§ 4. Property subject to chattel mortgage: Fixtures. The general rule is that any personal property, which is subject to present sale, is subject to chattel mortgage; for a chattel mortgage is in form a conditional sale. There arises a great deal of difficulty as to chattel mortgages on fixtures. Fixtures include a vast variety of articles which are more or less firmly attached to land, or to buildings on land, and in law, by such attachment, cease to be chattels and become a part of the real estate. (See Landlord and Tenant, Chapter IX, § 22.) A chattel mortgage may be given before attaching the chattel to the land, but, after attaching, the title cannot be in the chattel mortgagee because he has a chattel mortgage only and the articles covered have changed their character and become real estate. The chattel mortgage does not amount to, nor was it intended as, a mortgage on real estate, and therefore, when the fixture is attached to the land, the title to it is in the land owner. But such a chattel mortgage is good in equity between the parties. Suppose, however, the land to which the mortgaged chattels are attached is mortgaged. Here a conflict arises between the two mortgagees. Where the real estate mortgage was in existence at the time the chattels were attached to the land, the rule is that the chattel mortgagee has a right in equity to a lien to the extent to which the attachment of the chattels or fixtures increases the value of the land; for the real mortgagee did not rely on this additional value when he took his mortgage. There are some courts, however, which hold that when the fixtures are attached they become a part of the realty, subject to the mortgage on the land; and, even though the parties to the chattel mortgage agree that they shall remain chattels, this agreement does not affect the right of the real mortgagee.

§ 5. Chattel mortgage of future property. A chattel mortgage, being in form a sale on condition, cannot cover property to be acquired in the future; for, as a general rule, one cannot make a present sale of an article he does not own. (See Chapter V, §§ 24-27.) To illustrate, one cannot give a legal mortgage on a stock of goods in a store where goods are being constantly sold and replaced with new purchases, so as to cover the goods purchased after the mortgage was given. The attempt to make such

a mortgage is sufficient to give a lien in equity on the after-acquired goods, but, this being only an equitable right, is not good against subsequent purchasers for value, without notice of such right.1

§ 6. Description of property. The property covered by a chattel mortgage should be described so particularly that it can be identified. If this description is indefinite, extrinsic evidence cannot be used to show what property is really covered.

§7. Description of mortgage debt. The obligation secured by a mortgage may be pre-existing, contemporaneous, or one to arise in the future. The debt must be so definitely described and limited in the mortgage, that it may be recognized and distinguished from other debts.

§ 8. Execution of chattel mortgage. The statute of frauds requires written instruments to be signed by the party to be charged, and this statute applies to chattel mortgages. Consequently, the instrument should be signed by the mortgagor.

§ 9. Formalities required as against innocent purchasers of mortgaged property: Change of possession. By agreement or permission of the mortgagee, the mortgagor is usually allowed to remain in possession of the mortgaged property. In many states there is in such cases a presumption of fraud, which must be explained in order to protect the mortgagee. In some the presumption of fraud is conclusive. The mortgagee is, of course, protected where he actually takes and continues in the possession of the mortgaged property. In most or all states this question is now obsolete, on account of the existence of recording statutes, described below.

§ 10. Same: Recording acts. In order to enable a party to make a valid chattel mortgage and retain possession of the mortgaged property, recording laws are in force in most of the states which provide that, if a chattel mortgage is not recorded or filed according to the requirements of the statute, it shall not be valid as against subsequent purchasers and creditors if the mortgagee does not take possession. Anyone interested, by search

1 Holroyd v. Marshall, 10 House of Lords Cases 191.

ing the chattel mortgage records, can find out whether personal property is mortgaged, and, if no mortgage appears on record, can safely proceed to purchase or take a mortgage on such property in the owner's possession. A mortgagee, on the other hand, by recording or filing his mortgage, can protect himself against subsequent bona fide purchasers and creditors, for the chattel mortgage record is constructive notice of his mortgage as to all third parties. If the mortgagor resides in the state, the mortgage must be recorded in the county where he resided when it was executed, or, by some statutes, in the county where the property is located; if he lives outside the state, it must be recorded where the mortgaged property was located when the mortgage was executed. The statute usually provides that when there are several mortgagors, some residents of the state and some non-residents, the mortgage must be recorded in the county or counties where the resident mortgagors reside, and also in the county where the property is located when the mortgage was executed. When a mortgage covers both real and personal property it should be recorded both in the real mortgage records and in the chattel mortgage records.

§ 11. Same: Delivery after failure to record. When a chattel mortgage is not recorded, it is generally made valid, under the recording laws, if the property is delivered to the mortgagee before any third parties have acquired adverse rights in it. Delivery of the mortgaged property to the mortgagee not only makes an unrecorded chattel mortgage valid as to third parties, but also covers any indefiniteness in the description of the goods in the instrument, for, after delivery to the mortgagee, there is no doubt as to the goods intended to be covered by the mortgage.3

§ 12. Mortgagor's right to sell or transfer mortgaged property. Whatever right the mortgagor has in the mortgaged property he may transfer or sell, subject, of course, to the mortgage. Since the mortgagor can sell his interest in the mortgaged property, it follows that he may give a subsequent mort

Stewart v. Platt, 101 U. S. 731.

Morrow v. Reed, 30 Wis. 81.

gage on it. When a chattel mortgage is given by a merchant or shopkeeper on a stock of goods in his store, there is usually an understanding that the mortgagor is to continue the business. He must then have the power to sell goods free from the lien of the mortgage. Such mortgagee usually expressly gives the mortgagor power to sell goods. A parol agreement that he may sell goods is sufficient, or power to sell may be implied from other terms of the mortgage. If the mortgagee, when there is no such power to sell, express or implied, knows the mortgagor is selling goods and does not try to prevent such sales, he will be estopped from denying their validity.*

§ 13. Assignment of mortgage by mortgagee. The mortgagee may assign the mortgage. Such assignment, to be legal, should be in writing or by a transfer of the instrument itself. But an assignment of the mortgage, without an assignment of the debt also, is a nullity, for the mortgage is a mere incident of the debt. On the other hand, an assignment of the debt should also include a formal assignment of the mortgage securing it.

§ 14. Foreclosure of a chattel mortgage under power of sale. Chattel mortgages usually contain an express power of sale, which may be exercised by the mortgagee after default. In most states, statutes provide that such sales shall be public after due notice has been given by publication of the time and place of sale. Such statutes must be strictly followed. In the absence of statute the only requirement as to a sale, under a power in a chattel mortgage, is that the sale be made with good faith and fairness as to the mortgagor.5 The sale may be public or private, and notice to the mortgagor that such sale is to take place, though usually required, is not everywhere necessary. mortgaged goods may be sold in a lump, or in parcels; but, if sold in parcels, the sale must be ended as soon as enough is realized to satisfy the mortgagee's claim, for its continuation would amount to an unlawful conversion of the remaining goods."

Brooks v. Record, 47 Ill. 20.

Robinson v. Bliss, 121 Mass. 428.

€ 3 Denio (N. Y.) 33.

The

CHAPTER VII.

TITLE TO REAL ESTATE.

Section 1. Form of Conveyance and Description of Property.

§ 1. Policy of the law in regard to transfer of land. It is the policy of the law to allow owners of land the greatest freedom possible in carrying out their wishes regarding the transfer of that which belongs to them. Hence, any form of conveyance of title which expresses an intention of the owner to convey to another will be sufficient, except so far as certain formalities are positively required upon particular grounds.

At common law the transfer of property in the possession of the grantor was accomplished by livery of seisin, as it was called, or actually or symbolically putting the purchaser in present possession. At present, in addition to a writing, the instrument must have a seal, and the transferee must have given some consideration, however small, in return for the transfer.

§ 2. Usual forms of conveyance. Various kinds of deeds. The usual form of conveyance is a deed or instrument under seal. Long usage has developed a somewhat stereotyped form of conveyance of real estate. Deeds are catalogued as "warranty deeds," "special warranty deeds" and "quit-claim deeds." The first have full covenants of warranty, which are elsewhere more fully explained (§ 32, below). The second contain covenants of warranty only against the acts of the grantor. The last contain no covenants of warranty at all. Deeds, whether warranty deeds or quit-claim deeds, are also catalogued as indentures and deeds poll. The former are executed in duplicate and are properly used where by reason of the deed containing covenants by the grantee, it is proper for the grantee to sign. The indenture is most commonly used in leases, which it will be observed, contain many