Shaw v. Wilshire , 65 Me. 485 ( 1876 )

Barrows, J.

The legislature of this state have endeavored, by various enactments, to prevent the' perpetration of those frauds upon creditors and bona fide purchasers which are liable to be practiced if the owner of personal property, still retaining the possession of it, is permitted to encumber it with mortgages or liens of which no public notice is given.

In B. S., c. 91, § 1, it is declared that “no mortgage of personal property, to secure payment of more than thirty dollars, shall be valid against any other person than the parties thereto, unless possession of such property is delivered to and retained by the mortgagee, or the mortgage is recorded by the clerk of the town or plantation, organized for any purpose, in which the mortgager resides.”

Careful provision as to the place of record is made for cases in which all or any of the mortgagers reside without the state, or in an unorganized place within it, or where the mortgage is made 'by a corporation.

After it became apparent that, in place of taking mortgages to secure the purchase money, sellers of chattels were making a practice of stipulating in the contract of sale that the property should remain theirs ■ until the price was paid, and the court had held in Sawyer v. Fisher, 32 Maine, 28, and Gushee v. Robinson, 40 Maine, 412, that the statute did not extend to liens thus created because there was no mortgage from the debtor and no unconditional transfer of title from the vendor, the legislature again intervened with the requirement now embodied in R. S., c. Ill, § 5, invalidating every such agreement where a note is given for the purchase money, unless it is made and signed as part of the note and unless recorded like mortgages of personal property, when such note exceeds thirty dollars.

Various other enactments show the design of the legislature that there shall be public notice of all such incumbrances or liens if they are to be maintained against any except the parties creating them. See the provisions for recording attachments of personal property too cumbrous to be moved, as well as those of real estate, and for the record of leases for terms longer than seven years. R. S., c. 81, § 24, c. 73, § 8.

We do not feel at liberty to permit transactions which are confessedly designed by the parties to operate only as mortgages and to which they intend to give no other force or effect, when not recorded in conformity with the requirements of the statute, to take effect as absolute conveyances as against subsequent bona fide purchasers, merely because their form only partially represents their acknowledged purpose.

Unless the conveyance to the plaintiff can take effect as a mortgage in accordance with the design of the parties to it, it cannot be held operative to pass the title at all.

It is only by recognizing its true character as a mortgage or as evidence of a pledge that one of these anomalous instruments can be regarded as valid when it comes in conflict with the rights of those who have paid their money for the property to the general owner in possession.

The transfer and delivery of this property to the plaintiff and the receipted bill of parcels which accompanied it were not designed to constitute a sale by the parties to it. The plaintiff himself so expressly testifies. It was meant only to take effect as security for an indebtment that was not discharged or regarded as paid pro tanto.

Supposing it to have been done in perfect good faith, the transaction constitutes either an equitable mortgage, or a pledge of the property in question, and nothing more. If an equitable mortgage, we are brought to the conclusion that it is within the requirements of the statute and should be recorded, in order to make it valid as against a-subsequent bona fide purchaser.

In construing the statute which requires all mortgages of personal property exceeding thirty dollars to be recorded, it is the substance, intent, design and effect of the instrument, and not its form merely, which is to be regarded.

We cannot sanction what we think would amount to a palpable evasion of the statute by giving the effect of a duly recorded mortgage to an unrecorded instrument which the grantee himself declares was intended for security only. We think it would open a wide door to fraud and deprive bona fide purchasers of the protection which the statute was designed to afford.

The only decision to which our attention has been called, which sets form above substance to' this extent, Knight v. Nichols, 34 Maine, 209, must be considered as overruled on this point. We see no reason to discriminate between an equitable mortgage and one in which the condition is more fully expressed. Upon the plaintiff’s own version it was at the best, but a mortgage, and the statute requires that all mortgages of that amount shall be recorded.

There is.another view of the case which brings us to the same result upon the familiar principle, that even if the presiding judge was in error, in treating the document under which the plaintiff claimed title, as a mortgage, and thereupon holding that a record was necessary to make it available against Winn, the error was an immaterial one, because upon any legal construction of the instrument the plaintiff could be in no better condition.

There is a class of cases in which it has been held that a receipted bill of parcels, accompanied with a formal delivery and designed to constitute security for a debt, amounts only to a pledge of the property, of which the pledgee must retain the possession if he would make good his right to it against bona fide purchasers or creditors of the party who pledges the property to him. Thus regarded, tbe case falls within the doctrine laid down by our own court in Eastman v. Avery, 23 Maine, 248, and Beeman v. Lawton, 37 Maine, 543; and that of Massachusetts, Whitaker v. Sumner, 20 Pick., 399; Hazard v. Loring, 10 Cush., 267, and Walker v. Staples, 5 Allen, 34.

If the bill of parcels which the plaintiff received, coupled with the evidence as to the purpose for which it was made and as to the delivery of the property, be deemed to amount to proof of a pledge only and not a mortgage, then the conceded facts respecting the permission given by the plaintiff for the return of the property to the possession of the pledgeor would work the destruction of his rights as effectually as the ruling complained of.

In neither view of the case, can the plaintiff’s claim to hold the property as security be regarded as available against that of Winn.

Various dicta in cases of foreign attachment, which at first glance might seem to be in conflict with our conclusion here, will be found to be inapplicable because of the different nature of the questions under consideration. Exceptions overruled.

Walton, Dickerson, Daneorth, Virgin, Peters and Libbey, JJ., concurred.