Keating v. Hannenkamp

Black, J. The plaintiff brought this suit to recover the value of a quantity of furniture and fixtures. The case was tried by the court without a jury, resulting in a finding and judgment for defendant Cottrill, and a finding and judgment for plaintiff against defendant, Hannenkamp, in the sum of one dollar, and the plaintiff appealed. The evidence discloses the following facts : Defendant Hannenkamp and others being the owners of a three-story building leased the same to C. W.. Herbert for a period of five years, at eighteen hundred dollars per year for the first three years and two thousand dollars per year for the last two years, the rent to be paid monthly in advance. The lease bears date the fifth of November, 1883, though the term began on the — 166 — first of December, 1883. Herbert executed to Hannenkamp a mortgage dated the thirteenth, of November, 1883, to secure the payment of the rents reserved in the lease as they should fall due. The mortgage makes reference to the leased pro perty, and assigns and transfers “the personal property as described below, together with all furniture not mentioned herein, or that may be acquired by purchase or otherwise, and contained in the three-story brick house (describing the house again), the counters, shelving, mirrors, tables, chairs, stoves, ranges, glassware and table ware.” This mortgage was duly acknowledged, and recorded in December, 1883, though the lease was not recorded. The lease, it will be seen, bears date the fifth of N ovember and the mortgage is dated the thirteenth of the same month. The evidence, however, shows that they were in fact both executed at the same time. The building was a new one and Herbert, the lessee, rented it with a view of fitting it up for a restaurant, saloon and lodging house. The furniture was not in the building when the lease and mortgage were executed, and it is clear that some, if not all of it, had not then been purchased by Herbert. It had been purchased and placed in the house at or before the term of the lease began. Herbert assigned the lease and sold the furniture and fixtures to A. C. Hall in July, 1884; and Hall, after occupying the premises a short time, assigned the lease and sold out to Weiman. Both of these assignments were made by and with the written consent of the lessors. Weiman assigned the lease and sold the furniture to Barton prior to September, 1885. The lessors refused to give their consent to this assignment. Barton, however, took possession and paid rents until the first of December, 1885. On the twelfth of September, 1885, Barton and wife executed a chattel mortgage on the furniture to secure a note for fifteen hundred dollars payable to the plaintiff Keating. — 167 — Barton made default in payment of the rents for the months of December, 1885, and January, 1886, and, thereupon, Hannenkamp took possession of the furniture and fixtures under . the terms and provisions of his mortgage and sold the same at auction, and the defendant Cottrill became the purchaser. Keating then commenced this suit against Hannenkamp and Cottrill.* The evidence is clear that when Keating took the mortgage from Barton and wife he had actual notice of the lease and the mortgage executed by Herbert to Hannenkamp to secure che rents. 1. Herbert, the lessee and mortgagor, leased the building for the purpose of furnishing and fitting it up as a restaurant and saloon, and contemplated the purchase of furniture and fixtures suitable for that purpose when he executed the mortgage. Though the property described in the mortgage was not in the building at that date, still the mortgage was good in equity, and the property became subject to the equitable lien as soon as it was placed in the building. This doctrine has been so often declared by this court that it is only necessary to refer to the following cases: Wright v. Bircher, 72 Mo. 179; Frank v. Playter, 73 Mo. 672; Rutherford v. Stewart, 79 Mo. 216. Such equitable lien is valid as against the mortgagor and also as against Keating who had both actual and constructive notice of the mortgage. The appellant insists that, as the mortgage only created an equitable lien on the property purchased and put in the house by Herbert, Hannenkamp had no right to take possession and sell for default in payment of rents as he could if the mortgage had been good at law; and in support of this he cites France v. Thomas, 86 Mo. 80. In that case the plaintiff claimed after-acquired property under a deed of trust on a lot of hotel furniture. The suit was one for the recovery of the specific personal — 168 — property against the sheriff who had seized it on executions against the mortgagor. The opinion concedes the proposition that the deed of trust created a good equitable lien, but it holds the trustee could not recover in replevin because neither he nor the beneficiary had ever acquired possession under it. It is also conceded that there may be exceptions to the rule laid down. A mortgagee seems to have been allowed to recover after-acquired property in an action of replevin in 86. Louis Drug Co. v. Robinson, 81 Mo. 18. See same case, 10 Mo. App. 588. Frank v. Playter, supra, was also an action of replevin,, and the defendant relied upon a mortgage of after-acquired property, and it was held he should succeed, though it does not appear that the answer set up an equitable defense. But without pursuing the question whether the equitable owner can recover the property in an action of replevin under our code, it is certain that the present case differs from France v. Thomas, in this: That here the mortgagee took possession of the property for a default, under the terms and stipulations of the mortgage. “ Though a grant of a future interest is invalid, yet a declaration precedent may be made which will take effect on the intervention of some act.” Under this maxim of Lord Bacon it is held that “possession taken by a mortgagee of after-acquired property, under authority given in the mortgage, before rights had been acquired by others, makes it a valid lien upon such property.” Jones on Chattel Mortgages [3 Ed.] sec. 164 The rule just stated is, of course, one at law. But it must follow that possession acquired by a mortgagee under the terms of the mortgage will also vest the legal title in him in those cases where the mortgage of after-acquired property creates an equitable lien. The circumstance that it creates an equitable lien, good against creditors and subsequent purchasers with notice, cannot affect the legal consequences arising from taking possession. Hannenkamp had the right given to him — 169 — in the mortgage to take possession upon default, and when he took possession he stood in the same position as if his mortgage had been one good and valid at law from the beginning. He had the right to sell and to execute the powers contained in the mortgage without the aid of a court of equity, and his sale passed a valid title both at law and in equity. 2. Whilst Weiman was in possession under the lease, he made some additions to the furniture, costing two hundred and fifty or two hundred and seventy-five dollars, and the question is made whether this property became subject to the lien of the mortgage executed by. Herbert. Barton, of course, had actual notice of the lease when he took the assignment, and he had constructive notice of the mortgage. Keating had actual notice of both the lease and the mortgage. Upon this question, whether under the circumstances the property put in the house by Weiman became bound by the mortgage executed by Herbert, we are not cited to any authorities on either side. There seems to be no doubt but the lease and the mortgage were executed at the same time. The mortgage sets out and recites the lease,- and the two instruments relate to the same subject-matter and are in fact but different parts of the same transaction, and we can see no reason why they should not be treated as if ’ they constituted a single instrument. A lease and a mortgage made by the lessee upon a crop to be grown upon the leased lands, were treated as a single instrument in Booker v. Jones, 55 Ala. 266. Had this lien on the furniture been created by the lease, without any mortgage, there would be no doubt but the assignee of the lease would be bound by all the covenants of the lease. Taking the mortgage and the lease to be a single instrument the same result must follow. 3. The property was sold in bulk at the price of $387.50. There was evidence tending to show that it — 170 — was of the value of three thousand dollars; and there is other evidence that when removed and repaired it was not worth more than seven hundred dollars. The rents due for the two months amounted to only three hundred dollars. The proceeds of the sale paid this debt and the costs attending the sale, leaving a surplus of fifteen cents. The - objection that the property was sold in bulk, and that more property was sold than was necessary to pay the debt, do not appear from the abstracts to have been made in the trial court, and hence cannot be made in this court. Besides, it cannot be said that the sale was a void one for either or both of these reasons, and Keating does not offer or propose to redeem. The judgment in this case should have been for both defendants, but, as Hannenkamp is not complaining, the judgment is affirmed. All concur; Barclay, J., not sitting.