Single v. Phelps

Dixon, C. J. Section 9, chap. 76, R. S. 1849, now found as section 9, chap. 107, R. S. 1858, provides that “no mortgage of personal property hereafter made shall be valid against any other person than the parties thereto, unless possession of the mortgaged property be delivered to and retained by the mortgagee, or unless the mortgage (or a copy thereof) be filed in the office of the town clerk where the mortgagor resides.” The question in this case, and the only one we shall consider, is as to the effect of this provision upon a mortgage of personal property acquired after the mortgage was executed and filed, the property having remained in the possession of the mortgagors until it was sold and delivered by them to a third person, against whom the mortgagee brings suit to assert his title and right of possession under the mortgage. In considering this question, we shall assume that the new act required by law to make the mortgage effectual as between the mortgagors and mortgagee, was performed by the mortgagors before the sale, and that the purchaser bought with actual notice of the 401 claim of title asserted by the mortgagee. The supreme court of Massachusetts, speaking of the same question under a statute identical with our own, use the following language: “Now it is clear, we think, that the record of the mortgage deed is no sufficient notice of a legal incumbrance as to subsequently acquired property; because, by law, no such property could be sold or conveyed thereby; and it would furnish no notice that any property would be afterward purchased, or, if purchased, that any act would be done to ratify the grant in that respect. As to such property, therefore, the mortgage could not be valid, except as between the parties thereto, unless such goods were delivered by the mortgagor to the mortgagee, with the intention to ratify the mortgage, and the mortgagee retained open possession of the same until the time of the attachment.” Jones v. Richardson, 10 Met., 493. Ye are of opinion that this is a correct statement of the law, and that, in the absence of any actual fraudulent intent on his part, the purchaser from the mortgagor in possession is entitled to hold the property as against the mortgagee, he not having taken and retained the possession. This conclusion seems to result inevitably from the plain language of the statute, that no such mortgage shall he valid as against any other person than the parties thereto, unless possession of the mortgaged property be delivered to and retained by the mortgagee, or unless the mortgage be filed in the office of the town clerk. It is a direct legislative declaration that every such mortgage shall have no effect as against a person not a party to it, unless one or the other of these things be done. It is the same as if the legislature had declared that it should be void as to all third persons. Possession of the property not having been taken and retained by the mortgagee, his right to it, as between him and a third person who has fairly purchased and paid for it and received possession from the mortgagor, depends entirely upon the mortgage having been filed in the town clerk’s office. If there is no mortgage on file, then, by the imperative operation of the statute, 402 the title of the purchaser must prevail. Now, it is conceded that property not in existence is incapable of legal transfer, and that an instrument purporting to transfer it by way of mortgage, conveys nothing. What then has the mortgagee upon file in the clerks office ? Clearly not a mortgage, but an instrument inoperative and void as such by its very terms. He has then no mortgage on file, and both the conditions upon upon which his rights depend, by statute, as against the purchaser, are wholly wanting. The transaction may have been ratified by the mortgagors, after they acquired the property and before the sale, so as to make the transfer good as against them; but that does not change the terms of the instrument on file, or transform it into a valid mortgage on its face. It speaks the same language still, and informs the purchaser, not that the intended mortgagee has a lien or interest, but that he has none. It is by its terms no more a mortgage after the act of ratification by the mortgagors than it was before. It is impossible for us to conceive how the placing of such an instrument lipón the files can, in any case, be regarded as a compliance with the requirement of the statute. It clearly cannot be; for when the legislature speak of a mortgage or a copy, they mean an instrument which of its own force operates as a conveyance of the property — certainly not one which can have no such effect. The object of the statute was to enable purchasers and creditors to obtain full information as to the true state of the title of the party in possession. This was deemed necessary for the protection of purchasers and creditors, and it was never intended that they should look elsewhere than to the mortgages on file to obtain such information. There being then no mortgage on file, the mortgagee out of possesion is absolutely debarred by the very words of the statute. And knowledge in the purchaser, of the existence of a mortgage which has not been duly filed, will not preclude him from availing himself of the objection. The statute makes no exception, and the court cannot, without destroying the protection intended to be afforded by it. 403 Farmers' Loan & Trust Co. v. Hendrickson, 25 Barb., 484; Ely v. Carnley, 3 E. D. Smith, 489, and the same case affirmed in 19 N. Y., 496. As already suggested, the only ground upon which the mortgagee in such case can maintain his title or assert any right to the property as against the purchaser, is that the sale was merely colorable, or made for the purpose of defrauding him. The court below haying given some and refused other instructions to the jury contrary to the principles stated in this opinion, the judgment must be reversed, and the cause remanded for a new trial according to law. By the Court. — Judgment reversed, and a venire de novo awarded.