Groton Manufacturing Co. v. Gardiner

| R.I. | Jul 28, 1877

This is a bill in equity to establish an equitable lien on certain property which was sold by the deputy sheriff on attachment, and the proceeds of which sale are now held by him.

The plaintiff leased to certain persons, Lombard and others, who afterwards formed the Rhode Island Dairy Co., certain lands for certain rents, and by the lease said Lombard and others pledged and bound all improvements and machinery which they might put on the premises, and the goods they might have thereon, for payment of rent.

At the sale on the attachment the plaintiff gave public notice of its claim to a lien on the property.

Had it such a lien, and was the lien good against an attaching creditor?

In the case of Williams v. Briggs, ante, p. 476, this court decided that the person claiming such equitable charge or lien could not have an action of trover for the conversion of the property.

And in the case of Cook v. Corthell, ante, p. 482, this court held that while a conveyance of future acquired personal property would be ineffectual to transfer any legal title to the grantee, yet if, when such property was acquired, possession was delivered the property would pass, both at law and in equity.

The present case differs from those in several respects. It is a suit in equity to enforce what is claimed to be an equitable lien.

In the case of Smithurst v. Edmunds, 14 N.J. Eq. 408" court="None" date_filed="1862-05-15" href="https://app.midpage.ai/document/smithurst-v-edmunds-7286395?utm_source=webapp" opinion_id="7286395">14 N.J. Eq. 408, before the Court of Chancery of New Jersey, a hotel was leased with an agreement that the furniture then there, and all other furniture that the lessee should purchase and place on the premises during the lease, should belong to the lessor as security for the rent, and the lessee covenanted that it should not be sold, disposed of, or removed. Execution having been issued against the lessee, the furniture was levied on, and an injunction granted to restrain the sheriff from selling or removing it. On a motion to dissolve the injunction, the court held that the instrument did not constitute a pledge, as the property was not delivered; nor did it amount to a legal sale or mortgage, as the lessee, at the execution of the lease, had no present actual or potential property in it; but that it constituted an equitable lien or charge upon the property as soon as the lessee acquired it, which lien or charge was good against the lessee and all persons claiming under him, either voluntarily, or with notice, or in bankruptcy; and that while ordinarily such property might be sold subject to such charge, the court would enjoin a sale where it would greatly impair, and perhaps destroy, the rights of the mortgagee.

In the case of Butt v. Ellett, 19 Wall. 544" court="SCOTUS" date_filed="1874-04-18" href="https://app.midpage.ai/document/butt-v-ellett-88896?utm_source=webapp" opinion_id="88896">19 Wall. 544, a lease had been given, and to secure the rent the lessee mortgaged all the crops to be raised, and this was recorded. The lessee transferred the crop to the defendants who were his creditors. The assignee of the lessor filed a bill to charge the defendants as trustees for him. The United States Supreme Court held that it was not a legal mortgage, as the crop was not in existence; but that as the crops grew the lien attached to and bound them, and they passed into the defendant's hands impressed with this lien.

In the case of Pennock v. Coe, 23 How. U.S. 117, there was a mortgage of a road made and to be made, engines, machinery, and personal property, present or future acquired. The defendants, holders of some second mortgage bonds, sued and levied on the after-acquired rolling stock; the plaintiffs, trustees of the road, filed a bill to enjoin the sale. Judge McLean, in the United States Circuit Court for Ohio, had granted a perpetual injunction, and on appeal the United States Supreme Court confirmed his decision. The court, by Judge Nelson, pp. 126, 127, state the question to be whether the mortgage attaches in equity to the property from the time it was placed on the road, so as to protect it against judgment creditors. The court hold that the mortgagees had the superior equity; and that while, if there was more than enough to secure their claim the court might permit a sale, yet in the present case it was evident the security was insufficient.

This case is very much in point, as it was a claim by judgment creditors.

And Judge McLean in his decision, which is reported in 2 Redfield's Railway Cases, 667, and 6 Amer. Law Register, 27, considered the question of alleged hardship on the part of creditors.

The instrument in the present case was recorded, but not with mortgages of personal property; and if it had been, it would have given it no additional validity. It is not a mortgage, nor does it purport to be a mortgage, even of the after-acquired property. There is no transfer of title or possession. Although the word pledge is used, it is not a pledge, because unaccompanied by possession. It is simply a contract for a lien whenever the rent is in arrear, and would constitute a lien in equity.

And upon the authority of the cases we have referred to, we think it should be sustained,

Decree accordingly.