Eggleston v. Mundy

4 Mich. 295

Opinion

By the Court,

Wing, J.

The principal questions presented for our decision by this case, are:

Had the mortgagor any interest in the property sold which was liable to levy and sale on execution ?

' Were the proceedings on tbe part of tbe constable and tbe plaintiffs, in tbe execution, such as to protect them from liability to the defendant in error?

The rights of parties to chattel mortgages were much discussed in the case of Tannehill et al. vs. Tuttle, decided at the last term of this Court, and reported in 2 Gibbs M. R., 105. In that case, we recognized the principle that, the general title being in the mortgagee, he is entitled to immediate possession of the property, to hold it until condition broken, unless the parties otherwise stipulate m the mortgage ; and that without such agreement, the possession of the mortgagor (if suffered to retain the property) is deemed the possession of the mortgagee, so that he may reduce the property to possession at any moment, and may maintain trespass, or trover, or replevin, as the case may be, for any intermeddling with, or taking of the property by a third party, while in the possession of the mortgagor, equally as though such possession were actually in himself.

We do not now propose to review those propositions. They are not denied by the counsel in this case ; but it is insisted fpr the plaintiffs, that by the terms of this mortgage, it was expressly agreed that the mortgagor should retain possession of the property, until the amount thereby secured should become due and payable ; and, therefore, he had an interest which was liable to seizure and sale on execution.

The mortgage contains the following clauses, viz.: “ To have and to hold all and singular the said goods and chattels herein granted and sold, etc., unto the said party of the second part forever, said goods and chattels now remaining and continuing in the possession of the said party of the second part, in the town of Columbia.” It then provides, that if the amount to be paid is paid in eleven months from date, the mortgage shall be void; but in case of default, or “ if the said party of the first part should sell, assign or dispose of, or attempt to assign, sell or dispose of the whole or any part of the said goods and chattels, or remove or attempt to remove the whole or any part thereof from the town of Columbia, without the written assent of the party of the second part, it should be lawful for the party of the second part to enter upon the premises of the party of the first part, or any place where the goods might be, and take possession thereof, and sell and dispose of the same.”

The levy and sale of the property by the constable occurred before condition broken, and when the property was in the possession of the mortgagor. Was the stipulation contained in the mortgage such as to give to the mortgagor a right to the possession of the property for any definite period? If it was not, the property was not subject to levy and sale on execution.

In Welch vs. Whittemore (25 Maine R., 86), plaintiff’s mortgage was not due when the property was attached by the defendant, . The mortgage expressly authorized the mortgagor to retain possession of the property until default in payment, according to its tenor, but it contains a stipulation that, if tbe property should be attached by the creditors of the mortgagor, it should be lawful for the mortgagee to take immediate possession. It was decided, “that as tbe right to the immediate possession of the property was m the mortgagee, in the absence of any agreement to the contrary, that right was limited no farther than the intention of the parties, as manifested by the instrument required.” “That the attachment and mortgagee’s rights were simultaneous.” The Court say: The law will not say that the attachment is legal, when it can give no right to the officer who makes it to hold possession, and could create no lien for the security of the debt of tbe creditor.

In the case of Ferguson vs. Thomas (26 Maine R., 499), plaintiff claimed property by virtue of a chattel mortgage, payable in one year. The property was left in the possession of the mortgagor, and before condition broken, it was attached by the defendant in favor of a third party. The mortgage contained a clause giving full power and authority to the mortgagee, “ to enter upon the premises, or elsewhere, and take possession of the property and sell it, provided the mortgage should not be paid at maturity.” The Court did not doubt that the mortgagee might take possession of the property, unless the stipulation recited prohibited it. They say, the deed to the plaintiff spoke the language of the mortgagor, and did not, in express terms, reserve the- right to possession till the mortgage was due. They regarded it as an enabling provision in furtherance of the security, intended for the benefit of the mortgagee, authorizing him to enforce payment sooner than otherwise could be done, under their statute, which gave sixty days after the forfeiture of condition. They did not regard the clause as reserving, in express terms, to the mortgagor the right to possess the property until the note was paid; it was only so, if at all, by implication. They thought it was neither, but only gave authority to take possession at a particular time, for the purpose of selling and paying the debt. And see Melody vs. Chandler (3 Fairfield R., 283), where it was declared that, unless the mortgage contained an express stipulation to the contrary, the right of possession follows the right of property. In Spriggs vs. Camp & Camp (2 Speers R., 181), the mortgagee brought suit before the mortgage was due. The property was attached in the hands of the mortgagor, and sold by the Sheriff The mortgage contained a provision that, in the event it was not paid at maturity, the mortgagee should have the right to sell the property. It was decided that the title to the property was in the mortgagee, and that, before condition broken, he could maintain trover against an attaching creditor for a wrongful conversion. The Court say: The mortgagor had no more than a permissive license, resulting by implication from the covenant in the mortgage; it is unnecessary to say whether the mortgagee could have interfered with this- possession while it continued according to the terms of the agreement. But it becomes a different question when a stranger takes possession, and thereby puts the title of the true owner in jeopardy. In King vs. Bailey (8 Missouri, 332), a negro was mortgaged, and permission to retain possession of him was reserved. He was seized on execution, and sitit being brought by the mortgagee, the Court decided that this permission was determinable at the will of the mortgagee, and it would not be the subject of a sale on execution. Permission that a chattel might remain with one, is not a permission that it may remain with another; and see Perkins vs. Mayfield (5 Porter, 182). In Mattison vs. Baucus (1 Comst., 295), the mortgage contained a provision that the mortgagor should permit the mortgagee to possess, occupy and enjoy the property whenever he should demand the same. The mortgagor absconded, and the mortgagee took possession of the property prior to the levy by the Sheriff) who took ,it from him before the debt was due. It was decided it was not the subject of a levy; and see Howland vs. Willet, Sheriff, etc. (3 Sandf. Sup. C. R., 607). In Wheeler vs. McFarland (10 Wend. R., 318), it was agreed that the owners of a sawmill should have a lien for their charges in sawing logs into boards, that the boards should be removed a short distance from the premises, but the lien should continue until payment. The boards were sawed and were removed by the owners of them to a lot hired by them. The Court say: The boards were in the possession of the mill owners as against the judgment debtor, and the Sheriff could not levy upon them.

All those authorities, and many more cited in the case of Tannehill vs. Tuttle, maintain the doctrine that an officer cannot levy upon personal property which is mortgaged, whether in possession of the mortgagor or mortgagee, even if the mortgage is not due, unless the mortgage contains am express stipulation permitting the mortgagor to retain posses sionfor a definite period; nor then, if that period has elapsed. The clause in the mortgage in this case is not an express stipulation. Neither is it an implied covenant, according to the decision in Fairfield vs. Thomas. For the purpose of any right -which the plaintiffs seek to build upon it, it lacks the essential ingredient of certainty as to time, to make the property subject to levy and sale on execution. ¥e regard the levy and sale by the constable as within the words “ assign or dispose of, attempt to sell, assign or dispose of any part of said goods, or remove or attempt to remove,” in the stipulation. It was clearly the object of the mortgagor to give the mortgagee security for his debt, and the mortgagee did not intend to deprive the mortgagor of the possession or use of his property, but the ordinary right of the mortgagee was not intended to be abridged by the interference of another creditor. He might be willing, as is said in King vs. Bailey, that the mortgagor might retain possession, but not that another should take it, and much less, convert it. But for the stipulation, no one would contend that thére was any right in the mortgagor which could have been levied upon by the constable ; any one interfering with the property, at least to the prejudice of defendants’ rights, would have been liable to him in an action of trespass. Can they be less so, when the contingency has happened which the stipulation contemplates, when, if not before, the defendant was authorized to take possession of the property ? The levy of the execution, or at least the attempt to dispose of it by a sale, and the right of the defendant were simultaneous. This clause in the mortgage was intended for the protection of the mortgagee, and whether the acts should be done by the plaintiff, or the mortgagor, or some one else acting for him, or authorized by him to interfere with his property, the effect was the same to the defendant, and consequently neither the mortgagor, nor any one in his behalf, could have any further rights under that stipulation. The legal title and the right to the possession of the property was then, if not beforé, perfect in the mortgagee ; he was, in the judgment of law, the absolute owner, and if he had not, and could not obtain the immediate possession of it, whoever retained it, whether mortgagor or constable, or any one else, was thenceforth a mere bailee at sufferance. (2 Duer's Sup. Ct. R., 105, Hull vs. Carnly; Marsh vs. Lawrence, 4 Cow. R., 469; Otis vs. Wood, 3 Wend. R., 500; McCracken vs. Luce [cited in Otis vs. Wood]; Bailey vs. Barton, 8 Wend., 346; Mathison vs. Baucus, 1 Comst., 295; Fuller vs. Acker, 1 Hill, 473; Rogers vs. Trader's Ins. Co., 6 Paige, 583; 4 Comst., 509.)

The duty of the constable was plainly defined, and if he executed it, he, and all by whose direction he acts, are trespassers. (Kink vs. Manning, Comyns R., 619; Waddell vs. Cook, 2 Hill, 47; Melville vs. Brown, 15 Mass. R., 82; Burrall vs. Acker, 23 Wend., 609.)

It appears from' the record, that the mortgage was duly recorded in the office of the Town Clerk a considerable time before the levy of execution by the constable. The constable had constructive notice of the mortgage at the time he levied. The levy of an execution upon growing grain is usually considered a desperate remedy, and in such cases the officer should examine the record or files of the Town Clerk, for incumbrances which he perhaps might well apprehend to exist, and if it should be found that the personal property of the debtor was subject to a mortgage, giving the debtor a right of possession of the goods mortgaged for a specified or definite period, he should levy on the right, title and interest of the debtor or mortgagee, and advertise and sell it.

In this case there is no pretence that the constable levied on the right of the mortgagor subject to the mortgage, nor that he advertised the right; he must have advertised a sale of the property, for he offered the property at public sale when the defendant arrived and claimed it, upon and by virtue of his mortgage. It is claimed, that when thus notified of the mortgage by the defendant, and after he heard it read, he then changed his offer of the property, to an offer to sell tbe mortgagor’s right in the property. IIis return on the execution is, that, “by virtue of his execution, he levied on nine acres of wheat, and all of the debtor’s right to the wheat was sold and bid off by a stranger.” Without deciding whether he could sell otherwise than according to his levy and advertisement, we are of the opinion that the refusal of the Circuit Judge to receive the proof offered, to explain the,return, and show the circumstances attending the sale, that the offer of the debtor’s interest was made immediately after the reading of the mortgage, is of no importance. It was decided in Hull vs. Carnly, 2 Duer Sup. C. R., 106, in reference to a similar sale of a mortgagor’s interest, that, “ whenever it is known to the Sheriff or he has,reason to believe, that the interest of the judgment debtor in the property upon which he has levied is special and limited, it is his duty to declare thb fact, and, by express words, confine the sale to such right, title and interest as the debtor may really possess ; and this doctrine applies with peculiar force to the relation of mortgagor and mortgagee.” If the evidence which the plaintiffs offered had been received, it would not change the position of the plaintiffs, or any one of -them, from what they now appear. The officer, even in that case, would not appear to have sold the property subject to the mortgage, but rather in defiance of it, and, as if not recognising its validity, he makes no allusion to it; the officer and all the plaintiffs were manifestly acting upon the belief, that, as the property was in the barn of tbe defendant, they had the right to sell, at least the right of redemption of the judgment debtor ; and, in selling, the possession of the property, so far as it was capable of being done, was delivered by the officer to tbe purchaser, who took it away, and had the wheat made into flour ; when, as we have seen, there was no interest in the property in the mortgagor which was liable to sale, or which authorized the officer to meddle with. it. He appears to have acted in. entire disregard to the claim set up by the mortgagee, to the possession of the property. Instead of yielding to the claim, and relinquishing the levy, be continued to exercise control over it, and sold it. "If the right of redemption in the property in the actual possession of the mortgagor (but not for a definite period), could have been Sold, the property was worth far less than the sum due oh the mortgage, and it is difficult to perceive what use could have been made of the wheat, consistent with the rights of the mortgagee. We are of the opinion that the acts of all the plaintiffs were unauthorized, and that they are liable to this action.

It is said that the plaintiff' in the execution, and the constable, left the property in the barn, and plaintiff could have' taken it or replevied it; but this was occasioned by the necessity of the case. In all cases where goods are wrongfully sold, the owner has an election to replevy the property from the hands of the purchaser, or recover its value from the tortious vendor purchasers, etc. (2 JDuer’s Sup. O. B-, 108; 10 Wend. B., 318.)

Judgment affirmed.

Present, Wing, Green, Bacon, Pratt, Copeland, Martin, Douglass, J. J. Johnson, J., having decided the cause below, did not participate.