McGavran v. Haupt

Stockton, J. The plaintiff asked the court to, instruct the jury, that if the defendant had actual notice of the mortgage from Beatty to the plaintiff, at the time the same was given, he is not to be considered an “ existing creditor ” of Beatty, by reason of any debt to Mm from Beatty, created subsequent to such notice; and that the phrase “ existing creditor,” means a creditor who had a claim at the time of receiving actual notice; and one who becomes a creditor after receiving notice of a mortgage, is not to be preferred to the bona jide mortgagee, whose mortgage is not recorded. The court refused so to instruct the jury, and charged them, “that if, at [86] the time of the levy of the writ of attachment, the defendant was a creditor of said Beatty, and Beatty was in actual possession of the property named in the mortgage to the plaintiff, then such mortgage, unrecorded, was of no validity as against the defendant, even though he knew of the existence of such mortgage. Unless recorded, the law deems the mortgage, as to creditors of the grantor, fraudulent and void.” The question for our decision is, whether a mortgage of personal property, executed and acknowledged, but not recorded, where the mortgagor retains possession, is valid against existing creditors, with notice of the mortgage at the time of its execution. The provisions of the statute are peculiar. It is provided that no mortgage of personal property, where the mortgagor retains actual possession, is valid against existing creditors or subsequent purchasers, without notice, unless executed in writing, acknowledged and recorded. Code, section 1193. ) We think the validity of the mortgage is not made to depend solely on the fact of its being recorded before the goods are seized by the creditor on his legal process; and that actual notice of its contents to the creditor, is sufficient to give to the claim of the mortgagee, by virtue of his unrecorded mortgage, duly executed and acknowledged, a preference over the creditor with notice. The filing of the mortgage for record, is held to be constructive notice only; and no good reason is seen why actual notice of the mortgage and its contents, should not be quite as effectual to render valid the claim of the mortgagee against the attaching creditor. Such, we think, is the meaning of the statute. Actual notice is good against the subsequent purchaser, and an attaching creditor stands in no better position than a purchaser for a valuable considerationr~] Judgment reversed.