Barnet v. Fergus

Citations

• 51 Ill. 352

Syllabus

<p>1. Chattel mortgages—of possession in the mortgagor for purposes of sale. It has been held that a mortgage of a stock of goods, containing a provision authorizing the mortgagor to retain possession for the purpose of selling in the usual course of trade, was fraudulent and void as to creditors.</p> <p>2. It follows, that where the mortgage contains no such provision, but the mortgagee nevertheless knowingly permits the mortgagor to make sale of the property in the ordinary course of trade, and in the same way as before the mortgage was made, this would be such a perversion of the mortgage from its legitimate purposes, as to render it fraudulent in law, and void as to creditors, although it was valid on its face and at its inception.</p> <p>3. But while the mortgagee would thus lose his lien as to so much of the property as he permits the mortgagor to keep for purposes of sale, yet such subsequent acts would not necessarily render the mortgage void in tato, as it might remain valid as to other property embraced in the mortgage to which such acts did not extend.</p> <p>4. So, where a chattel mortgage covered a printing press and its appurtenances, and certain books and blanks, which had been printed by the mortgagor, and which were held by him for sale, and the mortgagor continued, with the knowledge of the mortgagee, to sell such books and blanks, in the same way after as before the mortgage was made, it was held, the mortgagee lost his lien as against creditors, as to the books and blanks, but not as to the printing press and its appurtenances.</p> <p>5. Nor would thé fact that the mortgagee permitted the mortgagor to control a portion of the mortgaged property in a manner inconsistent with his rights as a mortgagee, of itself, invalidate the instrument as to other property not so controlled, but, at most, would be a circumstance which might be considered in connection with other facts, in determining the bona fdes of the transaction.</p>