Johnson v. Stellwagen

• Decision Date: 06 October 1887
• Citation: 67 Mich. 10,34 N.W. 252
• Court: Michigan Supreme Court
• Parties: JOHNSON v. STELLWAGEN.

34 N.W. 252

67 Mich. 10

JOHNSON v. STELLWAGEN.

Supreme Court of Michigan

October 6, 1887

Appeal from circuit court, Wayne county.

Moore & Canfield, for appellant.

Edget Brooks & Conway, for appellee.

CAMPBELL C.J.

Johnson sued in trover for the conversion of certain lumber by defendant, who had seized it on attachment in favor of John G. Owen against James H. Rogers. The dates become material. Rogers had a lumber-yard at Wayne Junction, in Wayne county, and had been indebted to plaintiff for some years for advances. This debt he had secured from time to time by chattel mortgages not recorded. In January, 1885 this debt had become reduced to about $1,800, and a new mortgage given. Between that time and November 10, 1885 plaintiff had to provide for an additional $500, for which he had become security. On the tenth of November, 1885, Rogers, who had promised to see that plaintiff should be made secure, executed a mortgage to him for $2,300, which was duly recorded, but which, instead of being dated in November, was dated back to January. On December 31, 1885, the $500 for which plaintiff was surety he was obliged to pay. Plaintiff took possession of the yard, and had been in possession several days, when the defendant, who is sheriff of Wayne county, levied on the whole stock, which was worth $4,000, or thereabouts, not subject to but in opposition to the mortgage, upon an attachment in favor of John G. Owen for an alleged debt of $506. This debt was incurred during the year 1885, prior to November. The court below took the case from the jury, and held the plaintiff's mortgage void, giving no reason for the holding. Mr. Owen neither sold any goods, nor began any proceedings while this mortgage was unrecorded. He sold his goods before it was made, and began his lawsuit after the mortgagee was put in possession. This mortgage was not withheld from record during any period when Owen acted or dealt with Rogers.

It was pointed out in Waite v. Mathews, 50 Mich. 392, 15 N.W. 524, in accordance with other decisions before and since, that no one can complain of a failure to file a chattel mortgage for any length of time, unless after its date, and before its filing, or before possession taken under it, the creditor assailing it has dealt with the mortgagor as he would not have dealt had the mortgage been recorded, or else has secured some lien on the property. We have repeatedly held that a debtor may always prefer any of his creditors, so long as it is not done with some unlawful or forbidden purpose. He may pay any creditor in full, or secure him in full, and no unpreferred creditor can complain that such preference has been made. Root v. Potter, 26 N.W. 682. As Mr. Owen had taken no security, he was bound to know that Rogers could at any time secure any other creditor, if he saw fit to do so. The only plausible claim set up is that this mortgage was dated back to January. There is no pretense that there was any wrong purpose in this, and it is impossible to see how it could affect a valid mortgage. No instrument takes effect before delivery. This mortgage was not drawn and was not made operative until November, 1885. There was no default in filing it. It could not have been filed before execution, and the law will not allow filing to be dated back. The consequences imposed by the statute of invalidity as to creditors are the penalty attached to failure to file or take possession. This default cannot exist when there is nothing to file.

It is claimed, however, that it is void because given in place of old mortgages, which were not recorded. As the debt was honest, all that the statute provided as to those old mortgages was that they should be void until filed, and void against intervening rights. But it did not provide that taking a security honestly, and losing its priority, should prevent the acquisition of a new security which should be valid. All that the law declares is that the unrecorded mortgage shall be void as against creditors, which, as declared in Waite v. Mathews, and the other cases referred to, means creditors who have acquired rights in the interval. Declaring them void merely places parties in the same condition as if they had never existed. It does not create a perpetual inability to give a good security in the future. It was suggested in Waite v. Mathews, that a new mortgage would be good with immediate delivery, and that no lapse of time could affect parties not damnified. It is not claimed this mortgage would be void if there had been no prior one. If this is so, there can be nothing in a prior mortgage which is superseded, which can make things any worse. Plaintiff ran the risk of losing what security he possessed, but that did not prevent him from getting either payment or security good when given.

The judgment must be reversed and a new trial ordered. The other questions do not become important, as the case was taken from the jury.

SHERWOOD, J., concurred.

CHAMPLIN J., (concurring.)

In this case there was testimony introduced by the defendant which tended to prove that the series of chattel mortgages given by Rogers to his uncle, the plaintiff in this suit, were kept from the files in the town clerk's office by agreement, in order that Rogers might obtain a fictitious credit with persons dealing with him. If such agreement was made, and the mortgagee kept the mortgages from the files in pursuance thereof, such mortgages were fraudulent as to creditors who trusted Rogers upon the faith that his property was unincumbered. There was testimony also tending to prove that the mortgage under which the plaintiff claims was given to carry out the fraudulent agreement to keep the mortgages from record. This evidence should have been submitted to the jury.

The fifth point stated in defendant's brief, namely, that of estoppel, appears to have been raised for the first time in this court. There was no such issue raised by the...