Consol. Rendering Co. v. Stewart

• Decision Date: 08 August 1933
• Citation: 168 A. 100
• Parties: CONSOLIDATED RENDERING CO. v. STEWART et al.
• Court: Maine Supreme Court

168 A. 100

CONSOLIDATED RENDERING CO.

v. STEWART et al.

Supreme Judicial Court of Maine.

Aug. 8, 1933.

Report from Superior Court, Waldo County.

Action by the Consolidated Rendering Company against George E. Stewart and another. On report.

Judgment for plaintiff.

Argued before PATTANGALL, C. J., and DUNN, STURGIS, BARNTES, and TIIAXTER, JJ.

Burleigh Martin, of Augusta, for plaintiff.

Buzzell & Thornton, of Belfast, for defendants.

STURGIS, Justice.

This is an action on a demand note given the Consolidated Rendering Company by the defendant George E. Stewart, and secured by a chattel mortgage on two horses. The defendant P. A. Farwell is involved only as an accommodation signer of the note. The issue presented is as to the amount for which judgment should be entered. The case is reported on an agreed statement of facts.

The mortgage, as originally written, in addition to the usual provisions, included an agreement that, on default of any condition, it should be lawful for the mortgagee to take possession of and sell any or all of the chattels described in the mortgage, reimburse itself for costs, charges, and expenses, retain such sums as remained due under the mortgage, and account to the mortgagor for the balance of the proceeds of the sale. Under this provision, when the note was not paid on demand, an agent of the rendering company took peaceable possession of the horses, sold them, applied the money received as required by the agreement, and accounted to the mortgagor.

It is agreed, in the stipulations accompanying the report, that the sale of the horses netted $150, which should be credited upon the note if the sale was legal. The alternative agreement is that, if the sale is held to be void, judgment should be for $180, which is the amount of the note.

The defendants contend that the agreement in this mortgage, under which the rendering company sold the horses, must be construed as a release or surrender of the mortgagor's right of redemption, which the law will not allow under the rule that a mortgagor cannot change the character of his mortgage to that of an absolute conveyance, or release or surrender his right of redemption by any agreement, however explicit or forceful, made at the same time or as a part of the mortgage transaction. Greenlaw v. Savings Rank, 106 Me. 205, 76 A. 485; Reed v. Reed. 75 Me. 264, 272: Peugh v. Davis, 96 V. S. 332, 24 L. Ed. 775. This rule, while originally applied to mortgages of real estate, is now hold to bar any agreement made contemporaneously with a chattel mortgage which clogs the mortgagor's right of redemption. Jones on Chattel Mortgages (Bow. Ed.) § 682; 6 R. C. L. 472; editor's note, 24 A. L. R. 822 et seq.; Landers v. George, 49 Ind. 309; Graves v. Negy, 114 Kan. 373, 219 P. 286; Hart v. Burton, 30 Ky. (7, T. J. Marsh.) 322; Desseau v. Holmes, 187 Mass. 486, 73 N. E. 656, 105 Am. St. Rep. 417; Clark v. Henry, 2 Cow. (N. Y.) 324; Plnmiera v. Rricka, 79 Misc. 468, 140 N. Y. S. 171; Hughes v. Harlam. 166 N. Y. 427, 60 N. E. 22; McKnight v. Gordon, 13 Rich. Eq. (S. C.) 222, 230, 94 Am. Dec. 164; Luckett v. Townsend, 3 Tex. 119, 131, 49 Am. Dec. 723.

We are of opinion, however, that the defendants have misconceived the true intendment and legal effect of this provision in the mortgage. As we interpret the instrument, the parties, by their contract, superadded to the bill of sale and defeasance clause of the ordinary chattel mortgage a power of sale enabling the mortgagee to sell the property, after default, according to the terms of the power. This is a recognized mortgage provision which is now almost universally deemed a valid and binding exercise of the right of contract, which neither impairs the mortgage nor clogs the equity of redemption. It is an additional provision coupled with the mortgage, rather than a part of it. It may be included in the mortgage deed or be created by a separate instrument. 2 Perry on Trusts. 602: 41 Corpus Juris, 923; 19 R. C. L. 587. It is wholly a matter of "convention and contract between the parties, and not of law or jurisdiction." Washington County Railroad Company v. Cotton Mills Company, 104 Me. 527, 72 A. 491, 497; Perry on Trusts, supra. As long as the power of sale remains unexecuted, the relation of the parties remains as created by the mortgage, but, when the power is fully and lawfully exercised, the mortgage is stripped of its essential attributes and becomes a nullity. Eaton v. Whiting, 3 Pick. (Mass.) 484; Kinsley v. Ames, 2 Mete. (Mass.) 29. The due and proper exercise of the power of sale in a mortgage conveys the title to the property to the purchaser, deprives the mortgagee of all Interests in it, and, unless otherwise provided by statute, bars the mortgagor's equity of redemption. If a right of redemption after a sale under a power in a mortgage is given by statute, the sale confers an inchoate title on the purchaser, subject to be defeated if redeemed and to become absolute if not redeemed. Perry on Trusts, § 602 bb. These principles seem to be applied without material limitations to powers of sale given in chattel mortgages, and we think it may be accepted as the law here, as elsewhere, that a valid power of sale may be inserted in a chattel mortgage, and, if the power is exercised in accordance with its terms and with fairness to the mortgagor, if no statute intervenes, the equity of redemption is extinguished. We are in accord with the text And supporting citations in 2 Jones on Chattel Mortgages (Bow. Ed.) § 789 et seq.; 11 C. J. 704; 5 R.C.L, 102.

The redemption of...