104 N.Y.S. 900 | N.Y. App. Div. | 1907
Lead Opinion
The surplus here under consideration arose from the sale of- the ■ .premises Mos. 23 and 25 East Twenty-first street, in the city of Mew York, under foreclosure. The amount of this surplus is $10,852.73.
The Merrick Construction Company, a corporation organized under the laws of this State, was the owner of the premises, and had about completed a building, which it.desired to dispose of for the purpose'of paying its obligations. On the 31st day of May, 1904, while owing large sums of money for labor and materials, this corporation made and. delivered a mortgage covering the said premises to George Moore Smith for $42,500. This mortgage was .recorded on the morning of June 1, 1904. Mr. Smith was not a creditor of the corporation,.and it is claimed by him that the mortgage, with the accompanying bond, was given to secure all of the creditors who in any way performed work on said premises. It is conceded that simultaneously with the giving of the bond and mortgage Mr. Smith executed to the corporation a document in the nature of: a declaration of trust, in which he stated that he held the mortgage for the benefit of the creditors named in the document. It is claimed that at the time of giving this rhortgage the Merrick Construction Company ivas, insolvent, • but in the view we take of the question this is not material. The Yellow Pine Company was one of the creditors of the Merrick Company, for materials furnished, and on the fourth day of June, without accepting any rights under the mortgage, this company filed a mechanics’ lien for $2,704.16. This lien, and the amount thereof, is not questioned, the contention being that the trust mortgage has priority over this claim, and that the. appellant must accept an equal division of this surplus with the other creditors. In determining this question we must look to the substance of what has been done, and it seems to.me.that the giving of the trust mortgage, concededly for the purpose of giving all of the creditors an equal standing,, was in effect a general assignment of any interest of the Merrick Construction Company in the premises for the benefit of creditors, and the fact that all of the creditors, were materialmen or laborers does not affect the case, for'each of them had an equal right with the appellant to file liens, the law giving preference in the order of perfecting such liens. The effect being as we have
The order appealed from should be reversed, with costs, and an order entered directing that the lien of the Yellow Pine Company, with interest, should be first paid out of the surplus.
Laughlin, Clarke and Scott, .JJ., concurred; Ingraham, J., dissented.
Laws of 1897, chap. 418, art, 1.—[Rep,
Dissenting Opinion
I think this order should be affirmed. By the mortgage to Smith for the benefit of specific creditors the payment of their claims was postponed for one year from the date of the mortgage, and upon acceptance by the creditors of this mortgage for their benefit they waived their right to file mechanics’ liens or to enforce their claims against the mortgagor until the mortgage became due. There was, therefore, I think, a good consideration for the mortgage. ' The case is entirely different from assignments for the benefit of creditors where the creditors are not parties to the assignment and part with notiiing as a consideration for the transfer. I think this case must stand upon exactly the same condition as if the mortgagor had made a mortgage to each creditor to secure his claim, payable one year from date, which had been accepted by the creditor, and in such a case I think the mortgage is superior to a mechanic’s lien subsequently fled. The appellant occupied before the mortgage was executed the same relation to the mortgagor that the creditors who •were subsequently secured by the Sniith mortgage occupied. The creditors parted witíi a valuable right on the faith of this mortgage, and I think they should be protected.
Order reversed, with costs, and order directed as stated in' opinion. Settle order on notice.