A taking possession by the mortgagee of the personal property
under the power contained in the mortgage is a delivery that
satisfies the requirements of the Massachusetts statute in regard
to the delivery of goods sold or mortgaged unless recorded.
Goods under attachment may be sold or mortgaged upon notice to
the officer as effectively as though a true delivery took
The holder of a recorded mortgage on personal property in
Massachusetts, made within four months of the petition, took
possession under the power contained in his mortgage after the
sheriff had levied under an attachment, and the next day the
petition was filed. Held
that the mortgagee was entitled
to his security to the extent that
Page 236 U. S. 98
the mortgage represented cash advanced at the time it was
No order having been made in the bankruptcy court as to whether
the lien of the attachment should be preserved for the benefit of
the estate, the case is sent back to that court without prejudice
to further action on that point.
200 F. 747 reversed.
The facts, which involve the validity of a chattel mortgage and
the lien thereof on goods of the bankrupt, are stated in the
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a proceeding by a trustee in bankruptcy to obtain the
surrender of the proceeds of goods in possession of the appellant
and sold by him under an agreement with the trustee without
prejudice to the rights of the parties in the property. The
petition in bankruptcy was filed on May 26, 1909. The appellant
claims under a mortgage to him for $5,675, made on March 2, 1909,
but admits that $4,175 of this sum was a preexisting debt, and
claims only $1,500, lent on the day when the mortgage was given.
The mortgage was not recorded, and on May 24, 1909, the goods were
attached by a third person, the shop where they were was closed,
and no more business was done. Afterwards on the same day, the
mortgagee put in a keeper, subject to the possession of the
sheriff's officer. On May 25, he notified the deputy sheriff of his
claim, and also gave notice to the bankrupt that the property was
in his possession and that he intended to foreclose. The latter
notice was recorded on May 26, after the filing of the petition in
bankruptcy on that day. Under the Massachusetts laws, the
unrecorded mortgage was invalid
Page 236 U. S. 99
against others than the parties unless the property was
delivered to and retained by the mortgagee (Rev.Laws, c. 198, § 1).
The district court and the circuit court of appeals held the
mortgage void on the ground that the deputy sheriff's possession
was exclusive, and that therefore what was done by the mortgagee on
May 24 and 25 had no effect. 193 F. 533, 200 F. 747. The main
question before us is whether this ruling is right.
We may assume that the trustee in bankruptcy is not a party
within the meaning of the Massachusetts act. For, although there
have been decisions by the courts of the United States that the
assignee under former acts is the bankrupt -- that is to say, that
he is a universal successor who, like the executor, represents the
person of him to whom he succeeds -- the supreme court of the state
has established the construction of the Massachusetts statute.
Humphrey v. Tatman, 198 U. S. 91
198 U. S. 93
Haskell v. Merrill,
179 Mass. 120, 124; Clark v.
190 Mass. 219, 223. We assume, on the other hand,
that if possession was delivered and retained within the meaning of
the act at any time before the bankruptcy, the title of the
mortgagee will be good. Blanchard v. Cooke,
144 Mass. 207,
227; Keepers v. Fleitmann,
213 Mass. 210, 211;
Humphrey v. Tatman, supra.
Moreover, a taking possession
under the power in the mortgage is a delivery that satisfies the
statute. Keepers v. Fleitmann, supra.
So the issue is
narrowed to the precise point of the ruling below.
We agree that the possession of the deputy sheriff was
exclusive, and that there cannot be two possessions properly so
called at the same time. But that which would be deemed a delivery
sufficient to make a sale good as against attaching creditors also
satisfies the statute. Clark v. Williams,
190 Mass. 219,
222; Wright v. Tetlow,
99 Mass. 397, 400. And it is
familiar that what
Page 236 U. S. 100
is called a change of possession may be accomplished when the
goods are in the hands of a third person claiming a lien.
Hallgarten v. Oldham,
135 Mass. 1, 9, 10; Union Trust
Co. v. Wilson, 198 U. S. 530
198 U. S. 536
Accordingly, goods under attachment may be sold or mortgaged upon
notice to the officer, as effectively as if a true delivery took
place. Grant v. Lyman,
4 Met. 470, 477; Mann v.
1 Gray 250, 253; Clark v. Williams, supra.
The acts of the appellant had the same effect as if the mortgagor
had been present and assenting, Keepers v. Fleitmann,
Mass. 210, and we see in the attachment no sufficient ground for
denying him his security. The mortgage embraced after-acquired
property, with power of sale and substitution in the mortgagor, but
we assume that it was good under Massachusetts law. Blanchard
144 Mass. 207; Thompson v. Fairbanks,
196 U. S. 516
Whether or not the lien of the attachment should be preserved
for the benefit of the estate, and whether it still is open to the
bankruptcy court to make an order to that effect if, on due notice,
it should seem just, is not before us. No such order has been made.
The decree will be reversed without prejudice to further action
upon that point.