Court Opinion

ID: 6951313
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:32:09.347388+00
Date Added: 2024-06-11T16:08:05.307193
License: Public Domain

.Mr. Justice Breese delivered the opinion of the Court: The questions raised by. plaintiff in error are, first, as to the bona Jides of Goodman and Mason’s mortgage to Benson and Company of this furniture. Eo objection is made, in the answer of plaintiff in error, to this mortgage, on account of its having been-given to secure future advances, but it is charged to be fraudulent, —made with a design to deprive them of the collection of their rents. Although the objection stated is not made in the answer, yet it is made in the brief of plaintiff’s counsel, and argued at great length, and we will consider it. They insist that the mortgage, being made to secure an apparent debt of ten thousand dollars, when no such debt in amount was due, was void. Though they admit that such a mortgage on real estate might be valid although it be not so expressed in the deed, yet the doctrine cannot apply consistently with our statute to chattel mortgages, it being an essential element in such conveyances, that the possession must be -consistent with the deed, and it must be bona fide, otherwise the property remains subject to the rights of creditors. They ask, how can a creditor avail himself of the rights the law gives him if the deed does not show when the debt matures, and, consequently, when the retention of the goods by the mortgagors becomes unlawful. In the case of Truscott v. King, 2 Seld. 144, to which appellants refer, it was said, the principle was well established that a mortgage or -judgment may be taken and held as security for future advances and responsibilities to the extent of it, when that forms a part of the original agreement between the parties; and the future advances will be covered by the mortgage or judgment in preference to the claim under a junior intervening incumbrance, with notice of the agreement. In this case all the authorities are reviewed by the court, and among them is the case of James v. Johnson, 5 Johns. Ch. 417, wherein the chancellor said, that, in many cases, a subject pledged for a debt might be considered as a security for further loans, and that he saw no possible objection to it if no intervening right exists to prevent the justness of the application of the rule. In the case of the United States v. Hove et al., 3 Cranch, 73, Marshall, Ch. J., says: That the property stood bound for future advances was, in itself, unexceptionable. It may, indeed, be converted to improper purposes, but it is not positively inadmissible. It is frequent for a person who expects to become more considerably indebted, to mortgage property to his creditors as a security for debts to be contracted, as well as for that which is already due. And the same was held in the case of Shirras et al. v. Caig and Mitchell, 7 Cranch, 34. In this case the same eminent jurist said, “ It was true, the real transaction did not appear on the face of the mortgage, and that it was not to be denied that a deed which misrepresents the transaction it recites, and the consideration on which it is executed, is liable to suspicion. That it must sustain a vigorous examination. That it was always advisable, fairly and plainly, to state the truth. But if, upon investigation, the real transaction should appear to- be fair, though somewhat variant from that which is described, it would seem to be unjust and unprecedented to deprive the person claiming under the deed of his real equitable rights, unless it be in favor of a person who has been in fact injured and deceived by the misrepresentation.” In the case of Conrad v. The Atlantic Ins. Co., 1 Peters, 447, Story, Justice, said, that mortgages might as well be given to secure future advances and contingent debts, as those which already exist and are certain and due. A large number of other cases, to the same effect, are cited by the court, and among them the case of the Bank of Utica v. Finch, 3 Barb. Ch. 293, also cited by the appellants on their brief. In that case, it was held, that where a bond and mortgage were given to secure a particular debt mentioned therein, the mortgagee could not, as against subsequent purchasers or incumbrancers, hold it as a lien for an entirely distinct and different debt, upon parol proof that it was intended to cover that debt also. But that a mortgage or judgment might be given to secure future advances and responsibilities, or as a general security for balances which might be due, from time to time, from the mortgagor or judgment debtor. That such security might be taken in either form for a specific sum of money, large enough to cover the amount of the floating debt intended to be secured thereby, and such future advances and responsibilities will be protected by such security, to the extent of the sum mentioned therein, in preference to any claim under a junior incumbrance with notice, although such security, on its face, does not specify that future advances or responsibilities to be made or incurred are provided for in such sum. Parol evidence is admissible to show the purpose and intent for which such security was executed, and it does not conflict with the principle that such evidence cannot be admitted to contradict the written instrument. But neither a mortgage nor judgment can be rendered available to secure the party taking them for future advances or responsibilities, by any subsequent parol agreement, in preference to the lien of a junior incumbrancer. On the principle of these cases, of the last especially, the mortgage having been recorded, from the face of it, the presumption must be, that it was for a present debt of ten thousand dollars, due, and, to that extent, subsequent incumbrancers and purchasers would have notice by the record of this prior incumbrance. In the case of Craig v. Tappin, 2 Sandf. Ch. 78, the court said, that mortgages to secure future advances are good to the extent secured thereby. And in answer to a similar objection made by the appellants here, the court say, if, in this instance, the mortgage had stated that it was designed to secure future advances, the subsequent creditors or incumbrancers would obtain no useful information from that statement. So in any case, the record would afford him no certainty. His only resource would.be, an application to the mortgagee, to ascertain the extent of the advances already made, very much as in an ordinary transaction, when,'finding a large lien before him, he would inquire of the creditors, whether all or how much of it was due. This mortgage to Benson, showed on its face, by the record, the utmost amount or sum which it was intended to secure. It is only necessary in any such case, that the mortgage debt should be described with such certainty, as to enable subsequent creditors and purchasers to ascertain, either from the condition of the deed or inquiry almonde, the extent of the incumbrance. Such inquiry would have brought into view the acknowledgment or receipt by Benson, made in writing at the time the note and mortgage were executed, to the effect that they held this note as collateral security for any indebtedness then existing, or which might thereafter accrue to F. H. Benson, or F. H. Benson & Co., by Goodman and Mason, whether the same should be by bill, note, check or account, or any other manner whatever, and upon the same being paid they would surrender the note. This case’of Craig v. Tappin, holds, that a mortgage intended to secure future advances, need not express that object in the mortgage itself; it would be better to do it, but its omission will not render the security invalid. So this court held, in the case of Collins et al. v. Carlile, 13 Ill. 254, on a review of most of the authorities, that a mortgage taken to secure future advances is valid, although it does not show upon its face the real character of the transaction. But in such a case, the mortgagee can only recover the amount actually due at the date of the sale of the equity of redemption. But it is further objected by appellants, that this doctrine obtains only in regard to mortgages of real estate, and is not applicable to chattel mortgages. There is nothing in our chattel mortgage act inhibiting mortgages to secure future advances, and there is nothing in principle, that we can discover, to forbid it. All that is requisite is, that the transaction should be bona fide. The case referred to in Lawrence v. Tucker, 23 How. (U. S.), 14, was a case of a chattel mortgage on the furniture of the “ Briggs House,” in Chicago, and was for future advances; and was upheld by the Supreme Court of the Hnited States. It is true, the question was not started in that case, possibly for the reason given by the appellants here, that the eminent jurist, Judge Curtis, who argued for the appellant, and whose duty it was to know the whole law of the case, was ignorant of su8h a statute. The more probable reason would seem to be, that no difference was perceived, in principle, on what the mortgage should be based. It was impossible that the court and counsel did not know it was a chattel mortgage they were considering, and equally impossible, the objection should not have been made, if considered a sound one. We do not perceive the difficulties to which appellants have alluded. The chattel mortgage and note would disclose the extent of the claim to be secured by it, the time in which it should be paid, and the time the mortgagor shall retain possession. If the mortgage stipulates that the property shall remain with the mortgagor two years, as it may stipulate, and if made bona fide, it is good and valid for that space of time from the day it is recorded. Ho subsequent purchaser or incumbrancer could be deceived, or entrapped, or his rights injuriously affected. All the objections made by appellants on this point are answered by the cases to which reference has been made. In the case of Wescott v. Gunn et al., 4 Duer (N. Y.), 107, to the objection made, that the mortgage there under consideration was a chattel mortgage, the court said the authorities were not all agreed on the point whether such a.mortgage could be given for future advances, without it is so expressed in the deed, on the strength of a mere parol agreement. Whilst in Walker v. Snediker, 1 Hoff. Ch. 145; Divers v. McLaughlin, 2 Wend. 596, and James v. Morey, 2 Cow. 293, this was controverted ,• yet in Craig v. Tappin, 2 Sandf. Ch. 78, on which we have commented, and Bank of Utica v. Finch, 3 Barb. Ch. 293, the doctrine was conceded. If this transaction had assumed the form of a pledge, and this property had been actually delivered into the possession of the mortgagee, to secure the debt already due, as well as future advances, to the amount of ten .thousand dollars, and was to operate as a security for balances, could any person have doubted the validity of the transaction, if otherwise free from fraud? How, our statute has authorized the execution of chattel mortgages, providing for the retention of the property by the jportgagor, when acknowledged and recorded in the mode prescribed, and, if bona fide, they are declared to be valid and binding. These statutory mortgages were, evidently, designed to take the place of, and are substituted for, a pledge to secure the payment of money, and the acknowledgment and the record of the mortgage is designed to afford the same notice to subsequent creditors and purchasers as is afforded by the possession under the pledge. Such being the purpose of the statute, no difference can exist between a chattel mortgage and a pledge accompanied with possession. Another objection made by appellants is, that in the decree in the injunction case against Benson, Beveridge and' the others, the expenses and counsel fees of Beveridge, not. contemplated or referred to in the mortgage or in Benson’s receipt', could not be inserted into the mortgage, and by. embodying such a claim in the decree, it rendered the whole decree invalid so far as Speer is concerned. This proceeding was not to foreclose the mortgage by Benson, but was set on foot by the mortgagors and their assignees to restrain Benson from proceeding on the mortgage. In the settlement of the case, the details of the decree were left, as they usually are in such cases, to the parties and their counsel. The solicitor of the complainants in the case testifies that the sole object of the bill was to ascertain the amount due, and he stipulated that Haddock, who had filed his bill of interpleader, might have the decree and sale he had prayed for to include the sum of three hundred dollars to pay Beveridge and Moss, the assignees of Benson. The solicitor states, when the stipulation was made, he considered that it subserved the end sought by his clients, and so informed them; that it was made in good faith, and there was no fraud in the matter. Benson testifies, that the suit was compromised; the settlement was made in good faith; there was a balance due Goodman and Mason, on the 8th of October, 1857, of two thousand one hundred and seventy-four dollars, on which interest was computed to March 7, 1860, making the amount due at that time two thousand six hundred and eight dollars. There was the ten thousand dollar note which was given to secure any obligation, and there were three notes outstanding, one for two thousand dollars and two for fifteen hundred dollars each. Benson procured these two last notes, and on the settlement they amounted to about thirty-three hundred dollars. These notes were given up to the complainant, Gates, or to his solicitor, and the amount was settled by canceling the balance due Goodman and Mason and the payment of some four hundred dollars in cash by Gates or by his attorney. Haddock also gave his note to Benson for three hundred dollars, payable in three months, leaving one note of two thousand dollars still to be paid by the mortgage; that note was held by Haddock, and he gave the three hundred dollar note with the understanding that this two thousand dollar note, with the three hundred dollar note, was to be paid by the mortgage. There was an assignment made at the time, of all the Benson interest in the mortgage, to Haddock, by consent of all parties. This three hundred dollar note was foi part of the amount due by the fifteen hundred dollar notes, and they, with the two thousand dollar note held by Haddock, were secured by this mortgage which covered the personal property in the hotel. After this adjustment was had, the words “ without recourse on me,” over Benson’s name, were put on the note. The proceedings have every appearance of fairness, and one circumstance strengthens it, and that is, that Grates, one of the complainants, paid four hundred dollars which it is not probable he would have done had it not been due, and, the parties were then adjusting and settling their respective liabilities. There does not seem to be any fraud or collusion about these proceedings or decree. Both are denied by the principal actors in them, and no sufficient proof is adduced by appellants to establish the one or the other. Another point made by appellants is, that both the sales, the one under this decree by the receiver, Kimball, and the other by Haddock himself under his mortgage, bear strong marks of fraud. These grounds are, that the auctioneer was employed by Haddock. To this there can be no objection, as Haddock had the right to have the property sold to satisfy his decree and his mortgage, and to employ the necessary agent for such purpose, and so long as the agent violated no law in making the sale, it cannot be attacked. The auctioneer swears that'the sale was made as he had made them for a number of years. That when he commenced the sale, at his own instance, he offered the entire contents of a room. Haddock wanted the sale made for the best advantage. Speer objected; 'stated it was not best, and it was done otherwise; he had been an auctioneer twenty odd years, and the sale was so conducted as to bring the most money; that the usual way of selling chamber furniture is in sets, but, Speer objecting, it was done otherwise. The circumstances are not at all like those in the case of Crary v. Sprague et al., 12 Wend. 41, cited by appellants. There the sale was brought about by the defendant in concert with others, with the avowed object of defeating the interest of a third person in such property. Here the sale was managed by the party entitled to its proceeds, and the interest of Speer was all along regarded, and his wishes obeyed by the auctioneer, and he was himself a bidder at one of the sales. Another question made is, that the testimony of Isaac Speer and Joseph L. Smith was rejected. This testimony was offered in the form of depositions, to which objections were made before the hearing, on the ground of interest. On this point the record recites: “ It being admitted that the defendants claim the property as belonging to Isaac Speer, he having made an assignment for the benefit of creditors, and that Smith had signed the replevin bond as surety, the court sustained the objection, and excluded the depositions, to which ruling of the court the defendant then and there excepted. Isaac Speer had a direct interest in establishing the title to this property in the appellants, for thereby he relieved the sureties in the replevin bond, and created a fund out of which his liabilities c.ould be paid, and Smith was interested as surety in the replevin bond. The important point made in the case remains to be considered, it is this: That the property distrained for rent having been replevied by Gates, the lien of the distrainor was lost, and he was remitted to the replevin bond. This is an interesting question, and we have looked into all the authorities cited on both sides. As early as 1785, the High Court of Chancery of England, Lord Thtjblow being Lord Chancellor, in the case of Bradyll ex'r v. Ball et al., reported in Brown’s Ch. 427, it was decided, after elaborate argument by Kenyobt, afterwards Lord Chief Justice of the King’s Bench, in opposition, that goods taken in distress for rent and replevied, the distrainor has no lien on them, but is left to his remedy on the replevin bond. This was a suit in chancery to enforce an alleged equitable lien by the landlord, upon the goods taken in distress, for a return of the goods or payment of the value of them. Kenton contended that the landlord had a right to follow the goods,—that by the distress he had obtained a lien upon them, and that it was a clear rule in equity, that when a lien is once obtained, it will continue against the party and all volunteers claiming under him. It was argued on the other side, that if the sheriff upon the retorno habendo returns elongata\, the party has his remedy, first, against the sureties, and secondly, by carpías m withernam, against the general goods of the tenant, but if the distrainee had no goods, or the distrainor did not . choose this remedy, he had a scire facias against the pledgor, and if the sheriff made his return of scire feci, the landlord had his action for the value-of the goods. If the pledgor had no goods, the landlord had his action against the sheriff himself, for taking insufficient pledges, but if the goods were eloigned, and became the property of another person, he could not follow them. After the argument, which was conducted at great length, Lord Commissioner Ashhuest ordered the case to be spoken to again, when the court was full, and particularly to the point, whether, after the retorno habendo, and the goods returned,they could be sold under the statute, remarking, that at the common law the sheriff could only keep, not sell them; that a distrainor has no property in the goods, — they are only in the custody of the law for his security. These points were argued by Kenton on one side, and Mr. Madocks and Mr. Arden, afterwards master of the rolls, on the other; the latter contending that the plaintiff’s lien only continued until the goods were delivered by the replevin, and the statute only giving a sale if the goods are • not replevied ; the sheriff cannot sell in any other case; that upon elongata returned, the statute gave a remedy against the other effects of the tenant, and that, notwithstanding the acts were remedial, and favorable to the landlord, they did not vary the nature of his property; that being no contract in this case, there could be no equitable lien- arising from contract; and the legal lien being gone by the replevin, the plaintiff had no lien on the goods, but must seek the other remedies. Lord Loughborough, one of the lords commissioner, after remarking, when goods are replevied they are delivered over to abide the event of the suit, and if they come afterwards into the hands of persons in privity with the tenant, they would be liable on the return, and if sold, an action would lie for money had and received. If this were not the case, he said the law would be very defective, but the persons who had received money for them would certainly be liable in an action for money had and received. The bill was ordered to be retained in order that an action might be brought for money had and received to the plaintiff’s use, against the assignees, they to admit that they sold the goods taken in distress, to an amount exceeding the rent. This action was brought in the Court of King’s Bench before Lord Mansfield, and he, with Mr. Justice Willes and Mr. Justice Buller, threw out an opinion against the right of the plaintiff to recover, but on a technical ground the plaintiff was nonsuited. In a subsequent action tried in the same court, a verdict was found for the plaintiff subject to a case reserved for the opinion of the court. That case was argued, and the Court of King’s Bench were unanimously of opinion that the plaintiff had no lien upon the goods, and ordered another nonsuit. The cause came on in chancery, on the equity reserved, which resulted in a dismissal of the bill for want of equity. This case has been cited by all text writers on the subject, with approbation, and by the courts whenever the question has come up for adjudication. Sweet et al. v. Pyrn, 1 East, 18; McCombie v. Davis, 7 id. 5; Cross on the Law of Lien, 346; Whittaker on Lien, 68. In Woglam v. Cowperthwaite, 2 Dallas, 68, the same doctrine was held, and the question considered settled, by the case of Bradyll v. Ball. The court, by Shiffen, President, further say, by the replevin, the securities in the bond are substituted in the place of the goods which are restored to the tenant as his sole property; he may sell them; they may be taken in execution, and they become liable to any future lien or incumbrance. TJpon the retorno hdbendo, if the identical goods distrained are in the hands of the tenant undisposed of, and unincumbered, they may be taken by the sheriff; if not, after an elongata returned, a withernam may go against the general goods of the tenant. It was so decided also in Frey v. Leaper, id. 131. If this be so, in regard to the goods of a tenant which may be considered as held by him subject to the rent, how much stronger is the case in favor of a third party who claims the general property in the goods, as in this case, and gives pledges to make his claim good. And where is the hardship or injury to the landlord, since, all he can get in any event, is the amount of his rent, and it is quite immaterial, whether that amount is made out of the sale of the goods distrained or by action against the obligors in the bond. If the sureties are not sufficient, or were not, when taken by the sheriff, the sheriff would be liable on his official bond, so that it is next to impossible, the distrainor could be injured. It cannot be maintained that appellants by their distress warrants acquired any property in these goods. The most they acquired was a lien, the general property remaining in the distrainee, and while in him, he transferred it by mortgage, before the replevin suit was determined. This, if in fraud of his landlord, was valid between the parties to it, and could only be set aside by a creditor on the allegation and proof of the fraud. A bona fide purchaser will always hold the property against creditors, if he is no party to the fraud. The suit in replevin between appellant and Goodman and Mason, settled none of the rights of appellee, or Haddock under whom he claimed, as neither of them was a party to that suit or privy. When appellant levied the distress warrants, he had notice that Benson was in possession, or attempting to take possession under his mortgage, as he signed the injunction bond for Goodman and Mason. The appellants, in answer to these cases cited, have referred to a large number of cases, which may militate somewhat against the doctrine they establish, but in none of them, is any reference made to these cases. It is only by inference, that they are supposed to be in hostility. There is no such difference in the statutes of England and of Pennsylvania, on the subject of replevin, and our statute, as to originate a different doctrine. The principle is, that when the distrained property leaves the possession of the distrainor, he loses his lien. The case of Grimsley et al. v. Klein, 1 Scam. 343, is relied on by appellants, as a case in support of the views they have so ably pressed on the notice of the court. In that case, the point, among others, was made, that the claimant of the property was not the absolute owner of the goods levied on by virtue of the execution, but was only interested in them as a landlord who had distrained upon the goods for rent, and a motion, for this reason, was made to dismiss the cause for want of jurisdiction. This motion was overruled and an exception taken. The court say: During the progress of the trial in the court below, several exceptions were taken to the opinion of the court, which are also assigned for error here, if one of the exceptions, however, are considered well taken, except that which relates to the reading in evidence of a paper purporting to be a lease from Klein, the appellee, to one Bailey. It is by inference only, that the court can be said to have decided that a distrainor'had such an interest in the property levied on by execution, against his tenant, as to permit bim to claim it before the sheriff. In this view we entirely concur. The landlord had not lost his interest or lien, by losing the possession after he had taken it, and receiving in lieu thereof, a bond for the return of the property. He stood in a position where he could rightfully appear as a claimant, he never having lost his lien, and that lien, it must be presumed, was prior in time to that of the plaintiff in the execution. We must conclude, on the authorities we have cited, that the law is, that property distrained for rent, having been replevied by a party. claiming to be the general owner, the lien of the distrainor is lost, and he has no remedy but on the replevin bond. In Gorton v. Brown, 27 Ill. 495, this court held an action on the case • for maliciously suing out an injunction could not be maintained, the only remedy being on the injunction bond. Another, and the only remaining question raised by appellants,! not made in their brief, is this, that the replevin bond, being made in this case to the coroner, and not to- the sheriff, is void on its face. The replevin act, by the fourth section, provides that before the execution of any writ of replevin, the party suing out such writ, shall give bond to the sheriff, &c. • Section 18 of act respecting sheriffs and coroners, provides, in case of a vacancy in the office of sheriff, by death, resignation, removal or otherwise, the coroner shall do and perform -all the duties pertaining to the office of sheriff, receive the proper fees and emoluments, and be liable to the same .penalties and proceedings as if he were sheriff, until such vacancy be filled, &c., and it is -made the duty of all coroners to execute all process within their respective counties, in all- cases where just exception can be taken to the sheriff or his deputy or deputies, or where there is no sheriff; and in all cases, upon affidavit made and filed with the -clerk of any court of record in this State, of the partiality, prejudice, consanguinity or interest of the sheriff or of the deputy sheriff of-any county where suit is about to be brought, or shall have been commenced, it is made the duty of the clerk to issue and direct original or other process in the suit, to the coroner, who is required to execute the same, and attend to the suit throughout, in the same manner as the sheriff would or ought to have done. ■ The answer to the objection then is, that the court must presume one of the contingencies had happened which made it necessary-to direct the writ of replevin to the coroner-, and as the objection is now made here for the first time, this court will so presume. Had the objection been made below,- the party might have shown that at the time the writ was issued, the sheriff was dead, resigned or removed, or that an affidavit was filed of his interest, consanguinity or prejudice, or that other just exception- was ■ taken to the action of the sheriff" in that • particular case. ■ The writ of replevin being issued to the coroner, it follows as a matter of course, that he had power to take all legal steps towards its execution, which included the taking of a bond to himself, as coroner. The statute naming the sheriff as the party to whom the bond is to be given, means only that the bond shall be given to the officer serving the writ. 23Tot perceiving any error in the record, the decree must be affirmed. Decree affirmed.