Bigelow v. Smith , 84 Mass. 264 ( 1861 )

Hoar, J.

The plaintiffs’ exceptions show that Townsend ia Rich, who were the owners of the personal property in controversy, mortgaged it to Paige & Hosmer, citizens of Connecticut, on the 19th of January 1860, by a mortgage which was fraudulent as against creditors. On the 2d of February 1860, Townsend & Rich went into insolvency, the first publication being on February 5th 1860, and the defendant was chosen their assignee, and took possession of the mortgaged property. On the 5th of March 1860, the defendant filed a bill in equity, praying for an injunction against any transfer of the mortgage, but no service was made, except by a publication in a newspaper. On the 22d of May 1860, before either of the notes secured by the mortgage fell due, Paige & Hosmer transferred the notes, and assigned the mortgage to the plaintiffs in New York, the plaintiffs having no notice of the fraud or insolvency, or of the bill in equity. The judge who presided at the trial instructed the jury that these facts constituted a good defence to the action, and we are of opinion that this instruction was right.

The principle upon which the plaintiffs rely is certainly well settled, that a purchaser in good faith from the fraudulent grantee of a debtor acquires a good title against the creditors of the original grantor; but it has no just application to the relation between these parties. All the cases cited relate either to real estate, or to conveyances made to the innocent grantee before any attempt on the part of creditors to set them aside as fraudulent. The latter class of cases does not touch the point in controversy; and the distinction between real and personal estate in respect to it is a vital one. The title to real property can only be transferred by deed. When conveyed in mortgage, if the condition is not performed, the mortgagee has the title until he has released or conveyed it. It is the object of our registration laws to protect a purchaser who takes a conveyance in good faith according to the apparent title on the record. But no deed dr writing is made by law essential to the transfer of title to personal property. A purchaser must take it upon his vendor’s warranty of title. A mortgage duly recorded gives certain rights to the mortgagee, created and defined by the statute ; but the statute does not change the nature of the property, nor require that all subsequent changes in title shall be shown upon the record. An assignment or release of the mortgage is not required to be recorded. The mortgagor and mortgagee may join in a sale, which will give a perfect title to the chattel sold, and the record furnish no evidence of it. A creditor of the mortgagor may attach the mortgaged property, and acquire a right to apply it to the satisfaction of his debt, unless the mortgagee interposes seasonably for the assertion of his rights. The mortgagee may be summoned as the trustee of the mortgagor, and the validity and extent of the mortgage may be tried in that form.

The effect of the facts proved at the trial upon the conflicting claims of the parties is” clearly this, that when Paige & Hosmer assigned the mortgage to the plaintiffs, they had no title to the mortgaged property, and could convey nothing by the assignment. By St. 1838, c. 163, § 5, the assignment in insolvency conveyed to the defendant all property of Townsend & Rich which might have been taken in execution upon a judgment against them, at the time of the first publication of the notice of the issuing of the warrant; and by St. 1856, c. 284, §§ 26, 27 it conveyed all property which had been alienated by them in violation of the provisions of the statutes relating to insolvency. The fraudulent mortgage by Townsend & Rich was not void, but voidable; and if the plaintiffs had acquired their title by a purchase in good faith for a valuable consideration, before any act done to avoid the mortgage, they would have stood on a different and stronger ground. But the defendant, in his capacity as assignee, had avoided the mortgage. He had taken possession of the property, under an absolute claim of right, and had converted it to his own use, before the purchase by the plaintiffs was made. He stands in the same position as a creditor of Townsend & Rich would have done, who had seized and sold the mortgaged property on execution, on the ground that the mortgage was fraudulent at common law, before the plaintiffs’ title accrued. He has the elder and better title.

The exception to the admission of the testimony of Rich, on the ground that he was not a competent witness to invalidate his own conveyance, must also be overruled. The rule by which, in this commonwealth, parties to negotiable promissory notes and bills of exchange have been excluded from giving testimony to invalidate the instrument to which they had given circulation by their signature, has never been extended to questions respecting the title to property.

Exceptions overruled.