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prevail, which seems to be adopted in one or
more of the States of the Union wherein there
is no statutory law regarding registration or
recording of mortgages on personal property.
The courts of the State of Louisiana will not en-
force a mortgage made in another State, (o) Nor
will the State of Pensylvania, because in the
latter State, a sale or mortgage of personal pro-
perty is void, unless accompanied by delivery of
possession, as against the intervening rights of
creditors and purchasers; " as between the parties
to the chattel mortgage,' Pennsylvania courts
could safely enforce the validity of the mortgage,
and would do so. There would be no public
interest or policy of law that would require us to
hold the bill of sale or mortgage void, as between
the parties to it, for want of delivery of posses-
sion of the chattel. But it would be an extraor-
dinary stretch of comity that would induce a
court here to hold that a Maryland chattel mort-
gage shall be made the means of defrauding oar
own citizens. Either the lex rei sitae must pre-
vail over the lex loci contractus, or we must open
a wide door for fraud, to the detriment of citizens
on both sides of the border. Would it be reason-
able to require that the purchaser should have
first ascertained where this migratory doctrine
came from, and then have had the records of all
counties in Maryland searched for chattel mort-
gages ? Or is it fairer to hold that the mort-
gagees, by allowing the mortgagor to retain

(o) Delop v. Windsor, 26 La Ann, 185.



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ON THE LAW OF THE PLACE OF CONTRACT. 208

possession of the horse and bring it into Penn-
sylvania, and exercise notorious acts of owner-
ship, lost their rights under the mortgage as
against an intervening Pennsylvania creditor or
purchaser ? No people are bound to enforce a
contract in contravention of their public law and
policy. Whilst a lien created by the lex loci will
generally be enforced wherever the property may
be found, yet this is not necessarily so in pre-
ference to claims arising under the lex rei sitae.
The comity extended to the lex loci must yield to
the positive law and public interests of the place
where the remedy is sought, (p) " By the comity ^ ^ nerai
of nations, as a general rule, a contract valid comity of
where it is made, is valid everywhere, and the n * tioilB -
law of the place of the contract controls as to
the construction of it. Without this rule there
could not safely be commercial or business inter-
course between citizens of different nations. But
the laws of a nation or state have not, ex proprio
vigore, any binding force beyond the limits of its
territory. A*ny effect they have is ex comitate.
And the judicial tribunal in Pennsylvania must
determine how far comity is to be permitted to
interfere with the domestic interests and policy
of the state." (pp)

" As we have examined the effect of the lex
loci contractus upon the validity and effect of
mortgages, where the rights of mortgagees are
to be enforced in different provinces," we will
consider the question, as to where mortgages of
property that is in constant transit from county

(j>) Per HaH> J., McCabe v. Blymyre, 9 Phila. (Pa.) 615.
{pp) Jones on Chattel Mtges., sec. 800.



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204



BABBON ON MORTGAGES, ETC.



Where mort-
gages of pro-
perty in con-
stant transit
from one
county and
province to
another
county and
province.



to county, from state to state, and, in fact, from
the necessities of trade being moved in the usual
and ordinary course of business, from the Atlan-
tic to the Pacific coast, are to be recorded. * *
" Its nature requires the establishment of some
rule in regard to the rights of parties under a
mortgage of it." The general rule is, that the
place where its main office or place of business
is located is its residence. And the question as
to the effect of the registration of a mortgage at
such place, is by no means settled. " In the
case of personal property having no locality,
except that of its owner, who is presumed to be
in the possession and control of it, its situation
is presumed to be with him ; and registration is
required at the place of his residence, if his pro-
perty is in some distant state, or part of the
state ; so that he would come under the term
non-resident, and bis property would be amen-
able to the jurisdiction of a court having no
jurisdiction over his person ; in such cases the
law makes no distinction between personal and
real property, and a mortgage, in order to be
valid, must be registered where the property is
situated. That this provision is a salutary one,
there can be no doubt ; but that it would be
applicable to a railway corporation, whose busi-
ness compels it to keep the greater portion of its
personal property in constant transit from one
part of the country to another, is a matter of
grave doubt. The Registry and Recording Acts,
when applied to the protection of purchasers and
creditors, as far as the same relate to chattel
mortgages, and the requirements necessary for
their renewal, are matters of statutory precan-



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ON THE LAW OF THE PLACE OP CONTRACT. 205

tion for the prevention of fraud, in giving notice
to all persona of the encumbrances upon the
property. One of the requirements, that the
mortgage be recorded * * * at the place
where the property is situated, is a question that
is not easily disposed of as to rolling stock/'
Take the case of one of the numerous railway
equipment companies, located in some city or
town, on the line of some great railroad. In
order to fulfil some contract it needs money, and
in order to obtain it, executes a chattel mortgage
on fifty or more cars, which are in its shops, and
under its possession and control at its place of
residence, at the time when the mortgage is
executed, but are subsequently sold or leased ;
or in a case like this: A. has a mortgage
on the property of the Boston and Maine
railroad. Said mortgage includes the road-
bed, iron and rolling stock; its freight cars,
to the number of a hundred, are loaded ; and
in the ordinary course of business the cars,
being loaded with through freight, are trans-
ferred over twenty different roads to San Fran-
cisco; a creditor of the company being there,
and having a judgment, or commencing an
action by attachment, levies on the rolling stock,
it being a non-resident or foreign corporation —
that being a cause for attachment, recovers judg-
ment and sells the property, — has the mort-
gagee to follow that rolling stock to San Fran-
cisco, and record his mortgage there, and at all
the intermediate points between Boston and that
place, in Jorder to protect his lien on the pro-
perty ? This'may seem an extreme case, but it
is one of daily and constant occurrence, under



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206 BARRON ON MORTGAGES, ETC.

the American system of railway management.
It is, therefore, necessary to adopt some uniform
system — some principle that shall govern every
case as it arises, whether it be in different towns,
counties, or states, in regard to notice. The rale
that personal property follows the owner, and is
taxable wherever the owner is, may be a safe
rule in questions of taxation ; but can it be in a
question of this kind ? Proceedings subjecting
property to sale op execution upon judgments in
rem, are founded upon the location of the pro-
perty, regardless of the domicile or residence of
the owner, where the auxiliary remedy of attach-
ment secures the property for the satisfaction of
such judgment. What, then, can be adopted as
a /air and just method of imparting notice to
parties dealing with movable property, like the
rolling stock of a railroad, where it travels from
one jurisdiction to another, with a speed only
known to such corporations, is a question yet to
be determined. In New York the doctrine is
established that registration in every county on
the line of the road is necessary — that it is
a resident of every such county. While a
railway company may be liable to suit in every
county or township through which its road
passes, that fact does not make it a resident of
every such town or county. Almost every kind
of corporation transacting business beyond its
home office, and in distant states, may sue and
be sued ; but this does not make it a resident of
such state, nor require a chattel mortgage made
at its home-office to be recorded in such foreign
state, because it sends portions of its property to
be used there in its business, after the mortgage



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r



ON THE LAW OF THE PLACE OP CONTRACT. 207



is made. While this question of registration
depends in a great measure upon state legis-
lation, the jus gentium has established the doc-
trine that the lex loci contractus must govern.
The various state courts have assented to and
affirmed this doctrine ; and if it is applicable to
citizens of di fife rent states, is it any less so to
citizens of different counties of the same state ?
The courts in New York do not require a chattel
mortgage to be recorded in any county in which
the property may be taken, or the mortgagor
may remove to ; nor do the laws of any other
state require it. One registration, in conformity
with the statute, is sufficient as to individuals ;
is it any less so as regards corporations ? So
that applying the principles of the law of nations,
and the doctrine as established between indi-
viduals, the execution of a chattel mortgage by
a railway corporation of rolling stock, if filed or
registered, as required by the law of the state
where executed, will be valid in every other state
wherever the property may be." (q)

(?) Herman on Mortgagee, pp. 171. 172, 178, 174, 175.



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208 BARRON ON MORTGAGES, ETC.



CHAPTER IX.

THE REMEDIES OP A MORTGAGEE BY
SALE.

We have seen that one of the remedies of
a mortgagee upon default is that of foreclosure,
but the remedy most usually exercised is that
of selling.

The ordinary mortgage contains a provision
empowering the mortgagee to sell by public
auction or private sale, and in order to acquire
possession of the property for that purpose, to
make entry upon the lands of the mortgagor, or
wheresoever the goods may be, and if need be to
The right to break and force open doors, locks, etc. ; but the
does^ot°aa- liberties extended to a mortgagee, do not embrace
£ hor ' - e the right to commit a breach of the peace, or
peace. even to threaten such, in order to obtain posses-

sion. The moment resistance is met with, the
legal remedy of replevin or trover accrues to
the mortgagee, and to these remedies he must
resort.

In taking possession after default, it is not
absolutely essential that he should make claim
under his mortgage, so long as, in point of fact,
he acts by virtue of it ; but he should not make
use of the services of an officer of the law to



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THE REMEDIES OF A MORTGAGEE BT BALE. 209

deceive the mortgagor into believing he is acting
under lawful authority, when such is only a pre-
tence, (b)

Having obtained possession, a mortgagee in whatcar6
selling must exercise proper care and discretion, when realiz-
ed adopt auch means as would be adopted by a JJJJJiSr ofsale.
prudent man to get the best price that can be
obtained. He must use every exertion to sell
the property at the best price, (c) He must not
barter or exchange the property. He must sell
only for money, as the word " Sale * implies. 2J5Ja?£i „
This word " is a word of precise legal import in
law and in equity. It means at all times a con-
tract between parties to pass rights of property
for money which the buyer pays or promises to
pay to the seller for the thing bought and
sold." (d)

" It is well settled that though a mortgagee's
power of sale confers a clear right, it must be
exercised with a due regard to the purpose for
which it is given. A mortgagee with such a
power stands in a fiduciary character, and, un-
like an ordinary vendor selling what is his own,
he must take all reasonable means to prevent
any sacrifice of the property inasmuch as he is a
trustee for the mortgagor of any surplus that
may remain, (e) This duty is " to bring the
estate to the hammer under every possible
advantage to his cestui que trust." (/)

[b) Murray 7. Erskine, 109 Mass. 597 : Thornton v. Cochran, 51 Ala. 415.
{e) Orme v. Wright, 3 Jur. 19, 972 : Bird v. Davis, 14 N. J. Eq. 467.
W Per Justice Wayne, in Williamson v. Berry, S How. 495 : see Edwards
v.CottreU,iZ Iowa 194.
is) Jenkins v. Jones, 2 Giff. 99, 108.
if) Per Lord Eldon, Dowries v. Grasebrook, 3 Mer. 205.

B.M. 14



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210 BARRON ON MORTGAGES, ETC.

It doubtless is the fact that though a mort-
gagee or his assignee, selling under a power of
sale, is a trustee for the mortgagor, yet he does
not stand alone in the position of a dry trustee.
" He has rights, he has a beneficial interest and
that interest is the realizing of his security, in
other word 8, getting paid his mortgage money,
interest, and any costs he may incur ; that is
his right, but this Court will not allow him to
exercise that right without a due consideration
of the interest of the mortgagor ; and undoubt-
edly the interest of the mortgagor which the
mortgagee, in my opinion, is bound to attend to,
requires that the sale shall take place as benefi-
cially to the mortgagor, as if the mortgagor him-
self were selling the property." (g)

When debt If a mortgagee seizes and sells a portion of the
must stop!* e mortgaged property whereby his debt, interest
and costs are satisfied, he must not sell the
remainder of the property, bis title to which is
extinguished by bis mortgage being already
satisfied, and, if be does, the mortgagor will be
entitled to an action of trover, and can recover
the full value of the goods so wrongfully con-
verted, (h) And a mortgagee must refund to the
mortgagor any balance from the sale, after pay-
ing the mortgage-debt, interest and costs ; (t) for,
as to this balance, he stands towards the mort-
gagor in the relation of trustee, and all the reme-
dies at law or in equity consequent upon such a

(g) Per Sir Richard Kindersley, Faulkner v. The Equitable Reversionary
Interest Society, 4 Jar. N. S. 12, 14: see Prentice v. Consolidated Bank,
13, A. R. 69.

(h) Charter v. Stephens, 3 Denio. 38.

(i) Pratt v. Styles, 17 How. (N.Y.) Pr. 211.



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THE REMEDIES OF A MOHTOAOBE BY 8 ALE. 211

relationship, are open to the mortgagor to recover
any such balance from the mortgagee, (j)

An action of trover may be at the suit of a Mortgagor of
mortgagor in possession against a sheriff seizing g^ 8 ^^
under a fi. ja. against goods of the mortgagor, against
There may be trespass to the possession of a^^ 1 9eiz "
mortgagor when in possession with the assent
and by the will of the mortgagee, for the execu-
tion does not bind upon the goods ; then,
" quoad " these goods, the sheriff is a wrong-
doer, and the mortgagor would be entitled to an
action, (k)

A mortgagee, who has advertized under his Right to ad-
power of sale, has the right, in the interest of all 3oarn ** e *
parties, to adjourn the sale from time to time. (I)
Indeed, if a mortgagee does not do so, and the
property, by reason thereof, is wilfully sacrificed
or from negligence in the mortgagee, the sale
fails to realize enough to pay off the mortgage
debt, it will be a good defence in an action to
recover the balance of such debt, that, if the sale
had been bona fide the property would have been
sold for more than enough to pay the debt, (m)
and, if the mortgagee disregard the terms of the
mortgage and sell part only of the goods at a
private sale in an action for the balance of the
mortgage debt, the mortgagor can demand credit
for the value of the goods as ascertained in the
Court, (n)

(j) Davenport v. McChenesy, 86 N.Y. 242.
(*) Corbett v. Sheppard, 4 U. C. C. P. 43.
(I) Hotmer v. Sargent, 8 Allen 97.
(») Howard v. Ames, 3 Met. 308.
(n) BoUford ▼. Murphy, 47 Mich. 687.



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212 BARRON ON MORTGAGES, ETC.

Whatdefici- In general it may be said that a mortgages'
tmlemoH- cannot make a mortgagorliable for a deficiency
gam can greater than there would be, in the instance of an
mortgagor, ordinary sale fairly conducted, (o) and it will also
be a good defence to an action to recover the
balance of a mortgage debt, that the plaintiff had
repurchased at the sale under the power in the
mortgage, and sold again at an increased price,
for more than sufficient to pay the balance sued
for. And in equity, even when the goods repur-
chased were subsequently exchanged for land,
the necessary enquiries would be directed, and
steps taken to ascertain the true value of the
land, in order that the defendant might derive
the benefit of any profit from the exchange after
satisfaction of the mortgage debt, (p)

In all cases the mortgagee must strictly fol-
low the terms and stipulations of the mortgage,
and if the sale be not conducted regularly, the
mortgagee will be responsible for any damages
the mortgagor suffers by such departure from
the terms of the instrument, and enquiry can be
bad at any time by the mortgagor into the con-
duct of the sale, (q)
Bale may be A suit will lie to set aside a sale had under a
set aside. po Wer f g^e i n the mortgage, but redress is less
easy in such a proceeding than in one wherein
it is sought to charge the mortgagee with dam-
age resulting from negligence, and want of care
in selling the property. In the former case the
court will not interfere if the power of sale has

(o) Stoddan v. Detiison, 38 How. (N.Y.) Pr. 296.

(p) Anna v. Dornan, 10 U. C. C. P. 299 : see Fox and Mackreth, 1 V?h.
and T. Lg. Cases, 1st Am. Ed. 105 : Morrison v. Judge, 14 Ala. 182.
(q) Freeman v. Freeman, 17 N. J. Eq. 44, 47.



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THE REMEDIES OF A MORTGAGEE BY SALE. 21S

been exercised bona fide, and for the purpose of
realising the debt, and without collusion with
the purchaser, even though the sale be very dis-
advantageous, unless the price be so low as in
itself to be evidence of fraud, (r)

If there has been collusion whereby the goods
have brought a very inadequate price, then not
alone the mortgagor, but the mortgagor's as-
signee in bankruptcy, has a right to be heard
against the validity of the sale. (*)

There may be such a thing as fraudulent where fraud
undervalue, which simply means a gross under- ^Se* 4 " m the
value, such as shews either actual and inten-
tional fraud, or gross negligence, constituting in
the view of equity a fraud on the mortgagor, (t)
When such exists, then the sale will be set aside,
even though there does not exist the least inten-
tional wrong. The error may be one of judg-
ment, yet the rule is imperative that " a mortga-
gee must act in these matters as a provident owner
tfouM," and ignorantia juris non excusaU Fraud
vitiates all things, and when there is collusion
between the mortgagee and mortgagor to so con-
duct the sale as to lessen the chances of creditors,
then it is probable that even they would be per-
mitted to oppose the sale, if the fraud could be
brought home to the purchasers ;(u) but the mort-
gagor must act with reasonable promptitude.
He cannot, knowing of the wrong, lie by and do

(r) Davey v. Bowman, 1 DeG. A J. 585, 577 : Warner v. Jacob, 30 Ch. D.
320.

(«) Robiruon v. Blus , 121 Mass. 428.

(«) Latch ▼. Furlong, 12 Gr. 806: Crawford v. Meldrwm, 3 U. C.App.

113 cases there cited.

(*) Gordon v. Clapp, 113 Mass. 835.



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214 BARRON ON MORTGAGES, ETC.

nothing. If he does, he may lose hie rights, if
a sale be made to third parties, innocent of the
irregularity or fraud practised in the sale, (v)
and, of course, it he take the benefit of the sale
in any way, as by consenting to an application
of the surplus proceeds of the sale, to the satis-
faction of an execution against himself, he will
be estopped from afterwards objecting to the
sale, (w)

Astoadver- It is most important to advertise and give
tising. every publicity to the sale which is possible, and

which a prudent proprietor would use, to have
the sale conducted under the circumstances of
the greatest advantage, (x) Especially is this
important when the power to take possession
and sell requires advertisement, but failure to
advertise does not entitle the mortgagor to
regain possession of the property, (y) " It is the
ordinary custom before a sale by auction to give
every publicity to it by advertisement in the
newspapers, and by hand bills.*" (z) And so
secure are the rights of a mortgagor to have a
sale properly conducted, that it is no answer to
make, when he seeks his remedies, that he dis-
entitled himself to relief, because he employed
puffers at the sale ; (a) but he must not be guilty
of conduct which has the effect of prejudicing
the efforts of the mortgagee to secure a good and

(v) Wylder v. Crane, 53 111. 490.
(w) McConnell v. People, 71 111. 481.

(.r) Marriott v. Anchor Reversionary Company, 7 Jur. N. S. 155.
(y) Whitaker v. SigUr, 44 Iowa. 419.
U) Spragge, V. C, Richmond v. Evans, 8 Gr. 518.
(a) Matthie v. Edwards, 16 L. J. Ch. 405 : S. C. 11 Jur. 761 : Richmond
v. Evans, supra.



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THE REMKDIE8 OF A MORTGAGED £Y SALE. 215

proper sale. If he interferes with the sale, or Effect of
serves notices, or otherwise acts so as to discour- ™£^ring
age bidding, then no remedy is open to the w *th sale,
mortgagor, and he most suffer the consequence
of his own acts, (b)

A power of sale, however provided, does not
compel the mortgagee to pursue that method of
realizing upon his security. It is a cumulative Power of
remedy. The mortgagee's title becomes abso- |£t?v * cumu *
lute, subject to the mortgagor's right to redeem, remedy,
which the latter may exercise within a reasonable
time. Even though the mortgage stipulate that
upon a sale the mortgagor shall be paid over all
the proceeds after payment of the mortgage debt,
still the mortgagee is not compelled to resort to
sale, (c)

A provision for sale, after forfeiture has occur-
red, so that the title becomes vested in the mort-
gagee, does not extend the time for payment in
favor of the mortgagor, nor does it in any way
add to, or give to, the interest of the mortgagor
greater strength, (d) The mortgagee is notKetention of
liable because he retains the property, declining leM?onoF°*
to make sale of it, the simple result of his so property pro-

_ longs right of

doing being that the mortgagor's right to redeem redemption,
is prolonged, (e)

It is quite possible for the mortgagor to set up Effect of ver-
a verbal contract for the extension of time for J** 1 c° ntract

for extension

payment, based upon a new consideration, and of time,
if such verbal contract be shown to exist, then a

(6) Hall v. Ditson, 55 How. (N. Y.) Pr. 19 : S. C. 6 Abb. N. C. 198.

(c) NicholU v. Webster, 1 Chand. (Wis.) 203: Dur/ee v. Grinnell, 69 IU.
371: MeConmll v. Scott, 67 111. 274.

(d) Dur/ee v. Grinnell, supta.

(«) Bradley v. Redmond, 42 Iowa 452.



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216 BABBOH ON MORTGAGES, ETC.

mortgagee cannot, when there is a redemise
clause in the mortgage, or by implication the
mortgagor is to retain possession, take possession
without constituting himself a wrong-doer. Gen-
erally speaking, the mortgage provides that the
mortgagee may sell at private sale. This he
may do, notwithstanding provision is also made
for a sale by public auction. In neither case is
notice necessary to the mortgagor, unless the
instrument demands it ; (/) but the circum-
stances surrounding a private sale will be scan-
ned very jealously, to see if fraud or negligence
has taken place in the conduct of the sale, (g)
Purchaser Unless fraud exists, the sale to the purchaser
^e^exoept a ' private sale will pass to him a good title, even
when fraud without notice to the mortgagor, though the
proper course is to give formal notice of intention
to sell, whether the sale be private or by public
Noticeof sale, auction ; (h) but the giving of the notice is
optional with the mortgagee. Should the mort-
gage stipulate for notice to be given before a sale
is made, generally the mode and time allowed
in giving notice is also set forth, but when this
is not done, and simply notice required, then the
circumstances of each particular case governs
the proceedings regarding notice. The notice



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