Heyland v. Badger

By the Court, Sawyer, C. J.: This is an action in the nature of an action of trover at common law, to recover the value of a quantity of hay claimed to have been wrongfully converted by defendant. Plaintiff, in July, 1863, stored some sixty-two tons of hay in defendant’s warehouse, and from time to time, while the Hay was thus stored, obtained money from the defendant to the amount of six hundred dollars, for which he gave his obligation in writing, payable in coin, with two per cent per month interest, when the hay should be delivered out of the warehouse. Subsequently, in September, plaintiff obtained two hundred dollars more from defendant, and executed to him a bill of sale of the hay, absolute on its face. During the months of January, February, and March following, defendant sold the hay at about twenty dollars per ton—the value of the hay at the time. Sometime in March or April, after all the hay except about two tons had been sold, plaintiff demanded the hay of defendant, but did not tender the — 410 — amount due for the money before obtained. The value of hay had at that time risen to from forty to forty-five dollars per ton. Plaintiff claimed that the bill of sale was executed as a security for the money borrowed, while defendant claimed that the transaction was an absolute sale. The Court found the conveyance to be a security for money, and that the transaction was strictly a chattel mortgage, as distinguished from a pledge, and as a conclusion of law, that plaintiff cannot recover the value of the hay in the action adopted. There is a well settled distinction in the law between a pledge and a chattel mortgage, and as to this distinction there does not appear to be any conflict in the authorities. In the case of a pledge the title remains in the pledgor, but in the case of a chattel mortgage, whether possession of the chattel be delivered to the mortgagee, or not, the title passes to the mortgagee, subject to be defeated upon performance of the condition; and in case of a breach it becomes absolute at law in the mortgagee. The title being in the mortgagee, he is entitled to the immediate possession, even as against the mortgagor, unless the parties otherwise stipulate. The rule is well stated and numerous authorities cited in Tannahill v. Tuttle, 3 Mich. 110. In Wood v. Dudley, 8 Verm. 435, the difference between a mortgage and pledge is thus stated: “ The distinction between a mortgage and pledge is important, as the effects of each are widely different. In a mortgage of a personal chattel the general property passes to the mortgagee, subject to be redeemed according to the terms of the contract; if not redeemed within the time limited, the property becomes absolute in the mortgagee. The consequence is that the mortgagee may sell or otherwise dispose of the chattel immediately. But in case of a pledge the general property does not pass, but remains in the pawnor—the pawnee having only a special property or lien; and in this case, although the pledge may not be redeemed by the time limited, yet it retains the character of a pledge still.” (See, also, Fuller v. — 411 — Acker, 1 Hill, 475; Langdon v. Buel, 9 Wend. 83; Smith v. Acker, 23 Wend. 668; 2 Hill on Mort., Chaps. 51-53, p. 478, et seq.; Story on Bail., Sec. 287; Cortelyou v. Lansing, 2 Cai. Cas. 200; Homes v. Crane, 2 Pick. 210; Wilson v. Brannan, 27 Cal. 269.) The consequence of the distinction is important. The mortgagee could, upon his title, maintain trover against the mortgagor who should refuse to deliver up the property mortgaged, or who should assume to sell the entire property in it, or in any manner convert it, or against the party who should assume to purhcase the entire property from the mortgagor. (White v. Phelps, 12 N. H. 385.) But the mortgagor could not maintain trover against the mortgagee for refusing to deliver the property, or for selling it, because the mortgagee at law has the title, and there can be no conversion by the party having the title. The action of trover depended on title, general or special, to support it, and the mortgagor, as against the mortgagee, has no title. This was so expressly held in Burdick v. McVanner, 2 Denio, 171, in which the mortgagor, after the law day had passed, tendered the amount due and demanded the mortgaged property, which the defendant refused to deliver. He then sued in trover for the conversion. The Court held that the action could not be maintained and said: “ At law he had no title whatever against the defendant, and could only redeem in equity a right which, in this case, owing to the small value of the property could not be enforced in chancery. But this circumstance cannot change the construction of the mortgage, nor give to the plaintiff a right or a remedy which he wo.uld not have if the property was of greater value.” (Id. 172.) The case of Holmes v. Bell, 3 Cush. 823, is also a strong case to the same effect. The mortgage was ostensibly to secure a note payable in sixty days, but the evidence showed that the transaction was to secure the mortgagee against a liability as a receiptor for property of plaintiff taken in an attachment suit. After the note fell due, the mortgagee sold the property, — 412 — but the matter was subsequently settled and the mortgagee discharged from all liability, after which the mortgagor made a. written demand of the mortgaged property upon the mortgagees, who replied that they had not got it and should do nothing about it, whereupon trover was brought for a conversion. The Court say: “It appears very clear that this action, in its present form, cannot be maintained. To maintain trover the plaintiff must have a legal title to the property alleged to have been converted. It is not sufficient to show an equitable title, or that the defendant had converted property which he was bound to convey to the plaintiff.” It is then held that although trover might be maintained under similar circumstances in the case of a pledge it could not in the case of a mortgage. (3 Cush. 323.) Brown v. Bement, 8 Johns. 96, is to the same effect, and is, in all essential particulars, like the present case, for it is there held that it makes no difference whether the sale is made before or after default if no attempt to redeem is, in fact, made before default. The language of the Court is: “ The title of the defendants has become absolute after fourteen days, and though it does not appear whether one of the horses was sold before or after the expiration of the time to redeem, that omission is not material, as no attempt was made in season to redeem.” (Ib. 98.) So in the present case, if the money secured became due when the hay was delivered out of the warehouse by defendant there was a default, and the title at law became absolute; , but if not, there had been at the commencement of the suit no tender of the money and no attempt to redeem. . The legal title was in the mortgagee and could only be divested by a tender of the money in time. Until divested the mortgagor had only an equity. He has brought his action, however, as upon a conversion for the value of the property claimed to be converted. And the facts averred will sustain no other action. They are insufficient to constitute a cause of action for account and redemption. The authorities cited by appellant relate to pledges, in the — 413 — technical sense of the term, and do not apply to mortgages. It is claimed, however, that in modern law, there is no distinction between pledges and chattel mortgages, and particularly so in this State. But no authority is cited to sustain this view, and we find nothing tending to show that, the distinction is anywhere, in the slightest degree, abrogated or modified. There has been some modification of the legal aspect of the rights of the parties in this, and in some other States with reference to mortgages on real estate, assimilating the legal right to the former equitable doctrine. But this modification depends on the provisions of section two-hundred sixty of the Practice Act. This is conceded in the cases establishing the present rule in this State on the subject. Mr. Chief Justice Field, in Dutton v. Warschauer, 21 Cal. 623, says : “ It was from a consideration of the character of the instrument, as settled by these decisions and the modem cases generally, that we were induced to adopt the equitable doctrine as the true doctrine; and it was from a consideration of the provisions of the statute which led us to go beyond those cases and carry the doctrine to its legitimate and logical results, and regard a mortgage as a security under all circumstances, both at law and in equity. * * * Mortgages, since the statute, are regarded at all times as mere securities, creating only a lien or incumbrance, and not passing any estate in the premises.” So, in Fogarty v. Sawyer, 17 Cal. 592, after quoting section two hundred sixty of the Practice Act, Mr. Chief Justice Field says: “ This section, as we observed in McMillan v. Richards, 9 Cal. 409, takes from the mortgage its common law character and restricts it to the purposes of security. At common law, a mortgage was regarded as a conditional estate, which became absolute upon breach of its condition. It gave the mortgagee, upon its execution, except as otherwise provided by stipulations inserted in the instrument, a right of immediate possession. Upon it he could peaceably enter, or support ejectment. The section in question changes the character of the instrument.” In Hew York, also, even after the mortgagor was considered in equity, and even at law, for most — 414 — purposes as the owner of the land, the legal title was still held to be in the mortgagee, so as to enable him to maintain ejectment, until the rule was changed by statutory provisions. (Warings v. Smyth, 2 Barb. Ch. 135; Kortright v. Cady, 21 N. Y. 365.) And this is believed to have been the case in other States. The present doctrine prevailing in this State was not established, either here or elsewhere, without the aid of statutory provisions. But our statute has reference only to “ real property.” (Prac. Act, Sec. 260.) We know of no legislation affecting the character of the rights acquired under pledges and chattel mortgages. The common law, as a body, was expressly adopted by the Legislature as the rule of decision in this State, and the character of the rights acquired under pledges and chattel mortgages under th e common law is well settled. We know of nothing in' the decisions of England, or of the other States modifying it. ¡Nothing in the decisions of our predecessors,' or of the present Court has been brought to our attention recognizing any modification of the common law on the subject in question. On the contrary, the distinction between a pledge and chattel mortgage has been fully recognized as existing in this State, and the case of Brown v. Bement, 8 Johns. 96, before cited, referred to as authority. (Dewey v. Bowman, 8 Cal. 150.) A modification of the law now so well established, by the Courts, in the face of the statute adopting the common law would be judicial legislation, repealing the statute to the extent of such modification. The remedy of the mortgagor is by an equitable action to redeem. This was the view taken by the District Court. The judgment and order denying a new trial are affirmed..