Effect of Foreign Chattel Mortages upon the Rights of Subsequent Purchasers and Creditors

Authors

Marion Griffin

Abstract

Should the title or lien of a foreign mortgagee be protected against the claims of creditors and innocent purchasers in the state to which the mortgaged property is removed? It is sometimes said that the chattel mortgage creates a mere lien by the law of the state where made, which is not entitled to recognition in any other state. The weight of authority is otherwise. It is a transfer of the, property itself as a security for the debt. There are some states in which a mortgage of personal property creates no title in the mortgagee, but a mere lien; but even here the lien is created by contract, not by the law of the state, as will be seen hereafter. And according to certain well established principles of law, recognized by that comity which exists between all civilized nations, the mortgagee's rights are superior to all subsequently acquired claims, and should be enforceable in the courts of any state into which the property is brought, even against the claims of its own citizens. Despite the apparent confusion in many of the decisions, owing to the peculiar circumstances attending particular transactions, the courts of all but a very few states give to a mortgage duly executed and recorded in a foreign state the same effect that it has in that state. Its validity and priority are recognized in Alabama, Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, South Carolina, Texas, Veriont, Virginia, and by the courts of the United States including the Supreme Court. Alabama and Georgia have statutes requiring a foreign chattel mortgage to be registered also in those states in order to bar the rights of innocent purchasers, Alabama allowing four months' time after the property is brought into that state, and Georgia six months. But they apply the general rule up to the date at which the time allowed for such registration expires, and if the mortgage is duly executed and recorded in the state where the owner then resided, the claims of innocent purchasers or creditors acquired in Alabama or Georgia within that period must yield precedence to the mortgage.

Recommended Citation

Marion Griffin, Effect of Foreign Chattel Mortages upon the Rights of Subsequent Purchasers and Creditors, 4 Mich. L. Rev. 358 (1906).
Available at: https://repository.law.umich.edu/mlr/vol4/iss5/2