Chase v. Denny

130 Mass. 566, 1881 Mass. LEXIS 161

• Court: Massachusetts Supreme Judicial Court
• Decided: April 5, 1881
• Status: Published

Opinion

Soule, J.

It has been repeatedly held in this Commonwealth that a mortgage purporting to convey all the chattels of specified kinds which may thereafter be acquired by the mortgagor does not give any title to those chattels when acquired by him, unless the mortgagee takes possession of them. Jones v. Richardson, 10 Met. 481. Barnard v. Eaton, 2 Cush. 294. If, however, the after-acquired property is taken by the mortgagee into his possession before the intervention of any rights of third persons, he holds it under a valid lien, by the operation of the provision of the mortgage in regard to it. This is stated to be the rule in the case of Moody v. Wright, 13 Met. 17; and we see no reason to question its correctness. The mortgage in that case was held to be inoperative, against the assignees in insolvency of the mortgagor, as to the after-acquired property, solely on the ground that the mortgagee did not gain possession of them before the proceedings in insolvency were set on foot; and it was said by Mr. Justice Dewey, in delivering the judgment of the court, that “when the creditor does take possession under it” (the mortgage) “he acts lawfully under the agreement of one then having the disposing power, and this makes the lien good.” If, therefore, in that case, the mortgagee had taken possession of the after-acquired property at any time before the insolvency proceedings began, the decision would have been in his favor, on the ground that his title related to the date of the mortgage. Such taking of possession, though effected immediately before insolvency proceedings were instituted, and with full knowledge of the insolvency of the mortgagor, would not be the acceptance of a preference, but the assertion of a right which had been previously acquired by the mortgagee under an instrument in writing made when the parties to it were both competent to contract, and when there was no qualification of the right of either to deal with the other. Mitchell v. Black, 6 Gray, 100. See also McCaffrey v. Woodin, 65 N. Y. 459; Walker v. Vaughn, 33 Conn. 577.

The application of these doctrines to the case at bar is plain. The mortgage was made when the mortgagor was solvent. The defendant took possession of the after-acquired property, which the mortgage purported to convey to him, of his own motion, and without any suggestion from the mortgagor. In doing so, he availed himself of a right given to him when the mortgage was delivered, and did not accept a preference. He undoubtedly obtained security for the debt named in the mortgage, and took possession of the property for the purpose of doing so with full knowledge of the insolvency of the mortgagor; but this failed to make his act the acceptance of a preference, because the right to do what he did was obtained long before, and when there was no suspicion of insolvency.

The judge who presided at the trial in the Superior Court erred therefore in refusing to rule as requested by the defendant, and in making the rulings which were inconsistent with the ruling asked for by him.

Exceptions sustained.