Deering v. Cobb

• Decision Date: 02 February 1883
• Citation: 74 Me. 332
• Parties: ISAAC N. DEERING, Assignee, v. HARLAN P. COBB and another.
• Court: Maine Supreme Court

74 Me. 332

ISAAC N. DEERING, Assignee, v. HARLAN P. COBB and another.

Supreme Judicial Court of Maine.

February 2, 1883

ON REPORT on agreed statement of facts.

Trover by the assignee in insolvency of Ebenezer G. Delano, to recover the value of a stock of goods.

By the agreed statement it appears that Harlan P. Cobb and Ebenezer G. Delano were partners in trade at Saco, and on March 4 1876, gave Sweetsir, one of the defendants, a mortgage of their stock in trade, which contained this clause, " Provided also that it shall and may be lawful for said Cobb and Delano to continue in possession of said property until the said Sweetsir shall consider it for his interest to take possession under this bill of sale, and the said Cobb and Delano are to have the right to sell from said stock at retail, the proceeds of said sales to be appropriated to the purchase of new goods, said new goods to be held under this bill of sale."

February 1, 1877, the firm of Cobb and Delano dissolved, Delano continuing the business, and September 19, 1877, he gave Cobb a mortgage of his stock and fixtures, and it contained a clause like the first mortgage above written. Delano continued the business till March 21, 1879, when Sweetsir took possession under his mortgage with the knowledge of Delano and without objection. Three days later, Cobb by arrangement with Sweetsir with the knowledge of Delano, and without his objection, took possession under his mortgage for the purpose of selling and paying over proceeds to Sweetsir. Two days after that (March 26, 1879,) Delano was adjudicated an insolvent on his own petition. The opinion states other material facts.

R P. Tapley, for the plaintiff.

So far as the Sweetsir mortgage is concerned, the power of sale is given to the firm of Cobb and Delano and not to the individual members. It does not appear that the after-acquired goods were purchased to replenish the stock of Cobb and Delano nor does it appear that they were purchased with proceeds of goods sold. Chapin v. Cram, 40 Me 561.

Beyond this we consider it well settled law in this state, that after-acquired goods do not pass under such a mortgage.

The case of Emerson v. E. and N. A. R. Co. 67 Me. 387, fully considers the point and clearly lays down the rule that in actions at law such mortgages do not hold after-acquired goods. The court review the cases in this state touching the question, citing Chapin v. Cram, 40 Me. 561, as directly determining that a mortgage of a stock of goods would not transfer to a mortgagee goods afterward purchased and put in with the stock by the mortgagor, although the mortgage had a clause containing that agreement.

The assignment by operation of law vests in the assignee the title to all property and estate of the debtor. He succeeds to the rights of creditors as well as the insolvent. Bradshaw v. Klein, 1 B. R. 542; In re Metzger, 2 B. R. 355; In re Eldridge, 4 B. R. 498.

H. Fairfield, for the defendants, cited: Kittridge v. McLaughlin, 33 Me. 327; Goss v. Coffin, 66 Me. 432; Hersey v. Elliot, 67 Me. 527; Mitchell v. Winslow, 2 Story 630; Briggs v. Parkman, 2 Met. 258; Clarke v. Minot, 4 Met. 346.

SYMONDS J.

The clauses in the two mortgages under which the defendants as mortgagees claim to hold the stock of goods in question--to the effect that the mortgagors while remaining in possession may sell from the stock at retail, appropriating the proceeds to replenish the stock with new goods which are to be held subject to the mortgage--are so far valid between the parties to the mortgage as to vest in the mortgagees the title to goods so purchased and put into the shop in pursuance thereof. Allen v. Goodnow, 71 Me. 420; Jones' Chat. Mort., § 138.

This is the law in this state, at least since the decision cited, in cases to which the rule applies; where there is a power to sell at retail, accompanied with a duty to use the proceeds of sale in buying other goods to supply the place of those sold. It cannot be said to be the uniform rule declared by the authorities, but there is a some what general recognition in them of the validity of such stipulations between the parties; while at law the general rule is that so long as the mortgagors remain in possession such clauses are void against attaching creditors and subsequent purchasers. It is this latter class of cases which has been most frequently before the courts. Jones v. Richardson, 10 Met. 481, is a leading case--and similar authorities are numerous and repeatedly cited. As to the effect of this stipulation reserving to the mortgagee control of the proceeds of the property sold by the mortgagor, see also, Williams v. Briggs, 11 R. I. 476, 480. In comparatively few instances has attention been directed to this precise provision. The fact that after the dissolution of the firm this power to sell was exercised, and the duty to re-invest was performed, by one of the partners alone, without interference by the mortgagees, instead of by the firm to which the power was originally given, has no tendency to discharge the lien upon the goods, to the purchase of which the proceeds of the original stock were so applied.

Under each of these mortgages, the mortgagees had the right to take possession at will. They had in fact exercised this right and taken possession before the insolvency of the mortgagor. At that date without fraud they were in possession, under mortgages which had the legal effect to transfer to them, as against the mortgagor, the title to the property, the original stock and the substitutions by purchase with the proceeds. When it is considered that in the...