In re Caledonian Co.

HOUGH, Circuit Judge (after stating the facts as above). The statute of Vermont prescribing the form of affidavit used in chattel mortgages has been often construed (Tarbell v. Jones, 56 Vt. 312; Sherman v. Estey, etc., Co., 69 Vt. 355, 38 Atl. 70; Nichols v. Bingham, 70 Vt. 320, 40 Atl. 827; Herald v. Clere, etc., Co., 86 Vt. 141, 84 Atl. 23; Bean v. Parker, 89 Vt. 532, 96 Atl. 17); and the somewhat similar statute of New Hampshire has been considered in Belknap v. Wendell, 11 Foster (31 N. H.) 92. The Tarbell Case states the doctrine that— “Tinder our statute substantial truth specifically told is an essential requirement in describing the debt or obligation to be secured, in order to constitute a chattel mortgage valid as against creditors.” The same rule is somewhat differently phrased in the Nichols Case, which declares that— “The oath must conform to the purpose of the mortgage, and verily the truth, justice, and validity of the debt or other liability sought to be secured thereby.” The New Hampshire interpretation is stated, with due consideration of all the reported cases, in Hackett v. Potter, 135 Mass. 349, as follows : [974] Tbe debt secured “must be a debt due and owing from tbe mortgagor to the mortgagee. If it is giren to secure a liability, it must be the liability of the mortgagee assumed for the mortgagor. If it is given to secure the performance of any other agreement, it must be an agreement between the mortgagor and the mortgagee, to the truth, validity, and justice of which they are both able to testify.” About the transaction at bar there was nothing obscure, complicated or concealed, and the question presented is no more than this: Did Mr. Smith and the proper officer of the bankrupt tell the truth when, after the execution and delivery of the promissory note above referred to, they both swore that the bankrupt was a debtor to Mr. Smith for “a just debt honestly due and owing from the mortgagor to the mortgagee”? If Mr. Smith had been an indorsee of this note, and the note itself had been made originally to the 10 men, he. could have maintained an action upon it, and no one else could have done so, even though he had been accountable to the 10 contributors for whatever he might recover. Chase v. Burnham, 13 Vt. 447, 37 Am. Dec. 602. A fortiori is this true when he was the payee. -The debt was evidenced by the note, and, that being commercial paper, suit would have been sufficient demand. But as between the bankrupt and Smith there was no other evidence of debt except the note; consequently, as long as Smith held legal title to the note, he alone could sue upon it, and if he could sue he could prove his debt in bankruptcy. In short, the test question is this: Could any one of the 10 contributors, after this note was given, have maintained an action at law for $300 against the Caledonian Company? None of them could, because that company did not owe any of them $300. It did owe Mr. Smith $3,000 on a promissory note, and the law pays no attention as to where Mr. Smith got that money from. That in equity other remedies would have been available, had Mr. Smith proved an unfaithful trustee, is a matter of no moment under the facts at bar. It may be pointed out that the circumstance that Mr. Smith actually received the money, and actually loaned it, thereby being the person, and the only person, who made a contract with the bankrupt, wholly differentiates this litigation from the Tarbell decision, and makes the reason of that judgment excellent authority for the petitioner herein. Being of opinion that the affidavit attached to the mortgage was legally and morally true, the order under review is reversed, with costs, and the matter remitted for further proceedings not inconsistent with this opinion.