Case Name: David Marsh v. F. M. Wade
Court: Washington Supreme Court
Jurisdiction: Washington
Decision Date: 1889-01-31
Citations: 1 Wash. 538
Docket Number: No. 537
Parties: David Marsh v. F. M. Wade.
Judges: Bueke, C. J., concurs.
Reporter: Washington Reports
Volume: 1
Pages: 538–549

Head Matter:
[No. 537.
Decided January 31, 1889.
David Marsh v. F. M. Wade.
CHATTEL MORTGAGES — REQUISITES — RIGHTS OF MORTGAGEE IN POSSESSION — EVIDENCE BEST AND SECONDARY.
A chattel mortgage is valid without words purporting to grant, sell, convey, etc.; the word “mortgage” includes all these.
In an action of replevin by a mortgagee to recover the mortgaged property which had been attached while in his possession by creditors of the mortgagor, it was error for the court, after excluding the mortgage by reason of invalidity, to treat the transaction brought about by the mortgage as a pledge, and admit oral testimony to establish the relation of pledgeor and pledgee.
A mortgagee in possession of the mortgaged property, the mortgage being valid between the parties, and made in good faith, has the right of possession against all the world, and he cannot be deprived of that possession until the debt for which the mortgage is executed has been satisfied.
Error to District Court, Whitman County.
Replevin brought by F. M. Wade against David Marsh to recover possession of a stock of goods. Judgment for plaintiff, and defendant brings error.
Doolittle & Pritchard, and Cox, Smith & Teal, for plaintiff in error.
Sullivan, Wolford & Sullivan, and Allen & Crowley, for defendant in error.

Opinion:
The opinion of the court was delivered by
Nash, J.
This was an action of replevin brought by the defendant in error in the court below to recover pos session of a stock of goods. He alleges in bis complaint tbat be bas a special property in said goods by virtue of a chattel mortgage from one J. L. Heatberly, given to secure certain notes wbicb were held by tbe defendant in error as agent of the owners, and wbicb be was authorized to secure; tbat, by tbe terms of said mortgage, tbe defendant in error was authorized to, and, in pursuance thereof, did, take immediate and exclusive possession of said goods; and tbat afterwards tbe plaintiff in error wrongfully took said goods from bis possession.
Tbe answer contains three separate defenses. Tbe first is a denial of the possession, or right of possession, in tbe said plaintiff, a denial of tbe chattel mortgage claimed by him, and a denial tbat tbe seizure by the defendant was wrongful. Tbe second defense, admitting plaintiff's possession and rights under bis chattel mortgage, alleges tbat be bas no other rights, and justifies defendant's seizure under certain writs of attachment against J. L. Heatberly, tbe mortgagor, wbicb be held for execution, as sheriff of said county. Tbe third defense justifies defendant's seizure under said writs of attachment, as sheriff; alleges tbat tbe said mortgage and transfer by Heatberly to "Wade was fraudulent and void as against Heatberly's creditors, and tbat the same was fraudulent in fact, because made with intent to binder, delay, and defraud creditors, as shown by facts and circumstances fully set forth, and wbicb were well known to said Wade, and fraudulent in law upon its face, by reason of its terms and provisions, and because not acknowledged or recorded as required by law.
Tbe reply denies tbe validity of said writs of attachment and most of tbe facts and circumstances charging fraud, but admits tbat Wade's only claim to said goods and possession thereunder is based upon said chattel mortgage; denying tbat tbe same is a "pretended" or "alleged" chattel mortgage.
As will be seen, tbe pleadings admit tbat Heatberly was the general owner of the goods in controversy; the plaintiff claiming right of possession under a chattel mortgage from Heatherly, and-the defendant under certain writs of attachment against Heatherly.
The plaintiff in the court below replevied the stock of goods from the sheriff, who had them in possession by virtue of writs of attachment which it is not denied were legally sued out. The plaintiff, in his complaint and reply and evidence, and in every other way so far as we are able to ascertain, claims the rights to the goods by virtue of a mortgage executed to him, and that, immediately upon the execution of the mortgage by Heatherly, the mortgagor, he went into possession of said stock by virtue thereof, and not otherwise, and was in such possession by virtue thereof alone when the sheriff, who had writs of attachment against Heatherly, the mortgagor, levied upon said stock.
Upon the trial of said cause, the plaintiff, to prove his right to said stock of goods, offered in evidence this same mortgage upon which he relies to establish his case. To the introduction of this the defendant objected on the grounds: 1. Because the offer was of the original and not an exemplification of the recorded mortgage. 2. Because the indorsement shows that it was recorded before it was acknowledged. 8. Because it is immaterial and irrelevant, being upon its face and by its terms illegal, fraudulent, and void. Said mortgage was excluded by the court. Plaintiff then offered an exemplified' copy of the record of said mortgage, viz., Exhibit I, which, being objected to on the last two ground's above set forth, was also excluded. Sufficient to say that again the said mortgage was offered in evidence, and again objected to by defendant, for the reasons heretofore given, and the objection sustained, the mortgage ruled out, and exception taken and allowed. The mortgage, in fact, never did get to the jury in this case. The plaintiff made no effort to amend his pleading at any time during the trial, and the court required no amendment to said pleadings.
We gather, however, from subsequent proceedings bad in the case, that the court permitted the plaintiff to treat his right to the possession of the goods in the nature of a pledge, and permitted oral evidence only to prove the same, at all times expressly ruling out the mortgage, or paper writing, to all of which the defendant objected. The objection was overruled,and exception taken by the defendant and allowed, and this is one of the errors assigned for our consideration here, which, occurring at the very threshold of the case, may be decisive of it, and we will at once consider it. But, before doing so, we will make some general observations concerning pleadings and proofs under the code.
The rule that the allegata and the probata should correspond prevails under the code as well as at common law. Indeed, if this salutary principle was not reasonably adhered to under any system of pleadings, utter confusion would ensue, and the whole theory of pleading would only be a "delusion and a snare," and the prime object of every pleader would be to so frame his allegations as to most effectually conceal his true cause of action and deceive his adversary. The rule at common law was said to be not only sound in principle, thoroughly established by precedent, but absolutely essential to the administration of justice; and this was carried so far at common law as to hold that immaterial averments — that is, averments which were not actually impertinent as surplusage — must, if laid in the declaration, be proved.
The rule is stated by Mr. Chitty to be, that every allegation in an inducement which is material and not impertinent and foreign to the cause must be proved as alleged, and particularly as applied to written instruments, and failure to make such proof was regarded as a material variance. The code does not go to this extent, and has wisely restricted the application of the principle to material averments or allegations only; and, as thus explained, the rule is as sound, salutary and essential to the administration of justice under the code as at common law.
A very clear and able writer on this question, and one thoroughly imbued with the enlightened principles which the code system was intended to inculcate, says: "The very object and desigu of all pleading by the plaintiff, and of all pleading of new matter by the defendant, is that the adverse party may be informed of the real cause of action or defense relied upon by the pleader, and may thus have an opportunity of meeting and defeating it if possible at the-trial. Unless the petition or complaint on the one hand, and the answer on the other, fully and fairly accomplishes this purpose, the pleading would be a useless ceremony,productive only of delay, and the parties might better be permitted to state their demands orally before the court at the time of the trial. The requirement, therefore, that the cause of action or the affirmative defense must be stated as it actually is, and that the proofs must establish it as stated, is involved in the very theory of pleading. Pom. Bern. & Bern. Bights (2d ed.), § 554.
It may be stated in passing, also, that a cardinal principle of evidence, unchanged and unchanging, is that parol, contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument; and that when the terms or contents of a written instrument are the subject of inquiry, the instrument itself, if in existence and capable of being produced, is the only proper evidence. This is elementary.
The plaintiff in the court below claimed in his pleadings, not only in the complaint, but in his reply, to be entitled to recovery .in the action by virtue of a chattel mortgage. He rested his whole claim upon it. The denials of the defendant put not only the existence of the said mortgage at issue, but its validity, and, hence, it was incumbent upon the plaintiff to prove not only tbe existence of the mortgage, but its validity; and this could only be done by the instrument itself, it being in existence, and in the possession of the plaintiff. This, we have seen, was offered by the plaintiff, objected to by the defendant, and ruled out by the court, not by reason of defects of a clerical character, but because the said instrument was not a mortgage in law, but was absolutely void.
This having been done by the court, the plaintiff had no evidence whatever to sustain the issue on his part. It was not a variance, material or immaterial; it was a failure of proof (see code, § 107), and it follows as a matter of course that, if the ruling of the court was correct, the plaintiff had utterly failed to make out a ease, and the court should have so ruled, and given judgment for the defendant.
The mortgage in question, however, appears in the record in this case, and we presume is here for our consideration and inspection.
We understand from the record that the mortgage was held invalid, not, as before remarked, on account of clerical errors and defects in its execution, but upon the broad ground that there were no words in said instrument purporting to grant, sell, convey, etc., usually found in mortgages. Such words are entirely unnecessary. The word "mortgages" covers the whole ground. It has not only a well-defined meaning in this territory, as generally understood, but it is clearly defined by statute. The rule at common law, certainly unchanged by the code, is that words are generally taken in their ordinary sense, and the terms of every written instrument are to be understood in their plain, ordinary, and popular sense, unless they have generally, in respect to the subject-matter, acquired a special sense. The word ' ' mortgages " has only one signification in this territory, popular or otherwise, — " security for debtor obligation;" and we find by inspection that the mortgage on its face was in all respects a valid one. Jones, Chat. Mortg., §178, says: " If a mortgagee takes possession of the mortgaged chattels before any other right or lien attaches, his title under the mortgage is good against everybody, if it was previously valid between the parties, although it be not acknowledged and recorded, or the record be ineffectual by reason of any irregularity. " Chipron v. Feikert, 68 Ill. 284; Frank v. Miner, 50 Ill. 444; McTaggart v. Rose, 14 Ind. 230; Brown v. Webb, 20 Ohio, 389; Chase v. Denny, 130 Mass. 566; Parsell v. Thayer, 39 Mich. 467; Eastman v. Water Power Co., 24 Minn. 437; Clute v. Steele, 6 Nev. 339; Moresi v. Swift, 15 Nev. 215; Field v. Baker, 12 Blatchf. 438; Brown v. Platt, 8 Bosw. 324; Cameron v. Marvin, 26 Kan. 612; Hauselt v. Harrison, 105 U. S. 401, 405; Wood v. Weimar, 104 U. S. 786; Hamlin v. Jerrard, 72 Me. 62, 79; Baldwin v. Flash, 58 Miss. 593; Greeley v. Reading, 74 Mo. 309. 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 being acknowledged before the proper officer, if the junior mortgagee first obtains possession, he will hold it as against the prior mortgagee; 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 description of the property, an insufficient execution of the instrument, the omission to record it, or from its containing a provision which makes it void except as between the parties."
The court ruled, however, that the plaintiff might treat the transaction brought about by this mortgage as a pledge, and that oral or verbal testimony would be admitted to establish the relation of pledgee and pledgeor. This was no less error than the former ruling; for tbe instrument above set forth was in every respect a perfect pledge, and contains all the provisions of a pledge, and being the instrument containing the agreed stipulations of the parties, and especially the rights of the plaintiff, was the only competent evidence in the case to prove anything; and here again was an entire failure of proof, because the only competent proof — to wit,the instrument above set forth — was not allowed in evidence.
It has been suggested, however, by appellee's counsel, that § 105 of the code in regard to variance here applies. The definition of ' ' variance" is anything but definite, and the application of this provision of the code has ever been a fruitful source of trouble and disagreement among j urists, some claiming with much force that its principal mission is to provide for a quarrel between court and counsel. We think, however, that this section of the code cannot be invoked in this case; but it is clearly a case of failure of proof. Section 107 of the code reads as follows: " When, however, the allegation of the cause of action or defense to which the proof is directed is not proved, notin some particular or particulars only, but in its entire scope and meaning, it shall not be deemed a case of variance within the last two sections, but a failure of proof."
The error of the court below was evidently caused by making a distinction under our law between a mortgage and a pledge. A mortgagee in possession, under our statutes, and the pledgee are practically, if not identically, the same. The same rights are secured by the one as the other. No legal title passes in either case, but merely the right of actual possession of the property for the purposes of security. The difference between a mortgage and a pledge, independent of our statute, was, that a mortgage transferred the title to the mortgagee, to be revested by the perform- anee of the condition, while, by a pledge, the pledgeor retains the title in himself, and parts with the possession for a special purpose. By a mortgage the title is transferred; by a pledge the possession. Jones, Chat. Mortg., § 4; and Jones, Pledges, § 9.
Our statute, however, as we have seen, makes a mortgagee in possession and a pledgee occupy a very similar, if not identical, position, governed by the same rules in regard to their effects (see code, c. 141, § 1986, 1987; Byrd v. Forbes, 3 Wash. T. 318, 324; and this brings us to are-view aud modification of the doctrine announced in that decision relative to attaching property in the possession of the mortgagee. The learned chief justice, in delivering the opinion of the court, says: "It is not disputed but that under the statutes of this territory the interest of a mortgagor in mortgaged personal property is subject to attachment. Liability of his interest to be attached exists even in states where the mortgage operates to pass to the mortgagee the title to the goods. Hull v. Carnley, 11 N. Y. 501. A fortiori, such liability obtains under our statutes, which clearly will not consist with any other doctrine than that a chattel mortgage is a mere security under which no title can possibly pass except by foreclosure and sale. Such a mortgage is defined as to its nature and effect by the provisions of chapter 141, § 1986-1999, of the code, being therein spoken of and treated as gining a lien only and serving for a security, and as needing foreclosure to divest the title of the mortgagor. Sections 618 and 619 of the code speak of such mortgages as instruments ' creating liens,' provide for their foreclosure, class them with mortgages of real property, and assimilate the foreclosure of them to that of mortgages on real property, which have been determined by this court to be under our statutes mere securities. Parker v. D'Acres, 2 Wash. T. 439. As a general rule, any interest that may be sold on execution is subject also to process of attachment, and it is expressly provided in § 1990 that a mortgagor's interest in goods may be taken in execution» Under our law of attachment, there exists no other way of making the attachment levy upon chattels capable of manual delivery than to take them into custody. Gode, § 179. Section 1990 contemplates such a taking when it provides that the officer who executes the process shall mail to the mortgagee, ' or to his agent, if their post-office is known,, a notification of the intended sale at the time such mortgaged property is seized under said process, or within five-days thereafter,' and that said ' property shall not be sold within thirty days after its seizure,' and that he shall post notices at the time of ' the seizure under said process/ The provisions of § 1990 are inconsistent with the idea that, after levy by the sheriff, the mortgagee can demand and take possession. So, too, are all those provisions of statute which compel us to regard a chattel mortgage as a mere security. The theory upon which, at common law, and in some states of this Union, the mortgagee can take possession, and even dispossess the sheriff, is, that the mortgagee is owner, and the sheriff a trespasser. Hall v. Sampson, 35 N. Y. 274; 91 Am. Dec. 56. An express stipulation in a chattel mortgage, that the mortgagee may take possession upon a certain eontingencj', may be good as between the parties to the instrument, so as to allow the mortgagee to take possession from the mortgagor; but it cannot, in face of our statutes, be held to authorize a taking or retaining the possession as against creditors of the mortgagor seeking to attach his interest, or subject it to execution. Under our statutes, an unforeclosed mortgage is a mortgage still, regardless where the possession lies. "
The doctrine is here announced that, under our statute, whether a mortgagee be in possession or out of possession of the mortgaged property, a subsequent or lagging creditor may, by process of attachment, take possession of the mortgaged property; We have no doubt that the property, if in tbe bands of tbe mortgagor, could betaken possession of by process of attachment, and tbe property taken into actual custody by the sheriff. We further bold that tbe mortgagee in tbe possession of tbe mortgaged property, tbe mortgage being valid between tbe parties and made in good faith, has tbe right of possession against all tbe world, nor can be be deprived of that possession until bis debt or obligation for which tbe mortgage is executed has been fully paid or satisfied; and to bold otherwise would be to disregard plain provisions of contract, and, to this extent, tbe decision in tbe case of Byrd v. Forbes on this point was merely obiter, and is modified in accordance with the view expressed in this opinion.
We bold tbe law to be that any interest that tbe mortgagor may have in the mortgaged property in tbe bands of tbe mortgagee can be reached by tbe process of garnishment; in other words, the mortgagee can be garnished for any interest that may exist after bis mortgage is satisfied, but tbe possession of tbe honest mortgagee cannot be disturbed; and this, being tbe rule, with a court of equity ever keeping watch and eternal guard over tbe management of the mortgaged property, ready to step in and give relief if improperly diverted, fully subserves tbe interests of all tbe parties, and is in accordance with reason and sustained by authority.
We think it is useless to review the other errors assigned in this case. The court committed error at the very threshold in disregarding tbe paper writing called tbe mortgage, and not permitting tbe plaintiff to introduce tbe same in evidence as the foundation of bis right, and tbe only foundation of bis right as mortgagee or pledgee, and we have seen their rights are tbe same; and hence all tbe proceedings thereafter were tinged with and partook of this error, as it permeated tbe whole of tbe proceedings, and they were all nugatory and void.
It is claimed, however, that tbe vital question involved in this ease was the actual fraud in executing the mortgage, and fraud in fact; and that the question was fully passed upon by the jury. It is not the province of this court to determine whether it was fully passed upon or not. "We do not know what the jury would have determined had competent evidence been before them. We only know what they determined from incompetent evidence, and, having no proper evidence upon which to base their verdict, the jury could render no verdict that should be sustained in law. It may be that the jury has rendered a proper verdict on incompetent, or, rather, no evidence whatever. This court cannot and will not determine what a jury will do on competent evidence. The error that we are called to pass upon at the very threshold of this case was the improper rejection of the mortgage, or paper writing which was called a mortgage, from the jury, which is the only proper evidence to establish the claim of the plaintiff, and which wholly fails without it under the pleadings.
Let the case be remanded, with the direction to the court below to admit the mortgage or paper writing in evidence, and then let the case proceed as in ordinary trials in cases of this character.
Bueke, C. J., concurs.