Doolittle v. Lyman

Bartlett, J. If it appeared that the defendants’ note was given in part for intoxicating liquor sold by them in this State since the act of 1855 took effect, it was incumbent on them to show that they were legally authorized to make the sale, in order to establish the validit}' of the note. Bliss v. Brainard, 41 N. H. 256. If the defendants claimed that Barnard’s note, being given for intoxicating liquor sold in Massachusetts, was founded upon an illegal consideration, they should have proved the law of Massachusetts which they claimed rendered the sale illegal, if the inquiry became material. Ferguson v. Clifford, 37 N. H. 98. The sale of the horse to the defendants by Entwistle, and the mortgage by him to the defendants, were not one transaction, and an avoidance of the mortgage would not defeat the sale. Our statutes provide that the mortgagor and mortgagee of personal property shall make and subscribe an affidavit in substance as follows : “We severally swear that the foregoing mortgage is made for the purpose of securing the debt specified in the condition thereof, and for no other purpose whatever, and that said debt was not created for the purpose of enabling the mortgagor to execute said mortgage, but is a just debt honestly due and owing from the mortgagor to the mortgagee;” and that “such affidavit, with the certificate of the justice wTho administered the oath, shall be made upon or appended to such mortgage and recorded therewith;” and that “ no such mortgage shall be valid against any person except the mortgagor, his executors and administrators, unless possession is delivered, or the mortgage is sworn to and recorded in the manner herein prescribed.” Rev. Stat., ch. 132, secs. 5, 8, and 10. As the defendants did not take possession under their mortgage until after the delivery of the horse to the plaintiff, the latter contends that, under the statute cited, if the mortgage was made for any other purpose than to secure the debt mentioned in the condition, it would be invalid as against any person but the mortgagor and his personal representatives, although the debt described in the condition was justly due from the mortgagor to the mortgagee, upon the ground that, the affidavit being thus untrue, the mortgage was not executed in conformity to the statute. But we do not think that under this [612] statute this mortgage, which was executed in due form, and duly recorded, is to be held invalid as against the plaintiff, a subsequent purchaser, merely because the parties, in addition to securing the just debt described in the condition, may have also designed to hinder or delay the creditors of the mortgagor. The statute contains no express provision to this effect, and we think none is to be implied. Such a construction would seem to leave the mortgage in full force between the parties, but to avoid it as against all others, even such as were not creditors of or bond fide purchasers fi’om the mortgagor, and even though it were in the hands of an innocent assignee. We think that the legislature did not intend such results, especially where no rights of creditors were concerned, but were content to leave parties guilty of perjury in such affidavits, to the criminal law. Rev. Stat., ch. 132, sec. 6. Our Anew, that under the statute in question a mortgage of personal property, made to secure the debt described in the condition, which Avas justly due from the mortgagor to the mortgagee, wrould not be rendered void as against a subsequent purchaser by the mere fact that the parties had also another purpose beside securing the debt, seems supported by the terms of the act of December 17, 1840, which required the affidavit only in the case of the mortgage of personal property liable to attachment; Laws of 1840, 491; shoAving that the great object of the statute Avas the protection of creditors. The case of Belknap v. Wendell, 31 N. H. 92, does not conflict with these views, for there a liability, as security against which the mortgage was given, was not truly described in either the condition or the affidavit. The plaintiff" also claims that the mortgage to the defendants is void under sections 19, 20, and 21 of chapter 215 of "the Revised Statutes, which forbid the fraudulent making or receiving of a mortgage of property, to prevent its attachment, &c. Although the doctrine of avoiding contracts, as impliedly forbidden by statute, has been carried so far that there seems little occasion to extend its limits, yet in this State, so far as we are informed, such a mortgage, made to secure a valid debt, and duly executed and recorded, has always been held good as betAveen the parties. The statute does not forbid the making of a mortgage, and such a mortgage, executed in due form and recorded, being sufficient at laAv to pass the legal title to the mortgagee, we think it would be a somewhat novel and dangerous doctrine to hold that, as between the parties, the deed is void under this statute because of an intended fraud on creditors ; and if the deed is valid as between the parties, this position of the plaintiff Ayholly fails. For such a mortgage, strictly speaking, the debt, which is in no Avay illegal, is the consideration, and the intent forms no part of it; and this distinguishes the present from a large class of eases. The illegality is not in the mere making of the mortgage, but in the particular purpose for which it is made; and as there is no question in relation to the consideration, it would seem sufficient to avoid the mortgage so far as necessary to defeat the illegal purpose, and that is as against the creditors, whom the statute intends to protect;. while to go beyond this, and hold the mortgage entirely void, might allow the fraudulent mortgagor to [613] derive advantage from his own illegal act at the expense of innocent ¡parties. See White v. The Franklin Bank, 22 Pick. 181, 188. In fact, so far as relates to the question here, the mortgage, having been duly recorded, is to be regarded as an executed contract, for as between the parties it passed the legal title to the horse, and was no more executory, so far as this ease is concerned, than a completed sale of liquor, which, though prohibited, is not held void. State v. Plaisted, 43 N. H. 413; Andrews v. Marshall, 48 Me. 26. The statute, 13 Eliz., ch. 5, does not extend to subsequent purchasers ; Cadogan v. Kennet, Cowp. 434; Sloane v. Cadogan, cited in 3 Rep. 82, b, note (T. & F’s ed.); and the 27 Eliz., ch. 4, relates to lands and real estate, and not to personal property like that in question here. 1 Story Eq., sec. 352, n., 425, n.; Atherley Set. 207*; Jones v. Crowder, 1 Sim. & S. 315; Sloane v. Cadogan, and see Danbury v. Cockburn, 1 Mer. 635. Whether these statutes are wholly or in part declaratory of the common law, and whether in this State a mortgage of chattels made with the actual intent to defraud subsequent purchasers would be void by the common law as against such purchasers, with or without notice (see Bac. Abr., Eraud, c; Twyne’s Case, 3 Rep. 83, a; 1 Foub. Eq. 278, n.; 1 Madd. Ch. 221*; 4 Cruise 425*; Com. Big., Covin, B, 2; Viner Abr., Fraud, I, 9; Cadogan v. Kennet, Cowp. 434; 1 Gr. Cruise 424,* n.; 4 Kent 462*; 2 Kent 441,* n.; Hamilton v. Russell, 1 Cranch 316 ; Co. Litt. 76, a; 290 b ; 1 Story Eq., sec. 352; Atherley Set. 207*; Boberts Eraud. Con. 1-12; Kimball v. Hutchins, 3 Conn. 450; Sands v. Codwise, 4 Johns. 598; Angier v. Ash, 26 N. H. 108; Cooledge v. Melvin, 42 N. H. 534; 2 Hill. Mort. 227; Gibson v. Love, 4 Florida 217 (citing Hudnell v. Wilder, 4 McCord 295); Coppage v. Barnett, 34 Miss. 621; 20 U. S. Dig. 451, 88; Mason v. Baker, 1 A. K. Marsh. 208 ; 1 Eq. Dig. 545, 183), we need not inquire, for if we assume that such.a conveyance would be invalid as against a subsequent purchaser like the plaintiff, with constructive notice from the record, and that evidence of a design to defraud creditors can be received upon the question of intent to defraud subsequent purchasers, still an intent to defraud the former is not in law an intent to defraud the latter. Roberts Fraud. Con. 51, 59 ; Teasdale v. Atkinson, 2 Brev. 48; 5 U. S. Dig. 55, 608; and see Coppage v. Barnett. For this reason the verdict must be set aside and a New trial granted.