Main v. Alexander, 9 Ark. 112 (1848)

July 1848 · Arkansas Supreme Court

9 Ark. 112

Main et al. vs. Alexander.

mortgage is good between the parties, though not acknowledged and recorded, bnt under our registry act it constitutes no lien upon the mortgaged property as against strangers, unless it is acknowledged and recorded as required by the act, even though they may have actual notice of its existence.

The registry of a mortgage without acknowledgement does not constitute such constructive notice to the world as contemplated by the act.

A mortgage was executed upon a slave, and recorded without acknowledgement; afterwards the slave was attached by creditors of the mortgagor. On a bill to foreclose against the mortgagor and attaching creditors, held that the lien of the attachments was paramount to the mortgage.

Appeal from, the Chancery side of Crawford Circuit Court.

Bill to foreclose a mortgage, filed by Edward B. Alexander against John Griffith, John H. T. Main, and William M. Bennett, Joseph Bennett and Frederick Montgomery, partners under the style of William M. Bennett & Co., determined in the Crawford cireuit court, chancery side, at the August Term, 1847, before the Hon. Wm. W. Floyd, judge.

The bill alleges, in substance, that on the 30th day of April, 1S46, complainant loaned to defendant, Griffith, the sum of $150, to be re-paid on the first day of October, 1840, with nine per cent, interest. That at the time of the loan, Griffith was the owner of a negro girl named Minerva, which he had purchased of Henry A. Quesenbury; and being desirous to secure to complainant the re-payment of said money, he delivered to and deposited ivith complainant the bill of sale which Quesenbury had executed to him for said slave ; which bill of sale is copied in the bill. That at the same time, Griffith, for the purpose of securing the complainant the re-payment of said money, with interest thereon as aforesaid, executed and delivered to complainant a mortgage upon said slave, written upon the back of said bill of sale; which mortgage is also copied in the bill. That said bill of sale and mortgage were afterwards, on the 2d day of June, 1846, duly recorded in the office of the Register of Crawford county (where the bill alleges the parties resided.)

Complainant insisted that Griffith, by depositing said bill of sale with him, and executing and delivering said mortgage to him, for the purpose aforesaid, invested him with a lien on said slave, for the money advanced by him and interest, until the same should be paid; and alleges that this was the understanding of Griffith and himself when the bill of sale was so deposited, and the mortgage executed. He further insists that although said mortgage was not executed in strict conformity with the statute, that the delivery of said bill of sale, and execution of said mortgage to him, for the purpose aforesaid constituted a good and valid mortgage in equity, and invested him with a binding'lien on said slave, which could be released only by the payment of the mortgage debt. That the debt had not been payed] and Griffith was insolvent.

Complainant further alleges that defendant, Main, had commenced an action of assumpsit, in the Crawford circuit court against Griffith for $300, and caused to be issued therein a writ of attachment, which had been levied on said slave, as the property of Griffith, and the suit was then pending. That defendants, William M. Bennett & Co., had also brought an action of assumpsit against Griffith in said court, for a like sum, caused a writ of attachment to be issued therein, and levid on said slave as Griffith’s property, which action was pending. Complainant charges expressly that at the time of the commencement of said suits by attachment, as aforesaid, and long prior thereto, the said defendants, Main and William M. Bennett & Co., had full notice of complainant’s mortgage and lien on said slave as aforesaid.

The bill prayed the foreclosure of the mortgage, and the sale of the negro to satisfy the mortgage debt, &c.

Griffith made default, and a decree pro confesso was taken against him. The other defendants filed a joint and several answer, in substance as follows :

Defendants admit that complainant loaned Griffith the money, and that Griffith to secure the repayment deposited the said bill of sale with him, and executed upon the back thereof the mortgage, as alleged in the bill — that the bill of sale and mortgage were recorded; and that defendants had attached said slave as-alleged ; but they allege that although such mortgage as described in the bill may have been executed prior to the seizure of said slave under and by virtue of said writs of attachment, yet they insist that said mortgage was no lien upon said slave at the time of the seizure, because it was never acknowledged by said Griffith in manner and form as required by law.

The cause was heard on bill, answer and exhibits, and the court decreed a foreclosure of the mortgage, and a sale of the slave to satisfy the mortgage debt, according to the prayer of the bill; from which decree the defendants (except Griffith) appealed to this court.

W. Walker & Bertrand for appellants.

The lien of Alexander is subsequent to the attachment liens of Main, Bennett and others. The mortgage of Alexander is not acknowleged by Griffith, the mortgager, and its record is a matter of no moment, because the acknowledgment is indispensable before it can be put on record. The mere record of the instrument fixed no lien upon the property.

Our statute, under the head of mortgages, page 578, provides that, “ all mortgages, whether for real or personal estate shall be acknowledged before some person authorized by law to take the acknowledgment of deeds, and shall be recorded,” &c. The 2d section provides that when a mortgage (so acknowledged, &c.) shall be recorded, it shall be a lien upon the mortgaged property from the date of its filing, &c.

To obtain a lien upon property the party seekingtodo so must pursue the requirements of the law. The mode is clearly and plainly pointed out, and if a party elects not to pursue that mode, he does so at the peril of his rights, and has no cause to complain that others have been more vigilant than himself.

The following authorities have some bearing upon the point in this case. Wood vs. Owings, 1 Cranch, 248. Bend vs. Kippce el al., 3 Day's Rep. 500. Munning vs. Johnston, 3 Marshall, 221.

Turner,, contra. The delivery of the bill of sale and endorsement thereon by Griffith to Alexander, to secure the payment of the loan mentioned in the endorsement, constituted an equitable mortgage, equally binding in a court of chancery, as if the same had been executed in strict accordance with our statute law. Vide, 4 Kent 149. 2 John. Ch. Rep. 603.

And it is wholly immaterial whether the mortgage was recorded or not, if the defendants, Main and Bennett & Co. had notice of its existence at the time of the institution of their suits respectively. Vide 2 Sugden on Vendors 254, 255, 256, 257, 258, 259. 4 Kent 169. 1 Pick. 164. 4 Mass. 641. G ib. 487. 10 ib. 60. 11 ib. 158.

But the mortgage of Griffith to Alexander was recorded previous to the institution of suit and the attachment of the mortgaged slave by the defendants, Main and Bennett & Co. respectively, which operated as a notice to all the world of its existence. And though not acknowledged previous to the registration thereof, when once recorded, like all other recorded mortgages, it operated as constructive notice to the defendants, and all the world of its contents.

Notice of the existence of Alexander’s lien is^expressly charged in his Bill and not denied by the defendants.

Whatever is sufficient to put'a person upon inquiry is considered in equity as conveying notice. Vide l Paige 461. 4 Cowen 717. 1 McCord’s Ch. Rep. 395. 3 Bibb 204. 4 John. Ch. Rep. 47.

Johnson, C. J.

This is a contest between a mortgagee of a personal chattel and the attaching creditors of the mortgagor. To determine the question presented properly, it will be necessary to examine the several acts relating to mortgages and attachments, and endeavor, if possible, to place such a construction upon each as will reconcile their provisions with each other, and acomplish the design of the legislature. The 1st and 2d sections of the 101st chap, of the Revised Statutes, declare that “All mortgages, whether for real or personal estate, shall be acknowledged before some person authorized by law to take the acknowledgements of deeds, and shall be recorded, if for lands, in the county or counties in which the lands lie; and if for personal property, in the county in which the mortgager resides and that “ Every mortgage, whether for real or personal property, shall be a lien on the mortgaged property from the time the same is filed in the recorder’s office for record, and not before, which filing shall be notice to all persons of the existence of such mortgage.” It is contended that, inasmuch as the mortgage, relied upon by the complainant, was not formally acknowledged before it was admitted to record, therefore it could not operate as a lien upon the property specified in it. The language of the act, it must be conceded, is exceedingly broad and .comprehensive, and if taken in a strictly literal sense, would doubtless warrant the construction contended for by the appellants. We cannot conceive that the legislature ever entertained the idea of changing, or in any manner affecting the nature of a mortgage as between the parties to the contract. The rights of tbe partios to a mortgage, whether acknowledged and recorded or not, are precisely the same that they were before the passage of the act referred to, and the only real difference consists in the fact that although actual notice may bo shown, it will constitute no answer to the demands of strangers, and that nothing short of an actual filing for record will be recognized as such a notice as to effect his rights. Under this view of the law we consider it clear, that although the mortgage was not acknowledged by the party that made it, yet this is a matter of which he could never take advantage, and that, as between the parties themselves, the lien becomes fixed and complete by the mere execution and delivery of the instrument. It will not be pretended that the mere act of placing the mortgage upon the record without the pre-requisite of an acknowledgment could place the mortgagee in a better situation than if it had never been recorded at all, as it most clearly was not in a condition to be put upon the records of the country in the absence of such acknowledgment, and consequently its being so placed there could not constitute such a constructive notice to the world as is contemplated by the act.

Having thus determined the legal effect and operation of the mortgage in question as between the immediate parties to it, the only remaining point to be settled is as to its effect upon the rights of others. The appellants insist that, as their attachments were levied upon the mortgaged property before the mortgage was acknowledged and recorded, as required by the act, their rights thus acquired, take precedence of and override those of the mortgagee. This brings us to the main point in the ease, and upon its decision the whole of it must turn. The question is, whether the levy of the attachment merely changes the custody of the property from the hands of the mortgager and places it into the keeping of the law, for the purpose of confining it within the jurisdiction of the court and to abide the event of the attachment suit, though subject to the paramount rights of the mortgagee, or whether the act of levying the attachment before foreclosure and sale did not, ij)so fado, utterly oust the mortgagee of all the rights that he had acquired under the mortgage. We think it clear that the latter propositionis true. The attachments found the rights of the mortgagee in an inchoate and imperfect state, subject to be divested either by a subsequent purchaser or a judgment creditor, and transferred it into the custody of the law, with all its imperfections upon it, to await the final judgment of the law. The instant it passed into the custody of the law it went out of the reach of all persons having mere inchoate rights, and those rights,’if not utterly destroyed, must at least remain in abeyance until the property shall be legally released from the grasp of the attachment. The law regards a mortgage, which has not been ackdowledged and filed for record, as a fraud upon the rights of strangers, and consequently it will not countenance and uphold it in opposition to suchrights. If this view of the law be correct, and that it is, we think can scarcely admit of a doubt, it necessarily follows that the circuit court erred in rendering the decree which it did in this case. It is therefore ordered, adjudged and decreed, that the decree herein rendered by [the circuit court of Crawford county be and the same is hereby reversed, annulled and set aside with costs, and it is further ordered that the cause be remanded to said circuit court to be proceeded in according to law and not inconsistent with this opinion.