Read v. Wilson

Caton, C. J. The clause in this mortgage, allowing the mortgagors to retain possession of the stock of goods and to sell them, is substantially like that in the case of Davis v. Ransom, 18 Ill. R. 396, and must be held not sanctioned by our statute relating to chattel mortgages, so as to protect the mortgagees against subsequent creditors and purchasers, while the mortgagor is allowed to continue in the possession of the property. The clause allowing the mortgagor to retain possession is inadequate to the purpose designed, and so far as it was designed to effect that purpose, it was fraudulent and void, as to subsequent creditors and purchasers. A chattel mortgage without the provision dictated by our statute, authorizing the mortgagor to .retain possession is held to be fraudulent, if the mortgagor continues in the possession, and so it must be held in relation to this mortgage, which must be treated the same as if this mortgage contained no clause authorizing the mortgagor to retain the possession, for the clause in this mortgage, was not sufficient to justify such a course. Such possession was fraudulent under this mortgage. This reduces the inquiry to the simple question of the transfer of the possession from the mortgagor to the mortgagee, under the mortgage, for if there was such a transfer • of the possession before the rights of creditors actually intervened, at the moment of such transfer of the possession, that . clause become a dead letter in the mortgage. It was void before and it was void still. Because that clause could not justify the possession by the mortgagor. Such possession while it con-.tinued, was fraudulent. The fraud, whatever there was, consisted in the possession by the mortgagor, rather than in the - clause in the mortgage which attempted to authorize such possession. Had the mortgagees taken possession of the goods, under the mortgage, at the time the rights of the judgment creditor intervened ? Upon an examination of the evidence in this case, we are satisfied they had. Indeed the evidence on that subject is all one way. The mortgagees residing in New York, sent their agent to Chicago, for the express purpose of taking possession of the goods and disposing of them, in satisfaction of their debt, under another clause in the mortgage. This agent did take possession of the goods, according to the undisputed evidence. He acquired and continued in, the absolute and undisputed dominion of the goods, sold them from day to day, to customers, as opportunity offered, and deposited the money in bank to the credit of the mortgagees, except the amount required for incidental expenses, in carrying on the business. It is true he continued the mortgagors in the store to assist him in the sale of- the goods, but we know of no law which forbids this. Indeed it was very proper that he should do so, for they, it must be presumed, were better qualified to assist him in the advantageous sale of the goods than any strangers could be. They were acquainted with the business, and with the customers of the establishment, and were particularly desirable as servants in the business. We cannot doubt from the proof, that they were nothing else. Indeed, the only fact in the whole case which we think worthy of any serious consideration as tending to a contrary conclusion is, that the sign of the mortgagors was continued over the door of the house, after the possession was taken and while the business was continued by the agent of the mortgagees. But this fact is by no means absolutely inconsistent, with a bona fide change of possession. It may have been accidental or from inadvertence, or it may have been under the belief, that an old and well known sign, would draw customers, who were in the habit of trading with the mortgagors, and hence continued with upright intentions. At any rate, we do not think that that fact alone, should control the case, in despite of the positive and unsuspicious testimony, that the possession was absolutely taken and continued, by the agent of the mortgagees. The judgment must be reversed and the cause remanded. Judgment reversed.