Bank of Ukiah v. Moore

Searls, C. This is ,a bill for an injunction by the corporation plaintiff in aid of the preservation of certain personal property (neat cattle, sheep, etc.), upon which said plaintiff holds a chattel mortgage. Defendants demurred to the complaint, and moved the dissolution of an injunction issued in the cause for the discharge of a receiver appointed therein. The demurrers (two in number) to the complaint were sustained by the court upon the grounds stated therein, viz., that the complaint did not state facts sufcient to constitute a cause of action. The injunction was dissolved, the receiver discharged, and plaintiff having failed to amend, final judgment went for defendants. Defendant Mahulda 0. Drew filed an answer with her demurrer. The other defendants did not answer. The appeal is by plaintiff from the final judgment and from the order dissolving the injunction. The complaint to which the demurrers were interposed avers, in addition to the more formal portions thereof: 1. The execution, June 30, 1892, of a promissory note for twenty-nine thousand nine hundred and seventeen dollars and eighty-eight cents, with interest payable one year after date by defendant Gibson to plaintiff, and the execution of a chattel mortgage as security for the payment thereof by said Gibson upon certain neat cattle and sheep described therein, and upon the ranch of defendant Gibson, in the county of Mendocino. 2. The mortage complied with the requirements of section 2956 of the Civil Code, stated the occupation of the parties, and was accompanied by the affidavit, and was acknowledged and certified as required by said section, and was afterward, and on the ninth day of May, 1893, recorded as a chattel mortgage, etc. [679] 3. All the mortgaged property is inadequate to pay the note, and the defendants are insolvent. 4. In violation of the covenants of the mortgage, and for the purpose of depriving plaintiff of its security, and since the recording of the mortgage, defendant Gibson has made a pretended sale of the mortgaged property to the other defendants, who have taken possession thereof, and are threatening to appropriate and convert the same to their own use, and will do so, and deprive plaintiff of its security, unless restrained by an order of court. 5. The value of the said property is twelve thousand dollars. 6. Said pretended sale was without consideration, and was made and threatened to deprive plaintiff of its security. 7. Plaintiff is the owner of the note and mortgage, and is without remedy, unless the court shall interpose, grant an injunction, and appoint a receiver. The prayer is for an injunction and for an order appointing a receiver, etc. The complaint was filed herein May 24, 1893, and consequently the note and mortgage of plaintiff were not then due and payable. This case grows out of the same transaction involved in Nos. 15562, 15663, and 15722, this day decided, and much that is said in the opinion in No. 15562 is applicable here and will not be repeated at length. It will be observed from the foregoing statement that while the complaint avers the execution and recording of the mortgage as provided for, by sections 2955 and 2957 of the Civil Code, in cases of mortgages on personal property, yet the articles mortgaged—sheep and neat cattle—were not among the articles provided to be mortgaged under said section 2955. It follows that the mortgage was not one the recording of which imparted constructive notice to the world. It is claimed by appellant that as section 2955 was amended March 9,1893, so as to include within the articles which s [680] under it can be mortgaged neat cattle and sheep, the recording thereof, after the passage of the amendment, rendered it in all respects valid as a statutory mortgage. The answer to this proposition is that such a construction would give to the code a retroactive effect to make a statutory mortgage of that which was not such when it was executed. Section 3 of each of our four codes declares that: “Mo part of it is retroactive, unless expressly so declared.” The amendment does not so declare, and cannot, therefore, be so construed. But, says the appellant, a mortgage or other instrument recorded before the existence of any registry law will be held to impart notice when thereafter a registry law is enacted authorizing the recordation of such instruments, and authorities are cited in support of the contention. Registry laws are usually not held to have a retroactive effect, except so far as they may affect vested rights. The theory of appellant, however, presupposes a valid instrument to record, and in the present instance the objection is, there was no valid statutory mortgage to be recorded, and as the statute provides for recording only those which may be made pursuant to section 2955, and in the manner designated in section 1957, the record could impart no constructive notice. But plaintiff had a mortgage upon the personal property described in its complaint, which was valid as a common-law mortgage between the parties, and as against all other persons except creditors of the mortgagor and subsequent purchasers in good faith for value. (Tregear v. Etiwanda W. Co., 76 Cal. 537; 9 Am. St. Rep. 245; Works v. Merritt, 105 Cal. 467; Civ. Code, secs. 679, 2924.) The mortgage not being due at the date of suit brought, and not providing, so far as appears, for a change of possession of the mortgaged property, plaintiff, under section 2927 of the Civil Code, was not entitled to possession, and was without remedy at law. In many of the states it is held, as at common lal£, [681] that a mortgage of personal property transfers the title and the right to immediate possession in the mortgagee, unless otherwise provided in the mortgage. (Jones on Chattel Mortgages, sec. 426.) In such cases the mortgagee may bring replevin or trover for an interference with the mortgaged chattels, and, having a remedy at law, equity will not intervene. Such is not the rule in this state. The complaint does not aver that the defendants had actual notice of the existence of the- mortgage, but does aver that they were purchasers without consideration, which, if true, rendered the mortgage valid as against them. “The power of a court of equity to preserve the mortgaged property from destruction, so that it may answer the purpose of the mortgage, is undoubted. A bill for an inj unction may be sustained, where it is shown that this remedy is proper for the mortgagee’s protection, although the time of payment set out in the mortgage has not arrived.” (Jones on Chattel Mortgages, see. 459, citing Long Dock Go. v. Mattery, 12 N. J. Eq. 93, 431; Rose v. Bevan, 10 Md. 466; 69 Am. Dec. 170; Clagett v. Salmon, 5 Gill & J. 315; Maish v. Bird, 59 Iowa, 307.) The complaint in this case states all the facts essential to invoke action by a court of equity for the preservation of the mortgaged chattels, and the demurrer should have been overruled, and, as the order dissolving the injunction was, except as to the defendant Drew, based upon the supposed insufficiency of the complaint, its dissolution was error. As to the defendant Mahulda C. Drew, who answered, denying the equities of the complaint, and showing that she was a purchaser of the sheep in good faith, without notice, and for a valuable consideration, and who moved a dissolution of the injunction upon the complaint and her answer, the order of dissolution was proper. The judgment appealed from should be reversed and the court below directed to overrule the demurrer to the complaint; and the order dissolving the injunction [682] should be reversed as to all the defendants except Mahulda C. Drew, and as to her it should be affirmed. Haynes, C., and Belcher, C., concurred. For the reasons given in the foregoing opinion the judgment appealed from is reversed and the court below directed to overrule the demurrer to the complaint, and the order dissolving the injunction is reversed as to all the defendants except Mahulda C. Drew, and as to her it is affirmed. Harrison, J., Garoutte J., Van Fleet, J.