Taylor v. Barton-Child Co.

• Decision Date: 15 September 1917
• Citation: 228 Mass. 126,117 N.E. 43
• Parties: TAYLOR v. BARTON-CHILD CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

228 Mass. 126

117 N.E. 43

TAYLOR

v.BARTON-CHILD CO.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 15, 1917.

Case Reserved from Supreme Judicial Court, Suffolk County.

Suit by Violet I. Taylor against the Barton-Child Company, defended by Forest F. Collier, trustee in bankruptcy of defendant. Reserved for determination of full court upon bill of complaint, amended answer, replication, and master's report. Bill dismissed, without costs.

ASSIGNMENTS k13-FUTURE BOOK ACCOUNT-ASSIGNABILITY.

The assignment of book accounts which are to come into existence in the future in connection with an established business will not be enforced in equity against the trustee in bankruptcy, although a ‘book account’ is a chose in action.

J. J. McCarthy, of Boston, for complainant.

Forest F. Collier, of Boston, for respondent.

RUGG, C. J.

This is a suit in equity to enforce rights of the plaintiff under an assignment of book accounts made to her assignor by the defendant corporation as security for a loan. It is undisputed that on December 3, 1910, one McCarthy, who is the assignor of the plaintiff, lent to the defendant $5,000 and received its seven notes with different due dates, the most remote being June 3, 1913. As security for and in consideration of the loan, on the same day the defendant executed and delivered to the plaintiff's assignor an instrument which, it is contended, was an assignment of its present and future book accounts. Some of the notes were extended, some have been paid, and a balance remains unpaid. This bill was filed on February 2, 1914. An injunction respecting the book accounts was issued on February 13, 1914. The defendant was adjudicated a bankrupt on February 13, 1914. Its trustee in bankruptcy is defending this cause.

At the time of the loan the defendant was engaged in dealing at wholesale in butter, eggs and similar products and needed the money borrowed of the plaintiff's assignor for carrying on its business, and used it for that purpose. The book accounts at the time of the assignment were between $25,000 and $30,000, some of which were due, but the greater part of them would become due within the next 60 days.

The crucial question is whether the assignment of book accounts, which are to come into existence in the future in connection with an established business, will be enforced in equity against a trustee in bankruptcy.

It is a well recognized principle of the common law that a man cannot sell or mortgage property which he does not possess and to which he has no title. The vendor must have a vested right in personal property in order to be able to make a sale of it. ‘A man cannot grant or charge that which he hath not.’ Jones v. Richardson, 10 Metc. 481, 488;Moody v. Wright, 13 Metc. 17, 46 Am. Dec. 706; Leverett v. Barnwell, 214 Mass. 105, 109, 101 N. E. 75.

The ground of our decisions may be stated shortly. There can be no present conveyance or transfer of property not in existence, or of property not in the possession of the seller to which he has no title. A sale of personal chattels is not good against creditors unless there has been a delivery. Manifestly there can be no delivery of chattels not in existence. In order that after-acquired chattels may be brought under the lien of a mortgage, or of hypothecation, there must be some act of the parties subsequent to the time when such chattels come into existence and into the ownership and possession of the mortgagor. The mortgage is held not to have the effect of changing the title to after-acquired chattels without some further act of the parties.

There is an exception at the common law to the effect that one may sell that in which he has a potential title although not present actual possession. The present owner might sell the wool to be grown upon his flock, the crop to be harvested from his field or the young to be born of his herd, or assign the wages to be earned under existing employment. Kerr v. Crane, 212 Mass. 224, 229, 98 N. E. 783,40 L. R. A. (N. S.) 692;St. Johns v. Charles, 105 Mass. 262; Farrar v. Smith, 64 Me. 74, 77; McCarty v. Blevins, 5 Yerg. (Tenn.) 195, 26 Am. Dec. 262; Dugas v. Lawrence, 19 Ga. 557. But see now Sales Act, St. 1908, c. 237, § 5(3). That principle of the common law has never been carried so far as to include the case at bar. The catch of fish expected to be made upon a voyage about to begin cannot be sold. Low v. Pew, 108 Mass. 347, 11 Am. Rep. 357. There can be no sale of the wool of sheep, the crop of a field, or the increase of herds not owned but to be bought, and there can be no assignment of wages to be earned under a contract of employment to be made in the future. Eagan v. Luby, 133 Mass. 543; Citizens' Loan & Trust Co. v. Boston & Maine R. R., 196 Mass. 528, 531, 82 N. E. 696,14 L. R. A. (N. S.) 1025, 124 Am. St. Rep. 584,13 Ann. Cas. 365.

It is also the established doctrine in this commonwealth that a mortgage of future acquired property will not be enforced in equity before actual possession taken by the mortgagee as against persons subsequently acquiring an interest therein for value and having possession. That has long been settled although the contrary rule prevails more widely. Federal Trust Co. v. Bristol County St. Ry. Co., 222 Mass. 35, 45, 46, 109 N. E. 880, where cases are collected. It would be anomalous of a court governed by these principles as to sales and mortgages of future acquired goods and chattels to hold that there could be an assignment of future acquired book accounts valid and enforceable under circumstances where a like attempt to hypothecate future acquired chattels would be held unenforceable.

A book account is a chose in action. It is ‘a right not reduced into possession’, which ‘can only be reduced into beneficial possession by an action or suit.’ Haskell v. Blair, 3 Cush. 534, 535. It is property. While some of its...