Perry County Bank v. Rankin , 73 Ark. 589 ( 1905 )

McCurroci-i, J.

This is a suit in replevin by appellant against appellee for recovery of possession of personal property conveyed by chattel mortgage executed by appellee to one Stone to secure a note for sum of $100, which was assigned to appellant by Stone before maturity as collateral security for a loan of money. The note was assigned by proper indorsement thereon, but there was no assignment of the mortgage.

The court directed the jury to return a verdict for appellee, because appellant failed, before the commencement of the suit, to furnish appellee a verified statement of the amount secured by the mortgage.

1. The statute regulating foreclosure of mortgages provides as follows: “Before any mortgagee, trustee or other person shall proceed to foreclose any mortgage, deed of trust, or to replevy under such mortgage, deed of trust, or other instrument, any personal property, such mortgagee, trustee or other person shall make and deliver to the mortgagor a verified statement of his' account, showing each item, debit and credit, and the balance due.” Kirby’s Dig. § 5415.

Does this statute require a sworn statement of the amount of a note secured by the mortgage, as in this case, where no payments have been made thereon? We think not.

Construing the statute literally, it applies only to an account secured by the mortgage; and to hold that it applies to a note, without credits thereon, would be to extend it beyond the spirit and reason, as well as beyond the letter of the law. Manifestly, the Legislature intended only to require a mortgagee to furnish a verified statement of an account under the mortgage, the amount of which is or might be in dispute, so as to give the mortgagor an opportunity, before suit, to pay the debt; and not to the single item represented by a note without credits which is fully identified in the mortgage, and about which there can be no dispute. The court, therefore, erred in holding that the furnishing of the verified statement is a prerequisite to the bringing of the suit.

2. It is contended, however, that appellant cannot maintain this suit for possession of the property for the reason that the mortgage has not been assigned, and that the legal title to the property is in the mortgagee.

It is the rule in this State that a mortgage deed conveys to and vests in the mortgagee the legal title to the property described, subject to be defeated by payment of the debt. Fitzgerald v. Beebe, 7 Ark. 310; Kannady v. McCarron, 18 Ark. 166; Terry v. Rosell, 32 Ark. 478; Wells v. Rice, 34 Ark. 346; Whittington v. Flint, 43 Ark. 504; Danenhauer v. Dawson, 65 Ark. 129. An assignment of the debt carries with it the lien secured by the mortgage. Wilson v. Biscoe, 11 Ark. 44; Biscoe v. Royston, 18 Ark. 508; Hannah v. Carrington, 18 Ark. 85; Pullen v. Ward, 60 Ark. 90. But it does not follow that an assignment of the debt conveys to the assignee the legal title to the mortgaged property. On the contrary, unless the mortgage also be assigned, or the legal title in some manner conveyed, it remains in the mortgagee as a trustee for the benefit of the holder of the debt secured thereby. Boone on Mort. § 90; 1 Jones on Mort. § § 818, 819; Jones, Chat. Mort. § 503 ; Ramsdell v. Tewksbury, 73 Me. 197.

In Jones on Chat. Mort. § 503, after stating the proposition that an assignment of the debt also passes the lien, it is said: “The mortgagee’s legal interest does not, however, pass by his assignment of the debt. Such assignee cannot maintain replevin in his own name for the mortgaged property; though he may, in the absence of any express or implied stipulation to the contrary, bring such an action in the name of the mortgagee, who holds, in such case, the legal title in trust for such assignee’s benefit.” A lien upon or equitable interest in personal property will not support an action of replevin for the possession. The plaintiff must have the legal title or right of possession. Gates v. Bennett, 33 Ark. 486; Bell v. Matheny, 36 Ark. 572; Thatcher v. Franklin, 37 Ark. 64; Knox v. Hellums, 38 Ark. 413; 1 Shinn on Replevin, § 188; Garrett v. Carlton, 65 Minn. 188; Rice v. Crow, 6 Heisk. (Tenn.), 28.

Opinion delivered March 11, 1905.

The peremptory instruction to. the jury was, therefore, correct, though the court erred in the reason upon which it was based. The judgment is, however, without prejudice to appellant’s right to enforce his lien in a proper proceeding not inconsistent with this opinion.

Affirmed.