Source: https://www.law.cornell.edu/supremecourt/text/138/252
Timestamp: 2018-01-22 10:34:51
Document Index: 243213996

Matched Legal Cases: ['§ 287', '§ 1030', 'art, 1', '§ 4919', '§ 25', '§ 23']

WATERMAN v. MACKENZIE | US Law | LII / Legal Information Institute
138 U.S. 252 (11 S.Ct. 334, 34 L.Ed. 923)
WATERMAN v. MACKENZIE et al.
The remaining question in the case, distinctly presented by the plea, and adjudged by the circuit court, is of the effect of the deed of November 25, 1884, by which Mrs. Waterman assigned to the firm of Asa L. Shipman's Sons all her right, title and interest in the invention and the patent, with an express provision that the assignment should be null and void if she and her husband, or either of them, should pay at maturity a certain promissory note of the same date made by them, and payable to the grantees. This instrument, bein a conveyance made to secure the payment of a debt, upon condition that it should be avoided by the subsequent payment of that debt at a time fixed, was a mortgage, in apt terms, and in legal effect. Conard v. Insurance Co., 1 Pet. 386, 446, 447. On the same day, the mortgagees assigned by deed to Asa L. Shipman all their title under the mortgage, and the promissory note thereby secured, Both assignments were recorded in the patent-office within three months after their date, and the title thereby acquired by Shipman was outstanding in him at the times of the subsequent assignment of the patent-right by Mrs. Waterman to the plaintiff, and of the filing of this bill. This last assignment was therefore subject to the mortgage, though not in terms so expressed. By a mortgage of personal property, differing in this respect from a pledge, it is not merely the possession or a special property that passes; but, both at law and in equity, the whole title is transferred to the mortgagee, as security for the debt, subject only to be defeated by performance of the condition, or by redemption on bill in equity within a reasonable time, and the right of possession, when there is no express stipulation to the contrary, goes with the right of property. Story, Bailm. § 287; 2 Story, Eq. Jur. §§ 1030, 1031; Conard v. Insurance Co., 1 Pet. 386, 441; Casey v. Cavaroc, 96 U. S. 467, 477; Boise v. Knox, 10 Metc. (Mass.) 40, 43; Brackett v. Bullard, 12 Metc. (Mass.) 308, 310. A mortgage of real estate has gradually, partly by the adoption of rules of equity in courts of common law, and partly by express provisions of statute, come to be more and more considered as a mere security for the debt, creating a lien or incumbrance only, and leaving the title in the mortgagor, subject to alienation, levy on execution, dower, and other incidents of a legal estate; but the rules upon the subject vary in different states, and a mortgage is every where considered as passing the title in the land, so far as may be necessary for the protection of the mortgagee, and to give him the full benefit of his security. Stelle v. Carroll, 12 Pet. 201; Van Ness v. Hyatt, 13 Pet. 294; Hutchins v. King, 1 Wall. 53, 58; Brobst v. Brock, 10 Wall. 519, 529, 530. After the mortgagee has taken possession, the mortgagor has no power to lease, and the mortgagee is entitled to have, and is bound to account for, the accruing rents and profits, damages against trespassers, timber cut on the premises, and growing crops. Keech v. Hall, 1 Doug. 21; Turner v. Coal Co., 5 Exch. 932; Dawson v. Johnson, 1 Fost. & F. 656; Fairclough v. Marshall, 4 Exch. Div. 37, 47, 49; Scruggs v. Railroad Co., 108 U. S. 368, 375, 2 Sup. Ct. Rep. 780; Teal v. Walker, 111 U. S. 242, 4 Sup. Ct. Rep. 420; Hutchins v. King, above cited; Gore v. Jenness, 19 Me. 53; Bagnall v. Villar, 12 Ch. Div. 812. Even against a mortgagor in possession, the mortgagee may obtain an injunction or damages for such cutting of timber as tends to impair the value of the mortgage security, or as is not allowed by good husbandry or by express or implied license from the mortgagee. Robinson v. Litton, 3 Atk. 209, 210; Farrant v. Lovel, Id. 723; Hampton v. Hodges, 8 Ves. 105; Humphreys v. Harrison, 1 Jac. & W. 581; King v. Smith, 2 Hare, 239; Kountze v. Hotel Co., 107 U. S. 378, 395, 2 Sup. Ct. Rep. 911; Verner v. Betz, 46 N. J. Eq. 256, 267, 1 268; Page v. Robinson, 10 Cush. 99; Searlc v. Sawyer, 127 Mass. 491; Waterman v. Matteson, 4 R. I. 539. A mortgagee of a leasehold or other personal property has the like right to an injunction to stay waste by the mortgagor. Farrant v. Lovel, above cited; Brown v. Stewart, 1 Md. Ch. 87; Parsons v. Hughes, 12 Md. 1. The right of action against a stranger for an injury to goods mortgaged, generally, though not always, depends upon the right of possession. When the right of possession is in the mortgagor, he is usually the proper party to sue. Sellick v. Smith, 11 Moore, C. P. 459, 475; Brierly v. Kendall, 17 Q. B. 937; Luse v. Jones, 39 N. J.Law , 707; Copp v. Williams, 135 Mass. 401. But even a mortgagee out of possession may sometimes maintain an action for an injury to his interest. Gooding v. Shea, 103 Mass. 360; Manning v. Monaghan, 23 N. Y. 539, and 28 N. Y. 585; Woodside v. Adams, 40 N. J. Law, 417, 421, 422. And when the right of possession, as well as the general right of property, is in the mortgage, the suit must be brought by the mortgagee, and not by the mortgagor or any one claiming under a subsequent conveyance from him. Conard v. Insurance Co., 1 Pet. 386; Wood v. Weimar, 104 U. S. 786; Clapp v. Campbell, 124 Mass. 50; Watson v. Macquire, 5 C. B. 836, 844. When it is provided by statute that a mortgage of personal property shall not be valid against third persons, unless the mortgage is recorded, a recording of the mortgage is a substitute for, and (unless in case of actual fraud) equivalent to, a delivery of possession, and makes the title and the possession of the mortgagee good against all the world. Aldrich v. AEtna Co., 8 Wall. 491, 497; Robinson v. Elliott, 22 Wall. 513, 521; Bullock v. Williams, 16 Pick. 33; Coles v. Clark, 3 Cush. 399, 401. A patent-right is incorporeal property, not susceptible of actual delivery or possession; and the recording of a mortgage thereof in the patent-office, in accordance with the act of congress, is equivalent to a delivery of possession, and makes the title of the mortgagee complete towards all other persons, as well as against the mortgagor. The right conferred by letters patent for an invention is limited to a term of years, and a large part of its value consists in the profits derived from royalties and license fees. In analogy to the rules governing mortgages of lands and of chattels, and with even stronger reason, the assignee of a patent by a mortgage duly recorded, whose security is constantly wasting by the lapse of time, must by held (unless otherwise provided in the mortgage) entitled to grant licenses, to receive license fees and royalties, and to have an account of profits or an award of damages against infringers. There can be no doubt that he is 'the party interested, either as patentee, assignee, or grantee,' and as such entitled to maintain an action at law to recover damages for an infringement; and it cannot have been the intention of congress that a suit in equity against an infringer to obtain an injunction and an account of profits, in which the court is authorized to award damages, when necessary to fully compensate the plaintiff, and has the same power to treble the damages as in an action at law, should not be brought by the same person. Rev. St. §§ 4919, 4921; Root v. Railway Co., 105 U. S. 189, 212. The necessary conclusion appears to us to be that Shipman, being the present owner of the whole title in the patent under a mortgage duly executed and recorded, was the person, and the only person, entitled to maintain such a bill as this; and that the plea, therefore, was rightly adjudged good. In the light of our legislation and decisions, no weight can be given to the case of Van Gelder v. Society, 44 Ch. Div. 374, in which, upon pleadings and facts similar to those now before us, the mortgagor of a patent was treated as a mortgagor in possession, and was allowed to maintain a suit for infringement, under the provisions of the English Judicature Act of 1873 and Patent Act of 1883. St. 36 & 37 Vict. c. 66, § 25; 46 & 47 Vict. c. 57, §§ 23, 46, 87. Whether, in a suit brought by the mortgagee, the court, at the suggestion of the mortgagor, or of the mortgagee, or of the defendants, might, in its discretion, and for the purpose of preventing multiplicity of suits or miscarriage of justice, permit or order the mortgagor to be joined, either as a plaintiff or as a defendant, need not be considered, because no such question is presented by this record. Decree affirmed.
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