tions as to visible defects and imperfections, whether discovered or not, unless such delivery and acceptance is accompanied by some warranty of quality manifestly intended to survive acceptance. It is the better view that the buyer to whom the property has been delivered may rescind the contract for breach of warranty, by a reasonable return of the property, if it can be returned to the seller in the same state in which it was delivered to the buyer. It may be returned in a defective condition, if the defect is owing to the breach of warranty itself. In Smith v. Hale a buggy was sold with a warranty that the springs were strong. One of the springs broke while the buggy was in the buyer's possession. It was held that the buyer might rescind the contract and return the buggy. "The breaking of the spring was just what the plaintiff had warranted against." A number of states hold that there can be no return of the goods for breach of warranty, in the absence of fraud.o 529. 8 'Studer v. Bleistein, 115 N. Y., 316. 158 Mass., 178. "Thornton v. Wynn, 12 Wheat. 183, 193; Brigg v. Hilton, 99 N. Y., 517, CHAPTER VI. CHATTEL MORTGAGES. §1. Chattel mortgage distinguished from sale with right to repurchase. A chattel mortgage is often hard to distinguish from a sale with the right to repurchase, because they are both in form conditional sales and in courts of law are treated the same. But in equity, if the transaction was to secure a debt, it is a mortgage, so the important fact whether it was so intended has to be determined. Where it is clear there is a debt secured, the transaction is a mortgage, of course; and, if it is merely shown there is a debt between the parties, the presumption is that the transaction is a mortgage, though this presumption may be overcome by clear evidence that a conditional sale was really intended. Inadequacy of price also indicates a mortgage. Whenever the evidence is such that the court is doubtful what was intended it always presumes the transaction is a mortgage. § 2. Chattel mortgage distinguished from pledge. There are two important distinctions between a chattel mortgage and a pledge. The first of these is that in a chattel mortgage the legal title passes to the mortgagee, while the pledgor retains the title, a pledge being a mere giving of the possession of the property to hold as security. The second distinction is that the pledge from its nature cannot exist, unless possession is given to the pledgee, while the fact that the possession is retained by a mortgagor has no effect whatever on the validity of the mortgage. In fact, chattel mortgagors commonly keep possession of the mortgaged property. When the transaction is oral and possession is delivered over, whether it is a pledge or a mortgage is a question of intention of the parties, the presumption being in favor of a pledge. When there is an instrument in the form of a mortgage, however, the transaction cannot be shown to be a pledge. §3. Form of chattel mortgages. In many states a parol mortgage is not enforceable because a section of the statute of frauds requires all contracts for the sale of goods, wares, and merchandise, when amounting to more than a certain sum in value, to be in writing. Where such a statute is in force a chattel mortgage must be in writing if for a sum within the statute. Another difficulty about a parol mortgage is that it cannot be recorded, and recording is required by statute in most states to protect the mortgagee from subsequent purchasers who have no notice of the mortgage, if possession of the property is retained by the mortgagor. A chattel mortgage usually consists of a bill of sale of the goods, with a condition attached. No particular form of words is required, it being enough if the language is sufficient to pass title to personal property. Many states, in order to prevent clandestine bills of sale, made to defraud creditors of the mortgagor, require that the mortgagor attach his affidavit to the effect that the mortgage was made in good faith, in order to make it valid except as between the parties. A form of chattel mortgage is as follows: CHATTEL MORTGAGE. KNOW ALL MEN BY THESE PRESENTS, That William Stone, of the City of Chicago in the County of Cook and State of Illinois in consideration of the sum of One Thousand Dollars, to him paid by John C. Davis of the County of Cook and State of Illinois, the receipt whereof is hereby acknowledged, does hereby grant, sell, convey and confirm, unto the said John C. Davis and to his heirs and assigns, the following Goods and Chattels, to-wit: Two bay horses, weight about fifteen hundred pounds each; one gray horse, weight about one thousand pounds; one wagon, three sets of harness, together with all and singular the appurtenances thereunto belonging, or in any wise appertaining. TO HAVE AND TO HOLD all and singular the said goods and Chattels, unto the said Mortgagee herein and his heirs, executors, administrators and assigns, to his and their sole use forever. And the Mortgagor herein, for himself and for his heirs, executors and administrators, does hereby covenant to and with the said Mortgagee, his heirs, executors, administrators and assigns, that said Mortgagor is lawfully possessed of the said Goods and Chattels, as of his own property; that the same are free from all encumbrances, and that he will, and his executors and administrators shall, warrant and defend the same to John C. Davis, the said Mortgagee, his heirs, executors, administrators and assigns, against the lawful claims and demands of all persons, and will keep the said Goods and Chattels insured against loss by fire for the full insurable value thereof, in such companies as the holder of the note hereinafter mentioned, may direct, and make the loss, if any, payable to, and deposit the policies with, the holder of said note as further security for the indebtedness hereinafter mentioned. PROVIDED, nevertheless, that if the said Mortgagor, his executors or administrators, shall well and truly pay unto the said Mortgagee, his executors, administrators or assigns, one year from this date the sum of One Thousand Dollars ($1,000.00) with interest at five per cent per annum, payable semi-annually, for which said William Stone has given his promissory note, dated this day and payable one year hence to the order of the said John C. Davis, then this mortgage is to be void, otherwise to remain in full force and effect. AND PROVIDED, also, that it shall be lawful for the said Mortgagor, his executors, administrators and assigns, to retain possession of the said GOODS AND CHATTELS, and at his own expense, to keep and use the same, until he or his executors, administrators or assigns, shall make default in the payment of the said sum of money above specified, either in principal or interest, at the time or times, and in the manner hereinbefore stated. And the said Mortgagor hereby covenants and agrees that, in case default shall be made in the payment of the notes or either of them, or any part thereof, or the interest thereon on the day or days respectively on which the same shall become due and payable; or if the Mortgagee, his executors, administrators or assigns, shall feel he is insecure or unsafe, or shall fear diminution, removal, or waste of said property; or if the Mortgagor shall sell or assign, or attempt to sell or assign, the said Goods and Chattels, or any interest therein, or shall fail or neglect to keep the said Goods and Chattels insured and to deposit the policies, as aforesaid; or if any Writ or any Distress Warrant shall be levied on said Goods and Chattels or any part thereof, then, and in any or either of the aforesaid cases, all of said note and sum of money, both principal and interest, shall, at the election of the said Mortgagee, his executors, administrators or assigns, without notice of said election to anyone, become at once due and payable; or without such election by said Mortgagee the said Mortgagee, his executors, administrators or assigns, or any of them, shall thereupon have the right to take immediate possession of said property, or any portion thereof, and, for that purpose may pursue the same wherever it may be found, and may enter any of the premises of the Mortgagor, with or without force or process of law, wherever the said Goods or Chattels may be, or supposed to be, whether in this County or State, or elsewhere, and search for the same, and if found, to take possession of, keep and store the same on said premises till sold; or remove, and sell, and dispose of the said property, or any part thereof at public auction, to the highest bidder, after giving five days' notice of the time, place, and terms of sale, together with a description of the property to be sold, by notices posted up in three public places in the vicinity of such sale; or at private sale, with or without notice, for cash or on credit, as the said Mortgagee, his heirs, executors, administrators or assigns, agents or attorneys, or any of them, may elect, and, out of the money arising from such sale, to retain all costs and charges for pursuing, searching for, taking, removing, keeping, storing, advertising, and selling such Goods and Chattels, and all prior liens thereon, together with the amount due and unpaid upon said note, rendering the surplus, if any remain, unto said Mortgagor, or his legal representatives. It is expressly agreed, that in case of the foreclosure of this Mortgage by proceedings in court, or in case said Mortgagee, his heirs or assigns, shall be a party to any suit by reason of this Mortgage, he or they shall be allowed and paid all reasonable costs, attorney's fees, expenses and charges incurred, not to exceed the sum of One Hundred ($100.00) Dollars, and the same shall be and is hereby made a further charge and lien upon said Goods and Chattels. WITNESS The hand and seal of the said Mortgagor, this fifth day of October in the year of our Lord one thousand nine hundred nine. Signed, Sealed and Delivered in Presence of (Signed) William Stone. [SEAL] (Signed) Samuel Adams. Should be acknowledged and recorded according to the laws |