Opinion
No. 31783.
June 10, 1935.
1. CHATTEL MORTGAGES. Mortgages.
After-acquired property clause in mortgage or deed of trust is valid and enforceable in equity.
2. CHATTEL MORTGAGES. Mortgages.
Provision in deed of trust that "any increase of all property, real or personal, that may be hereafter acquired by the parties by purchase or otherwise, the legal title of which under said trustee, his successors and assigns we warrant and agree forever to defend," held sufficient description of after-acquired property to be enforceable in equity.
3. CHATTEL MORTGAGES.
Statute providing that chattel mortgage on after-acquired property is valid held not to limit validity to property acquired within twelve months, since statute does not grant right to execute mortgages on after-acquired property, but provides only when such mortgages shall be valid as to creditors, and that mortgagors may pay secured debts before maturity thereof (Code 1930, section 2130).
APPEAL from the chancery court of Jefferson Davis county.
HON. T. PRICE DALE, Chancellor.
Bill by the Prentiss Mercantile Company and others against Mrs. Mattie Thurman and others. From a decree sustaining a demurrer to the bill, complainants appeal. Reversed and remanded.
Livingston Milloy, of Prentiss, for appellants.
After-acquired property can be conveyed or mortgaged to secure a debt and the conveyance, deed of trust or mortgage is perfectly valid as between the parties, although invalid as to third parties.
White v. Thomas, 52 Miss. 49; Marx v. Davis, 55 Miss. 376; Sillers v. Lester, 48 Miss. 513; Williams v. Crook, 63 Miss. 9; Miss., etc., Co. v. Railroad, 58 Miss. 896; Fidelity, etc., Co. v. Sturtevant, 86 Miss. 509; Packwood v. Atkinson, etc., Co., 79 Miss. 646; Union Indemnity Co. v. Shirley, 150 So. 825.
The statute, section 2130, Code of 1930, does not prohibit the grantor from executing a deed of trust on after-acquired property as between the grantor and grantee, but merely provides that such deed of trust shall be a valid lien against all creditors of the grantor.
Union Indemnity Co. v. Shirley, 150 So. 825.
In the case at bar, there is no third party affected by the after-acquired property clause in the deed of trust, and certainly the deed of trust is good and valid as to the parties executing the same.
Atkinson Bacot et al. v. Varnado, 91 Miss. 825, 47 So. 113.
The court below erred in sustaining the demurrer of appellees to the bill of complaint as amended, and in refusing to follow the opinion of this court rendered in the case of Lee v. Lee, 135 Miss. 865, 101 So. 345.
Section 408, Code of 1930, provides that when a bill is filed in the chancery court in reference to personal property, and affidavit and bond as required therefor is made and filed, the clerk of the court shall issue a writ of sequestration.
Lee v. Lee, 135 Miss. 865, 101 So. 345; Section 407, Code of 1930.
C.E. Thompson and O.C. Luper, both of Prentiss, for appellees.
We do not think that the deed of trust given on the crop in January, 1931, to be grown in that year could in any conceivable way be made to cover or attach a crop made during the year of 1934. There was no particular description in the deed of trust on which the crops were to be grown and the crops were not in any way, so far as record discloses, connected with any particular piece of land, and the bill of complaint and amendment in no place charges that there was any lien against the land, for purchase money or otherwise, in favor of the appellant, complainant in the court below.
It has been held that a man may execute a mortgage good at law or in equity, on what he does not own actually, but what he potentially owns, as crop to be grown in fifteen months.
Everman v. Robb, 52 Miss. 653, 24 A.L.R. 682; White v. Thomas, 52 Miss. 49; Saldelacker v. Loeb, 67 Miss. 200, 6 So. 687.
In Fidelity Guaranty Co. v. Sturtevant, 38 So. 784, it is shown that for after-acquired chattels there must be particular designated property which may, in ordinary course of things, and with reasonable certainty, come into existence. Mortgagor must have an interest concerning the subject at the date of the mortgage. That the after-acquired clause in a deed of trust cannot take all property to be acquired within a given time.
McCown v. Mayor, 65 Miss. 541, 5 So. 98; Russell v. Stevens, 70 Miss. 685, 12 So. 830; Miss. Valley Co. v. Chicago Railroad Co., 58 Miss. 896, 38 Am. Rep. 348.
Certainly there is nothing in the appellant's original bill or amendment thereto that would have the slightest tendency to show that the makers of the deed of trust, at the time of the making of the same in the year of 1931, had any potential interest in the 1934 cotton seized under writ of sequestration sued out under bill of complaint.
The appellant by an original bill alleges that the appellees executed to it a deed of trust to secure a debt due it by them. The deed of trust, after describing certain property conveyed thereby, proceeds: "Also, any increase of all property, real or personal, that may be hereafter acquired by the parties of the first part (the appellees) by purchase or otherwise, the legal title of which under said trustee, his successors and assigns we warrant and agree forever to defend." The bill, filed about three years after the execution of the deed of trust alleges that there is a balance of four hundred sixty-eight dollars and sixty-eight cents due on the indebtedness, secured by the deed of trust; that the appellees have acquired and have in their possession six bales of cotton; that they are insolvent and have no other property out of which the appellant can collect the debt due it; and that they are about to dispose of the cotton.
The prayer of the bill is for a decree for the amount of the debt due the appellant, the subjection of the cotton to the lien of the deed of trust, and that the cotton be impounded (we presume by a writ of sequestration) for subjection to the payment of any amount found to be due the appellant.
A demurrer to this bill was sustained.
The appellant says that its bill presents (1) a case for the enforcement of a lien, and, if not, then (2) a case for equitable relief independent of the claimed lien. We are not here concerned with the validity vel non of this deed of trust in an action at law, for the suit is in equity, and it is settled that an "after-acquired" property clause in a mortgage or deed of trust is valid and enforceable in equity, and that the description of such property here is sufficient. Bacot v. Varnado, 91 Miss. 825, 47 So. 113; Central Trust Co. v. Kneeland, 138 U.S. 414, 11 S.Ct. 357, 34 L.Ed. 1014; 1 Jones on Mortgages (8 Ed.), secs. 208 and 209.
If the court below, as intimated in the appellant's brief, sustained the demurrer on the theory that such mortgages are limited by section 2130, Code 1930, to property acquired within a stated period not to exceed twelve months, an erroneous construction was thereby put on the statute. That statute does not grant the right to execute mortgages on after-acquired property, but provides only (1) when such mortgages shall be valid as to creditors, and (2) that the mortgagors may pay the secured debts before the maturity thereof.
The first of the appellant's claimed grounds for relief being valid, the demurrer should have been overruled, and we have no occasion to decide the second.
Reversed and remanded.