Henry's v. Payne

Sims, J., after making the foregoing statement, delivered the following opinion of the court: The material facts of the case are set forth in the statement preceding this opinion. It is one of grave hardship upon the appellee, as we feel compelled to decide it; but we may not allow our feeling that it is a hard case lead us to disregard well-established rules of law. [1] 1. Appellee does not controvert that, in so far as his claim of lien is concerned, his position is the same as that of any creditor the payment of whose debt is secured by a deed of trust, namely, that of a purchaser from the grantor of such a deed of trust. Appellee takes the position that the chattel mortgage under which he claims a [7] lien on the library is in truth a deed of trust, and by his pleading he seeks to have it enforced as a deed of trust. Appellee, therefore, being a purchaser from the grantor of said chattel mortgage, could not and did not acquire any lien on the library by virtue of such mortgage, because, as appears from the statement of facts preceding this opinion, he took the mortgage with prior notice that the library did not belong to his grantor, but to another, namely, the grantor’s father, appellant’s testator. [2] 2. Appellee relies upon section 2465 of the Code as rendering the bill of sale held by appellant’s testator void as against the appellee, a creditor of Randolph Henry, the grantor in suck bill of sale. So far as material, such section provides as follows: “Every * * * bill of sale * * * of goods and chattels when the possession is allowed to remain with the grantor * * * shall be void as to subsequent purchasers for valuable consideration without notice and creditors, until and except from the time that it is duly admitted to record * * *. “But the appellee, as we have seen, was not such a purchaser, and the creditors who are entitled to the benefit of this statute are lien creditors only. A creditor without a lien stands on no higher footing than his debtor and cannot successfully invoke the benefit of this statute. McCandlish v. Keen, 54 Va. (13 Gratt.) 615; Dulaney v. Willis, 95 Va. 606, 29 S. E. 324, 64 Am. St. Rep. 815. As we have seen above, appellee acquired no lien on the library by the chattel mortgage aforesaid. It is not claimed that he is a lien creditor in any other right. Therefore, section 2465 of the Code has no application to the case. 3. But appellee contends “that the supposed claimant, R. R. Henry, and the defendant, Randolph Henry, will not be permitted by a court to sit down and suporess knowledge of the claim of the said R. R. Henry to the ownership of [8] the property until the defendant, Randolph Henry had become involved to the extent he did, as shown in this record, in debt to appellee, and then come in and deprive the appellee of his rights to proceed against said property when it is clearly shown in the record of the cause that the credit was given to the defendant, Randolph Henry, on the faith of his absolute ownership of the books and office furniture which was in appellee’s, George W. Payne’s, building, and the testimony of the .defendant, Randolph Henry, shows that his father, R. R. Henry, was here during the time that these books were in the building of the appellee, and that nothing was said or done by either, R. R. Henry or Randolph Henry, to assert any claim for the benefit of the said R. R. Henry to the said books or to any interest therein, and the said George W. Payne, the appellee, was all along relying upon the said books and furniture as security for his debts and was carrying the said defendant, Randolph Henry, on the faith of his unconditional and absolute ownership of said property as shown by the record in the case.” [3] This position erroneously assumes that appellee had the right “to proceed against said property” at a time when he had acquired no lien thereon, and ignores the absence of any proof in the record of fraud or that R. R. Henry had any knowledge at any time that appellant contemplated or was extending or had extended credit to Randolph Henry on the faith of the absolute ownership by the latter of the library. The record, therefore; fails to make out a case of estoppel against the appellant and in favor of the appellee or to otherwise sustain the position of appellee under consideration. [4, 5] We can readily see how the possession and apparent ownership of tangible personal property in one, while the actual ownership, undisclosed by any matter of record, is in another, may mislead third persons to extend [9] credit to the former to their possible financial loss, especially when the apparent owner represents himself to be the true owner. But this is permitted at common law, for independent of statute a creditor stands in the shoes of his debtor and can subject no greater rights of property than the debtor in truth has, whatever may be the apparent property rights of the debtor; and whether such status of relative rights shall be allowed to continue to exist must be determined by another department of government than the judiciary. It is solely within the province of the legislature to act in the premises. So far, the legislature has enacted no statute prohibiting such severance of the real from the apparent ownership of property, where it results from a bona fide sale and purchase for value and no lien creditor of the vendor is affected. And there may be good and sufficient reasons of public policy why the legislature has not extended the registry statute so as to protect non-lien, as well as lien, creditors in such a situation as that under consideration. And in the instant case, indeed, the law as it exists afforded ample remedy to have given the appellee the relief he now desires, if he had acquired a lien by distress warrant or by execution levied on the library prior to the recordation of the bill of sale, instead of relying on the hope that plaintiff’s testator would consent to the chattel mortgage and thus make that a valid lien. For the foregoing reasons, we are constrained to reverse the decree under review in so far- as it holds the library aforesaid subject to the lien of appellee’s debt; the appellant will be decreed to be entitled to the library free of all claim of the appellee, and the cause will be -remanded for further proceedings concerning the sale of the furniture. Reversed and Remanded.