Harris v. Wemple , 63 Ill. App. 577 ( 1895 )

Mr. Justice Boggs

delivered the opinion of the Court.

Corn and oats, it is manifest, will be consumed and destroyed by any use that may be made of them.

In Illinois, a provision in a chattel mortgage giving the mortgagor power to retain possession and dispose of the mortgaged property at his pleasure, renders the mortgage fraudulent as a matter of law, and void as to third persons.

Power to dispose of mortgaged property is as effectually given by a provision which empowers the mortgagor to consume and destroy it by use as by one which authorizes him to dispose of it by bargain and sale, and each is equally obnoxious to the policy of our law, relative to such securities.

The fact that the mortgagor did not exercise the power except to the extent of feeding the corn and oats to the mortgaged stock, can not avail to relieve the instrument of the legal imputation of fraud.

This imputation arose because the mortgage reserved to the mortgagor an unlawful power to use and dispose of the property. Whether the mortgagor exercised this power in Avhole or in part was wholly inconsequential.

Perhaps authority to use mortgaged grain by feeding it to stock covered by the same mortgage, would not render the mortgage objectionable as matter of law. Whether it could amount to a fraud in fact would be a question dependent upon the circumstances of the particular case. But unlimited power to use property Avhich must be consumed by use can only be regarded as a fraud in law as against third persons in Illinois.

In Indiana and other jurisdictions where the legal imputations of fraud which here obtain are excluded by statute, and the question declared to be one of fact, a different rule prevails.

Hence the decisions of the courts of those jurisdictions are not applicable.

The judgment must be and is affirmed.