Jones v. Noel

Citations

• 139 Ill. 377
• 28 N.E. 805

Syllabus

<p>1. Chattel mortgage—made after maturity of notes—extending the• time of payment. A chattel mortgage was given to secure six promissory notes, all of which were past due, except one, which fell due about two months after the date of the mortgage. The mortgage provided that if the mortgagors should, on or before two years from its date, well and truly pay their respective notes, (describing them,) then the mortgage should become void: Held, that this provision in the mortgage did not extend the time of payment of the notes, and that the failure of the mortgagee to take possession of the chattels upon default of payment of the note last falling due, rendered the transaction fraudulent as to creditors of the mortgagors.</p> <p>2. Same—possession, of chattels by mortgagor, after maturity—fraud per se. Where the mortgagor is allowed to retain possession of the chattels after the maturity of the notes secured by the mortgage, such possession will be considered fraudulent as to creditors and purchasers-■of the mortgagor; and evidence of an outside agreement to extend the time of payment is not admissible in aid of the mortgage, as no collateral agreement between the mortgagor and mortgagee can make the continued possession of the mortgagor consistent with the mortgage.</p> <p>3. Although a chattel mortgage may authorize the retention of the possession of the property by the mortgagor, the mortgagee, upon default of payment of the notes secured, must change the possession of the chattels to himself within a reasonable time thereafter, and a failure to do so is a fraud per se, not subject to explanation.</p> <p>4. The indebtedness described in a chattel mortgage can not be due in the sense that the creditor may enforce its collection, and. at the same time not due, for the purpose of justifying him, as mortgagee, in leaving the mortgaged chattels in the possession of the mortgagor.</p>