Phillips, J.:— Plaintiff obtained a mortgage of certain properties including a bull, with which alone we are concerned here. The bull was left in the mortgagor's possession and was eventually purchased by third defendant from the mortgagor's vendee. The hypothecation of movables has been recognized in Indian Courts — vide Shyam Soonder v. Cheita(1) and Shrish Chandra Roy v. Mungri Bema(2) but that is not the question for consideration now. We have to determine whether a bona fide purchaser for value of hypothecated goods without notice of the hypothecation is bound by it. There is no direct authority on the point, nor is hypothecation of movables recognized by any statute. We are therefore thrown back upon principles of equity and justice. Under section 108 of the Indian Contract Act a person in possession of movables, although not the owner, can pass the property is the goods to an innocent purchaser. Much more then would it appear that the real owner could pass the property, which was only subject to an undisclosed hypothecation. Even if we are to apply principles of English law on this question, which is perhaps doubtful, we find that it has been held that goods included in a bill of sale and left with the original owner can be purchased in the ordinary course of business by a bona fide purchaser. National Mercantile Bank v. Hampson(3). When goods are left in the possession of the mortgagor, a wide door is opened for fraud, and when the equities between the innocent purchaser and the mortgagee have to be weighed, the preponderance must be given to the purchaser, for the mortgagee has by his omission to secure possession of the goods facilitated the commission of the fraud. In this view we think that a bona fide purchaser of hypothecated goods without notice of the encumbrance takes the goods free of it.
The second appeal is dismissed with costs.
N.R