Court Opinion

ID: 6602470
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:08:58.718055+00
Date Added: 2024-06-11T15:58:03.941139
License: Public Domain

The following decision was rendered on the 28 th of February, 1878:
Ryan, C. J.
The appellants were undoubtedly entitled to their appeal, whatever its effect upon their codefendants. And, prima faeie at least, the plaintiff below is the adverse party of the statute, respondent here. It is true that there is an adverse interest in the codefendants of the appellants, who are not nominally parties to the appeal. So it was in N. W. Ins. Co. v. Park H. Co., 37 Wis., 125, where we pointed out the difficulty. We cannot amend the statute to meet such a case as that or this. We can only administer it as we find it. The codefendants of the appellants, however, though not parties, are privies to the appeal, because parties to the record below. And they would have been entitled, upon proper application here, to all the rights of practice of respondents. They saw fit, however, to make no such application; appearing to rely on the nominal respondent for the assertion of their rights.
The learned counsel for the respondent appealed to us to reverse the rule of this court in Comstock v. Scales, 7 Wis., 159; *591Chynoweth v. Tenney, 10 id., 397; Farmers’ L. & T. Co. v. Com. Bank, 11 id., 207; Single v. Phelps, 20 id., 398; Mowry v. White, 21 id., 417, and perhaps other cases, that a chattel mortgage of after acquired goods does not create a lien, legal or equitable, by force of the mortgage, upon after acquired goods. The argument was learned and interesting. It went upon the assumption that this court had followed earlier English cases, now overruled in England, and American cases elsewhere following the English. The assumption is not altogether accurate; for an examination of the cases will show that the rule was rested here on general principle as well as on authority. And we certainly are not now inclined to change the strict rule so long established here, merely because courts elsewhere have abandoned it.
Whether, and in what cases, chattel mortgages containing express covenants for further mortgages to cover after acquired goods, could be specifically enforced, where there are no intervening adverse rights, after the goods have been acquired, is a question we need not consider here. For in this case the original chattel mortgage contained an express covenant for further assurance, to extend the lien to after acquired goods; and a new mortgage was actually executed upon after acquired goods, to one of the mortgagees, to secure a separate debt. And we cannot doubt that the second mortgage enured as additional security to the original mortgage.
We say that the second mortgage was executed to one of the original mortgagees. The mortgage secured three promissory notes, maturing at different times; the appellants holding the first in order of maturity, their codefendants the second, and the respondent the third. So these parties were all mortgagees in right, with priorities of lien in the order stated. The second mortgage was executed to the appellants, who now claim under it adversely to their co-mortgagees in the' first mortgage.
Although the mortgagees in the first mortgage held the *592notes secured by it in severalty, they held the security in common. This established, quoad the mortgage, a community of interest, a relation of trust and confidence between them, to support the common security in all proper ways, and to do nothing to divert or impair it. This equitable rule of good faith, we take to be as well recognized in mercantile ethics as in courts of equity. And, whether or not the covenant for further assurance in the first mortgage could have been specifically enforced, the mortgagees were equitably bound to each other, if' not actively to insist upon its performance, certainly to do nothing to defeat it.
Whether or not the covenant could have been enforced, the mortgagor was none the less morally bound to perform it. If it were an imperfect obligation, it was none the less an obligation in foro oonsoientice, and the mortgagees had at least a moral right to its fulfillment. It would certainly have been bad faith in the mortgagor to refuse to fulfill it; and it certainly was bad faith in him to give the second mortgage adversely to the first, in violation of his covenant and moral duty. So the mortgagees in the first mortgage were bound, in good faith to each other, to take the second mortgage, if they could obtain it, as additional security to the first. And it certainly was not good faith to their co-mortgagees, for one of the parties to take the second mortgage for a separate debt, adversely to the common interest under the first mortgage.
These parties were entitled in common, under the first mortgage. That gave them at least an imperfect title to a lien on after acquired goods of the mortgagor. And neither of them can be tolerated in acquiring an adverse title against his co-tenants. In the language of Kent, C.: “It is not consistent with good faith, nor with the duty which, the connection of the parties, as claimants of a common subject, created, that one of them should be able, without the consent of the other, to buy in an outstanding title, and appropriate the whole subject to himself, and thus undermine and oust his companion. *593It would be repugnant to a sense of refined and accurate justice. It would be immoral, because it would be against the reciprocal obligation to do nothing to the prejudice of each other’s equal claim, which the relationship of the parties, as joint devisees, created. Community of interest produces a community of duty, and there is no real difference, on the ground of policy and justice, whether one co-tenant buys up an outstanding incumbrance, or an adverse title, to dis-seize and expel his co-tenant. It cannot be tolerated, when applied to a common subject, in which the parties had equal concern, and which created a mutual obligation to deal candidly and benevolently with each other, and to cause no harm to their joint interest.” Wright v. Sperry, 21 Wis., 331; Van Horne v. Fonda, 5 Johns. Ch., 388; Page v. Webster, 8 Mich., 263. The rule rests, not upon the strict relation of joint tenants, or tenants in common, but upon community of interest in a common title, creating such a relation of trust and confidence between the parties, that it would be inequitable to permit one of them to do anything to the prejudice of the others, Rothwell v. Dewees, 2 Black, 613.
It is quite immaterial here, whether the mortgagees in the first mortgage could have obtained the second mortgage-, as further assurance under the first. They certainly might have received it. And it is enough to hold that, on principles universally recognized and applied, one of the mortgagees in the first mortgage cannot, in a court of equity, claim under the second mortgage adversely to the common interest under the first.
The learned counsel for the appellants claimed that his clients were not privies to the covenant in the original mortgage. They claim under that mortgage in this suit, and are bound by all that it contains. Every one is charged with notice of the paper title under which he claims.
We therefore hold that the appellants cannot, in good conscience, appropriate the proceeds of the second mortgage to *594their separate debt; but took the second mortgage in trust to apply the proceeds on the first mortgage, until that should be satisfied.
Some minor questions were made, which are not properly before us, because there is no bill of exceptions. We have nothing here but the pleadings, the findings of fact, and conclusions of law.
By the Oowrt. — The judgment of the court below is affirmed.
On the 19th of March the appellants filed a motion for a rehearing, and submitted it on the 9th of April. The brief of Winfield Smith, filed in support of the motion, argues that, by former decisions in this state, adhered to in the foregoing opinion, the mortgage as to after-acquired goods created no lien, legal or equitable; that this is equivalent to saying that, whatever might have been the moral duty of the mortgagor, he owed the mortgagee no duty of legal or equitable cognisance, as to such goods; that it follows as a necessary corollary, that if a stranger to the first mortgage, with full notice of its existence and provisions, had taken a mortgage of the after-acquired property, he would have been protected as against the plaintiff; that this is for the reason that courts enforce those rights only which have a basis in law (whether technically called equitable or legal), and refuse to entertain claims based solely on moral obligations; that if appellants could not take a separate mortgage, it must be because of some legal or eqvMable (not merely moral) principle, which applies to them and not to a stranger; and that none of the cases cited in the foregoing opinion, when carefully examined, establish any such principle. Counsel further contended, 1. That the rule of equity asserted in those cases applies only to a claim by cotenants “ to a common subjectf and this means a subject in which they all have a common interest at law or in equity: that the only common subject in the case *595at bar, in wbicb tlie parties had any such interest, was the property on which the mortgage created a-lien; that no act done by either cotenant in this case respecting the after-acquired goods could possibly prejudice any right of the other cotenants, because none of the cotenants, as such, had any rights in such goods; that while it is true, as suggested, that the holders of the first mortgage might have receimed a subsequent mortgage, that is equally true of every other creditor, and every other creditor had just as much right to it, in the eyes of a court, as they; that if they had no enforceable right to such further mortgage, they stood in respect to such after-acquired goods precisely as if the latter had been wholly omitted from the first mortgage; and that it would be a strange anomaly if an obligation not within the scope of judicial power to enforce against the mater, could be enforced on behalf of the obligee against his assignee. 2. That to make the equitable principle in question applicable, there must not only be a common subject and an imperfect title, but possession under such title, and where persons have only an imperfect title to a common subject, without possession or a right to reduce to possession, each one is free to do the best he can for himself. Van Horne v. Fonda, 5 Johns. Ch., 406; Wright v. Sperry, 21 Wis., 329, 337-8; Venable v. Beauchamp, 3 Dana, 324; Coleman v. Coleman, id., 404. In this case the thing held in possession, the thing enjoyed, the thing as to which the holders of the first mortgage had a common title, is the lien on the mortgaged goods existing at the date of the mortgage. As to the subsequently purchased goods, they had no lien, no right known to a court (beyond the right of any other creditor), no jus in re, no jus ad rem, no possession of the goods nor of any interest in them, no enjoyment of anything, by virtue of that part of the mortgage.
The plaintiff’s counsel objected that the motion for a rehearing was not submitted within twenty days after it was filed, as required by rule 20 of this court.
*596Ryan, C. J.
The motion for rehearing is seldom abused, as an opportunity for scolding the court. It can not properly be said that it is so in this case. But the learned counsel who makes the motion, opens his argument with this singular sentence:
“ The series of misfortunes which I have latterly met with at the hands of this court, has shaken my confidence in the result of any effort I may make to convince the court, or to obtain its favorable judgment in any case- where a serious contest is possible.”
The fact may be as stated, though the late volumes of reports do not quite appear to verify it. But the suggestion is not fair either towards the learned counsel himself or towards the court. Por it may be an imputation of failure in the intelligent discharge of duty equally to either. It does not seem to have occurred to the learned counsel that the misfortune of which he complains may be attributable to his clients, or to the work which they give him to do. A great judge once said that great lawyers were frequently unsuccessful; for the reason that, being generally expensive luxuries, they are apt to be employed only in desperate cases. This may be the occasion of the learned counsel’s complaint, and his consolation.
The learned counsel has made an ingenious and interesting argument, presenting the point on which the judgment of this appeal turned, in a light not suggested on the hearing. Had it been then presented, or were it now presented in time, it would be entitled to the careful consideration due to every lawyer-like argument. But unfortunately, as the learned counsel for the respondent objects, it comes too late. And the court has lost jurisdiction to consider it, or to entertain the motion, or to deny it with costs. Pierce v. Kelly, 39 Wis., 568; Diedrich v. Railway Co., 42 id., 274.
It is hoped that the learned counsel will not accept this ruling as a continuation of his series of misfortunes at the hands of the court.
By the Court. — Motion denied without costs.