Barnard v. Eaton

Shaw, C. J.

This is an original petition, in the nature of an appeal from a decision and adjudication of George W. Warren, esquire, a master in chancery for this county, made on the 22d day of August, 1845. The case comes before this court on an agreed statement of facts.

From this statement it appears, that Charles H. Stearns was. an insolvent debtor; that proceedings in insolvency against him were duly instituted before the master; and that at the first meeting of creditors, held on the 11th of August, 1845, Lilley Eaton and Thomas Sumner, the respondents, were duly chosen assignees of the estate and effects of the insolvent; that at the same meeting, Benjamin F. Barnard presented a petition to the master, setting forth a note and mortgage of personal property, to secure the same, made to him by the insolvent debtor, which are particularly described in the petition, and in the agreed statement of facts, praying that an order might be passed by the master, directing the property embraced in the mortgage to be sold, and the proceeds applied to the payment of the petitioner’s note, pursuant to the provisions of the insolvent act of 1838, c. 163, § 3, and that the balance of such note left unpaid after the application of such proceeds, if any, might be proved as a debt against the estate of the insolvent.

After notice to the parties interested, and full hearing on this petition, the master declined granting the same; and, at a court held on the 22d of August, 1845, adjudged that it be disallowed. On the 30th of the same August, the petitioner gave notice to the master of his desire to appeal from the *301 adjudication, and requested that the claim might be entered on the minutes of the proceedings. The present petition to this court bears date the 14th of October, 1845; and, at the same term of the court, the respondents, protesting against the petitioner’s right of appeal, appeared and filed an answer.

The first question, in the present case, is, whether the court have jurisdiction to revise the judgment of the master. It is contended, on the part of the respondents, that as the statute gives no appeal from a decision of the master, in a case like this, the court has no appellate jurisdiction, and that, upon the principle of res judicata, the decree of the master must be taken to be final.

So far as this proceeding is to be strictly considered as an appeal, we think the objection is well taken. But, although the proceedings before the master were in form the claim of an appeal, yet this petition bears all the characteristics of an original proceeding, and if the court have jurisdiction to hear and act upon it, as an original petition, the respondents have consented to appear, as indeed they would be bound to do, "if duly served with the order of notice thereon, of which no question is made. And as an original bill or petition, the court are of opinion, that they have jurisdiction to hear and consider it, under the eighteenth section of the original insolvent act of 1838, c. 163, which gives this court not only a general superintendence and jurisdiction, as a court of chancery, in all cases arising under the act, with power to make general rules and prescribe forms, but also in all cases not otherwise specially provided for, upon the bill, petition, or other proper process, of any party aggrieved by any proceedings under the act, to hear and determine the case, as a court of chancery, and to make such order and decree thereon as law and justice may require.

This power is given to this court in broad terms, and it seems to us, that it was intended to be so given, in order to secure a consistent and uniform application of the law, in all cases, which could not be particularly foreseen. The more simple remedy of an appeal was given, in the cases most *302 likely to occur frequently, those of the proof of debts ; but as there would be probably many questions springing up in the administration of a new and extensive system, it was the policy of the law to allow an application to this court, by the summary process of petition, or the more elaborate proceeding on a bill in equity, as the nature of the case might require. Wheelock v. Hastings, 4 Met. 504 . And this power has been exercised in several other cases, arising before judges of probate and masters in chancery. Eastman v. Foster, 8 Met. 19 . Under this provision, the court are of opinion, that this power extends to the revising of the decisions of judges of orobate and masters in chancery, in proper cases, and where the statute has given no appeal, nor indicated any mode in which relief shall be had, and that they have jurisdiction in the present case.

2. The other questions arise upon the deeds and documents referred to, and upon the agreed statement of facts. We do not perceive, that the fact of the minority of the plaintiff, when he entered into copartnership with the insolvent, can affect any of the questions before us. It is agreed, that he brought money into the copartnership; that he sold out to the insolvent, upon a dissolution; that the property was actually delivered to the insolvent and went into his exclusive possession ; and that he afterwards mortgaged it to the plaintiff. The validity of the sale to the insolvent did not depend wholly upon his ability and legal capacity to execute a bill of sale under seal; but it took effect from the delivery of the goods, and his title thereto has never been drawn in question. None of the contracts and stipulations entered into by him, have been avoided on the ground of infancy, and neither the insolvent nor his creditors have reason to complain of the plaintiff on that score.

It was intimated in various stages of the argument, that this mortgage was fraudulently made, to delay or defraud creditors, or with a view to give a fraudulent preference in violation of the insolvent laws. But we are of opinion, that this Question is not open upon the facts. Prim.a facie the *303 note and mortgage were given for a good and valuable consideration, at a fair and adequate value ; and if the respondents had intended to impeach the transaction, on the ground of a fraudulent intent and purpose, or a secret trust to hold the property against the just claims of creditors, the averments to that effect should have been set .forth more particularly in the answer, and all the evidence on which such charge rested should have been laid in some form before the court. Taking the facts as stated, we can see no pretence for setting aside the mortgage, on the ground of fraud. Marden v. Babcock, 2 Met. 99 ; Briggs v. Parkman, 2 Met. 258 .

The first exception taken to the validity and legality of the petitioner’s mortgage is, that there is no sufficient description to identify the goods embraced in it. This is rather an objection to the application of the mortgage to any particular goods claimed than to the validity of the mortgage itself. A mortgage is an executed contract; a present transfer of title, although conditional and defeasible; it can therefore only bind and affect property existing and capable of being identified at the time it is made ; and whatever may be the agreement of the parties, it cannot bind property after-wards to be acquired by the mortgagor. Jones v. Richardson, 10 Met. 481 ; Winslow v. Merchants Ins. Co. 4 Met. 306 .

It is manifest, therefore, that whatever were the terms of this mortgage, it could not apply to goods not then in existence, or capable of being identified, or to goods intended afterwards to be purchased to replace those which should be sold. If, therefore, at the time when this claim was made, none of the goods were capable of being identified, the mortgage must fail, not because it was void in its origin, but because there is no subject to which it can now apply. But if some of the goods can be identified, to that extent the objection is obviated, and to that extent, therefore, the claim of the plaintiff is valid.

Another objection to the plaintiff’s title is, that by the terms of the mortgage, the mortgagor retained possession with *304 a power to sell, and that he did in fact sell, by putting in the mortgaged property, soon after the mortgage, as his share towards the stock of a partnership entered into by him with Thwing. This, at most, can be regarded as the sale of an undivided part only to Thwing, the mortgagor retaining the other part; but we think it was not a sale in the ordinary course of business, where a retail trader mortgages his stock with an intent to carry on and not suspend his business, as in the case of Briggs v. Parkman, 2 Met. 258 , and that the sale was not within the power.

But whatever ground Thwing might have, to urge these objections against the claim of the mortgagee, they cannot, we think, be taken by these respondents, who claim under the insolvent, the mortgagor, and themselves insist on their right to hold the mortgaged goods as his property, and to take and apply the proceeds thereof to the satisfaction of his general creditors.

It is further insisted, on the authority of Jacobs v. Latour, „ 5 Bing. 130, that by attaching the specific goods, the plaintiff waived his lien, and is estopped from afterwards setting it up. In the case cited, the specific property was taken in execution by order of the creditor; when his lien, if he had any, consisted solely in his right to retain for services done, and depended entirely upon his actually retaining possession.

But the title of a mortgagee is not that of a mere lien, in the strict legal sense of that term, dependent on the retaining of possession ; but a real interest, defeasible and conditional, it. is true, but still a proprietary interest in the thing. But another answer is, that it does not appear, that any order was given to attach any of the mortgaged goods specifically, but only to attach his, the defendant’s goods, which might have been done with a view to attach those goods, which had been purchased and added to the stock after the mortgage, and which the mortgage would not hold.

On the whole, the court are of opinion, that the decision of the master must be reversed, and that the petitioner is entitled to an order for the sale of the mortgaged goods as prayed for.