Heyland v. Badger

By the Court, Sawyer, C. J.: This is an action in the nature of an action of trover at common law, to recover the value of a quantity of hay claimed to have been wrongfully converted by defendant. Plaintiff, in July, 1863, stored some sixty-two tons of hay in defendant’s warehouse, and from time to time, while the Hay was thus stored, obtained money from the defendant to the amount of six hundred dollars, for which he gave his obligation in writing, payable in coin, with two per cent per month interest, when the hay should be delivered out of the warehouse. Subsequently, in September, plaintiff obtained two hundred dollars more from defendant, and executed to him a bill of sale of the hay, absolute on its face. During the months of January, February, and March following, defendant sold the hay at about twenty dollars per ton—the value of the hay at the time. Sometime in March or April, after all the hay except about two tons had been sold, plaintiff demanded the hay of defendant, but did not tender the [410]amount due for the money before obtained. The value of hay had at that time risen to from forty to forty-five dollars per ton. Plaintiff claimed that the bill of sale was executed as a security for the money borrowed, while defendant claimed that the transaction was an absolute sale. The Court found the conveyance to be a security for money, and that the transaction was strictly a chattel mortgage, as distinguished from a pledge, and as a conclusion of law, that plaintiff cannot recover the value of the hay in the action adopted.

There is a well settled distinction in the law between a pledge and a chattel mortgage, and as to this distinction there does not appear to be any conflict in the authorities. In the case of a pledge the title remains in the pledgor, but in the case of a chattel mortgage, whether possession of the chattel be delivered to the mortgagee, or not, the title passes to the mortgagee, subject to be defeated upon performance of the condition; and in case of a breach it becomes absolute at law in the mortgagee.

The title being in the mortgagee, he is entitled to the immediate possession, even as against the mortgagor, unless the parties otherwise stipulate. The rule is well stated and numerous authorities cited in Tannahill v. Tuttle, 3 Mich. 110. In Wood v. Dudley, 8 Verm. 435, the difference between a mortgage and pledge is thus stated: “ The distinction between a mortgage and pledge is important, as the effects of each are widely different. In a mortgage of a personal chattel the general property passes to the mortgagee, subject to be redeemed according to the terms of the contract; if not redeemed within the time limited, the property becomes absolute in the mortgagee. The consequence is that the mortgagee may sell or otherwise dispose of the chattel immediately. But in case of a pledge the general property does not pass, but remains in the pawnor—the pawnee having only a special property or lien; and in this case, although the pledge may not be redeemed by the time limited, yet it retains the character of a pledge still.” (See, also, Fuller v.