made between them, is void equally with a purchase
made directly by the mortgagee himself.8 If he resell the prop-
erty to another at a profit, the mortgagor may claim such profit.’

If the mortgagee purchases under an arrangement between
himself and the mortgagor, whereby the property still continues
to belong to the mortgagor, the sale being colorable only, and the
indebtedness secured by the mortgage is not paid, the mortgagor
will still be liable thereon. But if, in such case, any of the
property is levied on after such sale, under an execution against
the mortgagee, and sold, the mortgage debt will be extinguished
to the extent of the value of the property so levied on.®

If one of two mortgagees sell the property under a power of
sale to one who purchases for the benefit of his co-mortgagee for
an inadequate price, the mortgagor is not divested of his equity
of redemption.§

If the holder of one of several notes secured by a mortgage
obtain possession of the property, he will hold it in trust for the
owners of the note; and if he purchase such property at a sale

1 Hungate v. Reynolds, 72 Ill. 425. 3 Pettibone v. Perkins, 6 Wis. 616;
2 Korns v. Shaffer, 27 Md. 83; Waite Phares v. Barbour, 49 Ill. 370; Alger v.
v. Dennison, 51 Ill. 319; Hungate v. Rey- Farley, 19 Iowa, 518.
nolds, supra ; Imboden v. Hunter, 23 Ark, 4 Cunningham v. Rogers, 14 Ala. 147.
622; Webber v. Emmerson, 3 Colo. 248. 5 Massey v. Hardin, 81 Ill. 380.
See 2 Jones on Mortgages, § 1876. 6 Alger v. Farley, supra.

604
POWER OF SALE MORTGAGES AND TRUST DEEDS. [§§ 807, 808.

made by himself, he will be required to account for the fair value
of it.

It matters not in the application of this rule, that the sale was
bond fide and for a fair price. The rule is not intended to remedy
an actual wrong, but is intended to prevent the possibility of
ie

It is usual in power of sale mortgages to authorize the mort-
gagee to purchase at a sale under the power, and when this is the
case there is no objection to such purchase.®

807. The same rule applies against a purchase of the prop-
erty by the cestui que trust in a trust deed. His purchase of
the property at a sale made by the trustee, unless authority for
such purchase was conferred by the mortgage, does not bar the
equity of redemption ; but the mortgagor may still redeem.*

808. In New York the mortgagee of a chattel may pur-
chase at a public sale under a power in the mortgage, and hold
the property for his own benefit free from any equity of redemp-
tion.6 ‘The inconvenience and expense of a resort to the equity
powers of courts to effect such foreclosures, which would be the
probable consequence of denying to mortgagees the right to pur-
chase, might be productive of greater oppression to mortgagors
than could result from maintaining that right. Unfortunately,
injustice cannot always be prevented by subjecting sales to the
direct control of courts, and such control should not be assumed
unless experience has demonstrated its necessity. The practice
has prevailed in this state from a very early day of allowing mort-
gagees to become purchasers at sales conducted by them, under
powers contained in mortgages of real estate; and that course is
now sanctioned by statute. The long continuance of this practice,
and the approbation which it has received from the legislature,
afford strong evidence that no great inconvenience or injustice
arises from it, and it is not perceived why a similar course, in sales

1 Beard v. Westerman, 32 Ohio St. 29.
2 Imboden v. Hunter, 23 Ark. 622.

See 2 Jones on Mortgages, § 1877.
3 See 2 Jones on Mortgages, § 1883.
4 Hannah v. Carrington, 18 Ark. 85.

5 Hall v. Ditson, 55 How. (N. Y.) Pr.
19; S.C. 5 Abb. N. C. 198; Olcott v.

Tioga R. R. Co. 27 N. Y. 546, 566, per
Selden, J.; disposing of dictum to the
contrary in Buffalo Steam Engine Works
v. Sun Mut. Ins. Co. 17 N. Y. 401; Pul-
ver v. Richardson, 3 T. & C. 436, was
decided upon the authority of the latter
case.

605
§§ 809, 810.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

under mortgages of chattels, would be attended with greater dan-
er.” 1

. In South Carolina a mortgagee of personalty may buy at his

own sale under a power ; but he holds such a trust relation under

the mortgage as to throw the burden upon him of showing the

fairness of his purchase.?

So in Tennessee a mortgagee or creditor may purchase at a sale
under a trust deed, and his title will be good if he act with fair-
ness. His relation to the debtor imposes upon him the observance
of fairness and good faith ; and if he abuse the power which he
holds over the trustee and over the sale, and becomes the pur-
chaser, he will be regarded as holding the property only as a
security for his debt, and subject to redemption.®

809. A purchase of the mortgaged property by a mortgagee
at a public sale is valid at law, and is voidable only and not
void in equity; and it is voidable only at the election of the mort-
gagor or some person whose interests are affected by the purchase.
The mortgagor is the party most directly interested, and the va-
lidity of the sale cannot be impeached without his consent, or
at least without giving him an opportunity of being heard. He
must be made a party to the proceeding.*

810. A mortgagor may purchase at a foreclosure sale, or he
may lawfully agree with another that the latter shall bid a cer-
tain sum for the property, and if he becomes the purchaser, shall
give the mortgagor an undivided interest therein, on his paying
a portion of the purchase money. Such an arrangement is neither
a fraud upon creditors, nor against public policy.6 The rule is
the same where the sale is public, but not strictly a foreclosure
sale, as is the case in New York.®

1 Olcott v. Tioga R. R. Co. 37 N. Y.
546, 566, per Selden, J.

2 Black v. Hair, 2 Hill (S. C.) Eq.
622. The court say: “ A creditor holding
a mortgage security is a trustee to sell,
not only for the benefit of the mortgagor,
but for his own also. If he were not at
liberty to bid, he would be deprived of the
means of protecting his own interest as
creditor. The mortgagor is at liberty to
bid also, and has thus the means of enter-

606

ing into fair competition with the mort-
gagee, and compelling him to give a fair
and full price.” ;

® Lyon v. Jones, 6 Humph. (Tenn.)
533,

* Olcott v. Tioga R.R. Co. supra.

5 Bame v. Drew, 4 Den. (N. Y.) 287.
See 2 Jones on Mortgages, § 1887.

8 Hall v. Ditson, 55 How. (N. Y.) Pr.
19,
POWER OF SALE MORTGAGES AND TRUST DEEDS. ([§§ 811, 812.

And so the creditors of a mortgagor may combine to purchase
the mortgaged property at a foreclosure sale, and other creditors
have no right to complain, inasmuch as they are not, by such com-
bination, deprived of the right to bid at such sale.1

811. An irregular foreclosure sale operates as an assign-
ment of the mortgage. A sixth mortgagee of the furniture and
effects of a hotel obtained from the first four mortgagees separate
bills of sale of-such furniture and effects, three of them being
made in pursuance of powers in such mortgages which conferred
upon the mortgagees authority to sell upon default, upon such
terms as they might think proper. The sixth mortgagee there-
upon advertised and sold the property under a power of sale
contained in his own mortgage for a sum less in amount than
that secured by the four first mentioned mortgages. The fifth
mortgagee of the same property holding a mortgage prior in date
to that under which such foreclosure sale was made, filed a bill
in equity asking for an injunction to arrest the proceeds of the
sale in the hands of the sixth mortgagee, and praying the same
should be applied as far as necessary to the payment of his
mortgage debt. It was held that even if the sales made under
the first four mortgages were irregular and not such as effect-
ually to foreclose their mortgages, they had the effect of transfer-
ring to him their respective mortgage claims. The payment to
the first four mortgagees of the consideration for their sales did
not operate to extinguish the mortgages.” .

812. The mortgagor or those claiming under him should
take immediate steps to set aside an irregular sale, and to re-
deem the property before the rights of innocent third parties have
intervened ; for such third parties buying without notice are not
bound to inquire whether the foreclosure sale was irregular, and
they obtain an unimpeachable title. The right to call the sale
in question may be barred by delay.3

An application of the surplus proceeds of a sale made with the

1 Kropholler v. St. Paul, Minneapolis ® Walker v. Stone, 20 Md.195. See 2
& Manitoba Ry. Co. (C. C. for Minn., May, Jones on Mortgages, § 1902.

1880.) 2 Fed. Rep. 302. 8 Wylder v. Crane, 53 Ill, 490. See 2
Jones on Mortgages, § 1922.

607
§§ 813-815.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

assent of the mortgagor to the satisfaction of an execution against
him estops him from afterwards calling it in question.

813. The mortgagee himself cannot call in question the
regularity of a sale made at his instance, for the amount of his
debt and costs, when neither the mortgagor nor any one inter-
ested under him calls it in question.2 If neither the mortgagor
nor the purchaser has applied to set aside the sale, an agreement
by a mortgagee with the purchaser at the sale, under a power to
rescind the sale, does not have the effect of annulling the foreclos-
ure effected by the sale, or of reinvesting the mortgagee with his
original rights under the mortgage, so as to enable him to main-
tain a suit in equity for the reformation of the mortgage. If he
could do this, it would be to put the mortgagor, and the persons
succeeding to his rights, at the mercy of the mortgagee and the
purchaser from him.?

814. A mere naked trespasser cannot question the validity
of a foreclosure sale, or of a sale under a power of a portion of
the mortgaged property ; nor can he complain of the application
of the proceeds as between different debts of the mortgagor, nor
ask an allowance or deduction of profits on a resale of the prop-
erty after it has been purchased by the mortgagee at his own sale.*

815. A mortgagee has an implied license to enter the mort-
gagor’s premises and take away the mortgaged goods, when
he has foreclosed a mortgage of property in possession of the mort-
gagor by notice, sale, or otherwise, without taking possession of
the property before such foreclosure. This is in accordance with
the settled rule, that if the owner of real estate sells personal prop-
erty situated on his premises, he thereby gives an implied irrevo-
cable license to the owner of such personal property to enter on
the premises for the purpose of taking and removing it therefrom.
The right of entry upon the land is in aid of the title to the chat-
tels. It makes no difference in the application of this doctrine
that the mortgagor is only a tenant in common of the premises.
If the premises are a dwelling-house, the door being open and no

1 McConnell v. People, 71 Ill. 481. 8 Williams v. Hatch, supra.
2 Massey v. Hardin, 81 Ill. 380; Wil- * Broughton v. Atchison, 52 Ala. 62.
liams v. Hatch, 38 Ala. 338.

608
POWER OF SALE MORTGAGES AND TRUST DEEDS. [§§ 816-819.

objection being made, the mortgagee has a right to enter and take
away the mortgaged property without previous notice. In all
cases he may enter in a peaceable and reasonable manner.!

816. A foreclosure sale made in the state of the mort-
gagor’s domicil and valid there is valid everywhere. Thus, a
bond fide purchaser of a chattel at a mortgagee’s sale, under a
mortgage executed and filed in New York, according to the stat-
utes of that state, the chattel being there, and the mortgagor also
residing there at the execution of the mortgage, and the mortgage
being due, is protected in New Jersey against a previous bond fide
purchaser from the mortgagor, the property having been brought
into the latter state and there sold.?

817. A mortgagee becomes a trustee for the mortgagor as
to the surplus received upon a sale in the exercise of a power ;?
and the existence of this relation gives the mortgagor a right to
the aid of a court of equity to obtain an account of the trust.‘
But generally a resort to equity to obtain the surplus is neither
necessary or proper. A suit at law is generally sufficient.®

818. Under a judicial sale, or sale by virtue of a power, the
property passes by delivery, and the purchase and ownership
may be established by parol proof. The want of a bill of sale
will not defeat the purchaser’s title.®

819. No warranty of title is implied in a sale under a chattel
mortgage, although the sale be not made by virtue of statutory pro-
ceedings for foreclosure, or even under a power of sale contained in
the mortgage ; but merely by virtue of the mortgagee’s common
law title and right to sell upon default, where such a mode of sale
has not been superseded by the enactment of statutory provisions
and is valid,.as in New York. ‘The sale in such case is itself no-
tice to the public that the mortgagee is not selling his own title
to the property, but the title he acquired through the mortgage.
Therefore where a horse was sold at auction by a mortgagee, and

1 McNeal v. Emerson, 15 Gray (Mass.), £ Korns v. Shaffer, 27 Md. 83.
384, 5 2 Jones on Mortgages, § 1940.
2 Parr v. Brady, 37 N.J. L. 201. © Conger v. Robinson, 4 Sm. & M.
8 Flanders v. Thomas, 12 Wis. 410,413. (Miss.) 210.
8g 609
§§ 820, 821.] FORECLOSURE IN EQUITY AND SALES UNDER POWERS.

a third person claiming the property afterwards recovered judg-
ment against the purchaser for the value of the horse, in an action
by the purchaser against the mortgagee to recover the amount of
the judgment and the costs paid for defending the action, it was
held that the purchaser was not entitled to recover.t

820. Opening foreclosure. —It is no ground for opening a
foreclosure legally perfected, that only a small amount of the
mortgage debt remained unpaid when the mortgagee proceeded in
good faith, and the mortgagor with a full knowledge of the pro-
ceedings to foreclose neglected to take any steps by which the
foreclosure could be arrested and his rights ascertained.?

821. The mortgagee may himself waive or open a foreclosure
either by an express agreement or by any unequivocal act on his
part. A promise by the mortgagee after foreclosing his mortgage,
made in the presence and with the consent of the mortgagor, to a
purchaser of the property from the latter, that he would assign or
discharge the mortgage on the payment of the amount due thereon,
is a waiver of the foreclosure. Such purchaser, upon a tender of
the amount due, is immediately entitled to the possession of the
property, and upon a subsequent sale of it by the mortgagee, he
may maintain an action against him for a conversion of the prop-
erty.2 “ Even in the case of a mortgage of real estate, a waiver
or opening of a foreclosure may be proved, not only by an ex-
press agreement in writing, but by any other unequivocal act of
the mortgagee. In the case of a mortgage of personal property,
a distinct oral agreement of the mortgagee must be allowed the
same effect.” 4

1 Sheppard v. Earles, 13 Hun (N. Y.), 3 Phelps v. Hendrick, 105 Mass. 106.
651. * Phelps v. Hendrick, supra, per Gray, J.
2 Burtis v. Bradford, 122 Mass.-129.

610
INDEX.

Reference is to Sections.

ACCEPTANCE of delivery essential to validity of mortgage, 104.
mortgage made without knowledge of creditor invalid, 104.
may be made by mortgagee’s agent, 105.
by recorder for mortgagee without authority not sufficient, 106.
mere knowledge of existence of mortgage not sufficient, 108.
may be by one of several mortgagees, 109.
ACCESSIONS to mortgaged chattels are subject to the mortgage, 148.
of plants and shrubs the growth of cuttings pass by mortgage, 151.
of substituted articles sometime become subject to mortgage, 152.
ACCOUNT, mortgagor in possession not liable to render, 441, 545.
mortgagee in possession liable for-rents and profits, 696.
is an incident to mortgagor’s right to redeem, 696.
ACKNOWLEDGMENT of chattel mortgages required in what states,
191-235,
mortgage good between parties without, 237.
statutes prescribing manner of must be complied with, 248.
false certificate of invalidates the mortgage, 248.
when imperfect, record is not notice, 248.
before one of mortgagees is void, 249.
ADDITIONS to mortgaged chattels by way of manufacture or repair
become subject to the mortgage, 148.
ADJOURNMENT of sale under power, 799.
ADMINISTRATOR. See Execuror.
ADMIRALTY, no jurisdiction for enforcing mortgages of ships, 550.
AFFIDAVIT verifying essential facts of the mortgage, 36.
possession by mortgagee dispenses with, 38.
AFTER-ACQUIRED PROPERTY. See Fururse PRoperry.
AGENT, authority of to execute mortgage for his principal, 49, 52.
parol authority to execute mortgage, 52.
authority of to take a mortgage, 49.
when mortgagor may not be for mortgagee, 180, 181.
611
INDEX.

Reference is to Sections.

AGENT — continued.
mortgagor may be, to file or record mortgage, 267.
holding title to ship may mortgage it, 528.
AGREEMENT to give a mortgage not a legal mortgage, 10.
to work land for a creditor is not a mortgage, 11. -
secured by mortgage need not be recorded, 283.
ALABAMA, statutory provisions relating to recording, 191.
sale without delivery of possession primd facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 383.
statutory provisions relating to attachment and execution, 567.
removal, concealment, and sale of mortgaged property, 602.
entry of satisfaction of record, 663.
provisions relating to foreclosure and redemption, 714.
APPROPRIATION of payments. See Payments, 638-641.
ARIZONA TERRITORY, statutory requirements as to form of mort-
gage, 36.
what property may be mortgaged in, 121.
statutory provisions relating to recording, 193.
statutory provisions relating to attachment and execution, 569.
provisions relating to foreclosure and redemption, 715.
ARKANSAS, statute providing for mortgages of crops, 1438.
statutory provisions relating to recording, 192.
sale without delivery of possession primd facie fraudulent, 320.
statutory provisions relating to attachment and execution, 568.
removal, concealment, and sale of mortgaged property, 603.
entry of satisfaction of record, 665.
provisions relating to foreclosure and redemption, 716.
ASSIGNEE for benefit of creditors cannot avoid mortgage void as to
creditors, 363.
ASSIGNEE IN BANKRUPTCY or insolvency takes only the debt-
or’s rights, 241.
contrary doctrine in some states, 242.
bound by bankrupt’s mortgage of fixtures, 137.
may avoid a fraudulent mortgage, 361.
state court has jurisdiction of action, 362.
alone can claim that proof of debt releases security, 365.
may affirm a voidable mortgage, 366.
ASSIGNEE OF MORTGAGE, rights of, 501-519.
is a purchaser, 501.
is generally assignee of debt also, 502.
takes all the interest of the mortgagee, 5038.
of part of the mortgage debt, 503, 504.
612
INDEX.

Reference is to Sections.

ASSIGNEE OF MORTGAGE — continued.
without the debt secured, 505.
of fraudulent mortgage, 508.
takes mortgagee’s rights of action, 509.
but not his rights of action for prior injuries, 510.
takes free from equities in favor of mortgagor, 513.
unless debt be non-negotiable, 513.
to secure future advances, 515.
ASSIGNMENT for benefit of creditors, whether unrecorded mortgage
is good against, 244.
made in another state, effect of, 299.
in the nature of a mortgage, 352-355.
ASSIGNMENT of mortgage usually carries the debt, 502.
of debt usually carries the mortgage, 503.
of part of the debt carries pro tanto interest in mortgage, 504.
of mortgage without the debt, 505.
by mortgagee not in possession, 506.
mortgagee may make, so long as he has an interest, 507.
of fraudulent mortgage, 508.
mortgagee cannot sue for conversion after, 509.
what rights of action pass by, 510.
with mortgagor’s consent does not revive a paid mortgage, 511.
need not be under seal, 517.
need not be recorded, 518.
irregular foreclosure sale operates as, 811.
ASSUMPTION of prior mortgage by purchaser, 487, 488, 489.
ATTACHMENT AND EXECUTION, 555-600.
mortgaged property not attachable at common law, 555.
‘this rule changed in many states by statute, 555.
in other states by the courts, 556.
mortgagor’s interest subject to only when he has a right of pos-
session for a fixed period, 556.
after forfeiture his interest not subject to, 556.
nor after mortgagee has taken possession, 557.
invalidated by mortgagee’s taking possession under safety clause,
558.
sale of all mortgagor’s interest under, 559.
officer not liable for selling entire property, 560.
contrary doctrine in some states, 561.
creditor has no right to sell in parcels, 562.
mortgage of goods already under attachment, 563.
accountable receipt by mortgagee to officer, 564.

613
INDEX.

Reference is to Sections.

ATTACHMENT AND EXECUTION — continued.
attachment of some property not a waiver of mortgage, 565.
mortgagee’s interest not subject to, 566. ;
Statutory provisions of the several states relating to, 567-600.

BANKRUPT AND INSOLVENT LAWS, fraudulent preferences
under, 3856-366.
construction of clauses of thirty-fifth section of Bankrupt Act,
360.
withholding mortgage from record does not invalidate under, 364.
BILL IN EQUITY to obtain surrender of fraudulent mortgage, 348.
Foreclosure by, 776-788.
is the usual mode when no other is provided by statute, 776.
proper though mortgage contains a power of sale, 777.
power of sale is a cumulative remedy, 778.
proper in case of successive incumbrances, 779.
other reasons for foreclosing in equity, 779.
when mortgage secures payment in goods, 780.
cannot be resorted to where statute prescribes another mode, 781.
when suit should be brought, 782.
parties to the bill, 783.
no demand necessary before bringing, 784.
personal decree against mortgagor, 785.
measure of damages for mortgagor’s refusal to surrender prop-
erty, 786.
appointment of a receiver, 787.
marshalling securities, 788.
BILL OF PARCELS may be shown by parol to be a mortgage, 21.
not within the recording acts, 277.
BILL OF SALE to secure debt is a mortgage, 14, 15.
with separate defeasance constitutes a mortgage, 19.
with subsequent defeasance, 19, 20.
parol evidence to vary terms of, 21.
may be shown by parol evidence to be in equity a mortgage, 22.
when a mortgage is within the recording acts, 275.
of vessel may be shown to be a mortgage, 529, 549.

CALIFORNIA, statutory requirements as to form of mortgages, 36.
what chattels may be mortgaged in, 121, 122.
statute providing for mortgages of crops, 1438,
statutory provisions relating to recording, 194.
sale without delivery of possession fraudulent per se, 319.

614

ees
INDEX.

Reference is to Sections.

CALIFORNIA — continued.
statutory provisions relating to attachment and execution, 570.
removal, concealment, and sale of mortgaged property, 604.
entry of satisfaction of record, 666.
provisions relating to foreclosure and redemption, 717.
CANAL-BOATS, provisions for filing mortgages of, 221.
not within recording acts of the United States, 523.
CESTUI QUE TRUST cannot purchase at sale under his trust deed,
807.
CHATTELS REAL not within recording acts relating to chattel mort-
gages, 280.
CHANGES in form of debt. See Payment, 642-645.
CHOSES IN ACTION, mortgages of need not be recorded, 191, 278.
COLORADO, statutory provisions relating to recording, 195.
mortgagee must take possession immediately after default, 370.
mortgage of goods with power of sale in mortgagor, 382.
statutory provisions relating to attachment and execution, 571.
removal, concealment, and sale of mortgaged property, 605.
provisions relating to foreclosure and redemption, 718.
CONCEALMENT, removal, and sale of mortgaged property, 601-631.
CONDITION need not be expressed, 1.
definite statement of, sometimes required, 16.
what required in a technical mortgage, 17.
may be implied, 17.
expressed in separate instrument, 19.
subsequently executed, 19, 20.
parol evidence admissible in equity to show, 22.
must be specifically stated, 79.
to indemnify or save harmless, 82.
to secure debts to others than the mortgagee, 84.
need not set forth all particulars of note secured, 85.
exceptional rule in Connecticut, 85.
to pay note according to its tenor sufficient, 87.
different condition cannot be substituted, 91.
in a power of sale mortgage must be definite, 93.
CONDITIONAL SALE distinguished from a mortgage, 26.
whether there is a debt is an important inquiry, 27.
in cases of doubt courts incline against, 30.
is indicated by provision that property is at risk of vendee, 31.
instrument will be so construed when so intended, 33.
is not within the recording acts, 276.
CONDUCT of sale under power, 796.
615
INDEX.

Reference is to Sections.

CONFUSION of mortgaged goods, effect upon the mortgage, 155.
goods mingled with mortgaged goods when subject to the mort-
gage, 155.
mortgagee may take all such goods, 481.
whether purposely or carelessly mingled, 481.
foundation of the doctrine of, 481.
when new goods have been added to mortgaged stock, 482.
when goods intermingled by fault or neglect of mortgagee, 483.
CONNECTICUT, full statement of mortgage debt required, 85.
what chattels may be mortgaged in, 121, 122.
statutory provisions relating to recording, 196.
sale without delivery of possession fraudulent per se, 319.
statutory provisions relating to attachment and execution, 572.
removal, concealment, and sale of mortgaged property, 606.
provisions relating to foreclosure and redemption, 719.
CONSENT of mortgagee required to sale of property by mortgagor. 455.
oral consent sufficient, 456.
may be inferred, 457.
to sale in ordinary course of business, 458, 459.
to sale by mortgagor a waiver of the mortgage, 465.
CONSIDERATION recited may be more or less than the debt secured,
79.
must be a legal and valid one, 80.
a preéxisting debt is a sufficient one, 81.
otherwise in New York, 81.
a contingent liability is a sufficient one, 82.
stated at a sum much larger than debt does not invalidate, 92.
CONSTRUCTION of a mortgage as to subject matter belongs to the
court, 78.
of clauses of thirty-fifth section of Bankrupt Act, 360.
CONSUMABLE PROPERTY, fraud in mortgages of, 367, 368.
when property is necessarily consumable in nature, 367.
when property is partly perishable, 368.
CONVERSION of mortgaged property by mortgagor, 460, 462.
by subsequent purchaser, 490, 491.
COPY of mortgage, record of ineffectual, 285.
CORPORATION, execution of mortgage by, 51.
COVENANT implied in mortgage for payment of debt, 209.
CREDIT, mortgagee may sell upon, under power, 800.
CREDITORS having no lien cannot impeach unrecorded mortgage,
245.
effect of actual notice of mortgage to, 317, 318.

616
INDEX.

Reference is to Sections,

CROPS. See Growine Crops.
Statutory liens upon, 475.
landlord has no lien on crops raised by tenant, 477.

DAKOTA TERRITORY, two witnesses to execution of mortgage re-
quired, 35.
statutory provisions relating to filing, 197.
statutory provisions relating to attachment and execution, 573.
removal, concealment, and sale of mortgaged property, 607.
entry of satisfaction of record, 667.
provisions relating to foreclosure and redemption, 720.
DAMAGES recoverable by mortgagee for a conversion, 448.
to reversionary interest of mortgagee, 449.
for refusal of mortgagor to surrender property, 786.
DATE of mortgage may be shown to be erroneous, 103, 203.
DEBT secured, 79-98.
is that described in the condition of the mortgage, 79.
may be more or less than the consideration named, 79.
need not be a sum of money, 79.
preéxisting, is a valuable consideration, 81.
otherwise in New York, 81.
may be a contingent liability, 82, 83.
to others besides the mortgagee may be secured, 84.
particulars of, need not be set forth, 85.
what description of is sufficient, 86.
omission of time of payment does not vitiate, 87.
description of, wholly false, 88.
parol evidence to show the debt intended, 89.
to show the purpose for which mortgage was made, 90.
mortgage cannot be extended to cover a different debt, 91.
recital of larger debt than is actually due not conclusive of fraud,
92.
in power of sale mortgage must be definitely stated, 93.
may be in form of future advances, 94.
amount of intended advances need not be stated, 95.
mortgage need not state on its face that it secures future ad-
vances, 96.
advances made after notice that others have acquired rights, 97.
advances not contemplated at the time are not secured, 98.
covenant for payment of implied, 209.
overstatement of does not invalidate mortgage, 343.
assignment of usually passes mortgage, 503.

617
INDEX.

Reference is to Sections.

DEBT — continued.
of part of debt, 504.
of mortgage without debt, 505.
Changes in form of, 642-645.
by judgment, 642,
by taking new note, 643.
by second mortgage for same debt, 644.
by new note and mortgage for old, 645.
payable in specific articles, 780.
DEFAULT renders mortgagee’s title absolute, 297, 699.
does not render refiling unnecessary, 297.
DEFEASANCE. See Conpirion.
Separate, should be recorded, 284.
DEFICIENCY, recovery of by mortgagee after sale of property, 711.
DELAWARE, statutory requirement of affidavit to be annexed to mort-
gage, 36.
statutory provisions relating to recording, 198.
sale without delivery of possession fraudulent per se, 319.
removal, concealment, and sale of mortgaged property, 608.
provisions relating to foreclosure and redemption, 721.
DELAYING, hindering, and defrauding creditors by mortgage, 333-351.
DELIVERY (see, also, Possmssion) an essential part of execution of
a mortgage, 104.
agent may accept for principal, 105.
to recorder not sufficient, 106.
unless specially authorized by creditor, 106,107.
may be made to one of several mortgagees, 109.
what proof of sufficient, 110.
what affords a presumption of, 111.
question of is one of fact for the jury, 112.
subsequent satisfaction is equivalent to, 113.
Possession of mortgaged chattels, 176-189.
essential at common law, 176.
registration is a substitute for, 176, 236.
not essential as between the parties, 176.
essential now unless mortgage is recorded, 177.
to an agent of the mortgagee sufficient, 180.
no particular formality is required, 180.
when property is already in charge of a third person, 182.
not immediately necessary in that case, 183.
of ponderous or bulky property by words not effectual, 187.
must be such as would be sufficient in a sale, 187.

618
INDEX.

Reference is to Sections.

DELIVERY — continued.
not complete so long as anything remains tc be done, 188.
burden of proving is upon the holder of the mortgage, 189. .
recording a substitution for, 236, 329.
of mortgage deed for record, what is sufficient, 266.
Essential to the validity of an absolute sale, 319.
want of it renders sale fraudulent per se, 319.
in what states this is the rule, 319.
better doctrine that sale is only primé facie fraudulent, 320.
in what states this is the rule, 320.
DEMAND, when necessary before suit by mortgagee for conversion,
443.
upon subsequent purchaser before suit for conversion, 491.
not necessary when mortgage is payable immediately, 770.
not necessary before suit to foreclose, 784.
DESCRIPTION OF DEBT SECURED. See Dest.
DESCRIPTION OF PROPERTY need not be such as by itself to
identify the property, 53.
parol evidence must necessarily be resorted to, 53.
sufficient, if it enables a third person to identify by inquiry, 54.
must point out the subject matter, 55.
specified articles out of a larger number, 56.
uncertainty in renders mortgage void, 56.
’ part of a growing crop, 56."
exception of articles, exempt from attachment and levy, included
in, 57.
when there is a general description to which exemption may
apply, 58.
where means provided for separating specified articles, 59.
when defective may be cured by delivery, 60.
portion which is false or inconsistent may be rejected, 61.
property not fairly included does not pass, 62.
there can be no substitution of property as against others,
62, 71.
when wholly false may invalidate mortgage, 63.
parol evidence admissible to identify, 64.
not admissible to contradict the terms of, 64.
not admissible to supply. what was purposely omitted, 64.
sufficient if it includes all articles specified in a certain place, 65.
now in a certain shop or house, 65.
parol evidence may serve to fix the quantity, 66.
not admissible to include what was not intended, 67.

619
INDEX.

Reference is to Sections.

DESCRIPTION OF PROPERTY — continued.
a change of property by repairs does not invalidate, 68.
by adding other articles does not invalidate, 68.
gathered crops may be identified under mortgage of growing
crops, 69.
mortgage of additions to a stock of goods not void for uncer-
tainty, 70.
there can be no substitution of other property, 62, 71.
the moving of goods from building does not invalidate mortgage, 72.
a schedule referred to is part of mortgage, 73.
omission to annex schedule does not invalidate, 74.
reference to schedule does not enlarge scope of mortgage, 75.
general clause after enumeration of particular articles, 76.
general words refer to articles of same nature, 77.
may be modified by particular words, 77.
construction of belongs to court, 78.
DISCHARGE OF MORTGAGE, payment operates as, 646.
of mortgage to surety by payment of principal debt, 647.
none when surety himself pays the debt, 648.
by payment made with mortgagor’s money, 649.
possession of property by mortgagor after default is not evidence
of, 652.
discharge of debtor in bankruptcy is not, 653.
proof of debt against estate of deceased mortgagor is not, 654.
Otherwise than by payment, 660-662.
by oral contract of mortgagee, 660.
by sale of property with mortgagee’s consent, 661.
by authorized withdrawal of mortgage from files, 662.
statutory provisions of the several states for entering, 663.
DURESS, mortgage procured by wholly void, 349.

EQUITABLE MORTGAGE, what constitutes, 12, 13, 22, 23.
of future property, 170-175.
of ships, 530.
EQUITIES, assignee of mortgage securing negotiable debt takes free
from, 513.
to secure future advances, 515.
of part owners of ship need not be regarded by mortgagee, 552.
EQUITY, distinction from law abolished in some states, 12.
cannot make a contract for parties different from that agreed
upon, 13.
admits parol evidence to prove an absolute sale a mortgage, 22.

620
INDEX.

Reference is to Sections.

EQUITY — continued.
doctrine of, regarding mortgages of future property, 170-175.
will enjoin threatened injury to mortgagee’s rights, 450.
See Brut in Equity.
EVIDENCE that mortgage has been recorded, 274.
EXECUTION. See ArracHMEentT AND EXECUTION.
Of mortgage need not be under seal, 102.
time of may be shown by parol, 103.
date of mortgage may be shown to be erroneous by parol, 103,
203.
acceptance an essential part of, 104.
EXECUTOR or administrator of mortgagor bound by his unrecorded
mortgage, 239.
in case his estate proves insolvent, 240.
personally liable for making illegal sale under power, 805.
EXTENSION of credit, a refiling does not effect, 298.
of mortgage after maturity does not obviate necessity of posses-
sion, 372.

FILING of mortgages instead of recording, 190. See Reriiine.
In Arkansas, 192.
in Dakota, 197.
in Jowa, 204.
in Michigan, 211.
in Minnesota, 212.
in Nebraska, 216.
in New Jersey, 219.
in New Mexico, 220.
in New York, 221.
in Ohio, 223. ©
in Oregon, 224.
in Texas, 229.
in Wisconsin, 234.
effect of, 236-247.
mortgage cannot be withdrawn from files, 268.
mortgage wrongfully withdrawn from files, 269.
takes effect from time of delivery to proper officer, 271.
FIXTURES, a building on land of another may be mortgaged, 123.
may become chattels by agreement, 124.
limitation of right of parties to change agreement, 124.
mortgage of ehattels about to be annexed to realty, 125.
of machinery annexed permanently, 125.

621
INDEX.

Reference is to Sections.

FIXTURES — continued.
seller of may be estopped to claim as realty, 126.
how far parties may agree to consider personalty, 127.
as against subsequent purchasers of the realty, 128.
legal character of determined by law as to existing incum-
brancers, 129.
do not pass by chattel mortgage as against purchasers of realty,
130.
machinery mortgaged after it has been set up, 131.
chattels affixed to realty after they are mortgaged, 132.
purposes of annexation as well as mode important, 133.
notice to subsequent purchasers of realty of prior mortgage,
134.
actual severance of, from land validates prior mortgage of, 135.
construction of term appurtenances, 136.
mortgage of, as against mortgagor’s assignee in bankruptcy,
137.
mortgage of when within the recording acts, 281.
FLORIDA, statutory provisions relating to recording, 199.
sale without delivery of possession fraudulent per se, 319.
statutory provisions relating to attachment and execution, 575.
removal, concealment, and sale of mortgaged property, 609.
provisions relating to foreclosure and redemption, 722.
FORECLOSURE is a bar to redemption, 693.
mortgagee not bound to make, 702.
may hold property without, 702.
mortgagee may sell the property without, 707.
statutory provisions of the several states relating to, 713-757.
In equity and sales under powers, 758-821.
all remedies may be pursued concurrently, 758.
the right of arises upon the breach of any one condition, 766.
whether mortgagee can sell entire property on first breach, 767.
prevailing rule that he may sell entire property, 768.
exceptional rule in Michigan, 769.
mortgage due immediately may be foreclosed immediately, 770.
when the right of is barred, 771.
when statute of limitations begins to run against mortgagee,
772.
Sale by mortgagee without formal foreclosure, 707, 773.
by virtue of his absolute title, 773.
rule otherwise in Michigan, 774.
sale by consent of parties, 775,
622
 

INDEX.

Reference is to Sections.

FORECLOSURE — continued.
By suit in equity, 776-788.
is the ordinary mode, 776.
power of sale does not preclude, 777, 778.
proper where there are successive incumbrances, 779.
proper when mortgage secures payment in goods, 780.
cannot be had when statute prescribes another mode, 781.
when suit should be brought, 782.
parties to bill, 783.
no demand necessary before, 784.
personal decree against mortgagor, 785.
damages for mortgagor’s refusing to surrender property, 786.
appointment of receiver, 787.
marshalling securities, 788.

FORFEITURE of mortgaged property under the revenue laws, 471.

FORM of a chattel mortgage, 34.
no particular form required, 34.
by statute in several states, 35.

FRAUD IN MORTGAGE not shown by contingent debt secured, 82.
recital of larger debt than is actually due not conclusive of, 92.
against creditors does not invalidate as between parties, 238.

Arising from mortgagor’s possession without record, 319-382.
per se from want of delivery in case of absolute sale, 319.
better doctrine that possession is only primdé facie evidence of,
320.
possession is only a circumstance bearing upon, 321.
distinction between an absolute sale and mortgage as regards,
322.
when possession of mortgagor is consistent with the mortgage,
3238.
possession of mortgagor only primd facie evidence of fraud,
324,
resumption of possession may be explained, 324,
continuing possession may be explained, 325.
the doctrine is only a rule of evidence, 326.
is a question for the jury, 327.
the rule otherwise in Pennsylvania and Illinois, 328.
_recording or filing has same effect as possession, 329.
when the mortgaged property is exempt from execution, 330
does not arise from security clause, 331.
waiver of invalidity arising from, 332.

623
INDEX.

Reference is to Sections.

FRAUD IN MORTGAGE — continued.
Under Statute of Frauds and at common law, 333-351.
under statute of Elizabeth, 333.
mortgage not executed alone to secure indebtedness, 334.
on part of mortgagor alone, 335, 343.
on part of one mortgagee does not affect others, 336.
on part of one beneficiary does not affect others, 336.
may be proved by circumstances, 337.
circumstances indicating intention to delay creditors, 338.
overstatement of amount secured, 339.
where the transaction is equivocal, 340.
statutory provision that intent shall be a question of fact, 341.
subsequent acts or declarations of mortgagor, 342.
by mortgagor while acting as agent of mortgagee, 343.
understanding of witness as to intention, 344.
only creditors and purchasers in good faith can impeach for,
345,
does not invalidate between parties, 345.
invalidates only as against creditors who raise the issue, 346.
a junior mortgagee may raise the issue, 347.
a bill in equity to obtain cancellation, 348.
mortgage procured by duress wholly void, 349.
in part makes void in toto, 350.
mortgage in violation of liquor law, 350.
mortgage may be valid in part and void in part, 351.
In trust assignments in nature of mortgages, 352-355.
reservation of surplus in trust assignments, 352.
trust in favor of mortgagor necessarily arises, 353.
provision that trustee may continue”business, 354.
mortgage need not be wholly for benefit of mortgagee, 355.
Preferences under bankrupt and insolvent laws, 856-366.
a debtor has a right to prefer a creditor, 356.
insolvency at time of making mortgage not conclusive, 356.
relationship of parties not evidence of, 357.
in mortgage given by debtor in failing circumstances, 358.
mortgage not given in usual course of business, 359..
under different clauses of Bankrupt Act, 360.
assignee in bankruptcy may avoid for, 361.
by actions in state courts, 362.
voluntary assignee for creditors cannot avoid, 363.
withholding from record by agreement, 364.
624
INDEX.

Reference is to Sections.

FRAUD IN MORTGAGE — continued.
proof of debt releases security only against assignee, 365.
assignee in insolvency may avoid or affirm, 366.
In mortgages of consumable property, 367, 368.
when goods are consumable in use, 367.
when goods partly perishable, 368.
Arising from mortgagor's possession after default, 369-378.
failure to take possession after default, 369.
rule in Illinois, Colorado, and Montana, 370.
reasonableness of time for taking possession, 371.
effect of extension of mortgage after maturity, 372.
as between two mortgagees, 373.
option of taking possession before default, 374.
what is sufficient possession, 375.
in case of a railroad mortgage, 376.
mortgagee purchasing at foreclosure sale, 377.
mortgage becomes void only as to third persons, 378.
Arising from power of sale in mortgagor, 379-425.
a disputed question, 379.
recording a substitute for change of possession, 380.
generally good reason why mortgagor should retain possession,
381.
doctrine upon principle, 381.
Doctrines of the state courts, 382-409.
doctrines of the federal and English courts, 410-418.
of the Supreme Court of the United States, 410.
of the Circuit and District Courts, 411.
of Bett v. Carter, 412.
Summary of authorities, 414, 415.
state courts about equally divided, 415.
in what states fraud is a question of fact, 415.
in what states fraud is conclusive, 415.
The subject considered upon principle and policy, 416.
fraud in law distinguished from fraud in fact, 416.
instruments declared fraudulent by statute, 417.
absolute sale without delivery, 418.
presumptions to help out doctrine of conclusive fraud, 419.
claim that such power makes mortgagor substantial owner, 420.
doctrine confined to mortgages of stocks of goods, 421, 422.
public policy as it affects the question, 423.
modifications of doctrine of constructive fraud, 424.
conclusions drawn, 425.

4} 625
INDEX.

Reference is to Sections.

FRAUD IN MORTGAGE — continued.
in mortgage as to creditors does not prevent enforcement of debt,
760. )
in sales under power of sale, 801, 802, 803.
FUTURE ADVANCES, mortgage to secure is valid, 94.
amount of need not be stated, 95.
mortgage need not show on its face that it was given to secure, 96.
may be covered by mortgage for a fixed sum, 96.
made after notice that others have acquired rights, 97.
not contemplated when mortgage was made are not secured, 98.
assignee of mortgage given for, 515.
FUTURE PROPERTY, mortgages of at law, 138-157.
can operate only on property in existence, 138.
of goods not owned by mortgagor void, 138.
this rule holds good though mortgage secure purchase money,
139.
one may mortgage what he potentially owns, 140.
crops to be grown on mortgagor’s land, 140.
on land he holds by lease, 141.
mortgage of growing crops, 142.
of unplanted crops, 143.
assignments of future wages, 144.
mortgage of growing trees, fruit, or grass, 145.
whether a severance in law, 146.
mortgage of trees or grass to be cut, 146.
doctrine of potential possession restricted, 147.
accessions to mortgaged chattels, 148.
by manufacture or repair, 148.
increase of domestic animals, 149.
when mortgage does not in terms cover, 150.
cuttings of plants and shrubs mortgaged, 151.
substituted articles covered by way of accession, 152.
exceptional cases of mortgages of held good at law, 153.
goods acquired by way of renewal or substitution, 154.
there can be no substitution as to third persons, 154.
when commingled with mortgaged stock, 155.
where identity destroyed with mortgagee’s consent, 155.
notice of a mortgage of, 156.
record not sufficient notice of, 157.
what sufficient notice in equity, 157.
Ratification of by new act of mortgagor, 158-169.
maxim of Lord Bacon regarding, 158.

626
INDEX.

Reference is to Sections.

FUTURE PROPERTY — continued.
merely bringing such goods upon mortgagee’s premises is not
159.
seizure of goods by mortgagee gives effect to mortgage, 160, 161.
doctrine affirmed in England, 162.
power to seize must be exercised before bankruptcy, 163.
same doctrine prevails in American courts, 164.
mere license to enter cannot be exercised against mortgagor’s
will, 165.
mortgagor may revoke such license, 165.
such license not revocable when coupled with an interest, 166.
such license must be contained in the mortgage, 167.
such license is operative according to its terms, 168.
ratification by indorsement on original mortgage, 169.
Mortgage of in equity, 170-175.
operative as an executory agreement, 170.
leading English case of Holroyd v. Marshall, 171.
authority to enter and seize property does not constitute, 172.
leading American case of Mitchell v. Winslow, 173.
doctrine generally established in the United States, 173.
all kinds of property may be subject of, 174.
under railroad mortgages, 175.

?

GEORGIA, statutory provisions as to execution of mortgage, 35.
provision that mortgage may cover changing stock of goods, 138.
statutory provisions relating to recording, 200.
sale without delivery of possession primdé facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 385.
statutory provisions relating to attachment and execution, 574.
removal, concealment, and sale of mortgaged property, 610. ,
provisions relating to foreclosure and redemption, 723.

GRASS, growing, whether a valid chattel mortgage can be made of, 145,
whether a mortgage of is a severance at law, 146.

GROWING CROP, uncertainty in description of a part of, 56.
mortgage of a certain number of bales of cotton out of crop, 59.
mortgage of an undivided part to be set aside when gathered, 59.
“now standing and growing” does not include gathered part, 62.
wholly false description of invalidates mortgage, 63.
parol evidence to identify, 64.
mortgage of may embrace gathered crops, 69.

how identified when gathered, 69.
mortgage of by owner or lessee of land, 140, 141.
627
INDEX.

Reference is to Sections.

GROWING CROP — continued.
of part of, if sufficiently described, 142.
of unplanted crop when valid, 143.
GROWING TREES, fruit, and grass, whether a mortgage of is valid,
145. .
whether a mortgage can be considered a severance of, 146.

IDAHO TERRITORY, statutory requirements as to form of mort-
gage, 36.
what chattels may be mortgaged in, 121.
statutory provisions relating to recording, 201.
statutory provisions relating to attachment and execution, 576.
provisions relating to foreclosure and redemption, 724.
ILLINOIS, statutory provisions relating to recording, 202.
actual notice of mortgage not equivalent to record in, 315.
sale without delivery of possession fraudulent per se, 319, 328.
mortgagee must take possession immediately after default, 370.
mortgage of goods with power of sale in mortgagor, 386.
equitable rules relating to attachment and execution, 577.
removal, concealment, and sale of mortgaged property, 611.
entry of satisfaction of record, 668.
provisions relating to foreclosure and redemption, 725.
IMPROVEMENTS by mortgagor are at his own expense, 478.
INCREASE of domestic animals, subject to mortgage of latter, 149.
when not in terms described in mortgage, 150.
INDIANA, statutory provisions relating to recording, 203.
actual notice of mortgage not equivalent to record in, 316.
sale without delivery of possession primdé facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 387.
statutory provisions relating to attachment and execution, 578.
removal, concealment, and sale of mortgaged property, 612.
provisions relating to foreclosure and redemption, 726.
INFANT, mortgage by not void but voidable, 40.
may disaffirm mortgage without returning loan, 40.
except the mortgage be for purchase money, 40.
INJUNCTION, when granted against mortgagee’s taking possession, 438.
against injury to mortgagee’s rights, 450.
INSANE PERSON, mortgage by is voidable, 41.
INSOLVENCY. See Banxrurrcy.
INSURANCE for benefit of mortgagee, stipulation for, 100.
effect of breach of covenant for, 100.
when notice of intention to foreclose avoids, 100.

628
INDEX.

Reference is to Sections.

IOWA, statutory provisions relating to recording, 204.

sale without delivery of possession fraudulent per se, 319.
mortgage of goods with power of sale in mortgagor, 389.
equitable rules relating to attachment and execution, 579.
removal, concealment, and sale of mortgaged property, 613.
provisions relating to foreclosure and redemption, 727.

KANSAS, statutory provisions relating to filing, 205.
sale without delivery of possession primé facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 383.
removal, concealment, and sale of mortgaged eo 614.
entry of satisfaction of record, 669.
provisions relating to foreclosure and redemption, 728.
KENTUCKY, statutory provisions relating to recording, 206.
sale without delivery of possession fraudulent per se, 319.
mortgage of goods with power of sale in mortgagor, 390.
statutory provisions relating to attachment and execution, 580.
entry of satisfaction of record, 670.
provisions relating to foreclosure and redemption, 729.

LAW OF PLACE of contract governs as to validity of mortgage, 299.
and as to validity of record, 299.
otherwise in Louisiana and Pennsylvania, 300.
when property is removed to another state, 301.
as to mortgages of property brought from another state,
802.
when mortgage is made outside the state, 308, 304.
when the dea situs governs instead, 305.
the lex fori governs as to remedies, 307. .
LEASE containing provisions amounting to a mortgage, 13, 19.
LEX FORI determines the remedies upon a mortgage, 307.
LEX SITUS, when this rule governs as to validity of mortgages, 805.
presumption as to the place of execution of mortgage, 306.
LIEN for purchase money reserved is not a mortgage, 11.
may operate in equity as a mortgage, 12.
Mortgagor’s power to create upon mortgaged property, 472-480.
mortgagor’ has no power to create, 472.
except with express or implied consent of mortgagee, 473.
‘given by law has precedence of mortgage, 474.
given by statute upon crops, 475.
when it may operate as a mortgage, 476.
landlord has none upon crops, 477.

629
INDEX.

Reference is to Sections.

LIEN — continued.
none for improvements and repairs by mortgagor, 478.
by vendor does not affect mortgagee, 479.
Upon ships, 532-539.
when strictly maritime takes precedence of mortgage, 532.
for wages of last voyage takes precedence, 532.
for advances in foreign port has priority, 533.
mortgagor in possession has implied authority to create, 535.
state may determine rank of, 536.
state courts have jurisdiction to enforce, 537.
decisions that recorded mortgage has precedence over, 539.
mortgagee has none upon earnings before taking possession,
545.
LOST MORTGAGE, secondary evidence of, 531.
LOUISIANA, a chattel mortgage, except of a ship, unknown to the law
. of, 207.
rule that law of place of contract governs validity of mortgage
does not apply in, 300.
sale without delivery primd facie fraudulent, 320.

MAINE, statutory provisions relating to recording, 208.

actual notice not equivalent to record in, 314.

sale without delivery prima facie fraudulent, 320.

mortgage with power of sale in mortgagor, 391.

statutory provisions relating to attachment and execution, 581.

provisions relating to foreclosure and redemption, 730.
MARRIED WOMAN, mortgage by is valid, 42.

whether mortgage to by husband is valid, 43.
MARSHALLING, securities on foreclosure suit, 788.
MARYLAND, statutory requirement of affidavit to accompany mort-

gage, 36.

of statement of mortgage debt in mortgage, 91.

statutory provisions relating to recording, 209.

sale without delivery prima facie fraudulent, 320.

mortgage of goods, with power of sale in mortgagor, 392.

equitable rules relating to attachment and execution, 582.

entry of satisfaction of record, 671.

provisions relating to foreclosure and redemption, 731.
MASSACHUSETTS, statutory provisions relating to recording, 210.

actual notice not equivalent to record in, 314.

sale without delivery prima facie fraudulent, 320.

mortgage of goods with power of sale in mortgagor, 393.

630
INDEX. '

Reference is to Sections.

MASSACHUSETTS — continued.

statutory provisions relating to attachment and execution, 583.

decisions under the statute, 583.

removal, concealment, and sale of mortgaged property, 615.

provisions relating to foreclosure and redemption, 732.
MERGER AND SUBROGATION, 658, 659.

surety is entitled to mortgage given to creditor, 658.

payment by mortgagee of prior lien for protection, 659.
-MICHIGAN, what chattels cannot be mortgaged in, 121.

statutory provisions relating to filing, 211.

no statute applicable to recording a non-resident’s mortgage, 304.

sale without delivery primd facie fraudulent, 320.

mortgage of goods with power of sale in mortgagor, 394.

mortgage does not transfer title, only a lien, 427.

statutory provisions relating to attachment and execution, 584.

removal, concealment, and sale of mortgaged property, 616,

provisions relating to foreclosure and redemption, 733.
MINNESOTA, statutory provisions relating to filing, 212.

filing not equivalent to a change of possession in, 236.

sale without delivery prim@ facie fraudulent, 320.

fraud presumed from mortgagor's possession, though mortgage be

recorded, 329.

mortgage of goods with power of sale in mortgagor, 395.

statutory provisions relating to attachment and execution, 585.

removal, concealment, and sale of mortgaged property, 617.

entry of satisfaction of record, 672.

provisions relating to foreclosure and redemption, 734.
MISSISSIPPI, statutory provisions relating to recording, 213.

sale without delivery prima facie fraudulent, 320.

mortgage of goods with power of sale in mortgagor, 396.

provision that mortgagor is owner of legal title, 427.

equitable rules relating to attachment and execution, 586,

removal, concealment, and sale of mortgaged property, 618.

entry of satisfaction of record, 673.

provisions relating to foreclosure and redemption, 735.
MISSOURI, statutory provisions relating to recording, 214.

actual notice not equivalent to record in, 314.

sale without delivery of possession fraudulent per se, 319.

mortgage of goods with power of sale in mortgagor, 397.

mortgagee not entitled to possession until default, 427.

equitable rules relating to attachment and execution, 587.

removal, concealment, and sale of mortgaged property, 619.

631
INDEX.

Reference is to Sections.

MISSOURI — continued.
entry of satisfaction of record, 674.
provisions relating to foreclosure and redemption, 736.
MISTAKE in spreading mortgage upon record, 273. ;
MONTANA TERRITORY, statutory provisions relating to recording,
215. ;
mortgagee must take possession immediately after default, 370.
removal, concealment, and sale of mortgaged property, 620.
provisions relating to foreclosure and redemption, 737.
MORTGAGE, what constitutes a legal, 1.
is a conditional sale as security, 1.
is a transfer of title, 1.
like a mortgage of realty under the old common law, 1.
need not express the condition, 1.
may be made without writing, 2.
parol agreement to give, 3.
Distinguished from a pledge, 4, 7.
whether an assignment of securities constitutes, 5.
intention largely determines nature of transaction, 6, 7.
in form cannot be shown to be a pledge, 7.
A conditional transfer of title essential to, 8, 9,11.
a naked power to sell property is not, 9, 13, 17.
an agreement to give a mortgage is not, 10.
lien reserved for purchase money is not, 11.
lien may in equity be regarded as, 12.
may arise from the use of the word mortgage, 12.
in equity, what constitutes, 13,
bill of sale to secure a debt is a legal, 14.
examples of informal, 14, 15.
definite statement of condition sometimes required, 16.
in technical form, must contain an express condition, 17.
whether an instrument be is a question of law, 18.
when the intention is left in doubt, it is a question for the jury,
18.
Arising from bill of sale with separate defeasance, 19.
defeasance must be part of same transaction, 19.
effect of bill of sale with subsequent defeasance, 19, 20.
Liffect of absolute bill of sale at law and in equity, 21.
at law, terms cannot be varied by parol, 21.
in equity, parol evidence admissible to prove, 22.
ground upon which parol evidence is admitted, 23.
all the attendant circumstances of the sale may be shown, 24.

6382
INDEX.

Reference is to Sections.

MORTGAGE — continued.
Distinguished from a conditional sale, 26.
whether there was a previous debt is an important inquiry, 27.
presumption of arises from continuance of previous debt, 27.
presumption of arises from creating debt at time of sale, 28.
presumption of arises from proposition for a loan, 28.
presumption of arises from inadequacy of price, 29.
in cases of doubt courts incline against conditional sales, 30.
is indicated by provision that the property is at risk of vendor, 31.
strict proof is required that sale was intended as a mortgage, 32.
Requisites of form and execution, 34-111.
no particular form required, 34.
statutory forms in several states, 35.
affidavit verifying essential facts of, 36.
reference required in second, to first, 39.
The parties to, 40-52.
by infant not void but voidable, 40.
infant may disaffirm without returning money, 40.
of insane person not binding, 41.
of married woman valid, 42.
whether husband may make to wife, 43.
by partners upon partnership property to secure individual debt,
44.
by one partner to another to secure individual debt, 45.
by member of unincorporated joint stock company, 45.
by one partner to secure partnership debt, 46.
by one tenant in common of his interest, 47.
by two or more persons jointly, 48, 49, 50.
to several persons to secure several debts, 49.
by corporation, execution of, 51.
by agent for his principal, 52, 528.
Description of property in, 53-78.
The debt secured, 79-98.
Special provisions in, 99-101.
for release of portions of the property, 99.
that property shall be kept insured, 100.
covenants of warranty in, 101.
Execution and delivery of, 102-113.
need not be under seal, 102.
delivery and acceptance essential to validity of, 104.
agent may accept delivery of, 105.
: 633

'
INDEX.

Reference is to Sections.

MORTGAGE — continued.
delivery to recorder not sufficient unless authorized, 106, 107.
subsequent ratification of, 113.
Subject matter of, 114-187.
what present interests are subject to, 114.
all interests in property subject to, 114.
owner not in possession may make, 115.
mere possession confers no power to give, 116.
interest under executory contract subject to, 117.
vendee’s interest under conditional sale subject to, 117.
vendor’s interest under conditional sale subject to, 118.
of property to which mortgagor has no title may be ratified,
119.
of property of which sale is forbidden by statute, 120.
such as intoxicating liquors, 120.
Statutory limitations of subject matter of, 121, 122.
On fixtures, 123-137.
of building erected on land of another, 123.
of chattels about to be annexed to the realty, 125.
of property incorporated with the realty, 130.
of machinery after it is set up, 181.
of property before it is affixed to the realty, 132.
record of does not protect against purchasers of the realty,
134.
actual notice of necessary to protect, 185.
of appurtenances, 136.
as against mortgagor's assignee in bankruptcy, 137.
Of future personal property, 138-175.
at law, 138-157.
ratification by new intervening act, 158-169.
in equity, 170-175.
Delivery and possession when requisite, 176-189.
Statutory provisions relating to recording, 190-235.
Recording, filing, and refiling, 236-318.
Law of place of contract governs as to validity, 299-807.
Actual notice of, 308-318.
When fraudulent, 319-378,
Of merchandise with power of sale in mortgagor, 379-425.
Of ships. See Snips, 520-554.
Provisions regarding removal, concealment, and sale of mortgaged
property, 601-631.
634
INDEX.

Reference is to Sections.

MORTGAGEE, possession of dispenses with affidavit of good faith in
execution, 38.
not affected by subsequent acts and declarations of mortgagor,
342.
not affected by fraudulent act of mortgagor alone, 343.
purchasing at foreclosure sale must take possession, 377.
Right of possession of, as against mortgagor, 426-453.
entitled to possession unless mortgage otherwise provides,
426.
exceptions to this rule, 427.
mortgage generally defines right of possession, 429.
right of possession determined by express stipulation, 430.
safety clause in favor of, 431.
possession under, 433.
in possession not subject to action of trespass by mortgagor,
434.
mortgagor cannot maintain trover against, 435.
mortgagor cannot maintain replevin against, 436.
liable to trespass for wrongfully disturbing mortgagor, 437.
may be enjoined from taking possession when, 438.
receiver will not be appointed over when in possession, 439.
cannot make mortgagor in possession account, 441.
may maintain replevin against mortgagor, 442.
when demand necessary before suit, 443.
may maintain trover for the property, 444, 446.
pleading and evidence, 445.
may maintain trespass against stranger, 447.
what damages he may recover, 448.
may maintain action for damage to reversionary interest, 449.
equity will enjoin threatened injury to his rights, 450.
may have a receiver appointed, 451.
may defend his title just as an owner may, 452.
is entitled to possession as against tax collector, 453.
may consent orally to sale by mortgagor, 456.
consent of to sale may be implied, 457.
waives his mortgage by being present at sale, 466.
may waive his mortgage in favor of another creditor, 467.
does not waive by taking under distress warrant, 468.
may purchase equity of redemption, 469.
extinguishes mortgage by buying at execution sale, 470.
Rights of subsequent. See Sussequent Morteaces, 492-500.
the interests of successive mortgagees are distinct, 500.

6385
INDEX,

Reference is to Sections.

MORTGAGEE — continued.
Of ship, 540-549.
in possession liable for supplies, 540, 542, 543.
not in possession not liable for supplies, 541.
has immediate right of possession, 544.
not in possession has no lien upon earnings, 545.
is entitled to freight afterwards earned, 546.
but must pay wages, 547.
may maintain action for conversion, 549.
Remedies of for enforcing mortgage of ship, 550-554.
upon default has absolute title, 551.
may enforce without regard to equities of part owners, 552.
may apply to courts for proceeds of execution sale, 553.
for fraudulent sale by mortgagor, 554.
Interest of not subject to attachment on execution, 566.
In possession is liable to account, 696.
is responsible for ordinary care of the property, 697.
not answerable if property be tortiously taken by another,
698.
Rights and remedies after forfeiture, 699-712.
upon default title rests absolutely in, 699.
provision for sale of property does not prevent title becoming
absolute, 700.
rule otherwise in Michigan, 701.
on taking possession not bound to foreclose, 702.
may hold without selling, 702.
when his title becomes absolute, 7038.
time of payment may be extended by parol, 704.
may take peaceable possession upon default, 705.
remedy for conversion at law not in equity, 705.
may maintain replevin after forfeiture, 706.
may sell after forfeiture without foreclosure, 707.
what is reasonable notice of sale, 708.
sale with mortgagor’s consent, 709.
embarrassments in selling without foreclosure, 710.
recovery of deficiency by, 711.
must account to mortgagor for surplus of sale, 712.
Cannot purchase at his own sale under power, 806.
directly or indirectly, 806.
otherwise in a few states, 808.
such purchase is voidable only in equity, 809.
cannot question regularity of his own sale, 813.

636
INDEX.

Reference is to Sections.

MORTGAGEE — continued.
has an implied license to enter and take mortgaged goods
815.
is trustee for surplus, 817.
MORTGAGOR, no right of possession against mortgagee, 426.
except by special provision, 426.
exceptions to this rule, 427.
provision for possession gives legal right, 428.
mortgage generally defines right of possession, 429.
express stipulation determines right of possession, 430.
right to remain in possession may be implied, 432.
cannot maintain trespass against mortgagee, 484.
nor trover, 435.
nor replevin, 436.
may maintain action when mortgagor wrongfully disturbs his
possession, 437.
may have mortgagee enjoined from taking possession, 438.
cannot have receiver appointed, 439.
may recover property as against third person, 440.
cannot be made to account, 441.
when his possession is that of mortgagee, 446.
Right of to sell the mortgaged property, 454-471.
may sell subject to mortgage before forfeiture, 454.
purchaser obtains his rights and no greater, 454.
statutory provision that he shall not sell without consent, 455.
may make valid sale with mortgagee’s oral consent, 456.
authority to sell may be inferred, 457.
authority to sell in ordinary course of business, 458.
does not authorize sale of whole stock, 459.
sale as owner in exclusion of mortgagee’s rights, 460.
sale by junior mortgagee not necessarily hostile, 461.
giving mortgage without notice of existing mortgage, 462.
authority to commit temporary custody of the property to an-
other, 463.
waiver of lien by mortgagee, 465.
by being present at sale by mortgagor, 466.
by agreement in favor of another creditor, 467.
none by taking under distress warrant, 468.
Power of to create liens upon the property, 472-480.
no power to create a prior lien, 472.
unless with express or implied authority of mortgagee, 473.
but lien may arise by force of law, 474.

6387

 
INDEX.

Reference is to Sections.

MORTGAGOR — continued.
priority of statutory liens upon crops, 475.
improvements and repairs by are at his own cost, 478.
not allowed to defeat mortgagee’s title, 480.
Confusion of goods by, 481-483.
mortgagee may take the whole, 481.
by adding new goods to stock, 482.
through fault or neglect of mortgagee, 483.
Interest of liable to attachment and execution, 555-600.
not at common law, 555.
rule changed by statute, 555,
rule changed by courts, 556.
liable only when he has right of possession for a definite
period, 556.
not after forfeiture, 556.
nor after mortgagee has taken possession, 557.
sale of all interest of, 559.
sale of entire property by officer under execution, 560, 561.
Right of redemption of, 681-698.
cannot debar himself of by agreement, 682.
only right of, after forfeiture, is redemption, 683.
-how long his right to redeem continues, 687, 688.
may purchase at foreclosure sale, 812.

NATURE of mortgages of personal property, 1-33.
NEBRASKA, statutory provisions relating to filing, 216.
filing not equivalent to a change of possession, 236.
sale without delivery prima facie fraudulent, 320.
fraud presumed from mortgagor’s possession though mortgage be
recorded, 329.
mortgage of goods with power of sale in mortgagor, 398.
equitable rules relating to attachment and execution, 588.
removal, concealment, and sale of mortgaged property, 621.
entry of satisfaction of record, 675. >
provisions relating to foreclosure and redemption, 738.
NEVADA, statutory provisions relating to recording, 217.
sale without delivery of possession fraudulent per se, 319.
statutory provisions relating to attachment and execution, 589.
provisions relating to foreclosure and redemption, 739.
NEW HAMPSHIRE, statutory requirement of affidavit to accompany
mortgage, 37.
638
INDEX.

Reference is to Sections.

NEW HAMPSHIRE — continued.
statute forbidding execution of second mortgage without refer-
ence to first, 39.
what chattels may be mortgaged in, 121.
statutory provisions relating to recording, 218.
sale without delivery primd facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 399.
statutory provisions relating to attachment and execution, 590.
- removal, concealment, and sale of mortgaged property, 622.
provisions relating to foreclosure and redemption, 740.
NEW JERSEY, statutory provisions relating to filing, 219.
sale without delivery primd facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 400.
equitable rules relating to attachment and execution, 591.
removal, concealment, and sale of mortgaged property, 623.
provisions relating to foreclosure and redemption, 741.
NEW MEXICO TERRITORY, a mortgage of growing crops void in,
143.
statutory provisions relating to filing, 220.
mortgagor declared entitled to possession, 427.
entry of satisfaction of record, 679.
provisions relating to foreclosure and redemption, 742.
NEW YORK, statutory provisions relating to filing, 221.
filing not equivalent to a change of possession in, 236.
sale without delivery primé facie fraudulent, 320.
fraud presumed from mortgagor’s possession though mortgage be
recorded, 329. ;
mortgage of goods with power of sale in mortgagor, 401.
equitable rules relating to attachment and execution, 592.
removal, concealment, and sale of mortgaged property, 624.
entry of satisfaction of record, 678.
foreclosure in, 743.
NORTH CAROLINA, statutory provisions relating to recording, 222.
sale without delivery primd facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 402.
removal, concealment, and sale of mortgaged property, 625.
entry of satisfaction of record, 680. °
provisions relating to foreclosure, 744.
NOTE containing provisions amounting to a mortgage, 15.
secured need not be fully described in mortgage, 85, 86.
variance from description may be explained, 85.
description of wholly false, 88.
639
INDEX.

1
Reference is to Sections.

NOTE — continued.
parol evidence admissible to identify, 89.
to show that the note offered is a renewal of that described,
89.
NOTICE, whether record of mortgage of fixtures affects purchaser of
realty, 184.
of a mortgage of future chattels when effectual, 156.
of such mortgage by record not sufficient, 157.
of such mortgage, actual or constructive, good in equity, 157.
to whom record is, 247.
effectual from time mortgage is left for record, 270.
Aetual notice, 308.
includes as well implied and constructive notice, 308.
should be equivalent to actual knowledge, 308.
should be notice of all that the statute requires record of, 309.
may be proved by facts and circumstances, 310.
any competent evidence may be used to establish, 310.
by debtor to sheriff when proceeding to attach, 311.
to subsequent purchaser before completion of sale, 312.
of prior mortgage which is defective, 812.
in several states is not equivalent to record, 314-316.
the statutes governing mortgages of realty different, 314.
to creditors, 317, 318.
Of sale by mortgagee without foreclosure, 708.
what is reasonable, 708.
of sale under power when need not be given, 790.
when not required by the power, 792.
provided for by power must be given, 795.

OHIO, statutory requirement of affidavit to accompany mortgage, 36.
statutory provisions relating to filing, 228.
sale without delivery prima facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 403.
equitable rules relating to attachment and execution, 593.
removal, concealment, and sale of mortgaged property, 626.
foreclosure in, 745.

OREGON, statutory provisions relating to filing, 224.
sale without delivery of possession fraudulent per se, 319.
mortgage with power of sale in mortgagor, 404.
provisions relating to foreclosure and redemption, 746.

PARCELS, sale in, by virtue of power, 797.
640
i
i

INDEX.

Reference is to Sections.

PAROL EVIDENCE, not admissible to vary terms of absolute sale, 21.
admissible to show a bill of sale to be a mortgage, 22.
ground upon which it is admitted, 23.
all attendant circumstances may be shown, 24.
admissible to identify property mortgaged, 53, 64, 65.
not admissible to contradict terms of mortgage, 64, 67.
admissible to fix quantity of goods intended to be covered, 66.
admissible to identify note intended to be secured, 89.
admissible to show purpose for which mortgage was made, 90.
not admissible to substitute different condition, 91.
admissible to show when mortgage was executed, 103.
PARTIES to mortgage, 40-52.
infant, 40.
insane person, 41.
married woman, 42.
husband, 43.
partners, 44, 45, 46.
tenants in common, 47.
joint tenants, 48, 49.
several mortgagees, 50.
corporations, 51.
an agent of a person or corporation, 52.
to bill in equity to foreclose, 783.
PARTNERSHIP PROPERTY mortgaged to secure debt of individual,
44,
mortgage of one partner’s interest for his own debt, 45.
mortgage of by one partner to secure partnership debt, 46.
PAYMENT, time of need not be set forth in mortgage, 87.
after forfeiture revests title in mortgagor, 633.
Appropriation of, 638-641.
mortgagee may apply to any debt due him, 638.
court of equity will apply to unsecured indebtedness, 639.
proceeds of security must be applied to mortgage debt, 640.
creditor may apply to any instalment due, 641.
Effect of changes in form of the debt, 642-645.
judgment upon mortgage debt, 642.
taking new note for old, 643,
taking second mortgage for same debt, 644.
new note and mortgage when payment of old, 645.
Effect of upon mortgage lien, 646-657.
is satisfaction of the mortgage, 646.
of principal debt discharges mortgage to surety, 647.
41 641
4

INDEX.

Reference is to Sections.

PAYMENT — continued.
release of surety discharges mortgage to surety, 647.
but otherwise if surety himeell | pay the debt, 648.
by whomsoever made extinguishes mortgage, 649.
a conversion by mortgagee is payment pro tanto, 650.
neither default nor foreclosure constitutes, 651.
possession of the property by the mortgagor not presumptive
proof of, 652.
discharge of debt in bankruptcy is not, 653.
proof of debt against estate of deceased mortgagor is not,
654.
bequest by mortgagee to mortgagor is not, 655.
release of part of property under agreement, 656.
recital of in recorded release not conclusive, 657.
Merger and subrogation, 658, 659.
a surety who has paid is entitled to mortgage to creditor, 658.
payment of prior lien by mortgagee for his protection, 659.
Release otherwise than by payment, 660-662.
by parol contract, 660.
by sale of mortgaged property with mortgagee’s consent, 660.
time of may be extended by parol, 704.
when no time is specified, 770.
PENNSYLVANIA, statutory provisions relating to recording, 225.
rule that law of place of contract governs validity of mortgage
does not apply in, 300.
sale without delivery of possession fraudulent per se, 319, 328.
entry of satisfaction of record, 679.
provisions relating to foreclosure, 747.
PLACE OF CONTRACT. See Law or Pracz.
PLEDGE, distinguished from a mortgage, 4, 7.
is a transfer of possession, not of title, 4.
whether an assignment of securities constitutes, 5.
intention largely determines nature of transaction, 6, 7.
rights arising upon default under, 7.
is waived by a mortgage of same property, 7.
does not necessarily arise from use of the word in a contract, 11.
POSSESSION. See, also, DeLivery.
By mortgagor not essential to his making a valid mortgage, 115.
without title confers no power to mortgage, 116.
under conditional sale confers power to mortgage, 117.
delivery of essential to a mortgage of chattels at common law,
176.
642
INDEX.

Reference is to Sections.

POSSESSION — continued.
registration is a substitute for, 176.
not necessary as between the parties to a mortgage, 176.
necessary to complete mortgagee’s title under an unrecorded
mortgage, 177.
taken before other rights attach gives priority of title, 178,
cures any invalidity in the mortgage, 178.
of part of mortgaged property not sufficient, 179.
delivery of to agent of mortgagee sufficient, 180.
no particular mode of taking required, 180.
by mortgagor as agent for mortgagee, 181.
is destroyed by allowing property to go back to hands of mort-
gagor, 181.
what constitutes depends upon situation of property, 182.
when property is in hands of a third person, 182.
immediate delivery of not then necessary, 183.
some authority must be conferred upon third person, 184.
mortgagee’s assuming control amounts to a change of, 184.
concurrent by mortgagor and mortgagee not sufficient, 185.
constructive is ineffectual, 186.
of ponderous or bulky property, what sufficient, 183, 187.
must be clear, unequivocal, and exclusive, 187.
what is sufficient is a question for the jury, 187.
delivery of not complete while anything remains to be done, 188.
burden of proving change of is with holder of mortgage, 189.
recording a substitution for, 236, 329, 380.
taken just before insolvency or bankruptcy, 243.
obviates necessity of refiling, 295.
Of mortgagor either conclusive or primd facie evidence of fraud, 319—
832.
want of delivery of renders absolute sale fraudulent, 319.
fraudulent per se in what states, 319.
prima facie fraudulent in what states, 320.
is a circumstance bearing upon question of fraud, 321.
distinction between absolute sale and mortgage as regards,
322.
when mortgage provides for mortgagor’s possession, 323.
inconsistent with terms of mortgage, 323.
when delivery is impossible, 323.
only prima facie evidence of fraud in mortgage, 324.
mortgagor’s right may be implied, 432.
mortgagee’s right under safety clause, 433.

643
INDEX.

Reference is to Sections.

POSSESSION — continued.

mortgagor cannot recover from mortgagee rightfully in, 434.

cannot maintain trover against mortgagee rightfully in,
435.

sale by mortgagee not a conversion, 435.

mortgagor cannot maintain replevin against mortgagee, 436.

mortgagee liable for disturbing mortgagor rightfully in, 437.

mortgagor may have mortgagee enjoined, 438. ;

a receiver will not be appointed over a mortgagee in pos-

session, 439.

mortgagor alone can recover against third person, 440.

mortgagor cannot be made to account, 441.

when mortgagee may maintain replevin against mortgagor,

442.

when demand necessary before suit, 443.

mortgagee may maintain trover without demand, 444.
pleading and evidence, 445.

when mortgagor’s possession that of mortgagee, 446.

when mortgagee may maintain trespass against stranger, 447.

damages which mortgagee may recover, 448.

damages to mortgagee’s reversionary interest, 449.

equity will enjoin threatened injury to mortgagee, 450.

mortgagee may have receiver appointed, 451.

mortgagee may defend his possession, 452.

mortgagee entitled to, as against tax collector, 453.

Mortgagee of vessel has immediate right of, 544.
effect of temporary resumption of by mortgagor, 324.
in mortgagor may be explained, 325.
rule of evidence shifting burden of proof of validity, 326.

‘fraud a question of fact for the jury, 327.
rule otherwise in Pennsylvania and Illinois, 328.
recording a substitute for, 329.
otherwise in New York, Nebraska, and Minnesota, 329.
when the property is by law exempt from attachment, 330.
effect of security clause, 381.
waiver of want of, 332.

By mortgagor after default does not invalidate mortgage, 369.
otherwise in Illinois, Colorado, and Montana, 870.
reasonable time for taking after default, 871.
extension after maturity does not dispense with, 372.
as between two mortgagees of same property, 378.
when mortgagee has option of taking before default, 374.

644
INDEX.

Reference is to Sections.

POSSESSION — continued.
what is a sufficient taking of, 375.
not necessary to remove property, 375.
in case of a mortgage of a railroad, 376.
when mortgagee purchases at foreclosure sale, 377.
mortgage only as against third persons, 378.
With power of: sale in mortgagor, 379-425.
recording a substitute for, 380.
reasons why mortgagor should retain, 381.
Right of as between the parties, 426-453.
vests in mortgagee unless otherwise stipulated, 426.
an incident to the right of property, 426.
exceptions to the rule, 427.
provision allowing mortgagor to retain, 428.
mortgagee has then no right to enter, 428.
generally provided for in the mortgage, 429.
determined by express stipulation, 430.
under provision for mortgagee’s safety, 431.
usually called a safety clause, 431.
mortgagee then has an absolute discretion, 431.
mortgagee may take upon default, 705, 706.
POWER OF SALE cannot be exercised in mortgage with indefinite
condition, 93.
advertising under obviates necessity of refiling, 296.
Jn mortgagor, how far it makes a mortgage fraudulent, 379-425.
is a disputed question, 379.
record a substitute for change of possession, 380.
good reason why mortgagor should retain possession, 381.
upon principle such power should not invalidate mortgage, 381.
Doctrines of the state courts, 382-409.
Doctrines of the federal and English courts, 410-413.
of Brett v. Carter, 412.
Summary of authorities, 414, 415.
subject considered upon principle and policy, 416—425.
what is fraud in law as distinguished from fraud in fact, 416.
what instruments may be fraudulent per se, 417.
an absolute sale without delivery, 418.
presumptions to help out rule of conclusive fraud, 419.
objection that such power makes mortgagor substantial owner,
420.
doctrine as applied to mortgages of stocks of goods, 421, 422.
public policy as affecting the question, 423.
' 645
INDEX.

Reference is to Sections.

POWER OF SALE — continued.
modifications of doctrine of constructive fraud, 424.
conclusions drawn, 425.
In mortgagee does not preclude foreclosure in equity, 777.
is a cumulative remedy, 778.
it is usual to insert, 789.
to sell at public or private sale, 790.
private sale when authorized is effectual, 791.
when notice of sale not required, 792.
mortgagee by virtue of his title may sell at private sale, 793.
confers no right to barter or exchange, 794.
notice must be given as provided for, 795.
conduct of sale, 796.
sale in parcels, 797.
sale should stop when debt is satisfied, 798.
mortgagee may in his discretion adjourn sale, 799.
mortgagee may sell upon credit, 800.
sale must be fair, 801.
fraud and collusion avoids, 802.
sale in fraud of creditors, 803.
mortgagee not liable to prior lien-holders for the exercise of, 804.
administrator liable personally for illegal sale, 805.
mortgagee cannot purchase at his sale, 806.
directly or indirectly, 806.
cestut que trust cannot purchase, 807.
in New York mortgagee may purchase, 808.
purchase by mortgagee valid at law, 809.
mortgagor may purchase at sale, 810.
irregular sale amounts to an assignment of the mortgage, 811.
irregular sale should be set aside immediately, 812.
mortgagee cannot question his own irregular sale, 813.
a mere trespasser cannot question such sale, 814.
mortgagee has an implied license to take away the goods, 815.
sale valid where made is valid everywhere, 816.
mortgagee is trustee as to the surplus, 817.
the property after sale passes by delivery, 818.
no warranty of title implied in sale, 819.
opening sale, 820.
mortgagee may waive or open foreclosure sale, 821.
PREFERENCE under bankrupt and insolvent laws, 356-366.
debtor has a right to make, 356.
though insolvent at the time, 356.
646
INDEX.

Reference is to Sections.

PREFERENCE — continued.
as affected by relationship of parties, 357.
mortgage to single creditor in failing circumstances, 358.
mortgage not in usual course of business, 359.
under thirty-fifth section of the Bankrupt Act, 360.
assignee in bankruptcy may avoid for, 361.
state courts have jurisdiction of action, 362.
voluntary assignee for benefit of creditors cannot avoid for, 363.
mortgage not void because withheld from record, 364.
assignee alone can claim that proof of debt releases security, 365.
assignee may affirm a voidable mortgage, 366.
PRIORITY, as between unrecorded mortgages, 246.
as between mortgages filed simultaneously, 246.
PRIVATE SALE by mortgagee proper when authorized by power, 790,
791.
mortgagee may sell at by virtue of his title, 793.
PURCHASER. See SussEquent PuRCHASER.
In good faith, who is not, 313.

RAILROAD MORTGAGES of future property, 175.
what is a sufficient change of possession of after default, 376.

RATIFICATION by mortgagee of mortgage not delivered, 113.
of mortgage made by another without authority, 119.

Of mortgage of future property by new act of mortgagor, 158-169.
maxim of Lord Bacon regarding, 158.
bringing such goods upon mortgagor’s premises is not suffi
cient, 159.
seizure of such goods by mortgagee is effectual, 160.
by indorsement upon original mortgage, 169.

RECEIVER will not be appointed over mortgagee in possession, 439.
will be appointed in case of threatened loss to mortgagee, 451.
appointment of pending foreclosure suit, 787. :

RECORDING of mortgage of fixtures does not affect purchaser of

realty, 134.
of mortgage of future property whether effectual, 157.
is a substitute for delivery of possession, 176, 236.
essential when possession not delivered, 177.
Statutory provisions relating to, 190-235.

the object of, 190.

when record is made, 190.

of absolute bill of sale used as a mortgage, 191.

limited time for, 200, 202, 203, 210, 262.

' 647
INDEX.

Reference is to Sections.

RECORDING — continued.
Liffect of, 236-247.
equivalent to a change of possession, 236, 329.
not necessary between the parties, 237, 238.
or as against mortgagor’s executor, 239.
unless his estate be insolvent, 239.
as against his assignee in insolvency, 241, 242.
under national Bankrupt Act, 241, 242.
possession taken shortly before bankruptcy, 243.
whether necessary against a general assignment for creditors,
244.
as against general creditors, 245.
priority as between unrecorded mortgages, 246.
; who are protected by, 247.
Requisites of a valid record, 248-274.
acknowledgment when required, 248, 249.
when record should be made, 250.
at place of mortgagor’s residence, 251.
when part of mortgagors are non-residents, 252.
place of residence of corporation, 253.
may be valid as to part of property and not as to rest, 255.
mortgagor’s residence should be alleged and proved, 256.
where made when mortgagees reside in several towns, 257.
where mortgage by partners to be recorded, 257, 258.
when non-residents of the state, 259.
effect of removal of mortgagor, 260.
in case mortgagor resides out of state, 261.
when required within a limited time, 262.
as against creditors of mortgagor, 263.
minuting time when instrument received, 264.
who may receive instrument for, 265.
what is a sufficient delivery for, 266.
mortgagor may be agent of mortgagee for, 267.
mortgage cannot be withdrawn from files, 268.
wrongfully withdrawn without authority, 269.
effectual from time instrument left, 270.
when a mortgage is filed, 271.
neglect of recording officer does not invalidate, 272.
mistake in spreading upon record, 278.
certificate of recording officer evidence of, 274.
What instruments within the acts, 275-285.
a bill of sale absolute upon its face, 275.

648
INDEX.

Reference is to Sections.

RECORDING — continued.
a conditional sale not within the acts, 276.
nor a bill of parcels, 277.
nor choses in action, 278.
mortgage of both real and personal property, 279.
chattels real not within the acts, 280.
mortgage of fixtures, 281.
when schedule should be recorded, 282.
agreement secured need not be recorded, 283.
separate defeasance should be recorded, 284.
of copy of a mortgage of no avail, 285.
Refiling. See Ruriuine.
Law of place of contract. See Law or Pracn.
Of mortgage of property brought from another state, 302.
of mortgage made outside the state, 303.
rule in Michigan, 304.
Actual notice. See Notice.
Not necessary for an assignment of trortgage, 518.
Mortgages of ships, 520-531.
statute of the United States regarding, 520.
in what office should be made, 521.
statute limited to vessels of the United States, 522.
state statute need not be regarded, 525.
unless vessel be not enrolled, 526.
not neccessary as between the parties, 527.
REDEMPTION did not exist at common law after default, 681.
courts of equity interfere to relieve mortgagor, 681.
mortgagor cannot beforehand debar himself of his right of, 682.
in equity is the only right of the mortgagor after forfeiture, 683.
when the property is no longer in mortgagee’s possession, 684.
generally enforced in equity without the aid of statute, 685.
when remedy is provided by statute, 686.
bill in equity proper when statutory method insufficient, 686.
how long the right continues after possession taken, 687.
time is counted from beginning of mortgagee’s adverse possession,
688.
time for regulated by statute in some states, 689.
bill for must make tender of debt due, 690.
in New York tender must be made before suit, 690.
any one having an interest in the property is entitled to, 691.
acceptance of part payment is a waiver of forfeiture, 692.
foreclosure is a bar to, 693.

649
INDEX.

Reference is to Sections.

REDEMPTION — continued.
so is sale under a power, 693.
by junior mortgagee, 694.
not cut off by mortgagee’s possession after forfeiture, 695.
mortgagee liable to account for rents and profits, 696.
mortgagee responsible for ordinary care of property, 697.
mortgagee not answerable for loss of property without his fault,
698.
Provisions of the several states relating to, 713-757.
REFILING, statutory provisions relating to, 190, 192, 205, 211, 219,
220, 221, 223, 224.
annually not necessary in New York, 286.
otherwise in Ohio and Michigan, 286.
must be effected within the time limited, 287.
in case mortgagor becomes a non-resident, 288.
without statement of mortgagee’s interest ineffectual, 289. .
entire accuracy in statement not required, 290.
statement which refers to another document, 291.
who may take advantage of omission of, 292.
purchasers who become such before expiration of year, 293.
mortgagees with notice, 293.
becomes unnecessary after mortgagee has taken possession, 294.
possession to have this effect must be actual, 295.
advertising property under power obviates necessity of, 296.
that mortgagee’s title has become absolute by default does not,
297.
RELATIONSHIP of parties not of itself evidence that preference is
fraudulent, 357.
RELEASE. See Discnares.
REMEDIES for enforcing mortgages of ships, 550-554.
Of mortgagee after forfeiture, 699-712.
his title becomes absolute upon default, 699.
although there be a power of sale, 700.
rule otherwise in Michigan, 701.
not bound to foreclose on taking possession, 702.
may hold without foreclosure, 702.
when his title becomes absolute, 703.
term of payment may be extended by parol, 704.
he may take peaceable possession, 705.
may maintain replevin, 706.
may sell without formal foreclosure, 707.
upon giving reasonable notice, 708.

650
INDEX.

Reference is to Sections.

REMEDIES — continued.
may sell with mortgagor’s consent, 709.
difficulties in selling without foreclosure, 710.
recovery of deficiency, 711.
mortgagor entitled to surplus of sale, 712.
May be pursued concurrently, 758-7 65.
by suit at law and in equity, 758.
by suit upon personal obligation and upon mortgage, 758,
759.
personal obligation may be enforced though mortgage be
void, 759.
or fraudulent, 760.
suit upon acknowledgment of indebtedness in mortgage,
761.
debt may be enforced though security released, 762.
personal obligation may be released and security pursued, 763.
waiver of mortgage is not waiver of debt, 763.
mortgagee not confined to the mortgaged property, 764.
but may attach other property, 764.
mortgagee need not resort to a surety, 765.
When right to foreclose arises. See FORECLOSURE.
REMOVAL of mortgagor from his residence, effect of upon his recorded
mortgage, 260.
concealment and sale of mortgaged property, 601-631.
REPAIRS by mortg: gor are at his own expense, 478.
REPLEVIN, mortgagor cannot maintain against mortgagee in posses-
sion, 436.
mortgagee may maintain against mortgagor, 442.
RESIDENCE of mortgagor determines where record should be made,
250. :
effect of temporary absence from, 250.
at time the mortgage was executed governs, 251.
of corporation for purpose of recording mortgage, 2 53.
of mortgagor must be alleged and proved, 256.
of partnership, 257, 258.
when partners are non-residents, 259.
effect of mortgagor’s removal from, 260.
RHODE ISLAND, statutory provisions relating to recording, 226.
sale without delivery primd facie fraudulent, 20.
mortgage of goods with power of sale in mortgagor, 405.
statutory provisions relating to attachment and execution, 594,
provisions relating to foreclosure and redemption, 748.

651

é
INDEX.

Reference is to Sections.

SAFETY CLAUSE does not render mortgage fraudulent, 331.
provided by statute in Washington Territory, 429.
when mortgagee may take possession under, 431, 433,
exercise of invalidates attachment of property, 557, 558.
SALE of mortgaged property by mortgagor, 454.
after forfeiture mortgagor cannot make, 454.
statutory provision that mortgagor shall not make without con-
sent, 455, 486.
by mortgagor with oral consent of mortgagee valid, 456.
authority of mortgagor to make may be inferred, 457.
by mortgagor in ordinary course of business, 458, 459.
by mortgagor as owner in exclusion of mortgagee’s rights, 460.
proceeds of cannot be pursued by mortgagee, 464.
mortgagee’s consent to is a waiver of the mortgage, 465.
mortgagee’s waiver by being present at, 466.
removal and concealment of mortgaged property, 601-631.
By mortgagee without foreclosure, 707, 773.
reasonable notice of, 708.
with consent of mortgagor, 709.
difficulties attending without foreclosure, 710.
SATISFACTION. See DiscHares, also PAYMENT.
SCHEDULE referred to in mortgage forms part of it, 73.
omission of does not invalidate mortgage, 74.
reference to does not enlarge scope of mortgage, 75.
notice of when referred to in mortgage, 309.
when record should be made of, 282.
SEAL not necessary to chattel mortgage, 102.
not necessary to assignment of chattel mortgage, 517.
SECOND MORTGAGE not to be made without referring to first, 39.
SECURITY CLAUSE. See Sargery Cuauss.
SHIPS, mortgages of, 520-554.
laws of United States in regard to recording, 520.
where record should be made, 521.
statute limited to vessels of the United States, 522.
what are vessels of the United States, 523.
a canal boat or scow is not, 523.
mortgage of vessels at sea, 524,
state statute in regard to recording need not be regarded, 525.
except the vessel be not enrolled, 526.
mortgage of, as between parties, need not be recorded, 527.
an agent or trustee may make valid mortgage of, 528.
absolute bill of sale may be shown to be mortgage of, 529.

652
INDEX.

Reference is to Sections.

SHIPS — continued.
equitable mortgages of, 530.
secondary evidence of lost mortgage of, 531.
Priority as between mortgages and liens of, 532-539.
mortgage inferior to maritime lien on, 532.
liens for advances in foreign ports have priority, 533.
ordinary obligations of master for vessel have priority, 534.
mortgagor in possession of may create liens, 535.
state may determine rank of domestic liens, 536.
state courts may enforce statutory liens, 537.
what is a domestic vessel, 538.
decisions that mortgage has precedence of statutory liens, 539.
Rights and liabilities of parties to mortgages. of, 540-549.
mortgagee in possession personally liable for supplies, 540.
otherwise if not in possession, 541.
even if he holds by absolute bill of sale, 542.
liable for wages of master, 543.
mortgagee has immediate right of possession, 544.
has no lien upon earnings, 545.
is entitled to freight afterwards earned, 546.
taking freight must pay wages, 547.
owner may charter mortgaged vessel, 548.
mortgagee by absolute bill may sue for conversion, 549.
Remedies for enforcing mortgages of, 550-554.
no jurisdiction in admiralty, 550.
legal title absolute in mortgagee upon default, 551.
mortgagee not bound to regard equities of part owners, 552.
mortgagee may have payment from proceeds of execution
sale, 553.
mortgagee’s remedy for fraudulent sale by mortgagor, 554.
SOUTH CAROLINA, statutory provisions relating to recording, 227.
equitable rules relating to attachment and execution, 595.
provisions relating to foreclosure, 749.
STATEMENT by mortgagee requisite for refiling mortgage, 289.
what is sufficient, 290.
entire accuracy not required in, 290.
which refers to a recorded document, 291.
STATUTE OF FRAUDS. See Fravups.
STATUTE OF LIMITATIONS, when it begins to run against mort-
gagee, 772.
STATUTORY LIENS. See Liens.
When written mortgage necessary to satisfy, 2.

653
INDEX.

Reference is to Sections.

STOCKS OF MERCHANDISE, mortgages of with power of sale in
mortgagor, 379-425.
SUBJECT MATTER of chattel mortgages, 114-137.
what present interests are subject to mortgage, 114.
owner of property not in possession may mortgage, 115.
mere possession confers no power to mortgage, 116.
vendee’s interest under executory contract may be mortgaged, 117.
vendor’s interest under executory contract may be mortgaged,
118.
property the sale of which is forbidden by statute may be mort-
gaged, 120.
Statutory limitations of, 121, 122.
Morigages of fixtures, 123-137. See Frxtures.
Mortgages of future personal property, 138-175. See Future Prop-
ERTY.
SUBROGATION. See Mercer.
SUBSEQUENT MORTGAGEE, rights of, 492-500.
holds an equitable title, 492.
is pro tanto a purchaser, 493,
when mortgage is in terms made subject to prior mortgage, 494.
of goods under attachment, 495.
is entitled to possession except as against prior mortgagee, 497.
selling with consent of prior mortgagee, 498.
cannot maintain trover unless in possession, 499.
SUBSEQUENT PURCHASER rights of, 484-491.
who is a bond fide, 484,
at execution sale, 485.
of goods sold in violation of a statute, 486.
who has assumed payment of prior mortgage, 487.
of property subject to a prior mortgage, 488.
not personally liable for prior mortgage unless he assumes it,
489.
conversion of mortgaged property by, 490.
demand upon, necessary before suit for conversion, 491.
SURETY, mortgage to inures to benefit of creditor, 512.
mortgagee under no obligation to resort to, 765.
SURPLUS, reservation of, may be express or implied, 352.
from sale of mortgaged property held by mortgagor in trust, 353.
mortgagor entitled to, 712.
mortgagee becomes trustee for mortgagor as to, 817.

TENANT IN COMMON may mortgage his interest, 47.
654
 

INDEX,

Reference is to Sections.

TENDER before and after default, 632-637.
at common law does not revest title in mortgagor, 632.
acceptance of, is a waiver of forfeiture, 632.
made after mortgagee has taken possession does not revest title,
634.
made after forfeiture, and before possession, 635.
not kept good does not extinguish lien, 636.
otherwise in Michigan and Oregon, 636.
in Michigan and Oregon tender destroys mortgage lien, 637.
bill to redeem must make of mortgage debt, 690.
in New York must be made before suit to redeem, 690.
TENNESSEE, statutory provisions relating to recording, 228.
sale without delivery primé facte fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 406.
equitable rules relating to attachment and execution, 596.
foreclosure in, 750.
TEXAS, statutory provisions relating to filing, 229.
sale without delivery primdé facte fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 407.
equitable rules relating to attachment and execution, 596.
removal, concealment, and sale of mortgaged property, 627.
entry of satisfaction of record, 680. ‘
provisions relating to foreclosure, 751.
TITLE to mortgaged property vests in mortgagee, 426.
_-vests absolutely in mortgagee upon default, 551, 699.
although there be a power of sale, 700.
when it vests absolutely in mortgagee, 703.
TREES growing, whether a valid chattel mortgage of can be made, 145.
to be cut may be mortgaged as personalty, 146.
TRESPASS, mortgagor cannot maintain against mortgagee in posses-
sion, 434,
unless mortgagee wrongfully takes possession, 437.
TROVER, mortgagor cannot maintain against mortgagee in possession,
435. i
unless mortgagee wrongfully takes possession, 437.
pleading and evidence in, 445.
TRUST ASSIGNMENT, in the nature of mortgage, 352-355.
in trust to pay debt is in nature of a mortgage, 352.
trust in mortgagee for surplus necessarily arises, 353.
provision that trustee may continue business, 354.
mortgage need not be wholly for benefit of mortgagee, 355.
TRUST DEED. See Power or Sate.
655
INDEX.

Reference is to Sections.

UTAH TERRITORY, provisions relating to foreclosure, 752.

VERMONT, statutory requirement of affidavit to accompany mortgage,
387.
statute forbidding making of second mortgage without reference
to first, 39.
statutory provisions relating to recording, 230.
sale without delivery of possession fraudulent per se, 319.
statutory provisions relating to attachment and execution, 598.
removal, concealment, and sale of mortgaged property, 628.
provisions relating to foreclosure and redemption, 753.
VIRGINIA, statutory provisions relating to recording, 231.
sale without delivery, prima facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 408.
foreclosure in, 754.

WAGES, no valid assignment can be made at law of future, 144.
of master, mortgagee in possession liable for, 543, 547.
WAIVER, of invalidity of mortgage, 332.
of mortgage by mortgagee’s presence at sale by mortgagor, 466.
mortgagee may make in favor of another creditor, 467.
by mortgagee’s buying the property at execution sale, 470.
attachment of same property by mortgagee is not, 565. a
acceptance of part of mortgage debt after forfeiture, 692.
after time of redemption has expired, 692.
mortgagee may open foreclosure, 821.
WARRANTY of title in mortgage, 101.
none implied in an assignment of mortgage, 519.
none implied in sale under power, 819.
WASHINGTON TERRITORY, statutory provisions relating to re-
cording, 232.
provision for security of mortgagee, 429.
statutory provisions relating to attachment and execution, 599.
removal, concealment, and sale of mortgaged property, 629.
provisions relating to foreclosure in, 755.
WEST VIRGINIA, statutory provisions relating to recording, 233.
foreclosure in, 754.
WISCONSIN, statutory provisions relating to filing, 234.
sale without delivery primé facie fraudulent, 320.
mortgage of goods with power of sale in mortgagor, 409.
statutory provisions relating to attachment and execution, 600.

656
INDEX.

Reference is to Sections.
WISCONSIN — continued.
removal, concealment, and sale of mortgaged property, 630.
foreclosure in, 756.
WYOMING TERRITORY, statutory provisions relating to recording,
235.
removal, concealment, and sale of mortgaged property, 631.
provisions relating to foreclosure, 757.

YACHT, mortgage of not within recording act of the United States,
528.
42 657
WORKS BY THE SAME AUTHOR.

A TREATISE
The Law of Mortgages of Real Property.

By LEONARD A. JONES, or rue Boston Bar.

SECOND EDITION.
In two volumes, 8vo, 800 pages each. Price, in law sheep, $13.00.

——

EXTRACTS FROM A FEW NOTICES OF THE SECOND EDITION.

From the Western Jurist. me

When the first edition of this work appeared we gave it a very thorough examination,
and were impressed with the fact that it was very greatly superior to any work before
published upon the subject of Mortgages. Indeed, the judicial character of the author’s
mind was manifest upon every page, and we arose from our examination of it impressed
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books. The year and a half which has transpired since the appearance of the first
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The publishers rival in the excellence of their work the superiority which the author
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From the Central Law Journal.

Mr. Jones’s treatise has since its publication received so many testimonials to its
worth, that anything more at this time is unnecessary. It continues to merit the good
opinion which was expressed eighteen months ago by the eminent jurist who wrote the
review from which we have quoted.

. From the American Law Review.

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to a substantially harmonious development. ... . In the second place, no inconsid-
erable part of the subject is new. In this portion of the work Mr. Jones has shown a
sound and careful judgment in stating the propositions, and discriminating between
the adjudged cases; and has presented a clear and readable text.

Jones on Railroad Securities.

A TREATISE ON THE LAW OF RAILROAD AND OTHER CORPORATE
SECURITIES INCLUDING MUNICIPAL AID BONDS.

By LEONARD A. JONES, Auruor or “A Treatise on Morreacss.”
Inone volume, 8vo0, 750 pages. Price, in law sheep, $6.50.

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From Juve Ditton.

A very complete, accurate, and useful work. It exhausts the special subjects to which
itis devoted. I have necessarily had to become somewhat familiar with these subjects,
and I have not been able to discover a single reported case relating to them that has
escaped the industry and research of the learned author.

From Hon. Wituiam B. Woops, Judge of the Supreme Court of the United States.

I feel assured that it will prove of great benefit to the profession and a great assist-
ance to the bench, showing as it does the same industry, research, and ability as the
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cultivated it..... He has made an excellent and useful work, and one of the most
interesting that has lately come to our notice.
WORKS BY THE SAME AUTHOR.

In preparation for early publication:

A TREATISE ON PLEDGHS,

INCLUDING

Collateral Securities.

By LEONARD A. JONES, Esq.

——-

The articles upon Collateral Securities which the author published
during the past year in The American Law Review form the basis of three
chapters of this work. These articles have been very much enlarged ; —
that, for instance, upon Stock Collaterals, which made about thirty pages
in the Review, will form a chapter in the book of upwards of one hundred

pages.

Also in preparation :

By LEONARD A. JONES, Esa.

A TREATISE ON LIENS

AT

Common Law and by Statute.

—_e—

These additional works now in preparation are intended to complete a
series of works on “PROPERTY SECURITIES,” The three forms
of security upon Property, — Mortgages, Pledges, and Liens, — will upon
the completion of this series be fully treated; and the several volumes
may be considered as being in fact one treatise embracing the whole
subject of “ Securities upon Property.”
 

 

 

 

 

 

 

 

 

 

 

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