Court Opinion

ID: 6948911
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:28:54.923857+00
Date Added: 2024-06-11T16:08:00.929474
License: Public Domain

Skinner, J. This was an action of replevin by Eansom and Cates against Davis, to recover a stock of goods. Davis justified the taking, under an execution to him directed, as marshal of the northern district of Elinois, issued out of the circuit court of the United States for said district against Sexton, in whose possession the goods were at the time of the taking and seizure. The plaintiffs below, to prove property in them, upon the trial read in evidence, a chattel mortgage of the stock of goods executed to them by Sexton. This instrument recites that Sexton is indebted to divers persons, among whom are the plaintiffs, amounting to six thousand two hundred and ninety-seven dollars; that he is unable to pay said debts without further time, and conveys to the plaintiffs below “all the goods, chattels and personal property belonging to the party of the first part, and now in his possession in the building known as Etniger’s building; that part now occupied by the party of the first part in the village of Oregon, county of Ogle, and State of Illinois, said property to include all the merchandise and stock in trade, consisting of thirty pieces of broadcloths, eassimeres and satinets, thirty pieces of ginghams, three hundred pieces of prints, thirty pieces of alpacas, twenty pieces of dress goods, twenty pieces of rib-, bons, fifty pieces of shirting, a quantity of sheeting, twenty pieces of cambric, four pieces of velvet, five pieces of silks, sixty over and under coats, thirty pairs of pants, thirty vests, twelve cases of boots, one hundred pairs of shoes, fifty pairs of brogans, a quantity of groceries, a quantity of hardware, a quantity of crockery, together with all and every article of merchandise of whatever kind and deserijrtion now of said stock.” The instrument provides that Sexton shall retain possession of the goods, sell the same in the usual course of trade, pay the proceeds thereof to certain preferred creditors, among whom are the plaintiffs, and apply the balance in payment of the debts of the other creditors named, pro rata/ that he shall pay all his named creditors in fifteen months, and that thereupon the mortgage shall become void; that in case, in the opinion of the mortgagees, their security should, for any cause, become endangered, they may take possession of the stock of goods, including all goods thereafter by Sexton added thereto, and sell the same, paying out of the proceeds the debts in manner mentioned in the mortgage, and the balance to Sexton. If this instrument is void upon its face, because it is against the provisions of the statute, or because it is fraudulent in law, as tending to delay and hinder creditors, the judgment below must be reversed, as it could not, in such case, be the foundation of a right of property in the plaintiffs; and this is the only question we deem it necessary to examine upon this record. The statute provides, that all instraments of writing having the effect of a mortgage or lien upon chattels, shall be invalid against third persons, where the possession shall not be delivered to and remain with the mortgagee, unless made, acknowledged and recorded in pursuance of its provisions. These provisions require that the mortgage be acknowledged before a justice of the peace of the district in which the mortgagor resides, and requires the justice to enter in his docket a memorandum of his acknowledgment, containing a description of the mortgaged property; that the mortgage be recorded in the recorder’s office of the county in which the mortgagor resides, and provides that thereupon the mortgage, if honafido, shall be valid for not exceeding the period of two years, notwithstanding possession remain with the mortgagor, if the mortgage provide for the possession so to remain. The statute also prohibits, under a penalty, sale by the mortgagor of the mortgaged property to third persons, without informing them of the mortgaged lien. Statutes of 1856, p. 136. From these provisions it is plain that the statute contemplates the retaining of possession, by the mortgagor, of chattels capable of description and identification only, and the retaining of such possession for use or custody, and not for sale and disposition in the course of business and trade. The possession is to rema/m with the mortgagor, a sale to third persons is prohibited, the chattels set forth in the mortgage &ve to be entered and described in the justice’s docket and the mortgage is to be recorded; thus affording public notice in the immediate neighborhood, and in a public office of the county of the mortgagor, of the lein existing against the particular chattels. This instrument does not provide for possession remaining with the mortgagor within the meaning of the statute, but seeks, under cover of a mortgage, to enable the mortgagor, in defiance of his creditors, to retan goods according to the course of merchants, and is against the evident policy of the statute. Goodrich v. Downs, 6 Hill R. 438; Grover v. Wakeman, 11 Wend. R. 187. In effect, the instrument is no less than an assignment, or bill of sale of a stock of goods, reserving to the assignor the absolute dominion and power of disposition for the period of fifteen months; during which time it contemplates that the assignor shall, with the goods, carry on his business of store keeping as by him “heretofore followed;” that what he should add to the stock should enure to and become a part of the assigned or mortgaged property, and that for this period the creditors of the assignor should be hindered in subjecting the property to the satisfaction of their legal demands ; thus affording the assignor immunity against the claims of creditors while he is in the visible possession and dominion of the property for all purposes, with the naked undertaking, on his part, with one of his creditors, to apply the proceeds of the goods to the payment of the named debts, in the manner in the instrument provided. The law gives no sanction to such arrangements, and, however well intended in fact, will hold them void as against creditors, as tending to encourage and sustain frauds, and to hinder creditors in the collection of their just demands. Ford v. Williams, 3 Kernan R. 577; Edgell v. Hart, 13 Barbour’s (S. C.) R. 380; Delaware v. Ensign, 21 ibid. 85; Griswold v. Sheldon, 4 Comstock’s R. 580; Hart v. Crane, 7 Paige’s Chy. R. 37; Ward v. Trotter, 3 Monroe R. 1; Sheerer v. Loutzherhizer, 6 Watts’ R. 543; Whallon v. Scott, 10 ibid. 237. Judgment reversed.