Cumberland National Bank v. Baker. the doctrine expounded in Runyon v. Groshon and other cases (ubi post), irrespective of the record under the statute. On the other hand, if the rule laid down by the supreme court in Knowles Works v. Vacher, ubi supra, be followed, the complainant's mortgage, though given to secure a pre-existing debt, was yet in good faith and was thus entitled, on being recorded, to receive the priority which is given by the statute. But in my view the case in hand does not call for the consideration of the construction of the fourth section of the statute. The mortgagor expressly covenanted that the complainant's mortgage should be prior to the mortgage given to the defendants Garrison & Minch on the same day, March 5th, 1895, and the latter's own mortgage contained a like provision. Both the complainant's and defendants' mortgages of that date were drawn at the same time and under an agreement of all the parties that the complainant's should be the prior lien. The complainant's mortgage was in fact the first one delivered and recorded. The defendants had, therefore, not only actual and constructive notice of the existence of the prior mortgage of the complainant, but they had actually agreed by the clause in their own mortgage that the complainant's mortgage should have priority, and if by any mishap the defendants' mortgage had been first recorded, the complainant would have had an equity to have its mortgage put in its proper place of priority. It is no answer to this to say that the complainant parted with nothing for its mortgage, while the defendants gave a presently-passing consideration for their mortgage. All the parties were informed of the whole transaction, and it was on the faith of their agreement that the complainant's mortgage should be prior to the defendants', that the latter obtained their mortgage. It would be inequitable to permit them to retain their own mortgage thus secured, and to dispute the priority of the complainant's mortgage which they had agreed should be first. The mortgage of the complainant and those taken by the defendants on August 30th, 1897, stand to each other on this point in the same position as do those dated March 5th, 1895. Those taken on August 30th, 1897, were both received as securi Cumberland National Bank v. Baker. ties for pre-existing debts. That of Garrison & Minch was given for precisely the same debt as was secured by their previous mortgage of March 5th, 1895; that of the defendant William O. Garrison for an outstanding indebtedness of Baker, the mortgagor, to him personally. The defendants, both Garrison and Minch, knew of the previous mortgage of the complainant when they took their mortgages of August 30th, 1897. Under the rule as stated in Milton v. Boyd, ubi supra, if the prior record of the complainant's mortgage did not protect it, because that mortgage was given to secure a precedent debt, the absence of the aid of the record did not avail the defendants, because both of their mortgages taken on August 30th, 1897, had the same infirmity; they, also, were both taken to secure debts pre-existing their creation, and, under the doctrine in Milton v. Boyd, their holders were not subsequent mortgagees in good faith, and the precedent mortgage of the complainant, whether recorded or not, was not void as to them. They knew of its priority when they took their mortgages, and were bound by it, when it is shown to have been honestly given with no purpose to defraud creditors. If the rule declared in Knowles Works v. Vacher be applied, the mortgage of the complainant being in good faith, they were bound by its previous record. I also think that as far as the later mortgage of the defendants Garrison & Minch covered only the same goods as were included in their previous mortgage, those defendants were bound by their covenant to recognize the complainant's mortgage as prior to their own. The complainant's mortgage was not illegal in any sense, and they could not avoid their agreement that the complainant's mortgage should have priority over theirs, by taking another mortgage upon the same property. The defendants further claim that the complainant's mortgage is invalid so far as it is asserted to be a lien upon the crops raised in the year 1897, which have been sold by the receiver, the proceeds of which sale await distribution in this cause, contending that an unplanted crop cannot be made the subject of a chattel mortgage. This question turns upon the extent and validity of the lien Cumberland National Bank v. Baker. of the complainant's mortgage. The clause in the complainant's mortgage which is claimed to include the crops raised in 1897 is: "And also all the seeds and crops, of whatever kind and description now in the ground or hereafter to be planted upon the farm where we now reside." At the time this mortgage was given, the mortgagor, Baker, was in the actual possession and cultivation of the farm on which the seeds and crops named in the mortgage were in the ground or to be planted. At the date of the mortgage-March 5th, 1895-it is probable that no crops were growing on the farm, certainly those now in question were yet to be planted, for it is the proceeds of the sale by the receiver of the crops (largely onion seed) raised in 1897 which are in dispute. The defendants insist that the mortgagor had neither right nor power to mortgage an unplanted crop, a thing not yet in existence. In order that a vendor may make a sale either conditional or absolute, it is necessary that he shall have a present property in the thing sold. This property may be either actual or potential —that is, the vendor may actually have the subject-matter of the sale at the time when the contract is made, or he may at that time occupy such a position to the property dealt with that it is reasonably certain to come into being, subject to his disposition, and in such case the sale transfers the property as soon as it is extant, though in the later cases some act of possession seems, at law, to be required. Such a sale was sustained at law as long ago as the case of Grantham v. Hawley, Hob. 132, which was a grant by a lessor of such corn as should be growing upon the leased ground at the end of the term of twenty-one years. It was objected that it was a mere contingency whether there should be a crop of corn growing at the end of the term, and that the lessor never had any property in the corn, and, therefore, could not grant it, yet it was held that the right to the corn standing at the end of the term being certain, accrued with the land to the lessor, and he might lawfully dispose of it. What may be potential property, capable of being dealt with by a sale, is well illustrated by the discussion in the case of Petch v. Tutin, 15 Cumberland National Bank v. Baker. Mees. & W. 115. In that case a tenant, in order to secure an indebtedness, assigned a large amount of property, "and also all the tenant right and interest yet to come and unexpired," and the question debated was whether the crops not sown at the time of the assignment passed by it. The trial judge thought they did not, but, on rule to show cause, it was argued that they did, because the tenant in possession of the farm had a potential interest in the after-planted crop. Chief-Baron Pollock accepted the argument, and stated the principle to counsel thus: "Your distinction seems to be this, the party cannot grant the next year's crop of wool of sheep he has not got, but he may grant the next year's wool of the sheep he has got ;" and the whole court agreed that the trial judge was in error, and directed a verdict for the assignee of the after-planted crop. * * This doctrine has been enforced in the law courts upon the ground of the potential existence of the subject-matter of the conveyance. A mortgage by a lessee of crops yet to be planted on the land of which he is in possession was held, in an action of replevin, to be a disposition of things which had a potential existence when dealt with by the lessee, a farmer in possession of the land in which the crops were to be planted in the ordinary course of husbandry. Arques v. Wasson, 51 Cal. 622. Professor Dwight, sitting as a commissioner of appeal, held, in an action of trover, that a clause in a lease of a farm creating a lien securing the payment of rent "on all goods * and other personal property which may be put upon said premises," covered crops subsequently raised on the farm, and operated in equity to transfer the interest of the tenant immediately that the new property came into existence. McCaffrey v. Woodin, 65 N. Y. 459. The reasoning of the courts of law in the later cases proceeds upon the idea that the contract is a continuous agreement, operating as a power, and perfecting the interest of the creditor as soon as any act is done in the nature of an execution of the power. A very clear statement of the general rule as to the operation of a transfer of after-acquired property may be found in the opinion of Lord Chelmsford in Holroyd v. Marshall, 10 H. L. Cas. 220, where he declared that at Cumberland National Bank v. Baker. law a disposition of after-acquired property passes no title until possession is taken, or by some equivalent novus actus interveniens, dominion over it is assumed by the assignee; but in equity the moment the property comes into existence the agreement operates upon it. Under this view, one in the ownership of lands may assign an interest in crops thereafter to be planted on those lands which, being of a potential property, would pass the interest conveyed even at law. In the case in hand the mortgagor, Baker, was the possessor of the lands in which the after-planted crop was mortgaged; he was personally engaged in the production of the crops of the very character in dispute (onion seeds) in the usual course of husbandry, and, applying the doctrine above stated, he appears to have had such a potential interest in after-planted crops that he might, in the consideration of a court of law, convey it. If there be any question of the status of a mortgage made by a tenant or owner of lands on after-planted crops in the view of a court of law, there is little doubt that such an agreement will be sustained in a court of equity. While the rule at law requires an actual or potential ownership, equity will support assignments of contingent interests and expectations, and of things which have no actual or potential existence and which rest in mere possibility only. Smithurst v. Edmunds, 1 McCart. 418, where an assignment by way of security of articles (furniture of a hotel) yet to be purchased, was held to be an equitable mortgage. It will be noted that in this case the articles charged were actually non-existent when the mortgage was given, and in order to bring them in relation to it, the mortgagor was obliged to purchase them and bring them upon the property. The distinction between the rule at law and in equity declaring that the equitable title to things not in actual existence may pass by assignment is elaborated by Chancellor Green in the case last cited, which is approvingly referred to by the court of errors in McFarland v. Stanton Manufacturing Co., 8 Dick. Ch. Rep. 650. The complainant's mortgage is also criticised because it did not specify the year when the after-planted crop was to be raised, |