Court Opinion

ID: 8507703
Source: CourtListenerOpinion
Date Created: 2022-11-23 08:07:56.897847+00
Date Added: 2024-06-11T16:50:57.870799
License: Public Domain

Spencer, J.,
gave the decision of the court.
It is impossible to distinguish this case, in principle if in letter, from that of Goodenough v. Harris, decided by this court in general term, October, 1855, or from that of Collins v. Myers, 16 Ohio, 547. In the latter of which it was held, that a mortgage of a stock of goods, when possession was left with the mortgagor, accompanied with a power of sale in him, was void, not only as against judgment creditors, but as against a general assignment in trust for creditors;' and in the former of "which we held that, a similar mortgage leaving possession in the mortgagor, accompanied by a parol agreement authorizing the mortgagor to sell and apply the proceeds in payment of the mortgage debt, was void as against subsequent creditors, who had.obtained judgment and levied upon the property mortgaged before any actual possession taken of it by the mortgagee. These cases were not predicated upon the ground of fraud in fact as between the parties. For in truth the transaction was considered to have been made in good faith. But upon the ground that the transaction was inconsistent with itself; that the power of sale enabled the mortgagor to strike down the security, at any moment, and was therefore inconsistent with the idea of security, but should rather be regarded as a ward to keep off creditors. So long then as this power exists, the mortgage, as against creditors, is inoperative, and the property may be taken in execution; as was said in the case of Collins v. Myers, for as much as the mortgagor might have satisfied and paid off the debt, so the creditor may take in execution and pay himself off, for it is against the policy of the law *222that the debtor shall treat the security as existing or not at his own option.
There is nothing opposed to this doctrine in the still later case of Chapman v. Weimer et al., 4 O. S. 481, where it was held, that such a mortgage was good, after the mortgagee had taken possession, as against a judgment creditor.
The substance of these decisions is, that taking the whole transaction together it amounts not to an absolute security as against creditors, but as an agreement for a security which becomes absolute upon the taking possession by the mortgagee, but until such possession is taken there is no such absolute security.
Here, it is in evidence:
1. That'there had been two prior and similar mortgages upon the moving stock; that notwithstanding these mortgages the mortgagor continued in possession and sold without regard to them; that in the mortgages is contained an agreement that until default the mortgagor shall use and enjoy without denial or molestation by the mortgagee.
Now the only use and enjoyment that could be beneficial to the mortgagor was the right to sell, i. e., to use as in times past.
"We think that here is an express power in the mortgagors to sell.
2. If not, there is one clearly implied from the course of business pursued by the mortgagors, with the assent and knowledge of the mortgagee.
Lastly, The mortgagee never took possession and had no ownership at the time of levy.
The attempt to unite in the sale, though it amounted to a claim of ownership, was not the taking possession nor did it place the plaintiff in such a position as to render his security complete as against creditors seizing the property.
Judgment affirmed.