McCourt v. Myers

By the Court, Cole, J. This is a contest between the vendee and mortgagees of personal property. It is very [241] manifest that the defendants in error, in order to recover in the action in the court below, should establish the validity of the chattel mortgage given them by Reardon, so as to defeat the sale made by him to the plaintiff in error. The material facts relating to the giving of the mortgage and the sale of the goods to McCourt, may be briefly stated as follows: M. T. Reardon, of Oshkosh, being indebted to the defendants in error, who were merchants, doing business in the city of New York, in the sum of six hundred and seventy-four dollars, upon a promissory note, which he had given them for goods bought, of his own accord made a chattel mortgage running to them, of all the goods and merchandize in his store, and of every part thereof. The note bears date some time in September, 1857, and was payable six months from date, and the mortgage to secure the payment of the note was dated on the 13th day of January thereafter. The mortgage was made without the request or any understanding previously had with the defendants in error, and even without their knowledge, until after the sale to McCourt. The circumstances attending the giving of the mortgage are detailed by the witness Edmonds, who testified that, at the request of Reardon, he drew the mortgage, placed it on file in the office of the clerk of the city of Oshkosh, on the date it was made, subsequently took the mortgage from the office at 9 A. M., of the 15th of January, and again placed it upon file at noon of that day, and that all the time he acted on behalf of Reardon, and as his agent and attorney. McCourt, who was sworn as a witness for the defendants in error, gives the facts and history of the purchase made by him, and says: “ I purchased a part of Reardon’s stock of goods which he had in his store on the 15th day of January, 1858, and paid him two thous- and and twenty-five dollars for what I purchased. I bought them at 15 per. cent less than Reardon’s N. Y. cost, but at just about what I could buy them for myself in N. Y. Before [242] I had completed my purchase, I went to the city clerk’s office and found four or five mortgages on file, including mortgage to the. plaintiffs. Went immediately to Reardon and told him I would not complete any purchase, because there were mortgages on file against the goods. Reardon said to me that the mortgages amounted to nothing, were a mere sham, placed on file to keep his creditors off, and he would have them removed in five minutes. I went back to the clerk’s office soon after-wards, and found that they were not on file. Reardon and Edmonds were in the clerk’s office when I went back there, and one of them or the clerk told me that they had just taken the chattel mortgages from the files. I found no mortgage on file at this time,, covering the goods. This was after 9 o’clock in the forenoon of January 15th, 1858. I then went and completed the purchase, paid for the goods and took them to my store before noon of that day,” &c. At what time the defendants in error were informed of the giving of the chattel mortgage, and concluded to accept it as security for the payment of the note, does not very clearly appear from the testimony in the case; but it is quite evident that it was some time subsequent to the sale to McCourt. Now the main question presented to the consideration of the circuit court upon the motion for a non-suit, and upon the instructions asked for and refused, and which we are called to pass upon, is, whether there was such a delivery of the chattel mortgage, actual or constructive, as to render it valid, and so as to make it operative to intercept and defeat the title to McCourt. Upon this point a great number of cases have been cited, to show what in law has been held to be a good delivery of a deed, but we do not deem it necessary further to refer to these authorities than to state that the principal upon which the case must rest, will be found in harmony with the doctrine of them all. The proposition that a delivery of this mortgage was essen [243] tial to its validity was not controverted upon the argument by the counsel for the parties claiming under it; but it was insisted that the testimony satisfactorily showed that there had been a good and sufficient delivery of the mortgage to a third person for the use of those for whom it was made. The evidence upon this point has already been cited, and we think it tails to show any delivery of this mortgage before the sale of the goods to MeCourt. The proof in the case very clearly and conclusively shows that the mortgage was made by Reardon upon his own motion, without any arrangement or understanding with,, or knowledge by the mortgagees, that it should be made or was to be given; and Reardon’s attorney, acting for him, placed it on file in the office of the clerk of the city of Oshkosh. This is all that was done in the premises. There was no declaration or intimation to the clerk, either made by the principal or agent, that the mortgage was placed upon file to remain there under his charge for the use and benefit of the mortgagees —nothing going to show that Reardon regarded the filing of the mortgage as a delivery to the mortgagees, and that by that act he intended to part with the possession, and all power and control over the instrument — nothing in the transaction up to this time to show that the mortgagees would have been willing to accept an absolute delivery of the mortgage by Reardon. It is said that the law will presume that a man will accept what will be for his benefit, and that there is the strongest ground here for presuming that the defendants in error would have at once accepted the mortgage as soon as tendered, because they now seek to claim title under it. Could we see evidence in the case sufficient to authorize the conclusion that Reardon, by placing the mortgage on file, intended to part with all control and power over it, we should have but little difficulty. It would then come within the doctrine of the case of Cooper vs. Jackson, 4 Wisconsin, 537, and of [244] the authorities cited on the briefs of counsel. But the declarations and acts of Reardon are entirely inconsistent 'with the idea that he supposed in placing the mortgage on file he had parted with all control over it, and that it was absolutely and fully in possession of the clerk for the use of the mortgagees. He states to McCourt that the mortgages on file amounted to nothing, and were mere shams, placed on file to keep off his creditors, and that he would have them removed in five minutes. He actually went and took the mortgage from the file. He assumed the right to control it, and did in fact take it into his possession at his pleasure. It does not appear that he practiced any fraud upon the clerk to obtain possession of the mortgage, but that he took it because it was subject to his control. Not having made an absolute and unconditional delivery of this mortgage to the clerk or any one else, for the benefit of the defendants in error, at the time of the sale of the goods to McCourt, we think the title passed unaffected by the mortgage. Reardon’s motive for placing this mortgage on file for the purpose of frightening and deceiving his creditors as to the real condition of his affairs, was undoubtedly very improper and reprehensible. Such conduct cannot be approved. But we do not see how this fraudulent motive of his can affect the validity of this mortgage, and the question as to whether there was ever a delivery or not. It appears to us that the circuit court erred in not granting the non-suit, upon the ground that the evidence showed there had been no delivery of the mortgage by Reardon to the the mortgagees, or to any third person for their use and benefit, before the sale of the goods to McCourt. We do not perceive any circumstance in the case which would authorize us in declaring the sale from Reardon to Mc-Court void because made to defraud creditors. It follows from these views that the judgment of the circuit court must be reversed and a new trial ordered.