Court Opinion

ID: 3579974
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:31:13.637567+00
Date Added: 2024-06-11T07:41:22.614067
License: Public Domain

A mortgage upon a vessel in this country is precisely like other chattel mortgages, except that it must be registered as required by the Federal law; and it is not claimed by the counsel who argued this case that the mortgages in question are not to be treated just as if they were upon other chattels.
The facts are undisputed, and there is no real dispute about the principles of law. The dispute is as to the application to the facts of this case of principles of law recognized by both *Page 511 
parties and established beyond controversy by numerous decisions.
There were three chattel mortgages upon the vessel. The first was held by Spaulding, the second by the plaintiff and the third by the defendant. The first mortgage was in default when the other two were given.
A chattel mortgage carries the legal title to the property mortgaged to the mortgagee conditionally, and if the condition be not performed, the mortgagee at once upon the default becomes the absolute owner of the property at law. The only right then remaining to the mortgagor is an equity of redemption, a right which he can enforce only in equity. He has no title, legal or equitable, to the property. The mortgagee may permit him to remain in the lawful possession of the property; but his use and possession of the property are merely permissive, and the mortgagee may at any moment put an end to the same. If anyone wrongfully takes the property out of the possession of the mortgagor, the mortgagee can sue him in trover, trespass or replevin; and if anyone, without authority of legal process, seizes the property against the will of the mortgagor upon any pretense, he is in like manner liable to the mortgagee; and one interfering with the property left in the possession of the mortgagor by the mortgagee after default may be liable to the latter. If either of the subsequent mortgagees, the plaintiff or defendant, had seized and sold the vessel, he would have been a wrongdoer against the first mortgagee.
The mortgagee of a vessel has no lien on the freight she earns, or absolute right to the freight as an incident to his mortgage. He can obtain the freight by taking possession of the vessel (or doing something equivalent thereto), after default in the condition of the mortgage, at any time before the cargo has been fully discharged and the freight thus fully earned.
I do not understand that these principles of law are in any degree disputed by the learned counsel for the plaintiff, and they are substantially laid down in many cases, among which *Page 512 
are the following: Butler v. Miller (1 N.Y. 496); Judson v.Easton (58 id. 664); Casserly v. Witherbee (119 id. 522);Leadbetter v. Leadbetter (125 id. 190); Moore v. PrentissTool Co. (133 id. 144); Essen v. Tarbell (9 Cush. 407);Ring v. Neal (114 Mass. 111); Pecker v. Silsby
(123 id. 108); The Brig Wexford (7 Fed. Rep. 674, 681); Wilson v.Wilson (L.R. [14 Eq.] 32); Brown v. Turner (L.R. [3 Ch. App.] 597); Collins v. Collins (11 Jur. [N.S.] 1); LiverpoolMarine Credit Co. v. Wilson (L.R. [7 Ch. App.] 507);Kersivile v. Bishop (2 Cromp.  J. 529); Rusder v. Pope
(L.R. [3 Ex.] 269).
The plaintiff does not base any substantial right here upon his mortgage. By virtue of that, taken after default in the first mortgage, he obtained no title, interest or property in the vessel. He did not, as against the first mortgagee, obtain even a lien on the vessel. All he got was the mortgagor's right of redemption. His mortgage was, however, of some further value to him against the mortgagor. As against her he could, after default in the payment of his mortgage, if the first mortgagee did not interfere, take possession of the vessel, and might thus intercept freight which she had earned, in the manner above stated; and he could retain the possession of the vessel as against the defendant, the third mortgagee. But the seizure and possession of the vessel, in this case, by the plaintiff were of no value or importance, as there was no freight to intercept, and he could not sell her or make any profit out of her, having no right or title whatever to her. Therefore, when he surrendered the possession of the vessel, he parted with no valuable right. He then obtained from the mortgagor an assignment of the freight to be earned by the vessel upon the two round voyages to Chicago and back to Buffalo. His surrender of the possession of the vessel was absolute, and it was the inducement to and consideration for the assignment of the freight. The mortgagor resumed the possession of the vessel as she had her before. She was not to navigate her in any sense as the agent of the plaintiff, nor upon his responsibility, but she was to navigate her in her own right, *Page 513 
for her own benefit and at her own expense, except that she was to apply the freight earned, less the towage charges, in discharge of her debt to the plaintiff.
The position of the plaintiff, then, is as assignee of the freight, and only that. His position as assignee is not improved or strengthened by the fact that he also held the second mortgage. His rights, whatever they may be, are as such assignee, and his counsel does not contend that he has any other upon which to base his action. But here occurs the fallacy in his counsel's argument. What right had the mortgagor to assign the freight? She had no title to or property in the vessel. She could assign freight which she expected to earn, and if she earned it, it would belong to her assignee. But she could not in any way bind the vessel by such an assignment for freight which she never earned. Plaintiff's counsel does not take notice of the fact that all she owned as to the vessel at the time of the assignment was a mere equity of redemption, enforcible in equity. Whatever right, therefore, the plaintiff as assignee got, was the right, not to the freight which the vessel might earn, but only to the freight she might earn with the vessel and which would, thus, otherwise be payable to her.
But even if she had been the legal owner of the vessel at the time of the assignment of the freight to the plaintiff, it would make no difference. The unearned freight of a vessel may be assigned, in equity, and such an assignment is governed by the same rules which govern the transfer of anything not in esse. The assignment can have no positive operation to transfer inpresenti property in a thing not in esse; but it operates by way of present contract to take effect and attach to the thing assigned when and as soon as it comes in esse. (Mitchell v.Winslow, 2 Story, 630, 639.) Suppose Mrs. Nims, after the assignment of the freight, had sold the vessel to a bona fide
purchaser, and he had made the voyages and earned the freight; or, suppose some mere wrongdoer had taken the vessel against her will and had earned the freight, could the plaintiff, in either case, have claimed the freight? Suppose the owner of a farm assigns the crops to be grown upon his *Page 514 
farm the ensuing year, and he afterwards sells his farm to abona fide purchaser who sows and harvests the crops, can the assignee claim them? Or, suppose the owner of a farm, to secure an antecedent debt, or money presently advanced, assigns the proceeds of all his crops for the ensuing year, and the owner, after sowing the crops, is ejected from the farm, either by legal process or by a wrongdoer, and the person thus taking possession cares for the crops, harvests them, sells them, and thus obtains the proceeds, can the assignee maintain an action against him for such proceeds, claiming to be the legal owner thereof? All that is assigned or can be assigned in such cases is the freight or property to come in esse in the future, which, but for the assignment, would belong to the assignor. His assignment operates to take the property away from him then, and vest it in his assignee. But when he never brings the property in esse, there is nothing for his assignment to operate on.
Now what happened here? The vessel was taken to Chicago and then to Milwaukee where, after taking on a cargo, she was frozen in for the winter. Then toward spring she was attached for liens and claims against her, and the defendant found her in the possession of the sheriff under his seizure. It then knowing nothing about the claim of the plaintiff, using its mortgage, replevied the vessel from the sheriff and paid $538.76 to discharge the claims; and then it took possession of the vessel and navigated her to Buffalo, paying all the expenses, and discharged the cargo and received the freight before it knew anything about the claim of the plaintiff. It probably knew of her mortgage, but that gave the plaintiff no lien upon the freight. All this the defendant did by the consent, permission and authority of the first mortgagee, the general, absolute owner-at-law. The defendant was thus a wrongdoer to no one in taking possession of the vessel at Milwaukee. Its act was not a wrong to the plaintiff as mortgagee, because as such he had no title or property, legal or equitable, in the vessel, and no lien upon or right to the freight. It was not a wrong to him as assignee of the freight, because the *Page 515 
vessel had been lawfully taken out of the possession of the mortgagor, and her voyage thus broken up, and because, for reasons above stated, he acquired no right to unearned freight, and had no lien on or interest in the vessel for the freight. It was not a wrong to the owner, the first mortgagee, because he consented to and authorized it. Having taken possession of the vessel with the consent of the owner, its possession was lawful against the whole world. The mortgagor did not earn the freight, but the defendant earned it. We are not necessarily dealing here with the rights which the owner can give to an assignee of freight, but with the rights which one not having an atom of ownership or property in the vessel can give. We are not dealing with freight earned by the assignor, but with freight earned by the defendant. Under such circumstances there is absolutely no authority — absolutely no principle which sanctions the maintenance of this action by the plaintiff as assignee of the freight. He could not even have maintained the action against a wrongdoer who had seized and navigated the vessel to Buffalo and had thus earned the freight. Much less can he maintain it against one who had the consent and sanction of the true owner.
It is probably true that the first mortgagee by expressly assenting to and countenancing the action of the defendant in taking the vessel and the freight, became just as accountable for the freight in an action for redemption from his mortgage as if he had actually himself received the freight. (Liverpool MarineCredit Co. v. Wilson, supra.) But he could be made liable for it only in an equitable action for redemption brought against him by the mortgagor or one of the subsequent mortgagees. In such an action he could be compelled to account for all the profits he had permitted and allowed anyone else to make. But no action whatever can be maintained against the defendant for the freight because its receipt of it was rightful against the whole world; and certainly a legal action like this cannot be maintained against it by the plaintiff, claiming to be the legal owner of the freight. *Page 516 
Much has been said in this case about the superior equity of the plaintiff to this freight. Upon the trial he planted himself upon his legal rights as assignee, and no proof was given as to the equities, and there are no findings of fact or law as to the equities. There are no findings from which we can know or determine anything except the legal rights of the parties. As we have shown, plaintiff's mortgage gave him no equitable right to the freight, and he obtained no equitable right to it as assignee. Where then does his equity come from? What equity has he against the defendant which took the vessel at Milwaukee, paid the charges upon which she had been seized and was detained, navigated her to Buffalo at its own risk and expense and thus earned the freight? If we were willing to dispose of this case upon mere humanitarian views, guided by our feelings of beneficence, we cannot even determine upon this record which of the two parties will suffer or lose the most by being deprived of this freight. All we have showing the relations and equities between these parties is the three mortgages, and their amounts, the assignment and earning of the freight, and the fact that the plaintiff finally took an assignment of the first mortgage paying the full amount due thereon. For aught that appears in this record, he may have full security for all that is due to him from Mrs. Nims. We know nothing about the equities and we must dispose of this case upon the facts as they appear, applying to them the rules of law, mostly elementary, which we are bound to administer.
The order of the General Term should be reversed, and the judgment entered upon the report of the referee affirmed, with costs.
All concur with O'BRIEN, J., except EARL and PECKHAM, JJ., who dissent.
Judgment affirmed. *Page 517