
    SATTERTHWAITE v. ELLIS.
    (Filed October 1, 1901.)
    1. CHATTEL MORTGAGES — Glaim ancl Delivery — Replevin—Pos-session — ''Assignments.
    The assignee of a chattel mortgage is entitled to the possession of the property before the mortgage becomes due.
    2. COUNTER-CLAIM — Glaim and Delivery — Damages.
    A counter-claim does not arise in an action for possession of mortgaged chattels by reason of the wrongful seizure of the property.
    3. DEMAND — Chattel Mortgages — Glaim and Delivery.
    
    Where it is obvious from the defense set up that a demand would have been futile before instituting claim and delivery for mortgaged chattels, demand was unnecessary.
    4. CHATTEL MORTGAGES — Possession—Assignment—Notice.
    Where an assignee of a chattel mortgage acquires the note for value before maturity, he is not, in the absence of notice thereof, bound by an agreement between the mortgagor and mortgagee that the former is to retain possession until the note is due.
    ActioN by L. M. Satterthwaite and others against W. S. Ellis, heard by Judge A. L. Cohle and a jury, at Fall Term, 1900, of the Superior Court of Graven County. From a judgment for the plaintiffs, the defendant appealed.
    No counsel for the plaintiffs.
    
      W. D. Mclver, for the defendant.
   MoNtgombey, J.

The plaintiff, who is the assignee of a' note and mortgage made by the defendant, brought this action to recover possession of the personal property conveyed in the mortgage before the maturity of the debt, and at the ■time of the issuing of the summons seized the property under a proceeding in claim and delivery. The defendant, in his answer, resisted the plaintiff’s claim, averring that there was a verbal agreement between the mortgagee and himself, at the time of the execution of the mortgage, that he should be allowed to remain in possession of the property until the note should fall due, and also set up a counter-claim and prayed for judgment for a return of the property and for damages for the wrongful taking and detaining the same. Amongst the issues submitted was one (the fifth in number) as to whether demand was made under the mortgage and note on the defendant for possession of the property before the action was commenced, and another (9th) as to the value of the use and possession of the property seized from the date of its seizure to the trial — both issues submitted under the plaintiff’s objection. The jury responded “No” to.the fifth issue, and “$110” to the ninth. His Honor, notwithstanding the finding of the jury on the two issues, gave judgment that the plaintiff recover the property absolutely, the jury having found in response to the first issue that the plaintiff was entitled to the property.

His Honor instructed the jury, amongst other matters, that, “If the jury should find that the plaintiff purchased the note and mortgage from Mitchell (the mortgagee) for value and before it was due, unless they should find that tbe plaintiff bad bad notice of tbe agreement between Mitchell and Ellis (tbe defendant), tbat Ellis should retain possession of the property (if they should find there was such an agreement), tbe plaintiff would not be bound by tbe agreement, and tbat tbe jury should find tbat tbe plaintiff was tbe owner and entitled to tbe possession of tbe property, and answer 'Yes’ to tbe first issue; and that tbe fact tbat tbe defendant was then in possession of tbe property was not notice of such an agreement.”

Tbe defendant excepted to the charge, and tbe contention of bis counsel here was, that tbe plaintiff as assignee of the mortgagee bad no authority or right to have possession of the property, tbat being tbe privilege of tbe mortgagee only, and tbat that right belonged to tbe mortgagee, because, and only because, of the legal title being in the mortgagee — the legal title drawing tbe right of possession. But it seems to us tbat tbe better view is tbat tbe assignee was entitled to possession of tbe property. Under numerous decisions of this Court it is held tbat tbe assignee of a note secured by a mortgage is entitled to all the rights and privileges which the mortgagee bad, except to sell tbe property under tbe mortgage, and in Jones on Chattel Mortgages, section 501, it is said: “Tbe legal effect of tbe assignment is to transfer tbe entire interest of the mortgagee in tbe property to the as-signee, who thereupon, in place of the mortgagee, becomes tbe general owner. If tbe mortgagee was entitled to tbe possession of tbe property, the legal effect of bis assignment is tbe same as if be bad been in tbe possession of tbe property, and bad sold and delivered it to tbe assignee. His assignee may recover possession in tbe same manner that tbe mortgagee himself might have recovered it.” And so also it is said in Jones on Chattel Mortgages, section 506: “An assignment by a mortgagee not in possession has the same legal effect as an assignment bj a mortgagee in possession. It passes bis entire interest in tbe property, and the assignee becomes entitled to all the rights of the mortgagee. If the latter is entitled to possession, his assignee in like manner is entitled to possession.”

The defendant also excepted to the judgment, first, because it,was for the absolute possession of the property; second, because the defendant was not allowed the amount found by the jury under the ninth issue; and also because the jury found that no demand had been made by the plaintiff on the defendant for the property before the action was commenced.

We think the judgment is correct. The action was not for the debt and foreclosure of the mortgage, but simply for the possession of the property. The debt was not due. If the action had been for foreclosure and there had been a verdict of the jury ascertaining the debt, and it had appeared that the property was largely in excess of the debt, the Court might have rendered a judgment for the recovery of the property with a proviso that the same should have been relieved of the lien and liability to seizure and sale by the payment of the sum actually due with interest and costs. Taylor v. Hodges, 105 N. C., 344.

But as-we have said, the action was for the possession of the property itself and the plaintiff had the right to that, notwithstanding the debt was not due. Hinson v. Smith, 118 N. C., 503; Jackson v. Hall, 84 N. C., 489.

As to the second exception of the defendant to the judgment, it may be said that if the demand for such damages as aie embraced in the ninth issue could be considered as a counter-claim (the same not having been set out in the answer, but only in the demands for judgment), it ought not to have been allowed in the judgment. It did not exist at the time of the commencement of the action, nor did it arise out of the same cause of action. It grew out of an alleged tvrong-fxd procedure in tbe present action — tbe seizure of tbe property by claim and delivery — and not out of tbe cause of the action. Kramer v. Electric Light Co., 95 N. C., 277; Snotv v. Commissioners, 112 N. C., 335; Phipps v. Wilson, 125 N. C., 106.

In respect to tbe third exception to tbe judgment, it is sufficient to say that no demand was necessary for tbe possession of tbe property before tbe action was commenced. The answer shows, as we have pointed out, that tbe demand would have been useless. Tbe defendant intended to resist tbe claim of tbe plaintiff. Buffkin v. Eason, 112 N. C., 162; Moore v. Hurtt, 124 N. C., 27. In tbe last-mentioned case it is said: “Tbe sole purpose in requiring a demand before action is that tbe defendant shall not be taxed with costs when tbe plaintiff could have obtained tbe object of his action by simply making demand. When, therefore, tbe defendant set up a defence to tbe action, it appearing that a demand would have been futile, tbe courts do not bold that tbe omission to make demand is fatal.”

Affirmed.

Douglas, I.,

concurring. While concurring generally in tbe opinion, I can not agree with that part of it which bolds that tbe so-called damages embraced in tbe ninth issue did not arise out of the same cause of action, but out of an alleged wrongful procedure in tbe action. Whatever terms may have been used by tbe parties, tbe sum found due is, in fact, not damages arising out of a wrongful act, but tbe net value of tbe use of tbe property in tbe plaintiff’s possession. It is well settled that while a mortgagee may, in tbe absence of any stipulation to the contrary, take possession of mortgaged property, be can not sell such property before default. If be sees fit to take tbe property before tbe debt is due, be must aecount'to tbe mortgagor for the value of any reasonable use to wbicb tbe property is or could bave been put. Tbe reason of tbe rule is thus given in Jackson v. Hall, 84 N. C., 489: “While tbe defendant invaded no .right of the mortgagor in taking and keeping possession until tbe, day of default, whether the property was or was not in danger of being lost or injured, yet be was, meanwhile, acting as trustee, bound to exercise that diligence and care expected of one in tbe preservation and management of bis own property, and to account not only for profits actually received, but for the value of any reasonable and prudent use to which it could bave been put without detriment to tbe property itself, since be has, as the -verdict finds, needlessly deprived the plaintiff of its use.” Such a claim is rather in tbe nature of recoupment, and being “connected with tbe subject of tbe action,” clearly comes under the first class of counter-claims mentioned in section 244 of The Code. Electric Co. v. Williams, 123 N. C., 51. If this were a suit for tbe foreclosure of tbe mortgage, which it appears to have been considered through every stage of its proceeding, up to the judgment, I do not see why the defendant could not maintain bis counter-claim for tbe reasonable hire of tbe property taken before default.  