CHAPTER 157

REGULATIONS CONCERNING TRADE

RELATING TO MORTGAGES ON CHATTELS AND CROPS

AN ACT TO AMEND CHAPTER 79 OF THE REVISED CODE OF DELAWARE, 1935, RELATING TO MORTGAGES ON CHATTELS AND CROPS; PROVIDING FOR MORTGAGES ON CHATTELS OF ANY KIND INCLUDING LIVESTOCK, POULTRY, FARM MACHINERY, FARM EQUIPMENT AND CROPS GROWN, GROWING OR TO BE GROWN; PROVIDING FOR THE FILING, DOCKETING AND INDEXING THEREOF IN RECORDERS' OFFICES AND THE EFFECT THEREOF; PRESCRIBING FEES, REGULATING ASSIGNMENT, RELEASE, SATISFACTION AND EXTENSION OF THE LIENS OF SUCH MORTGAGES; PRESCRIBING METHODS OF FORECLOSURES; DEFINING DEFAULTS AND VIOLATIONS AND FIXING PENALTIES, AND REPEALING ARTICLES 2, 10 AND 11 OF THE SAID CHAPTER.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Chapter 79 of the Revised Code of Delaware, 1935, be and the same is hereby amended by striking out and repealing all of Article 2, all of Article 10 and all of Article 11 and inserting in lieu thereof a new Article to be styled Article 11, 3371. Section 48 as follows:

3371. Sec. 48. (a) Chattel Mortgages Authorized:--Any person, association, partnership or corporation may give as security for any funds borrowed or to be borrowed or for any pre-existing indebtedness, a chattel mortgage upon chattels of any kind or description, including livestock, poultry, farm machinery, farm equipment and crops, including annual or perennial crops, and other plant products, either grown or growing at the time of the execution of such chattel mortgage, or to be planted or grown within one year thereafter. For the purposes of this Act all such crops shall be deemed to be personal property and mortgageable as such.

(b) Formal Requirements:--Any mortgage, executed under and pursuant to this Act, shall be in writing and signed by the mortgager or his duly authorized agent. Any such mortgage may be acknowledged but an acknowledgment shall not be necessary to the validity thereof or to entitle it to be filed and docketed. The property covered or to become covered by any such chattel mortgage may be described as all that property of a specified class so identified by reference to location, brands, marks, numbers or otherwise as to distinguish it from other property of the same class, or such property may be described in any other mariner authorized by law.

() Property Mortgageable:--Any chattel mortgage executed under and pursuant to this Act may also cover chattels of the same class as that described in the mortgage provided the same are required by the mortgagor, subsequent to the execution of the chattel mortgage, and prior to its extinguishment; and any such mortgage also may include replacements of any of the mortgaged property and all increase, issue, progeny and produce of mortgaged animals, poultry and livestock and other property mortgaged under the provisions of the Act.

Any chattel mortgage conveying livestock or poultry and hay, grain or other foodstuffs or crops shall not be invalid in any particular because provision is contained therein or the mortgagee agrees that the mortgagor may use and consume any such hay, grain, food, forage, fodder or crops in preserving or preparing for market the livestock or poultry covered by the mortgage.

(b) Debts Which May Be Secured:--Any chattel mortgage executed under and pursuant to this Act may secure a pre-existing debt, advances currently made or contracted for, and future advances, whether obligatory or optional to be made by the mortgagee within a period of three (3) years from the date of the execution of such mortgage, but not to exceed in the aggregate outstanding at any one time an amount stated in the mortgage. Such a chattel mortgage may also secure advances and expenditures of the mortgagee for taxes, levies, insurance and repairs to or maintenance of the property described in the chattel mortgage, together with interest on such advances and expenditures at the rate fixed therefor by the terms of the bond

or note or the chattel mortgage securing same. All future advances made within the terms of such chattel mortgage shall be secured to the same extent and shall have the same priority of lien as if made at the time of the execution of the mortgage.

(e) Priority of Lien:--Any chattel mortgage executed pursuant to this Act shall be a lien upon the property therein described, which lien shall be good and valid against and superior to all rights of subsequent creditors, subsequent purchasers, subsequent mortgagees and other subsequent lienors and encumbrancers, and all persons subsequently dealing with the mortgaged property or subsequently acquiring an interest therein from the time of filing of the mortgage, as provided in Paragraph (i) of this Act; Provided, however, that such filing of a chattel mortgage against any motor vehicle, with respect to which a certificate of title is issuable under the laws of this State shall not constitute notice of the lien against such motor vehicles as to the State, or creditors or purchasers unless and until a statement of such lien is noted and recorded in the manner required by law for the recording of liens against motor vehicles. The lien of any chattel mortgage executed pursuant to this Act on crops grown, growing or to be grown shall be superior to the lien of any mortgages, deeds of trust or judgments or other liens upon the realty or land upon which any such crop has been or is to be seeded or may be growing and any sale made under any mortgage, deed of trust or judgment or other lien upon such realty or land before such crops have been severed shall be made subject to the lien on the crops as provided for in this Act.

(f) Effect of Removal of Property:--Any of the property covered by a chattel mortgage executed pursuant to this Act which may be removed without the written consent of the mortgagee from the county in which it was located at the time of the execution of the mortgage, or from the county in which the mortgage is filed, shall remain subject to the lien of the mortgage.

Any of such property which may be removed, with the written consent of the mortgagee, from the county in which it was located at the time of execution of the mortgage or from the county in which the mortgage is filed shall remain subject

to the lien of the mortgage for a period of only six months from the date of removal unless, within such period, a true copy of the mortgage is filed in the office of the recorder in the county to which the property is removed.

(g) Effect of Sale of Mortgaged Property:--Any property covered by a chattel mortgage which may be sold by the mortgagor shall remain subject tO the lien of the mortgage, unless the mortgagee expressly consents in writing to such sale, free and acquit of the mortgage lien, and the consent of the mortgagee to the sale of a part of the property shall not invalidate or impair the lien of the mortgage as to other property covered by the mortgage.

If the mortgagor, with or without the written consent of the mortgagee, shall make sale of the mortgaged property, or any part thereof, the proceeds realized through such sale shall be subject to the lien of the mortgage and the mortgagee at his option may enforce his lien against the chattels or against the proceeds; Provided, however, that the mortgagee shall receive only one full satisfaction of the debt secured by the mortgage; And provided further, that the mortgagee in consenting in writing to sale of the mortgaged property, or a part thereof, may authorize and permit the mortgagor to sell such mortgaged chattels, free and acquit of the mortgage lien, upon condition that the proceeds of sale be paid to the mortgagee, and if consent to sale is given on such terms and conditions, any purchaser or grantee of the mortgaged chattels shall acquire title to the chattels free and acquit of the lien, but the lien shall remain attached to the proceeds realized through sale until payment thereof to the mortgagee.

(h) Default:--If the mortgagor, without the consent of the mortgagee, shall remove any of the mortgaged chattels from the county or counties stipulated in the chattel mortgage or shall substantially injure the same or shall conceal, or undertake or purport to sell, or otherwise dispose of them, or any substantial part thereof, under claim of full ownership or otherwise, by his wilful act or neglect shall substantially impair their value save in so far as is consistent with a reasonable use of the chattel or chattels, such action shall constitute a default under the chattel mortgage.

(i) Manner and Effect of Filing:--Any chattel mortgage executed pursuant to this Act may be filed in the office of the recorder for each county in which the chattels or any portion of the chattels are located at the time of filing the same, either by filing the original mortgage or by filing a true copy thereof duly certified by the recorder of the original county, and when so filed such chattel mortgage shall constitute a lien on the property described therein from the time of such filing which lien shall be good and valid as hereinbefore provided for the full amount of indebtedness intended to be secured thereby. The recorder shall maintain a book to be known as the "Chattel Mortgage Book" in which he shall docket each mortgage presented to him for filing pursuant to this Act, and in said docket he shall set forth the date and the hour of filing, the name of the mortgagor, the name of the mortgagee, the amount advanced or to be advanced and the limit thereof, and a brief description of the chattels or crops described in the instrument, and the premises upon which such chattels and crops are located, and he shall retain the instrument in his office for future public inspection. The recorder shall likewise maintain a "Chattel Mortgage Index" in which he shall index alphabetically under the names of the mortgagors and the mortgagees, all chattel mortgages filed pursuant to this Act and in which the date of filing such instruments shall be noted.

Any instrument affecting the lien of a chattel mortgage or its ownership may be filed in each office in which the chattel mortgage is filed, and from the date of filing thereof each such instrument shall be good and valid as against subsequent creditors, subsequent purchasers, subsequent mortgagees, other subsequent lienors and other persons subsequently dealing with the property or subsequently acquiring an interest therein. The fact and date of filing of each such instrument shall be noted by the recorder on the margin of the page on which the chattel mortgage is docketed.

(j) Fees:--The recorder shall be entitled to charge and receive for services rendered hereunder the following fees:

For filing, indexing and docketing each chattel mortgage, Two Dollars ($2.00).

For filing, indexing and noting each assignment, One Dollar ($1.00).

For filing and noting each satisfaction, partial release, extension or subordination by written instrument, fifty cents (50c).

For attesting the entry of a marginal satisfaction and noting the satisfaction on the index, fifty cents (50c).

For indexing and attesting the entry of a marginal assignment, fifty cents (50c).

For a certified copy of a chattel mortgage filed hereunder, the sum of One Dollar ($1.00), provided a copy of the instrument is furnished by the person requesting the same.

(k) Transfer of Mortgages From Other States Authorized: --When chattels are brought into this State subject to a chattel mortgage or other chattel lien filed or recorded in another state, such chattel mortgage or other chattel lien instrument, or a copy thereof, certified by the officer in whose office it was filed or recorded may be filed as chattel mortgages provided for herein are filed, and when so filed, any such instrument shall be indexed and docketed as herein required upon an affidavit of the mortgagee setting forth a brief description of the lands upon which such chattels are located in this State, and upon such filing, the chattel lien instrument shall have the same force and effect and be subject to all the terms and conditions of this Act to the same extent and in the same manner as though executed and filed in this State pursuant to this Act.

(1) Assignments:--Any chattel mortgage executed under and pursuant to this Act may be assigned by an instrument, in writing, signed by the mortgagee or assignee, and setting forth the amount of the debt as of the date of the assignment, and upon presentation of such assignment to the recorder, the recorder shall file the same and note on the margin of the page in which the chattel mortgage is docketed the fact of the assignment, the date of the notation, the name and address of the assignor, the name and address of the assignee, the date of the assignment, and the amount of the debt as of the date of the assignment and such assignment shall, except as to the parties thereto,

take effect and be valid only from the time of the marginal notation as herein provided: however, any such chattel mortgage may be assigned on the margin of the page where such chattel mortgage is docketed, which assignment shall be attested by the recorder.

(m) Satisfaction:--Any such chattel mortgage may be satisfied by an instrument in writing signed by the mortgagee or assignee, and upon presentation of such instrument to the recorder, the recorder shall file the same and note the fact of such satisfaction and the date thereof on the margin of the page of the book where the chattel mortgage is docketed, and when so noted such satisfaction shall fully and effectually release the lien of such mortgage: Provided, however, that any such chattel mortgage may be satisfied on the margin of the page where such chattel mortgage is docketed, which satisfaction shall be attested by the recorder. The satisfaction of a chattel mortgage shall be noted by the recorder on the line of the page on which the chattel mortgage is indexed.

(n) Period of Lien:--Such chattel mortgages shall, except between the parties thereto, take effect and be valid only from the time of filing as herein provided. As between the parties, such mortgage shall be and remain a lien on the property mortgaged until the debt secured thereby is paid, but as to third parties shall remain a lien for a period of only five (5) years, unless the lien thereof is extended by filing, prior to the expiration of such period, with the recorder an affidavit of the mortgagee or his assignee stating the amount then secured by the lien, in which case the mortgage shall remain a lien for an additional period of five (5) years from the date of the filing of such affidavit. The lien of any mortgage may be further extended with like effect by the filing of successive like affidavits. The recorder shall note each extension of a chattel mortgage lien and date of filing the same on the margin of the page of the book where the chattel mortgage is docketed and shall likewise index each such extension in the "Chattel Mortgage Index" in the same manner as is herein provided for the indexing of chattel mortgages.

(o) Remedies on Default:--Upon default in performance of any of the terms and covenants of any chattel mortgage or of

any bond or note secured thereby, the mortgagee, assignee or the duly authorized attorney or agent of such mortgagee or assignee shall have the right, with or without process of law, immediately to take possession of the mortgaged property and to do all things necessary to preserve the same, and any expense incurred thereby shall be included in and secured by the lien of such chattel mortgage. In the event of repossession of the mortgaged property, in accordance with the foregoing provision, the mortgagee may sell the same at public or private sale after giving a written notice of at least ten (10) days thereof to the mortgagor by mailing same to him at his last known address. Any surplus realized in excess of debt secured by the mortgage and costs shall be paid over to the mortgagor and personal liability for any deficit may be enforced in the manner authorized by law. The mortgagor or his assignee at any time prior to the sale of the mortgaged property as above provided shall have the right to redeem the same and to reacquire possession thereof upon making payment to the mortgagee or his assignee of the indebtedness secured by such chattel mortgage, together with interest thereon, and other charges secured by the same.

Upon default in the payment of the mortgage debt, either as to principal or interest, or upon default in the performance of any covenant contained in the chattel mortgage or bond or note, the chattel mortgage may be foreclosed by any of the methods authorized by law for the foreclosure of a mortgage, including the entry of judgment on a warrant of attorney contained in the bond, or note secured by the chattel mortgage. The lien of any levy which may be made upon the mortgaged property by virtue of any execution based upon a judgment entered upon such bond or note shall relate back and be effective as of the date of the filing of the chattel mortgage. In such foreclosure proceedings the mortgaged chattels may be sold in the manner authorized by law for the sale of personal property taken in execution.

(p) Penal Provision:--Any person who, without the written consent of the mortgagee or his assignee, shall wilfully sell any property mortgaged by him or his predecessor in title in conformity with the provisions of this Act, either before or after the debt is due and before the debt is paid, or shall wilfully injure, destroy, conceal or without notice to the mortgagee,

abandon or shall wilfully deface any marks identifying any such mortgaged property shall be guilty of a misdemeanor, and, upon conviction thereof, shall be sentenced to undergo imprisonment not exceeding one year, or to pay a fine of double the value of the personal property so sold, injured, destroyed, defaced, concealed or abandoned, or both, at the discretion of the court.

(q) Corporation Mortgages, To Secure Bonds, Not Within The Act:--None of the provisions of this Act are applicable to mortgages or deeds of trust including both real and personal property executed by a corporation to secure an issue of bonds.

(r) Saving Clause:--This Act shall not be construed to adversely affect or impair the lien of or rights under any existing chattel or crop mortgage, nor shall this Act be construed to repeal or affect any act relating to chattel mortgages not herein expressly repealed.

(s) Separability:--If any provision of this Act, or the application thereof to any person or circumstance shall be held to be invalid, such invalidity shall not affect the provisions or application of this Act which can be given effect without the invalid provisions or application, and to this end the provisions of this Act are declared to be severable.

Approved May 27, 1949.