Peabody v. Landon
| Decision Date | 01 May 1889 |
| Citation | 17 A. 781,61 Vt. 318 |
| Parties | D. P. PEABODY, ASSIGNEE, v. WALTER C. LANDON |
| Court | Vermont Supreme Court |
JANUARY TERM, 1889.
Action of trover for a stock of goods. Plea, the general issue. Trial by court at the September Term, 1888, Royce, Ch. J presiding, upon an agreed statement of facts. The court rendered judgment, pro forma, for the defendant to recover his costs, to which the plaintiff excepted. The case appears in the opinion.
The judgment of the County Court is affirmed.
J C. Baker, for the plaintiff.
This is an action in favor of the plaintiff, as assignee of Lee S. Houghton, against the defendant to recover the avails of goods sold under a mortgage of personal property given by Houghton to the defendant. From the agreed statement of facts, it appears that June 1, 1885, the defendant sold to Houghton a stock of goods, and took Houghton's four notes in payment to the amount of four thousand dollars, payable in two, three, four and five years from date, secured by a mortgage on the stock of goods sold. Houghton also rented the defendant's store in which to carry on the business. The mortgage describes the property conveyed, as: There is a further stipulation that if said Houghton should fail to keep the said stock up to, or insured for the required amount, the defendant might cause all the property to be sold as prescribed in the mortgage. Houghton went on selling from the stock purchased, with the knowledge and consent of the defendant, and continued to make new purchases, so as to keep the stock up to the required amount, making some of the purchases for cash and some on credit, until December 1, 1887. In the mean time he had paid one year's interest on the notes and one hundred thirty dollars of the principal. One of Houghton's creditors, having a claim against him for about fifteen hundred dollars, sued out a writ of attachment against him and placed it in the hands of the sheriff for service. Before this last was done, on the same day, without any knowledge of this creditor's action, so far as is shown, the defendant placed his mortgage in the hands of a deputy sheriff with instructions to take possession of the stock of goods then on hand, and sell the same under the terms of the mortgage agreeably to law. The deputy sheriff at once took peaceable possession of the stock of goods, by the leave and with the consent of Houghton, and sold the goods according to the provisions of the mortgage, and of the statute. Dec. 3, 1887, a petition in insolvency was filed against Houghton, which passed into judgment Dec. 14, 1887, and the plaintiff was duly appointed the assignee of his estate in insolvency, and demanded the goods which the deputy sheriff had taken possession of. On invoicing the goods, it was ascertained that over one-third of the goods were of the stock at the date of the mortgage, and that the others had been purchased after the mortgage was given, partly for cash, but mostly on credit. It did not appear how many of the goods were purchased for cash. The goods did not sell for enough, after deducting the expenses of the sale, to pay the mortgage debt due the defendant. Until 1878 a mortgage of personal property was not provided for by the statute law of the State. The present law was then passed authorizing the mortgage of all such property. This law provides that such mortgage shall not be valid against any person except the mortgagee and his representatives, unless possession of the property is delivered to, and retained by the mortgagee, or the mortgage is recorded as therein provided by R. L. s. 1966. Each party to the mortgage is
required to make oath that the debt specified is a just debt, and owing from the mortgagor to the mortgagee, and that the mortgage is given to secure the payment of the debt, and for no other purpose. S. 1967. The statute has provisions for recording and for foreclosing all such mortgages. There is no claim made that the mortgage was given for any other than the honest purpose of securing payment of the debt incurred by Houghton in purchasing the
original stock of goods of the defendant. From the language of s. 1966, it is the intention of the Legislature to make the record of the mortgage as there required, a substitute for taking and retaining possession of the goods conveyed by the mortgage. The statute contains well guarded provisions against the removal of the goods from the State, and against their sale by the mortgagor, except by the consent of the mortgagee in writing endorsed upon the mortgage or its record. There is in this mortgage no express authority given by the mortgagee to the mortgagor to sell the mortgaged goods, but the mortgage contains an express provision against the pledge, sale or mortgage of any of the goods mortgaged, without the consent in writing of the holder endorsed thereon. That the mortgagor shall not sell without such consent in writing of the holder of the mortgage, endorsed thereon, is in accordance with the provisions of the law. R. L. s. 1972. While the statute does not in terms declare that the mortgagee may, in the manner specified, consent to the sale of the mortgaged goods, or to some part thereof, and still hold his mortgage upon the unsold goods, such authority is fairly implied from the section last cited. It would be nugatory to provide for a sale with the written consent of the holder of the mortgage, if the giving of such consent discharged ipso facto, the mortgage, or rendered it invalid in the hands of the holder. The mortgage was duly recorded, and the deputy sheriff proceeded duly in the sale of the goods. By the stipulation of the parties it is agreed that the court shall determine their rights in accordance with law, regardless of the form of action and pleadings.
On this state of facts, and of the statute law governing the execution of mortgages of personal property, the plaintiff makes several contentions.
1. He contends that the consent of the defendant to the sale of the goods by Houghton, without accounting to him for the avails of the sale, whether that consent is contained in the mortgage, by express terms or by implication, or was given by endorsement upon the mortgage in writing, or its record, as provided by the statute, rendered the mortgage, per se, fraudulent and void. In support of this contention he cites cases from several of the States, and one from the United States Supreme Court. All the cases so cited, and many more, with a general review of the law and decisions of courts of final resort, with the reasons in support of and against such contention, may be found in Pierce's Work on Mortgages of Merchandise, published in 1884, and in Jones on Chattel Mortgages, 2d Ed. The decisions in this country are quite numerous and conflicting. It would be needless to review the decisions after the careful and exhaustive work of these eminent law writers. The most that we shall attempt will be to state briefly the results arrived at by each, and, as the question is for the first time presented to the consideration of this court, the reasons for the decision we have arrived at.
Mr. Pierce claims that the balance of authority in both State and national courts, as well as of reason and principle, is in favor of holding such mortgages fraudulent, per se, and void. The foundation for this holding is found, by the writer, and by the decisions adopting and enforcing it, in Twyne's case, 3 Coke, 80. In that now celebrated case Pierce was indebted to Twyne in # 400, and to C. in # 200. C. commenced an action on his debt. Pending this action, Pierce, who was possessed of goods and chattels to the value of # 300, in secret made a deed of all his goods and chattels to Twyne in satisfaction of his debt, and yet continued in possession of the same, sold some of them and marked the sheep with his own name. The deed to Twyne was held void, notwithstanding it was made for full consideration. The decision is based on the six resolutions promulgated by the court:
First--That the deed had the marks of fraud, in that it was general, not excepting apparel or anything of necessity.
Secondly--The donor continued in possession.
Thirdly--It was made in secret.
Fourthly--It was made pending the suit.
Fifthly--There was a trust between the parties, for the donor was in possession and used them.
Sixthly--It was contained in the deed that it was an honest and true transaction, an unusual statement to be inserted.
The court conclude, for these six reasons, that the deed was...
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