67 N.Y.S. 229 | N.Y. App. Div. | 1900
Lead Opinion
The learned trial justice found that the mortgage was not given or accepted with any fraudulent intent and that the omission to file it was not for any fraudulent purpose. It is contended that from the nature .of the agreement and the transactions had, the contrary
A finding was also made to the effect that there was an immediate delivery of possession of the property to the mortgagee and an actual, continued change of possession thereof. The correctness of this finding is also challenged by appellant. The evidence upon which it is based is undisputed and the question narrows to what is the reasonable inference to be drawn from uncontroverted facts. We are of opinion that the delivery of possession on December thirty-first was only colorable. By the express terms' of the agreement,. it was contemplated that the mortgagor should remain in possession, and the evidence not only fails to show' any open or public change of possession (Crandall v. Brown, 18 Hun, 461; Steele v. Benham, 84 N. Y. 634), but, on the contrary, indicates that the change of ownership and possession were intentionally concealed from the public: We think that the finding of delivery and change of possession was not warranted, but, having reached the conclusion that the judgment should be affirmed notwithstanding, it becomes unnecessary to consider the evidence on this point further.
On the 26th day of January, 1897, Mayer, at the request of Pryor’s attorneys, voluntarily delivered the key back and Pryor took possession, and later on the same day turned the property over-to the sheriff with authority to sell the same under the mortgage. The sheriff subsequently sold the property at publip auction and it was purchased by Mayer’s sister. H either the date of such sale or the consideration for which the property sold is stated- in the evidence. The judgments upon which the receiver bases this action were recovered in the Municipal Court of Rochester and transcripts thereof filed on the 4th and 19th days of February, 1897, respectively. There being no finding of fraud, the mortgage is unaffected by the Revised Statutes (2 R S. 136, §§ 5, 6), and is valid unless it comes within the condemnation of section 1 of chapter 279 of the Laws of 1833, which provides as follows: “ Every mortgage or con-' veyance intended to operate as a mortgage of goods and ^chattels
It is not essential that a- party be other than a general creditor at the time when the mortgage was given, but, of course, he cannot enforce any right by virtue of this statute until he recovers a judgment or obtains a warrant of attachment and is in a position to acquire a lien upon the mortgaged property. Until that time, for all practical purposes at least, the mortgage remains valid as to him. (Stephens v. Perrine, 143 N. Y. 476; Mandeville v. Avery, 124 id. 376; Karst v. Gane, 136 id. 316, 320, 323; Button v. Rathbone, Sard & Co., 126 id. 187; Jones v. Graham, 77 id. 628; Kitchen v. Lowery, 127 id. 59, 60; Thompson v. Van Vechten, 27 id. 568; Crouse v. Schoolcraft, 51 App. Div. 160.) We are of opinion that the Court of Appeals did not intend to decide in the later cases of Stephens v. Meriden Britannia Co. (160 N. Y. 178, 181, 182), and Sheldon v. Wickham (161 id. 500), that a general creditor at the time of giving the mortgage could not obtain relief under the statute by subsequently becoming a judgment creditor before the property is sold or appropriated under the mortgage. On January 26, 1897, and prior to the recovery of these judgments, the mortgagor voluntarily surrendered possession of the property to the mortgagee. The mortgage being valid between the parties, the mortgagor could then have lawfully turned the property over to the mortgagee in payment of the indebtedness, or as security therefor, regardless of the mortgage, and in that event those who were general creditors only at that time could not reach the property without first paying the amount honestly owing to the mortgagee. (Hardt v. Deutsch, 30 App. Div. 589; Sheldon v. Wickham and Stephens v. Meriden Britannia Co., supra; Parshall v. Eggert, 54 N. Y. 18 ; Tremaine v. Mortimer, 128 id. 1; Bowdish v. Page, 153 id. 104; Schwarzschild & S. Co. v. Mathews, 39 App. Div. 477.) Although the possession was demanded and taken under the mortgage, that would not affect defendant’s rights, since possession was thus voluntarily delivered at a time when the debtor had a right to turn the property over to his
It follows, therefore, that, notwithstanding this erroneous finding, the judgment must be sustained, as the finding was not essential thereto. The judgment appealed from should be- affirmed, with costs..
Adams, P. J., and McLennan, J., concurred; Spring, J., dissented in memorandum in which Williams, J., concurred.
Dissenting Opinion
The chattel mortgage was not filed and there was no transfer of possession to the mortgagee. However free from culpability the mortgagee may have been, the mortgage was void as against existing creditors of the mortgagor. (Laws of 1833, chap. 279, § 1; Stephens v. Perrine, 143 N. Y. 476.)
The claims need not be reduced to judgment to be within the protection of this .statute. As was said in Karst v. Gane (136 N. Y. 316), at page 323 : “ A simple contract creditor is as much within, the protection of the statute as a creditor whose debt has been merged in a judgment.” The creditor, of course, must have his judgment before he can assail the mortgage, but that is simply a necessity to its enforcement. The judgment relates back in its remedial effect anterior to the void mortgage if the claim antedated that instrument.
In the present case the mortgagee , demanded possession, of this ■ property, and it was surrendered to him on the 26th.of January, 1897. The demand was made and possession given by virtue of the
That is not this case, for the surrender was made in pursuance of a void mortgage, and the sale was founded upon that instrument. In the one case the mortgage is ignored and the transfer made regardless of it. In this case the parties acted upon the assumption that the mortgage was valid and possession and title were acquired solely through it. The two cases are vastly different. (Stephens v. Perrine, supra)
It is contended that as the case does not show that any lien was acquired by virtue of the judgment, and that, apparently, the sale was to a bona fide purchaser,- no relief can be had. The purchaser at the sale is not a party. The mortgagor and the mortgagee are the only defendants. Whatever money was paid to the mortgagee came through the sale under the void mortgage. That the avails paid his debt puts him in no better light, for that would be all he could get anyway. If the doctrine of the prevailing opinion is to stand, he is as fully protected as if the property had been turned out to him in payment of his debt, disregarding the mortgage.
To reach the money acquired by the mortgagee it is not necessary that the actual lien be acquired before the sale, but when the judgment creditor seeks to assert his lien he must be in a situation to maintain it. Here judgments were rendered, executions were issued and returned unsatisfied, and the plaintiff was appointed receiver in proceedings supplemental to execution, all of which were steps preliminary to the commencement of the action. They were all made with the purpose to attack this mortgage, and there was no delay in their prosecution. The sale might be made under the void mortgage before the debt is due or before any levy can be made or lien perfected. It cannot be that because the mortgagee has been swift to sell the property lie is absolved from attack. He has made a sale by virtue of an instrument which is within the condemnation of the statute, and he should account for what he has received, and that is all which can he accomplished in this action.
In Stephens v. Perrine (supra), which is an action closely akin
It is possible that the purchaser at the sale, if unaware that there were existing creditors, may be secure in his title. But the mortgagee who is,not innocent, but a wrongdoer within the ban of the statute, cannot invoke the sale.made in the face of impending'attack •from the creditors, to protect himself in his illegal acts. He did not file his mortgage and is responsible, therefore, for the situation which avoids it. The fact a sale has been made is never a protection to the wrongdoer, and the money he receives always stands in lieu of the property and can be reached in equity. ■ The court says in Mandeville v. Avery (124 N. Y. 376) at page 386 : “ The right to collect the debt out of the mortgaged property could not be defeated by the mortgagee simply by selling the‘property.
" “ The same right that existed against the property would exist' in favor of the creditor against the proceeds of the sale in the possession of the mortgagee, and an action to reach such a fund would be maintainable either by the creditor or by a receiver appointed in ■ supplementary proceedings under the judgment. To hold other
The judgment should be reversed, and a new trial ordered, with costs to the appellant to abide the event.
Williams, J., concurred.
Judgment affirmed, with costs.
