Court Opinion

ID: 6604677
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:11:06.012621+00
Date Added: 2024-06-11T15:58:08.724156
License: Public Domain

The following opinion was filed January 13, 1885:
Cole, C. J.
The learned counsel for the defendant insists that the instrument under which the plaintiffs claim the goods in controversy is really an assignment for the benefit of creditors, and is void for several reasons. If his view of the nature of that instrument is correct, its invalidity would follow as a natural consequence. The plaintiffs gave no bond, and did not attempt to comply with the statute regulating voluntary assignments for the benefit of creditors. But an inspection of the instrument will show that it is a chattel mortgage and not an assignment. It is in the usual form of a chattel mortgage. For the purpose of securing the payment of $1,000, Charles H. McLean bargained, sold, and transferred to the plaintiffs all of his stock in trade — consisting of a quantity of jewelry — and other personal property named, upon the condition that if McLean should forthwith pay the three debts specified, amounting to the *555sum of $385, also to secure such other claims against him as might come into the hands of the plaintiffs for collection, and a claim of Aiken, Lambert & Co. of $127, then the sale to be void. It is a conditional sale to secure the payment of certain debts. In case of default in the payment of the moneys mentioned as specified, the plaintiffs were authorized to take possession of the mortgaged property and sell the same at public or private sale for the best price which could be obtained therefor, and out of the proceeds pay the debts named and expenses, and return the surplus to the mortgagor. It will be seen that the instrument is a formal chattel mortgage, and must be so regarded. In many important respects it differs from the instrument considered in Page v. Smith, 24 Wis. 368, whiqh was held to be an assign-merit for the benefit of creditors.
Now, treating this as a legal mortgage of personal property, given to secure the payment of certain debts, the question arises, Is it valid, and did it have the effect to vest in the plaintiffs the title to the property embraced in it? The instrument was not only filed in the town clerk’s office, but the plaintiffs took possession of the property under it, and had possession when the defendant seized a portion of the property on the attachments. There is no pretense that the debts which the chattel mortgage was given to secure were not bona fide debts of the mortgagor. But it is said that McLean was largely indebted to other creditors when he gave this mortgage upon his entire stock of goods, and that the plaintiffs knew the fact. But still it is competent for a debtor in failing circumstances to pay or secure one creditor or a number of creditors, w'here there is no statute forbidding such preference and the transaction is not tainted with any unlawful intent. But it is further objected that the mortgage purports to be given to the plaintiffs as attorneys, not only to secure certain claims in their hands, but also all such other claims against McLean as might there*556after come into their hands for collection. It is insisted that this uncertainty as to the claims or liabilities intended to be secured by the mortgage renders it void as to creditors; but we suppose a chattel mortgage may be given to secure future advances as well as an existing indebtedness, providing it appears on the face of the mortgage to be intended as a continuing security for such advances.
In Butts v. Peacock, 23 Wis. 359, there is a strong intimation by Mr. Justice Patnb that a chattel mortgage given for a greater amount than was due, even though designed to secure future advances, should be held void as to creditors if it did not disclose its real character on its face. The distinguished judge thought such a mortgage must necessarily tend to hinder and delay the creditors of the mortgagor, because it would deceive and mislead them as to the extent of the liens upon the property. But the use of a chattel mortgage “ as security for future advances, and as indemnity for liabilities as sureties and indorsers, must necessarity exclude the idea of great precision in the exact amount of the in-cumbrance being made apparent on the face of the mortgage. There must be a sufficient general description to embrace the demands and liabilities intended to be secured, and to put the person examining the records upon inquiry, and to direct him to the proper source for more minute and particular information of the amount of the incumbrance.” Dewey, J., in Henshaw v. Sumner, 23 Pick. 446, 453. Within this rule it is apparent that the description of the indebtedness the mortgage was intended to secure in this case could be readily ascertained by any one. Certain debts were named and the amounts stated. And the plaintiffs would be bound to disclose to a creditor whether they held any claims for collection other than these debts, and any creditor had the right to subject the mortgaged property to the payment of his debt at any moment by paying the amount for which the plaintiffs held the goods. This *557amount, as we have said, could be ascertained by inquiry of them. Consequently we hold that the clause in the mortgage stating that it was ’also given to secure such other claims as might come into the hands of the plaintiffs for collection did not vitiate the mortgage.
The defendant’s counsel admits that an attorney may take a mortgage in his own name to secure a debt due his client, but he says the attorney cannot take a mortgage from an insolvent debtor to secure debts due creditors not his clients. But it seems to us the case in principle stands upon the same grounds as a mortgage for future advances. If a mortgage given to secure future advances to a certain amount is valid to that amount, why is not the mortgage in question legal? But it is enough to say that the clause does not render the mortgage void. The plaintiffs do not claim that any demands against McLean did cofne into their hands, and they do not hold the mortgage to secure any other debts than those in their hands when the mortgage was made. They do not seek to give effect to the clause, but claim that the mortgage was valid to secure the debts expressly mentioned. We think this claim well founded.
By the Court.— The judgment of the circuit court is affirmed.
Lyon, J., took no part.
A motion for a rehearing was denied March 31, 1885.