Frankenthal v. Meyer

Mr. Presiding Justice Waterman delivered the opinion oe the Court. The question here presented is: When the mortgagee of personal property has, after default, taken possession of the goods for the purpose of foreclosure, can the mortgagor maintain an action of case against a third party, who without right and with violence takes such property from the possession of the mortgagee, against his will, the value of the goods being largely in excess of the amount of the mortgage % It is said that after default and possession taken by a mortgagee of personal property, the legal title to such property is vested in the mortgagee and that he alone can maintain an action at law for a seizure of or an injury done to such goods. That the legal title of goods mortgaged, is, after breach of condition, vested in the mortgagee, is announced in numerous' cases. Pike v. Calvin, 67 Ill. 227; Simmons v. Jenkins,76 Ill. 479; Whittemore v. Tirchner, 137 Ill. 243; Blain v. Foster, 33 Ill. App. 297. Nevertheless, the mortgagor retains an interest in the goods until divested thereof by sale under the provisions of the mortgage, or by lapse of time his right of redemption has been lost. McConnell v. People, 84 Ill. 583; Jones on Chattel Mortgages, Secs. 682, 687 and 688; Waite v. Dennison, 51 Ill. 319-323; Whittemore v. Fisher, 132 Ill. 243 and 256. By the old common law, a mortgage of personal property gave an absolute title to the mortgagee on breach of condition. Ho process of foreclosure was necessary, and there was no right of redemption. Jones on Chattel Mortgages, Sec. 681; Taber v. Hamlin, 97 Mass. 489; Burtis v. Bradford, 122 Mass. 127. In respect to mortgages of real property, also, the legal estate vested in the mortgagee and was forfeited upon default; equity established the right of redemption after default. Jones on Mortgages, Vol. 2, Sec. 11. A mortgage of land is one thing at law and another in equity; at law it is an estate, in a court of chancery it is but a security. notwithstanding this, a mortgagor of lands may maintain an action at law for an injury to his reversion. Jones on Mortgages, Sec. 664. The law courts, following the rule first set up in equity, have come to recognize mortgages of all kinds to be exactly w ha': th sy are—mere securities. Th e title may be differently regarded and treated in different forums, but the actual fact that, until foreclosure has in some way been had, the mortgagor has an interest in the property, is recognized at law as well as in equity. While courts have, and do frequently, speak of the title of the mortgagee being, after forfeiture, that is after default, absolute, they do not mean that the ownership of the mortgagee is absolute. Ho where is it now held that upon forfeiture the mortgagee may sell the property, give it away or destroy it without reference to or consideration for any right or interest of the mortgagor. Waite v. Dennison, supra; Phares v. Barbour, 49 Ill. 370; Hungate v. Reynolds, 72 Ill. 427; Cobbey on Chattel Mtgs., Sec. 937; Jones on Chattel Mtgs., Sec. 682; Dupuy v. Gibson, 36 Ill. 197; Story’s Eq. Juris., Sec. 1031; Treat v. Gilmore, 49 Me. 34. In Chitty’s Pleadings, 16th Am. from the 6th Eng. Edition, it is said: “ The action of case is a proper proceeding for an injury to property when the interest to it is in reversion.” The term reversion is, indeed, often used in such a sense that it-is descriptive, only, of an interest in land. Coke’s Littleton, 142 b; 4 Kent’s Com., 354. It is also used when speaking of the right to a return of such personal property as does not perish with a short term of “ using,” the possession of which property the general owner has temporarily parted with. Gordon v. Harper, 7 Tenn. Reps. 9; Rapalje’s Law Dictionary, 1125. In this State the mortgagor of chattels has, after default and possession taken by the mortgagee, no legal estate in the mortgaged property. Kenyon v. Shuck, 52 Ill. 382; Durfee v. Grinnell, 69 Ill. 371; Simmons v. Jenkins, 76 Ill. 479; Whitmore v. Fisher, 132 Ill. 243. And after default and possession taken, the interest of the mortgagor being equitable only, the goods can not be taken and sold upon an execution against him. Durfee v. Grinnell, supra; Simmons v. Jenkins, supra. In some States the rule is otherwise, it being held that the mortgagor having, until barred therefrom by foreclosure, a subsisting interest in the property, capable of enforcement, ■ such interest may be sold on execution. Woodside v. Adams, 40 N. J. Law 417; Frigate v. Clarkson, 2 B. Monroe 41; see, also, Mears v. The London & S. W. Ry. Co., 103 Com. Law 849. Having in this State, after default and possession taken by the mortgagee, no legal estate in or legal claim to the mortgaged property, his relation to the same being that of a mere cestui que trust, it would seem that a mortgagor can not, under such circumstances, maintain at law an action based upon his merely equitable interest. The rule laid down in Chitty on Pleading, 16th Am. from 7th Eng. Ed., is that “ a cestui que trust or other person having only an equitable interest can not, in general, sue in the courts of common law against his trustee, or even a third person, unless in cases where the action is against a mere wrongdoer, and for an injury to the actual possession of the cestui que trust? That it would be well if, in such a case as this, where the mortgagor seeks merely a judgment for money, and the value of his interest in the property is easily ascertainable, being its worth, less the claim of the mortgagee thereon, the mortgagor might bring suit at law in his own name, we are disposed to think. We do not regard the mortgagor as remediless in such a case as this. The mortgagee has a right of action against appellees for their invasion of his lawful possession, and in such action he can recover not only the damage he has suffered but also the damage done to the mortgagor. Story on Bailments, Sec. 93; Edwards on Bailments, Sec. 39; Perry on Trusts, Sec. 328; Sedgwick on Damages, Sec. 76; Atkins v. Moore, 82 Ill. 240; Sutherland on Damages, Vol. 1, 210, Vol. 3, 474. It does not appear in this case that the mortgagee refuses to bring such action, but if he does, or if he fails to vigorously prosecute the same, we do not think appellee remediless. We clo not regard the allegation as to ownership of books and papers as sufficient to warrant a recovery for the taking of such articles. Upon further consideration we are satisfied that in this State there is no authority for the maintenance of such a suit as this. The judgment of the Circuit Court is affirmed. Gary, J. In Yates v. Joyce, 11 Johns. 136, the plaintiff had only an equity, being but an assignee (which was no' title at law) of a judgment which was a lien upon premises wasted by the defendant; yet he had his action. In the eighty years which have since elapsed, courts of law have advanced in noticing equities. A chattel mortgage is not a conditional sale. If it were, the debt, the consideration of the transfer of such title as passes, would be satisfied by the transfer. But not being satisfied, the mortgagee may sue, and it is a defense fro tanto to the mortgagor and his surety, that the mortgagee has not dealt fairly with the mortgaged chattels. ■ Courts of law will inquire into the matter. Phares v. Barbour, 49 Ill. 270; Waite v. Dennison, 51 Ill. 319. . I think the judgment should be reversed.