Leland v. Collver

• Decision Date: 04 October 1876
• Citation: 34 Mich. 418
• Court: Michigan Supreme Court
• Parties: Samuel G. Leland and others v. Peter H. Collver and others

34 Mich. 418

Samuel G. Leland and others v. Peter H. Collver and others

Supreme Court of Michigan

October 4, 1876

Submitted on Briefs June 20, 1876 [Syllabus Material]

Error to St. Joseph Circuit.

Judgment affirmed, with costs.

David Knox, Jr. and Upson & Thompson, for plaintiffs in error to the point that a chattel mortgage, so far as it attempts to subject after-purchased property of the mortgagor, or his assigns, to its operation, is void and creates no lien on such property and gives no authority to the mortgagee to seize and sell the same, and that a mortgage, like a sale, requires a subject in esse and in the power of the mortgagor, cited: 2 Hill on Mort., 337, §§ 16-24; Jones v. Richardson, 10 Met. 481; Edgell v. Hart, 9 N. Y., 217; Mogg v. Baker, 3 M. & W., 195; Gale v. Burnell, 7 A. & E. (N. S.), 850; Single v. Phelps, 20 Wis. 419; Tucker v. Alger, 30 Mich. 67; Gay v. Bidwell, 7 Mich. 521; that a mortgage of the whole of the mortgagor's stock now in his possession, and also such additions thereto as he may thereafter make from time to time, conveys only the stock on hand at the date of the mortgage: Wagner v. Watts, 2 Cranch C. C., 169; In re Kahley, 2 Biss. 383; Winslow v. Merchants' Ins. Co., 4 Met. 306; Moody v. Wright, 13 Met. 17; Barnard v. Eaton, 2 Cush. 303; Gardner v. McEwen, 19 N. Y., 123; Lunn v. Thornton, 1 M. G. & S., 379; Mowry v. White, 21 Wis. 417; that the mortgage in question was void for uncertainty: Collins v. Myers, 16 Ohio 547; Gay v. Bidwell, 7 Mich. 522; Blakely v. Patrick, 67 N. C., 40; Matter of Manly, 2 Bond, 261; that a stipulation that subsequently acquired property should be subject to the same lien would be an executory agreement only, and would not bind after-acquired property until actually executed by a new mortgage given after its purchase: Codman v. Freeman, 3 Cush. 309; Jones v. Richardson, 10 Met. 481; that the statements of Moore should not have been received in evidence as binding his wife: People v. Olmstead, 30 Mich. 435; Horner v. Fellows, 1 Doug. 51; Converse v. Blumerich, 14 Mich. 109; Thomas v. Harding, 8 Greenl. 417; Anderson v. Rome, etc., R. R. Co., 54 N. Y., 334; that the admission in evidence of the contracts of mesne purchasers from the mortgagor, whereby they assumed and agreed to pay the mortgage, was erroneous; since they only created a personal liability, and not a lien on the property, and especially not a new and independent lien on the stock of any new contracting party as to additions made by him or his assigns: Moody v. Wright, 13 Met 32; Codman v. Freeman, 3 Cush. 306; Otis v. Sill, 8 Barb. 102; Rhine v. Phelps, 3 Gilm. 455; Gale v. Burnell, ubi supra.

R. R. Pealer and H. H. Riley, for defendants in error, as to the validity of the mortgage to authorize the seizure and sale of after-acquired goods, no paramount rights intervening, cited: 7 Mich. 519; 2 Cush. 294; 3 Met. 518; 11 Ib. 333; 20 Me 408; 40 Ib. 561; 42 Ib. 132; 20 Ia. 399; Alb. L. J., May 20, 1876, p. 341; Cent. L. J., May 5, 1876, p. 286; that a person buying subject to a mortgage is in no position to dispute its validity: Webb v. Mann, 3 Mich. 142; that the mortgage contained no illegal provision, not reconcilable with an honest intent, and was therefore not void on its face: 7 Mich. 108; and was operative, as between the parties, to convey the property subsequently acquired: 7 Mich. 522; and that under the condition the goods could be sold before the mortgage became due: 29 Barb. 518; 6 Abb. N. Y. Dig.; that the plaintiffs, taking subject to and with notice of the mortgage, have no greater rights than the mortgagor: 2 Story 630; 2 Johns. 229.

OPINION

Campbell, J:

Plaintiffs in error sued defendants in error in trover for the conversion of certain furniture which had been the stock in trade of plaintiffs. Defendants justified under a chattel mortgage, the terms of which are important as presenting most of the questions in controversy. This mortgage, dated July 3, 1870, was made by Emanuel Shnyder to defendants Illenden & Collver to secure two thousand dollars and interest at ten per cent. annually, one thousand in two years and one thousand in three years from date. It was given for the purchase money of the stock of goods mentioned in it. The property mortgaged was set forth in these terms, with the conditions appended:

"All the goods, wares, and merchandise, chattels and effects mentioned and described in the schedule hereto annexed and marked 'Schedule A,' this day bought of Illenden & Collver, thereby intending to convey all the present stock in trade as enumerated in said schedule; also all the stock I may have from time to time in trade as security for the above named consideration, said goods to remain and continue in the possession of the party of the first part, in the village of Three Rivers, Michigan, except as they are disposed of in the usual course of retail trade; the party of the first part is to have the privilege of selling the goods for cash or on credit in the usual course of trade, and is to apply the proceeds of the sales in buying other goods to keep up the stock and to the support of his family. The party of the first part covenants to keep up a stock of like goods to the value of three thousand dollars as security to the parties of the second part until the above amount, with interest, is paid, and also covenants to keep the stock insured to the amount of two thousand dollars for the benefit of the party of the second part and as collateral thereto, and a breach of the last two covenants shall cause the whole sum secured to become due and payable."

In addition to the usual conditions of defeasance, the mortgage contained the following as among the acts which would authorize a seizure and sale: "If the said party of the first part shall sell, assign or dispose of, or attempt to sell, assign, or dispose of the said goods and chattels contrary to the terms of these presents, or remove or attempt to remove the whole or any part thereof from the said village of Three Rivers without the written assent of the party of the second part, or if the insurance is not kept up, or if the stock is sold below the amount covenanted to be kept up, then and from thence-forth it shall and may be lawful for the said party of the second part," etc., to enter, etc.

The undisputed facts are that Shnyder, after making this mortgage, continued in business alone, and in partnership with others, until August 30, 1871, when he sold out his interest in the firm of Shnyder & Bellows to one John Koahn, who in a short time bought out Bellows also, and continued in business alone until on the 11th of November, 1871, he sold out his stock to the plaintiff Nancy Moore, giving an inventory which was declared to be "subject to a chattel mortgage." There was no other chattel mortgage than the one in question. The other plaintiffs became partners with Nancy Moore, and during their continuance in business they added three hundred and forty-four dollars worth of goods purchased from other parties, and sold about one thousand five hundred dollars worth at retail. Illenden & Collver seized the stock under their chattel mortgage on the 22d of February, 1872, and sold it. The property sold included some recent purchases and unfinished articles. But a small part of the property was in that originally sold by Illenden & Collver to Shnyder. Alfred B. Moore, husband of Nancy Moore, acted for her in making her original purchase, and in superintending all her business, in which she did not act personally for herself at all.

All the persons who became interested in the stock of goods took with notice of the chattel mortgage, and bought subject to it.

The principal question, which is presented under many forms, is, whether Illenden & Collver had a right under the chattel mortgage to seize and sell the property not originally in their possession and within their sale to Shnyder, for the purchase price whereof the security was given.

It is not insisted by defendants in error as matter of law that the mortgage became operative as a present conveyance upon each successive addition to the stock in trade as soon as purchased. The claim, as we understand it, is, that it gave the mortgagees authority to seize and subject such property to sale, and to make good title under such power, unless prevented by the paramount right of some person intervening with a valid claim or title created prior to such seizure.

Some question appears to have arisen concerning the effect of a...