Brereton v. Bennett , 15 Colo. 254 ( 1890 )

Mr. Justice Hayt

delivered the opinion of the court.

The taking of an acknowledgment before a mortgagee, who is also an officer, authorized generally to take acknowledgments of such instruments, is against the policy of the law, and an instrument so acknowledged is fraudulent and void as to other mortgage creditors. Hammers v. Dole, 61 Ill. 307.

Meyers, the party taking the acknowledgment to the Bennett mortgage, was, however, not the mortgagee named, therein. And, although it is shown that he negotiated the loan, and was at the time engaged in business as a partner with Bennett, the mortgagee, the evidence does not show that he was a party in interest to either the lien or the note.

Aside from this, the suit is brought directly upon the instruments. The mortgage, which is the basis of the plaintiff’s claim to the property, is set forth, in legal effect, in the complaint.' It is fair upon its face; and if the defendant desired to impeach it for fraud the facts relied upon as constituting such fraud should have been pleaded by the defendant in his. answer. No such plea was interposed in this case. In its absence, the instrument must be taken as valid. Jones, Mortg. § 538 ; De Votie v. McGerr, post, p. 467.

Appellant bases his claim to the right of possession of the property upon two chattel mortgages; the first bearing date June 23, 1887, and the other, September 30th of the same year. As the latter instrument was not filed for record until after the mortgage given to appellee upon the same property was recorded, appellant’s claim, founded upon the subsequently recorded instrument, is of no force as against the mortgage of Bennett.

Is appellant entitled to the possession of the property under the instrument of June 23d? By the terms of this instrument the mortgagor was to retain possession of the property until the maturity of the note and mortgage. These instruments became clue early in October. Then it became the duty of appellant to take possession of the property within a reasonable time. Appellant, however, made no effort to reduce the mortgaged property to his possession until the last of November. "Whatever may have been his rights had he acted promptly, they were forfeited by this delay, and the mortgage became, in law, fraudulent as to other mortgage creditors. By his own' negligence, his rights under the chattel mortgage became subject to those of appellee. Rhines v. Phelps, 3 Gilman, 455; Cass v. Perkins, 23 Ill. 382.

It is urged, however, that the giving of the note and mortgage of September 30th was no more than an extension of time upon the prior instruments, and that the lien of the old mortgage was thereby continued. There is no authority for allowing the lien to be- extended in this manner by the contract of the parties so as to preclude the rights of third parties. “The chattel-mortgage act is in derogation of the common law, and must be strictly construed.” Crene v. Chandler, 5 Colo. 21.

The facts relied upon by appellant were not such as to give him a right to a prior lien as against appellee. The judgment of the trial court sustaining the demurrer to the defense setting tip such facts cannot be disturbed. For the same reason, the court below properly held that the evidence of such facts was not sufficient to entitle appellant -to a judgment. The judgment in favor of appellee is accordingly affirmed.

Affirmed.