First National Bank v. Baker

Mr. Justice Waterman delivered the opinion of the Court. The certificate of acknowledgment of the chattel mortgage under which appellant claims, is as follows : “ State of Illinois, ) County of Cook, j ss' I, Jarvis Blume, a justice of the peace in the town of West Chicago, in and for said county, do hereby certify that this mortgage was duly acknowledged before me by the above named James B. Rielly, Sect’y, and Francis W. Corey, Pres’t, the mortgagors therein named, and entered by me this 6th day of February, A. D. 1894. Witness my hand and seal. Jarvis Blume, [Seal.] Justice of the Peace, Town of West Chicago, County of Cook, State of Illinois.” The second section of the chattel mortgage act prescribes the manner in which a chattel mortgage “ shall be acknowledged,” and also sets forth the form of certificate; the language of the statute as to this form being: “ The certificate of acknowledgment may be in the following form: This (name of instrument) was acknowledged before me by (name of grantor),” etc. Rev. Stat. of Illinois, Ch. 95, Sec. 2. The word “ may ” as used in this statute is imperative. Henderson v. Morgan, 26 Illinois 431; Ticknor v. McClelland, 84 Illinois 471-476. It is the grantor only who can acknowledge a chattel mortgage, and the certificate must set forth that the grantor did acknowledge. The certificate in the present case is not that the grantor acknowledged but that the mortgage was acknowledged “ by the above named James B. Rielly, Secretary, and Francis W. Corey, President, the mortgagors therein named.” Neither James Rielly, Sect’y, or Francis W. Corey, Pres’t, were “ above named,” nor were they “ the mortgagors therein named.” It is said that this certificate is sufficient, because no one could mistake its meaning. If all the world, to whom the certificate of acknowledgment, entry in the justice’s docket, and recording Is supposed to give notice, knew that at the time of the acknowledgment James Rielly was secretary, and Francis W. Corey president, of the Corey Car & Manufacturing Co., the mortgagor, and intended by what they did to make an acknowledgment by the said company, then the said world could hardly mistake the meaning of the certificate. As it is, the justice for some reason has failed to take the responsibility of certifying that the grantor did acknowledge, or that Rielly and Corey were respectively the secretary and president of the Corey Car & Manufacturing Co., or 'as officers of that company acknowledged to him anything whatever. The question here presented is, whether this certificate of acknowledgment of a chattel mortgage which does not purport to be an acknowledgment by the grantor, is to be held to be by the grantor. • A chattel mortgage, valid against Iona fide purchasers and creditors where possession is not delivered, is entirely the creature of the. statute. It is not enough that an intention existed to make, and parties believed they had made such mortgage, or that a creditor knows of an attempt to make and acknowledge a mortgage of chattels; compliance with the statute is requisite to its" validity. Therefore, we are not to consider what one who reads this certificate might conclude, but what is certified. In Schroeder v. Keller, 34 Ill. 46, and Harvey v. Dunn, 89 . 539, the words “ and entered by me ” were in each case omitted from the certificate of acknowledgment. These words are required to be inserted only when the acknowledgment is by a resident. The omission of them is held not to vitiate and render invalid the acknowledgment “ where the justice taking the acknowledgment did, in fact, make the entry upon his docket as required by the statute.” What entry, if any, the justice made upon his docket, of the acknowledgment of the mortgage now under consideration, is not shown. We do not regard the case of Durfee v. Grinnell, 69 Ill. 371, as analogous to the present. In that case the justice had written in the certificate as its date 1872, instead of 1871, the true date. This was a most obvious mistake. The parties stipulated in that case that 1871 was the true date; having thus stipulated that a mistake was made in dating the certificate, the court infers that the entry in the justice’s docket “ bears the proper date, and is without objection.” There, is no stipulation in the present case that the mortgage was acknowledged by the Corey Car & Mfg. Co., or that any entry in the justice’s docket is to such effect. Appellant did not call Rielly or Corey, or show by them that the acknowledgment was by the grantor, the Corey Car & Mfg. Co., instead, as the certificate declares, by Rielly, secretary, and Corey, president. The execution issued upon the judgment obtained by Jaffray against the Corey Car & Mfg. Co. was a lien upon its personal property; his creditor’s bill was an equitable lien in his favor as a judgment creditor. Appellant sets up a chattel mortgage, invalid as to creditors, against the lien of a creditor. “ It is a well established rule of law that, as to all the property and rights of property of the judgment debtor, and as to all lawful transactions with his property, the receiver stands only in the place of the judgment debtor.” Beach on Receivers, Sec. 639; Atkinson v. Foster, 27 Ill. App. 63. The chattel mortgage act of this State declares “ That no mortgage, trust deed or other conveyance of personal property having the effect of a mortgage or lien upon personal property, shall be valid as against the rights and interests of any third person, unless possession thereof shall be delivered to and remain with the grantee, or the instrument shall provide for the possession of the property to remain with the grantor, and the instrument is acknowledged and recorded as hereinafter directed.” Whether a chattel mortgage invalid “as against the rights a,nd interests of any third person ” is valid as against an assignee, under the insolvency statute of this State, being as he is a trustee for creditors of the mortgagor and representing them, has not been decided by the Supreme Court of this State. In Hanes v. Tiffany, 26 Ohio St. 549, it was held that an assignee appointed under the statute of that State, relating to assignments for the benefit of creditors, took title free from a claim based upon a chattel mortgage not prepared in accordance with the statute regulating the creation of chattel mortgages. The court say that while the chattel mortgage was good as against the mortgagor, and so at common law would have been against his voluntary assignee, the statute having declared void all chattel mortgages not prepared in accordance with the statute, such mortgage is not valid against an assignee holding for the exclusive benefit of creditors. The same rule is announced in Lindemann v. Ingham, 36. Ohio Stat. 1-11. To the same effect is the case of Lockwood v. Slevinet al., 26 Ind. 124-126. In Putnam v. Reynolds, 44 Mich. 113, a mortgagee of chattels filed a bill to foreclose the property, the same then being in the possession of an assignee for the benefit of creditors. The court dismissed his bill, Cooley, J., for the court, saying: “It is insisted on behalf of complainant that his mortgage,' notwithstanding the failure to file it, was perfectly good as against the mortgagor, and that the latter could not, by a voluntary assignment, transfer a right to assail it which he did not himself possess. The assignee is not a purchaser for value, and not a creditor; and even creditors, it is said, can not attack the mortgage except indirectly through a seizure of the property by attachment or other suitable process. This is doubtless true where the invalidity of the mortgage arises .from the fraud of the mortgagor, but whether the same rule will apply when the mortgage was originally valid, but is made void by the neglect of the mortgagee, may well be questioned. It would be easy to suggest weighty considerations arising in such cases, but not existing in the case of a fraudulent mortgage, and which it might well be thought should control. But we do not think the question fairly arises in this case.” In Thompson v. Van Vletchen, 27 N. Y. 568, it is held that a chattel mortgage, invalid because not filed, is void as to a creditor at large, whose claim accrues while the default in filing continues, though such creditor is not in a position to raise the question until he has obtained judgment or process against the property. That property covered by an invalid chattel mortgage only, is subject to the lien of an execution against the mortgagor, is manifest; if, upon an assignment under our insolvency law, the assignee takes no title against the mortgagee, it follows that a creditor may, after the assignment, obtain judgment, have execution issued, and thus acquire a lien superior to that of the assignee and mortgagee; in other words, that the assignee as the representative of all the creditors, does not possess as to the assets of the assignor what, by proceedings had after assignment, may be acquired by any creditor. The statute as to chattel mortgages is very broad; if not acknowledged, etc., as provided, they are invalid as to the rights and interests of any third person. It can hardly be said that after an assignment by the mortgagor for the benefit of creditors, neither such creditors nor the assignee have an interest in the mortgaged property. The necessary and proper expenses of a receiver stand upon as high a footing as the claim of the creditor under which the receiver was appointed. The order of the Circuit Court is affirmed.