Court Opinion

ID: 3306300
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:21:03.715583+00
Date Added: 2024-06-11T13:41:04.060353
License: Public Domain

I dissent from the conclusion declared in this case. I do not believe the bar of this state construe the law upon this question as it is here construed, and owing to the important principle involved I feel compelled to briefly indicate why this case should be decided the other way.
The true solution of the question raised upon this appeal is dependent upon the construction to be given section 2957 of the Civil Code, which provides: "A mortgage of personal property is void as against creditors of the mortgagor and subsequent purchasers and encumbrancers in good faith and for value, unless: 1. 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; 2. It is acknowledged or proved, certified, and recorded in like manner as grants of real property."
By virtue of the foregoing provision of the code it is now held that a chattel mortgage must be immediately recorded upon its execution, or, ipso facto, it is void as to creditors; and the fact that the mortgage may be recorded before any creditor takes a single step toward judicially enforcing his claims is a matter wholly immaterial. The inevitable result flowing from this decision will be to stamp many chattel mortgages as worthless property, when up to the present moment their genuineness has never been doubted. The serious results to follow from thus holding should lead the court to an opposite conclusion if a fair construction of the statute justifies it. For the simplest of reasons it is apparent that it would be work well done to declare *Page 307 
the principles of law governing the recording of chattel mortgages to be similar to those governing the recordation of mortgages of real estate; for the law as to the effect of recordation of mortgages upon real estate is well defined and understood. And now, if in the case of chattel mortgages we declare the same principles to be controlling, a broad road is marked out which all may follow. But a decision to the contrary simply blots out all roads. If it be held under this statute that chattel mortgages similar to the one here involved are void as to creditors, the decision will produce an abundant crop of litigation. This litigation will not only arise upon the rights of creditors as bearing upon chattel mortgages now outstanding, but as long as the statute stands it will be a prolific source of litigation as to the respective rights of creditors and mortgagees.
I am satisfied the provisions of the code only mean that unrecorded chattel mortgages are void as to creditors who assert their claims by attachment or otherwise before a recordation is had. This construction may be maintained without violating any principle of statutory interpretation, and for the reasons already suggested, if for no other, the court should so declare. I know of no reason based upon sound policy which may be urged in favor of a contrary construction. It is suggested in the majority opinion that such a construction of the statute cannot be declared because the policy of our law is opposed to secret liens. But my construction of the statute is directly in line with a policy opposed to secret liens. Until the chattel mortgage is recorded it is void as to third parties, and is only valid between the parties. A mortgage only valid between the parties is in no sense a secret lien as to third parties, and public policy is in no way concerned in such a mortgage. Men may pass their days and nights in mutually giving each other chattel mortgages upon their property, and it is no concern of the public. The public has no interest in that kind of a transaction, but is a totally indifferent party.
In a great many of the states the statute does fix the time when a chattel mortgage must be recorded. In Ohio, where the statute even declares that a chattel mortgage shall be recorded "forthwith," under the penalty of being void as to creditors if not so recorded, the highest court of that state held such a *Page 308 
mortgage valid as against all creditors whose rights had not attached previous to the recordation. (Wilson v. Leslie,20 Ohio, 161.) But we will not attempt a review of the authorities of other states bearing upon the question here involved. It is sufficient to say they are irreconcilable, although it may be safely claimed that a large preponderance are favorable to the conclusion we here declare. Some of these authorities are incidentally enumerated in the case of Fassett v. Wise, 115 Cal. 322.
Section 3440 of the Civil Code, among other matters, declares: "Every transfer of personal property, . . . . and every lien thereon, other than a mortgage, when allowed by law, . . . . is conclusively presumed, if made by a person having at the time the possession or control of the property, and not accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things transferred to be fraudulent, and therefore void, against those who are his creditors while he remains in possession." It is now sought by a process of reasoning by analogy from the provisions of section 3440 to construe the aforesaid section upon chattel mortgages as requiring an immediate recordation of the mortgage. Reasoning by analogy is not the best mode of reasoning, and conclusions thus deduced are often unsound. It may be further suggested that in a proceeding purely and entirely statutory the word "immediately" should not be construed into the statute by a process of analogous reasoning. If quasi judicial legislation is ever justified, it should rest upon a stronger foundation. If the legislature thought that chattel mortgages should be recorded immediately, it was a very easy matter for that body to have said so; and we see no authority to justify this court in invoking the provisions of section 3440 as to sales of personal property for the purpose of assisting in the construction of section 2957 as to chattel mortgages.
Section 2957 of the Civil Code was ingrafted therein in lieu of an act of the legislature of 1857 covering the whole question of chattel mortgages, and not, as the main opinion declares, in place of the statute of 1850. Whatever analogy existed under the act of 1850 between sales and mortgages of personal property was completely annihilated when the chattel mortgage act of 1857 was passed. An examination of a few of the provisions *Page 309 
of that act shows this to a demonstration. For those provisions are directly opposed to the principles of law declared in the act of 1850, and likewise directly opposed to the decisions of this court, cited in the main opinion, rendered under the act of 1850. And I feel assured they are likewise opposed to the principles recognized and approved upon which the present decision of the court is rested. The act of 1857, section 7, provides: "The mortgagee in all mortgages made under this act shall be 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." This was the law at the time the code was adopted, and it is therefore evident that the statute at the time pertaining to the sale and transfer of personal property had no relationship whatever with the execution and recordation of chattel mortgages. Again, the subject matter of section 2957 of the Civil Code is found in this chattel mortgage act of 1857. Yet that act itself, in section 7, which I have just quoted, places a construction upon those provisions entirely in line with my conclusion, and that construction should have great weight in deducing the proper conclusion in this case. Section 7 provides that the mortgagee shall have a certain number of days — dependent upon the distance he lives from the recorder's office — in which to record his mortgage before it shall be void as to attaching creditors. If respondent's position be the sound one, then that provision of the act should have simply said "creditors," and should have omitted any qualifications whatever as to attaching creditors. Indeed, the substance of this identical provision of the chattel mortgage act of 1857 was carried into the original enactment of the Civil Code. (Civ. Code, sec. 2937) This section conclusively demonstrates that the close relationship existing in the early legal history of this state between chattel mortgages and sales of personal property never existed after 1857.
Let us see into what deep water this reasoning by analogy leads us. If by analogy we are justified in inserting the word "immediately" in the chattel mortgage act, then, by the same analogy, it must be held that a chattel mortgage is void as to all *Page 310 
creditors of the mortgagor having claims at any time during the period between the execution of the chattel mortgage and its recordation. Indeed, it has been held by this court in Cardenasv. Miller, 108 Cal. 258, 49 Am. St. Rep. 84, that: "The term `creditors' is general and applies to creditors existing prior to the mortgage as well as subsequent." Yet it is not even claimed here that this mortgage is void as to creditors existing at the time it was executed, and no such claim can be made, for then the whole superstructure of the court's reasoning, builded story after story upon the theory of the creation of a false credit in the mortgagor and a public policy opposed to secret liens, would come down with a crash; for, as to creditors in existence prior to the execution of the mortgage, there would be no false credit in the mortgagor and no secret lien in existence at the time their debts were created. If these two sections of the code are required to fill the same measure, and that a measure furnished by principles of analogous reasoning, the transfer of personal property and the chattel mortgage are each void as to the same class or classes of creditors; and, in the absence of an express legislative enactment to the contrary, this court has no right to hold otherwise.
In a transfer of personal property there must be an immediate delivery; ergo, it is argued the chattel mortgage must have immediate recordation. Such a construction of the statute in numberless cases demands an impossibility. The statute says that a chattel mortgage must be recorded in the county where the mortgagor resides, and also where the property is situated. This express demand of the statute often requires weeks to carry out. It is impossible that the two recordations shall take place immediately, or even at the same time. Section 2962 of the Civil Code allows a chattel mortgage to be given upon personal property situated in different counties. It is impossible to see how such a mortgage could be recorded immediately. What would be said as to the immediate recordation of a chattel mortgage executed in the county where the mortgagor resides and where the property is situated, but one hundred miles distant from the recorder's office? If a mortgage of that character is to be declared void as to creditors because not recorded immediately, it is probable that such a conclusion would invalidate *Page 311 
recorded chattel mortgages in many counties of the state. Again, if a chattel mortgage may not be executed one hundred miles from the recorder's office because an immediate recordation under such circumstances would be impossible, then how near to the recorder's office must the execution of the mortgage take place in order that it may be recorded immediately? This interrogatory presents an interesting question and suggests a broad and fertile field for future litigation.
It is also insisted that a construction of the statute demanding an immediate recordation of a chattel mortgage is justified from general language found in Berson v. Nunan, supra,
to the effect that the recordation of a chattel mortgage is an equivalent of the immediate delivery demanded by section 3440 of the Civil Code. There was no element of immediate recordation of the chattel mortgage involved in that case, and the court never for a moment thought it was declaring the law upon that important question when it used the language to which we are referred. The language used by the court was as clearly in point upon the case of a future recordation of a chattel mortgage as in the case of an immediate recordation. At that time the court was speaking of the effect of the recordation of the mortgage, entirely disconnected from any question as to the time of recordation. This is conclusively apparent when we find the court upon the very same page of the opinion declaring: "The object to be attained by requiring the recording of mortgages of personal property is the same as that in providing for the registration of mortgages of real estate. The same general principles are alike applicable in each case. The design is to give notice to the public of all existing encumbrances upon real or personal estate by mortgages." In view of this language Berson v. Nunan, supra,
affords but a foundation of sand upon which to rest the weighty results flowing from this decision. As distinguished from Bersonv. Nunan, supra, it is said in Martin v. Thompson, 63 Cal. 4, that the chapter of the Civil Code treating of mortgages of personal property "substitutes the record of a mortgage for the actual and continued change of possession in case of other transfers, required by section 3440 The purpose of the actual delivery in the one case, and of the record or registry in the other, is to give notice to those who *Page 312 
shall deal with the vendor or mortgagor." In speaking of the chattel mortgage act in Beamer v. Freeman, 84 Cal. 556, this court said: "This law substitutes the record of the mortgage for the actual delivery and continued change of possession made essential to effect transfers in other cases by section 3440 of the Civil Code." It would seem that the word "immediate" was intentionally omitted by the court in the language quoted in the two foregoing cases; and the language there used entirely and accurately expresses the law upon this question.
In conclusion it may be suggested that section 3431 of the Civil Code provides: "In the absence of fraud, every contract of a debtor is valid against all his creditors, existing or subsequent, who have not acquired a lien on the property affected by such a contract."
In this case there is no actual fraud. Neither is there any constructive fraud, for the law has not so declared. In the face of this provision of the statute it is impossible to see how the mortgagor's creditors have any rights as to the mortgaged property until they have first secured a lien upon it. In this case, before they took any steps to secure the lien the chattel mortgage was recorded.
For the foregoing reasons I dissent from the judgment.
Van Dyke, J., and Harrison, J., concurred in the dissenting opinion.