Hughes v. Menefee

Ellison, J. This is a bill in equity seeking to enforce an agreement for a chattel mortgage, alleged to have been made with defendants’ intestate. The bill, among other things, states “that, prior to the death of said A. P. Moore, deceased, in February, 1883, said deceased applied to the firm of J. S. Hughes & Company, then bankers in Richmond, Missouri, for a loan of about two thousand dollars (82,000) to purchase cattle and liogs, aiid the corn to feed and fatten them for market; that thereupon a contract was made between said deceased and said firm of J. S. Hughes & Company, by the terms of which contract the said firm of J. S. Hughes & Company agreed to furnish the amount of money aforesaid, at the rate of ten per cent., and the deceased agreed ■to give them a lien upon the cattle, corn, and hogs purchased, and the proceeds thereof, when sold, and that the said proceeds of the sale of said cattle, corn, and hogs, when sold, were to be paid to said J. S. Hughes & — 201 — Company, in payment of said loan and interest thereon, and that said J. S. Hughes & Company were to have said lien from the time said money was loaned and invested in said stock and corn; and that when said purchases were completed the deceased was to make and execute a chattel mortgage, on the cattle, corn, and hogs, to secure the money so loaned ; that, under and pursuant to said contract, the said firm of J. S. Hughes & Company loaned the deceased in all, under said contract, and furnished at different times, the sum of nineteen hundred and sixty dollars and seventy-five cents; that all of said money was invested in cattle, corn, -and hogs by said deceased; that deceased, a few days after the sum last loaned as aforesaid, died intestate without having-executed and delivered the chattel mortgage herein aforesaid, without paying the money so loaned as aforesaid, and without having sold or disposed of the stock and corn purchased by him ; that, at the death of said deceased, he (said deceased) had a carload of cattle, eighty-nine head of hogs, and a lot of corn undisposed of, and which had been sold by him; that, soon after his death, his administrators (who are now the appellants in this cause) took possession of the cattle, hogs, and corn herein aforesaid, and sold the same with the other personal property of said deceased.” The prayer was, that the administrators pay the money arising from the sale of the stock to plaintiffs. Or if it had been intermingled and confused with other money of the estate, that the court decree its payment out of other money of the estate. A demurrer to the petition, on the ground that it did not state facts sufficient to constitute a cause of action, was overruled.' Defendants then answered. The trial resulted for plaintiffs and defendants appeal. We are unable to sustain the decree in this cause. By our statute (sec. 2003) no chattel mortgage shall be valid against any other person than the parties thereto, unless possession be delivered or the mortgage be acknowledged and recorded. This is not a contest between the parties to the agreement, for, while the ad — 202 — ministrators are the representatives of the deceased, they are also trustees for the creditors, and the defendants are resisting this action for the benefit of the creditors of the estate. In matters of this nature they may be said to represent the general creditors. Kennely v. Shepley, 15 Mo. 640. Administrators are trustees in charge of the property and effects of the deceased, among other things, for the benefit of the creditors of the estate. Money or property in their hands is primarily for the satisfaction of the claims of creditors and they can hold them to a just account of the administration. Aside from these considerations, the petition alleges the estate to be insolvent, and. attorneys for the general creditors have appeared in the trial court, and.here, to resist this claim. If this judgment is sustained it is at the expense of the general creditors. If the estate was solvent and the rights of third parties did not intervene, a verbal agreement for a mortgage of personal property could be upheld. The plaintiffs claim that the administrators and the creditors had notice of the agreement, and endeavor to sustain themselves by calling to their aid the -equity principle announced in Mitchell v. Winslow, 2 Story, 630, where it is said: “It seems to me the clear result of all the authorities, that, whenever the parties, by their contract, intend to create a positive lien or charge, either upon real or personal property, whether it is then in esse or not, it attaches in equity as a lien or charge upon the particular property as soon as the assignor or contractor acquires a title thereto against the latter, and all persons asserting a claim thereto under him, either voluntarily or with notice, or in bankruptcy.” This quotation has been approved by the Supreme Court of this state, in Wright v. Bricher, 72 Mo. 179; Rutherford v. Stewart, 79 Mo. 216, and France v. Thomas, 86 Mo. 80; but in each of these, there was a regular written mortgage duly acknowledged and recorded. And so, in Mitchell v. Winslow, 2 Story, 630, there was a duly executed mortgage, and the question in those cases was simply as to the — 203 — right of a mortgageor to mortgage after-acquired property or property not in esse. In the Missouri cases, at least, the instruments were statutory mortgages, the contention being whether they covered subsequently acquired property. There may be authorities holding that creditors with notice of an agreement for a mortgage can only enforce their claim subject to the lien created by the agreement, but I apprehend there is no similar statute to ours defining what shall be a valid mortgage,, in such jurisdictions. That notice of an unrecorded agreement for a mortgage cannot affect creditors’ rights, is made apparent by a single suggestion; a regular written mortgage, duly acknowledged, but not recorded, is void, though the creditors have actual notice of it. Bryson v. Penix, 18 Mo. 13; Wilson v. Milligan, 75 Mo. 41; Rawlings v. Bean, 80 Mo. 614. All question of notice is purposely avoided. Bevans v. Bolton, 31 Mo. 437. Surely, a-verbal agreement for a mortgage cannot be more potent than the written mortgage itself. When possession is= not delivered there can be no valid chattel mortgage in this state, as against creditors, unless it be executed, acknowledged, and recorded. No equitable doctrine can-overcome the force of statute law. Otherwise, the conscience of the chancellor would usurp the legislative department of the government and control the policy of the state. Judge Story, in his excellent treatise on the subject of Equity Jurisprudence (sec. 96), makes this very pertinent suggestion: “Whatever formalities are-required by statute must be punctually complied with, otherwise, the defect cannot be helped, or, at least, it may not perhaps be helped in equity, for courts of equity cannot dispense with the regulations prescribed by statute.” II. There is another consideration, equally potent in overturning the decree in this cause ; there is no sufficient description or ascertainment of the property upon which the mortgage lien was to attach. The de — 204 — ■scription in the agreement, as declared by the bill, is, that the deceased wanted to engage in feeding and fattening for market'“a lot of cattle and hogs,” and applied to plaintiff to obtain two thousand dollars with which to purchase them, and the corn to feed and fatten them; that plaintiffs agreed to furnish deceased said sum of money aforesaid at the rate of ten per cent, interest per annum, and deceaséd, too, agreed to give plaintiffs a chattel mortgage on said cattle, hogs, and corn as soon as purchased. It strikes me as apparent that the description should be, at least, as explicit and definite in an agreement for a mortgage as in the mortgage itself. If this was a written mortgage, containing ■as the sole description of the property, ‘ ‘ A lot of cattle, hogs, and corn, purchased with two thousand dollars, loaned me by the mortgagee,” I think, in a contest with creditors, it would be void for uncertainty. The property is not located. The particular purchase or purchases are not identified, the kind of cattle and hogs ■are not stated or described, and the time of the purchase is not given. While the law is, that parol evidence is admissible in aid of the description of the property in a chattel mortgage, yet the rule, as stated and approved m Stonebraker v. Ford, 81 Mo. 532, is, that, “where the recording of a mortgage, as under our statute, takes the place of actual delivery of the mortgaged property,” the mortgage, tó be effectual, must point out the subject-matter of it, “ so that a third person, by its aid, together with the aid of such inquiries as the instrument itself ■suggests, may identify the property covered.” The agreement in this case is wholly void of any identification, and the only inquiries it, or the mortgage itself, if made, would suggest, would be as to whether a given lot of cattle, hogs, and corn was the property purchased with the money borrowed of the mortgagee. Such Inquiry is unreasonable. It is inquiring after a matter which, in business affairs, is known to be private and is .generally concealed. It could hardly be ascertained ex — 205 — cept through information voluntarily given by the mort • gageor himself. It is a secret matter, the knowledge of which is almost necessarily and universally confined to the mortgageor himself. Unless we admit the right of the inquiring creditor to compel the mortgageor to purge himself as to the source of his title and his means of acquiring the property, I know of no method by which the information could be obtained. The authorities, on assignment or mortgage of future-acquired property, do not contravene what is here said ; on the contrary, so far as my research has gone, they all require the description to be such that the particular property may be identified. Such is the English rule. Belding v. Reed, 3 H. & C. 955; Lazarus v. Andrade, 5 C. P. D. 318. In the latter case it is said, “ Holroyd v. Marshal, 10 H. L. C. 193, and Leatham v. Amor, 47. L. J. (Q. B.) 581, were relied on by the plaintiff, and Belding v. Reed, 3 H. & C. 955, by the defendant. The principle deducible from these decisions is, that property to be after acquired, , if described so as to be capable of being identified, may be, not only in equity but also at law, the subject-matter oí a valid assignment for value. The-contract must be one which a court of equity would specifically enforce.” There should be something to-“ear-mark it.” In America the rule is the same. Judge Story, in Mitchell v. Winslow, 2 Story, 630, says the lien must be upon the “particular property described. “After-acquired chattels definitely pointed out, as, for instance, by reference to the ship, mill, or place into which they are to be brought, may be lawfully assigned as security.” Brett v. Carter, 2 Lowell, 458. “The contract must relate to some particular property described therein.” Morrill v. Noyes, 56 Maine, 458. In the Missouri cases cited, supra, the property to be afterwards acquired was described in the mortgages, and the means was therein provided for its specific identification, as, that it was furniture to be placed in a hotel; brick to be moulded in a certain brick-yard, at a certain time, on certain lands. These — 206 — considerations lead me to believe the agreement void, as to creditors, for uncertainty of description. The result is the judgment should be reversed and the bill dismissed. All concur.