pended, at the instance and request of the defendant company, $1,886.76; and that further to secure the payment of the said notes and advances the company, on June 3, 1918, delivered to the plaintiff the actual possession of all of the lumber covered by said bills of sale; and that since that date the plaintiff has been and now is in the exclusive possession of all of the said lumber as security for the payment of the several sums of money mentioned.

The plaintiff prays for the usual decree of foreclosure of the bills of sale as chattel mortgages, the sale of the lumber and the application of the proceeds to its claims, and that such claims be declared superior in right and time to all other demands against this defendant.

At the time of the filing of the complaint herein the defendant P. C. Wright had commenced a suit to foreclose his own and some 34 assigned liens for labor performed in cutting logs and manufacturing lumber for the defendant company. By stipulation the complaint of Wright was made his answer in the suit of this plaintiff, wherein he pleads that between May 1 and June 5, 1918, at the instance and request of the defendant company, he performed work, labor, and service upon and assisted in obtaining sawlogs, spars, piling, and other timber for it, and performed labor upon and assisted in manufacturing the same into lumber, which is that described in the plaintiff's complaint; that his services were of the reasonable value of $209.50; and that to protect and preserve his lien, on June 8, 1918, he filed with the county clerk of Union county a claim, containing a statement of his demand, which was recorded on page 74 of Book E, Records of Liens, and of which a copy is attached to his pleading as Exhibit "1." His second cause of suit is a similar claim of one J. C. Gilmore. Then follow 21 like causes of suit, representing liens for labor on both lumber and timber, all of which were assigned to Wright.

For a separate cause of suit, Wright alleges that between the dates last above mentioned, one Harry Proctor performed work, labor, and services upon and assisted in manufacturing said logs and other timber into lumber, for which he filed his lien on June 8, 1918, a copy of which is attached to the pleading and marked “Exhibit 24." Like allegations are made as to 11 further causes of suit, all of which are assigned to the defendant Wright, who as plaintiff in his suit prayed for a decree for the sale of the logs and lumber, the application of the proceeds thereof on the payment of the labor liens, and that all of such liens be declared prior in time and right to the claims of the plaintiff and to all other demands against the defendant company.

To this answer the plaintiff filed a general denial of all material allegations, and as a reply alleged the execution of the bills of sale described in this complaint; that all of the 761,000 feet of lumber had been manufactured at the mill and millyards of the defendant company on the Haggerty site, and prior to the filing of such liens had been removed from the said millyards where manufactured, and hauled to and piled in the lumber yards at Union, a distance of 10 or 12 miles; that "none of the labor or assistance in logging or in manufacturing the logs into lumber, for which the plaintiff claims a lien in this case in his several causes of suit, was labor or assistance in the logging or manufacturing of said logs into the 761,000 feet of lumber now upon the lumber yards at Union, Or.," covered by the bills of sale to the plaintiff and then in its possession in the said yards; and that such lumber "was not lienable or subject to lien in favor of the laborers for the work and labor performed by them or their assistance rendered between the 1st day of May, 1918, and the 5th day of June, 1918, or any part thereof." The plaintiff then disclaims any right or interest in the 400,000 feet of sawlogs or the 75,000 feet of lumber located on the railroad site, then the millyard of the defendant company, or the 300,000 feet of lumber in the yard at the Haggerty place.

Upon petition of P. C. Wright and order of the court, La Grande National Bank of La Grande, Or., was made a defendant, and filed its answer, alleging that on April 9, 1918, it loaned to the defendant company $1,400, and took therefor its note, payable in 90 days, and that to secure the payment thereof the defendant company executed to that bank its bill of sale of 200,000 feet of lumber, then on its yards at the Haggerty site, which instrument was recorded in the office of the county clerk of Union county in Book C, page 186, Record of Bills of Sale, on April 10, 1918. It also alleges that the bill of sale specified that the defendant company would not "waste or destroy the lumber above mentioned, nor suffer it nor any part thereof to be attached on mesne process," but that the defendant company has allowed the lumber in question to be attached and the alleged liens to be filed thereon; that the bill of sale was intended to be and was in fact a chattel mortgage, and was a first and prior lien on the 200,000 feet of lumber therein described; that none of the labor liens represented claims for work or labor performed in obtaining the logs from which the lumber in question was sawed or manufactured; that all of such labor was performed long subsequent to the manufac ture of that lumber, and that the same was not lienable therefor. This bank prayed for a decree for the amount of its note, to fore

close its bill of sale as a chattel mortgage, for the sale of the 200,000 feet of lumber described therein, and the application of the proceeds to the payment of its claim.

As a reply, the defendant Wright made a general denial of all of the material allegations of the answer of the La Grande bank.

On July 8, 1918, the defendant company was adjudicated to be bankrupt by the United States District Court for the state of Oregon, George F. Hall was appointed trustee, and on petition and order of the court he was made a defendant here. On August 29, 1918, he filed his answer, denying all of the material averments of either of the banks or the lien claimants, and alleging affirmatively that he was in possession "of all of the assets and property" of the defendant company, and was "preserving said property and administering the same subject to the orders of said court of bankruptcy." He prayed for a decree that he be entitled to such possession, "to dispose of the said property, and to distribute the same among the creditors of the said" bankrupt company.

The defendants Stonedahl and Davis were attaching creditors whose lien in legal effect was dissolved by the adjudication of bankruptcy, and for such reason made no defense. For the purpose of trial, the cases in which P. C. Wright and the Union bank were plaintiffs were consolidated, and they will be so treated in this opinion.

The trial court made findings of fact and conclusions of law, and rendered a decree in favor of the Union bank for the full amount of its claim; that its bills of sale were in effect chattel mortgages; directing that the 700,000 feet of lumber then on the yards of the defendant company at Union be sold, and the proceeds first applied to the payment of its claim; that this was a first and prior lien on the lumber; that the alleged liens of P. C. Wright and his assignors for labor were null and void; and that the rights of the trustee, Hall, to any property of the company were subject to the lien of

the Union bank.

A like decree was entered in favor of the La Grande bank, directing the sale of the 200,000 feet of lumber on the Ilaggerty site, and the application of the proceeds to the satisfaction of its claim.

An appeal was taken by the defendant Wright and the defendant Hall as trustee, both claiming that neither of the banks was entitled to any lien, the defendant Wright contending that he should have a prior lien for the full amount of the claims for labor, and the trustee insisting that all liens against the lumber were null and void, and that he was entitled to possession of all of The property as trustee for the use and benefit of the creditors of the bankrupt com

The first transaction between the Union bank and the defendant company is evidenced by two promissory notes and a written instrument, in form a bill of sale and in substance a chattel mortgage, which contains the following provisions:

istrators or assigns, shall pay unto the grantee "That if the grantors, their executors, adminhundred twenty-five and no/100 dollars in six or its assigns, the sum of ($3,125.00) thirty-one months from this date, with interest semiannually at the rate of 8 per cent. per annum, and, until such payment, shall not waste or destroy the lumber above mentioned, nor suffer it, nor any part thereof, to be attached on mesne process (labor liens, etc.) and shall not, except with the consent in writing of the grantee or its assigns, attempt to remove the same or sell the same, then this deed as also the note of even date herewith, signed by the said Western White Pine Lumber Company; whereby the said Western White Pine Lumber Company promises to pay to the grantee, or order, the said sum and interest at the time aforesaid, shall become

null and void.

"But upon any default in the performance of the foregoing conditions, the said Western White Pine Lumber Company does hereby grant, bargain, sell and convey unto the said First National Bank of Union, Union, Oregon, the foregoing described chattels."

and written instruments above described, This was followed by the remaining notes which were never filed, indexed, or recorded as chattel mortgages, and all of which in legal effect contained the above provisions. From an inspection of the first instrument it is apparent that, except as to amount, date, and descriptions, the alleged chattel mortgage to the La Grande bank was copied from a like instrument previously executed and delivered by the defendant company to the Union bank. Each note was for the amount of money which the bank then loaned and paid over to the defendant company. At the trial the alleged chattel mortgages were received in evidence over objection of counsel for the trustee, upon the ground that they "were filed and recorded as bills of sale, and not as chattel mortgages." The statute does not provide for the recording of a bill of sale, and the record thereof as legal notice is a nullity. Nicklin v. Betts Spring Co., 11 Or. 406, 5 Pac. 51, 50 Am. Rep. 477.

By section 7407, L. O. L., it was enacted:

"Every mortgage, deed of trust, conveyance, or instrument of writing intended to operate as a mortgage of personal property, either alone or with real property, hereafter made, which shall not be accompanied with immediate delivery and followed by the actual and continual change of possession of the personal property mortgaged, or which shall not be recorded as provided in section 7405, shall be void as against subsequent purchasers and mortgagees in good faith and for a valuable consideration of the

amendment, was that in which no creditors had acquired liens by legal or equitable proceedings, and to vest in the trustee for the interest of all creditors the potential rights of creditors potential with such liens."

absolute upon its face, was intended to be and was in fact a chattel mortgage to secure the payment of said sum of $1,400, evidenced by said promissory note."

To this pleading P. C. Wright filed his re

This excerpt is quoted with approval in Kenney v. Hurlburt, 88 Or. 688-700, 172 Pac. 490, 173 Pac. 158, L. R. A. 1918E, 652, Ann. Cas. 1918E, 737.

bankruptcy adjudication, beside the suit of the Union bank there was pending the suit of Wright, in which he claimed liens for a large number of laborers for the cutting of logs and the manufacture of lumber.

In the Wright suit an affidavit was then of record, from which it appeared that the La

Grande bank "has or claims to have a lien or interest in the property mentioned in the

complaint," and that the bank named “has or

claims to have some lien by way of mortgage on certain of the property described in the complaint, and is therefore a necessary party

defendant in this case." The La Grande bank had then filed its answer, setting forth in full detail all its dealings with the defendant company, the execution of the bill of sale, the facts tending to show that the instrument was a chattel mortgage, and the nature and extent of its claim, all of which was a matter of record in the pending suits at the time of the bankrupt adjudication.

From an examination of the record it will

"The taking possession by a mortgagee under a chattel mortgage or conditional sale is equivalent to recording."

[5] We hold that the Union bank had a valid chattel mortgage lien, and that as to it the decree of the circuit court should be affirmed. The claim of the La Grande bank presents a more serious question. Its attorneys state in their briefs and the trial court found that the bill of sale given it by the defendant company was indexed as a chattel mortgage. If that were true, a much stronger case would be presented, but we have searched the record in vain for any evidence that would show or tend to show that its bill of sale was ever indexed by the county clerk as a chattel mortgage.

On June 26, 1918, P. C. Wright, as plaintiff in his suit, filed a motion based upon an affidavit of one of his attorneys for an order of court that the La Grande bank be made a defendant. The order was made, and that bank filed its answer, from which it appears: "That in order to secure the payment of the said promissory note, principal and interest, in accordance with the tenor and purport thereof, the said defendant Western White Pine Lumber Company then and there made, executed, and delivered to the said defendant La Grande National Bank, a bill of sale of 200,000 feet board measure, of pine, fir, and tamarack lum

it appeared from the debtor's bankrupt petition, attached as an exhibit and made a part thereof under the heading, "Creditors Holding Securities," the following:

"Particulars of securities held, with dates of same, and when they were given, to be stated under the names of the several creditors, and also particulars concerning each debt, as required by acts of Congress relating to bankruptcy, and whether contracted as partners or joint contractor with any other person, and, if so, with whom."

Each note of the Union bank is then listed and described, together with that held by the La Grande bank, and the statement shows that each note was "attempted to be secured by a bill of sale which holder is attempting to have declared a chattel mortgage."

In Remington on Bankruptcy (2d Ed.) § 1270, with reference to the 1910 amendment of the Bankruptcy Act, the author lays down the rule that:

"The trustee, as to all property in the custody or coming into the custody of the bankruptcy court, is, in addition to his other rights, to be deemed vested with all the rights, remedies, and powers of a creditor holding a lien by legal or equitable proceedings thereon; and also as to all property not in the custody of the bankruptcy court is to be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly return

Assuming that Hall, as trustee, actually had the custody of the 200,000 feet of lumber on the Haggerty site, on which the La Grande bank claimed a chattel mortgage lien, and that as such trustee on July 8, 1918, he had all the rights of a lien creditor, he then legally knew that laborers' liens had been duly filed on that lumber, and were then a matter of record in the office of the county clerk, and a further search would have disclosed the fact that a suit was then pending to foreclose those liens, wherein the La Grande bank had been made a party defendant because of its claim of lien, and had filed its answer, fully setting forth the nature and extent of its claim and its right to such a lien, and praying for affirmative relief. It also appeared upon the face of the petition by which the defendant company was adjudicated bankrupt and Hall was elected trustee that each bank had or claimed to have a chattel mortgage lien upon the lumber in controversy. All of such facts existed and were a matter of record at the time of the adjudication on July 8, 1918, when Hall acquired his title as trustee.

known as the "Railroad site," and at the time the laborers' liens were filed there was about 75,000 feet of lumber in that yard. The Haggerty site is on Catherine creek, at least 12 miles from the defendant company's yard at Union, and the Railroad site is about 1 mile from the Haggerty place. No lumber was ever cut or manufactured in the company's yard at Union, and any placed there was hauled at least 12 miles from the Haggerty site, at which the sawmill was first located and the logs were manufactured into lumber.

There is no dispute as to the amount of the liens for labor, and it appears that the men were paid in full for their work up to May 1, 1918, but that within a short time after the Union bank took possession of the lumber in the Union yards, under its claims, the laborers prepared their respective liens, and duly filed them of record on and after June 8, 1918.

Section 7461, L. O. L., is as follows:

"It is now settled that the assignment or transfer by a defendant of his interest in the subject-matter of the litigation during its pendency does not defeat the suit, but that his purchaser is bound by any judgment or decree that may be rendered therein. * An assignee

who acquires title to the subject-matter of the litigation after the filing of the complaint takes pendente lite, and is bound by the proceedings against his assignor."

owner of the same or his agent. The cook in a logging camp, and any and all others who may assist in or about a logging camp, shall be regarded as a person who assists in obtaining or securing the sawlogs, spars, piles, or other timber herein mentioned."

[6] Under the facts disclosed by the ord, we hold that when the bankrupt adju

dication was made and Hall was elected trustee, he legally knew of the existence of the written instrument held by the La Grande bank, in form a bill of sale and in substance a chattel mortgage, and that it was intended to be a chattel mortgage to secure the $1,400 note of the defendant company owned by that bank.

[7] While the circuit court allowed the La Grande bank $150 as attorney's fees, there is no provision in either note or alleged chattel mortgage for the payment of any such fees. The amount is reasonable, but no attorney's fees should have been allowed, and that was error. The decree of the circuit court as to the La Grande bank is modified in regard to the allowance of attorney's fees, and in all other respects is affirmed.

As to the labor liens, it appears that the defendant operated its mill and cut all of its lumber at the Haggerty site until about May 1, 1918, and that during that month about 450,000 feet of lumber there cut was hauled to the defendant company's yards at Union. About May 1st the defendant company moved its mill from the Haggerty site to what is

It is shown that 24 of the liens were "filed for labor performed upon and assistance rendered in cutting and manufacturing said logs and lumber." The remaining liens are for work and labor performed "in manufactur ing said lumber now on the mill sites." It is contended that the lumber liens are void as to the lumber in the Union yards. Section 7462 gives the laborers "a lien upon such lumber while the same remains at the yard wherein manufactured." The defendant com. pany never had a sawmill or manufactured any lumber at or in its Union yards, and any lumber lying there was hauled a distance of at least 12 miles from the yards where it had been manufactured. The lienholders contend that the lumber was hauled to the Union yards for the purpose of cutting the ends and trimming it ready for market. But the fact remains that none of the lumber was ever cut or trimmed there, and that the company did not have any machinery actually installed or prepared to do that work at the Union yards. It is significant that the only lumber which was actually sold and shipped was