Case ID: wash_9/html/0046-01.html
Source: Caselaw Access Project
Author: {"author": "Stiles, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[No. 1276.
    Decided May 26, 1894.]
    Edwin D. Sanders, Assignee of A. M. Orchard, Respondent, v. Main & Winchester et al., Appellants.
    
    ASSIGNMENT FOR BENEFIT OF CREDITORS — RIGHT OF POSSESSION TO MORTGAGED PERSONALTY.
    Where a mortgagee of chattels has taken possession thereof for alleged breach of the condition providing for payment, he is entitled to retain possession as against a subsequent assignment by the mortgagor for the benefit of creditors, until it is determined by legal proceedings that the assignee has a superior right thereto.
    
      Appeal from Superior Court, Spokane County.
    
    
      R. B. Blake, and F. T. Post, for appellants.
   The opinion of the court was delivered by

Stiles, J.

— One A. M. Orchard executed and delivered to Main & Winchester a chattel mortgage covering certain personal property. The mortgagees, claiming that the condition of the mortgage providing for payment had been broken, caused the sheriff to take possession of the mortgaged property, and directed him to proceed with the foreclosure by sale. While the sheriff was thus in possession the mortgagor made an assignment for the benefit of creditors. The assignee, who is the respondent in this case, commenced the suit against the appellants to determine the validity of their mortgage, he claiming that the mortgage was conceived and executed in fraud. The main case has not yet been tried, but the court below, by an interlocutory order, required the sheriff to surrender possession of the property to the assignee. This appeal is from the last named order.

The appeal is not resisted, and we have it from the appellants’ brief and the language of the order that the court below determined that because an assignment had been made the mortgaged property was in custodia legis, and therefore rightfully in the possession of the assignee, basing his rulings upon Hamilton Brown Shoe Co. v. Adams, 5 Wash. 333 (32 Pac. 92); Sabin v. Adams, 5 Wash. 768 (32 Pac. 793), and Mansfield v. First National Bank, 5 Wash. 665 (32 Pac. 789, 999).

In thus ruling we think the court was wrong. In the first two of the above named cases the property had been actually taken possession of by the assignee when the attachments were levied, and were actually in custodia legis. In Mansfield v. First National Bank it was not held that the property in the hands of the sheriff was in the custody of the court because an assignee had been appointed, but that the assignee, upon proof that the mortgage under which the sheriff retained possession was fraudulent and void, was entitled to take the possession, as will be done in this case if it shall turn out that the plaintiff’s allegations of fraud in the transaction are true.

This case- falls directly within the principle of Marsh v. Wade, 1 Wash. 538 (20 Pac. 578); State, ex rel. Machinery Co., v. Superior Court, 7 Wash. 77 (34 Pac. 430), and State, ex rel. Hunt, v. Superior Court, 8 Wash. 210 (35 Pac. 1087); the substance of which cases was, that a party who has acquired possession of personal property as a mortgage or pledge, or by means of a specific lien, is entitled to retain possession thereof as against a receiver or assignee, until it is determined by legal proceedings that the receiver or assignee has a superior right to it, unless, in extraordinary cases, it be shown that the preservation of the property pending the litigation requires that it be placed in the hands of an officer of the court.

The order appealed from is therefore vacated and set aside.

Anders, Scott and Hoyt, JJ., concur.

Dunbar, C. J., dissents.