4 N.Y. 580 | NY | 1851
Lead Opinion
The county court judgment is void for the reason assigned at the circuit, that it is for an amount exceeding the jurisdiction of the court as prescribed by the judiciary act of May, 1847. (Stat. of 1847, p. 328, § 30.) And I think it open to the further objection that the statute conferring original jurisdiction on the county court in common law actions is unconstitutional and void. (Const, art. 6, § 14; art. 14, § 58.) Although two of the learned judges in one branch of the supreme court, whose opinions are entitled to the highest respect, have arrived at a different conclusion, (Beecher v. Allen, 5 Barb. 169,) I must say that, after carefully considering the question, I have never been able to entertain a doubt that the statute is in conflict with the constitution, and can not stand. But as it is not now necessary to discuss the question—the judgment being
Although the county court judgment was void, the judge ruled that if the execution was issued and the levy made without the knowledge or consent of the defendants, they were not liable: and there was not a particle of evidence that the defendant Sheldon knew any thing about either the judgment, the execution, or the levy; nor was there any proof that Payne, the sheriff, knew any thing about the matter, save what may be inferred from the fact that one of his deputies made the levy. It may be added that at the time of the first levy, the mortgage had not been forfeited, and the plaintiff had no right to the possession of the property. Burdick had paid all of the debt which had previously become due; and it was expressly provided by the mortgage that until default in payment he should retain the possession and enjoyment of the property. As there had been no default, and Burdick was in possession, the right of action for the illegal levy—whoever should be made defendant—was in him, and not in the plaintiff.
Six days after the levy under the void judgment a new levy was made under a valid judgment and execution against Bur-dick. This brings ns to the consideration of the grounds on which the case was put at the circuit; and the general question is, whether the plaintiff can hold the goods by virtue of the mortgage against a judgment and execution creditor of the mortgagor.
The case was shortly this. The plaintiff and Burdick were respectively country merchants at Whitehall. On the 31st of May, 1847, Burdick hired the plaintiff’s store for the term of three years, and purchased the plaintiff’s stock of goods, then in the store, for the sum. of about three thousand dollars. To secure the payment of the price he mortgaged those goods and all his own stock of goods to the plaintiff. The debt was to be paid by installments, the last of which was to fall due on the
yA I am far from thinking this a proper disposition of the cause. „ The parties not only stipulated for continued possession in the mortgagor, a thing which the legislature has condemned as presumptively fraudulent against creditors ; (2 R. S. 136, § 5;) but I have been unable to read the conveyance, with a knowledge of the surrounding circumstances, without coming to the
But if the intention to allow Burdick to dispose of the mortgaged property as owner can not be gathered from the face of the deed, still the goods were left in his possession, and he was in fact allowed to deal with them as owner, and disposed of them as a merchant to his customers, from the date of the conveyance down to the time of the levy. Such a transaction the law always has, and I trust always will, pronounce a fraud upon creditors and purchasers ; and the judge should have so ruled at the circuit, ln Worrall v. Smith, (1 Camp, 332,) the debtor had made an assignment of his household furniture and stock in trade as a publican; and although a servant of the assignee was immediately put into the house, yet as the debtor was still allowed to carry on the business as usual, Lord Ellenborough held the assignment fraudulent and void as against creditors ; and a creditor recovered against the sheriff in an action for falsely returning nulla bona to an execution against the assignor. In Paget v. Perchard, (1 Esp. 205,) Mrs. Spencer, who kept a public house, made a bill of sale of her liquors and furniture to the plaintiffs on the fourth of April, and the plaintiffs put a person in possession under the bill of sale the same evening. The property was taken the next day under an execution, and the plaintiffs brought trespass. But, it appearing that the agent whom the plaintiffs had put in possession had permitted
If the plaintiff had attempted to recover the goods which Bur-dick had sold to his customers, no one would think for a moment that he could succeed : and the statute gives no greater or better right to a Iona fide purchaser, than to an execution creditor. The transaction was clearly fraudulent in law as against both. There w@uld be no hope of maintaining honesty and fair dealing, if the courts should allow a mortgagee or vendee to succeed in a claim to personal property against creditors and purchasers, after he had not only left the property in the possession of the debtor, but had allowed him to deal with, and dispose of it as his own.
But we are told that the court of errors has decided that in a case like this the question of fraud must be left to the jury, and that their finding is conclusive. The answer to this argument is, that the court of errors never made any such decision. That court went a great way during the “ hard times ” towards protecting debtors against the claims of creditors : (see 1 Hill, 457, 461:) but it never went so far as to legalize a transaction like this. YIt was held more than once that continued possession in the vendor or mortgagor was not such conclusive evidence of fraud as to preclude all explanation; and that where the vendee or mortgagee gave evidence tending to show the transaction fair and honest, the question of fraudulent intent must be left to the jury. But merely leaving the property in the possession or keeping of the debtor, is a very different thing from allowing Eim to traffic with the property and sell it as his own. It is but
It is proper also to correct another erroneous statement in relation to the decisions of the court of errors. That court held that, although the property was left in the possession of the debtor, yet if the vendee or mortgagee gave evidence tending to repel the legal presumption of fraud, the question of fraudulent intent was one of fact, which must be left to the jury. But the court never held that the finding of the jury upon that question was conclusive. It never attempted to subvert the ancient and well established jurisdiction of the supreme court to grant new trials when the jury find a verdict, either without evidence to support it, or against evidence, or the weight of evidence. It is often a question of fact for the jury whether the defendant made the bond, note or promise on which the action is founded; whether the debt has been paid or released; whether the defendant took the plaintiff’s goods as a trespasser, or has held the lands in question adversely, and the like. But still the court has an undoubted right, and is under a corresponding obligation, to set aside the verdict when it is erroneous, and grant a new trial. The late Mr. Justice Cowen thought the court of errors had gone far enough to make the finding of the jury conclusive in this class of casés.. But that error was long since corrected by the supreme court, and its jurisdiction asserted, by setting aside a verdict in favor of a fraudulent sale, and granting a new trial. (Vance v. Phillips, 6 Hill, 433.) It is as clearly the right and duty of the supreme court to review the finding of a jury in cases of this kind, as it is to review their verdict on any other question of fact: and the court is not at liberty to disclaim that jurisdiction.
Although we, as an appellate court, can not review the finding of a jury on any question of fact, I have deemed it proper to notice the plaintiff’s argument that the verdict was conclusive in the court of original jurisdiction, because the learned judge who delivered the opinion of the court in that case appears to suppose that the court of errors had so decided; whereas, from
lEnough has been said to show that the mortgage was fraudulent in law as against the creditors of Burdick; and the plaintiff should either have been nonsuited, or the jury should have been directed to find a verdict for the defendants.
But if there had been nothing beyond the. fact of unchanged possession, and this had fallen within the class of cases where the’court of errors has held that the question of fraudulent intent must be left to the jury, I should still think the judge wrong in the mode of submitting the cause to the jury. He decided that the mortgage was “ not void in law on its face, and that the jury must pass upon the questions whether the mortgage was made to hinder, delay or defraud the creditors of Burdick: and if they found it was not, then whether sufficient reason or excuse had been given for permitting "Burdick to have possession of the goods.” This mode of leaving the cause to the jury was not in accordance with the statute, and was well calculated to produce a wrong verdict. 'Instead of telling the jury that the mortgage was not void in law, he should have told them that, because the possession was not changed, the mortgage was presumed in law to be fraudulent and void as against creditors and bona fide purchasers. I Such is the rule of the common law, and such are the words of the statute. (2 R. S. 136, § 5.) . And instead of telling the jury that they must pass upon the question whether the mortgage was made to defraud the creditors of Burdick—thus, in effect, leaving the onus of proving the fraud upon the creditor—he should have told the jury that the law presumed the fraud, ‘and cast the burden of disproving it upon the person claiming under the mortgage. Such is the plain declaration of the statute. The words are—Every sale or assignment by way of mortgage, &e. of goods and chattels, unless accompanied by possession, “ shall he presumed fraudulent and void ” as against creditors and purchasers; “ and shall be conclusive evidence of fraud, unless it shall he made to appear on the part of the persons claiming under such sale or assignment, that the same was made in good faith, and without any intent to defraud such credi- [593]
The statute does not introduce a new rule, nor does it make a forced or unnatural presumption. The direct tendency of a-conveyance of goods without a change of possession is to deceive and to defraud creditors and purchasers; and the law always presumes, even in criminal matters, that a person intends whatever is the natural and,probable consequence of his own actions. (1 Phil. Ev. 444, Am. ed. of 1849.) In Rex v. Sheppard, (Russ. & Ryan's Cr. Cas. 169,) the prisoner was indicted for uttering a forged receipt with intent to defraud one Mordey; and although Mordey swore to his belief that the prisoner .had no intent to defraud him, yet as the necessary effect and consequence of.the forgery was to defraud Mordey, if the prisoner could not repay the money procured by the receipt—in other words, as the natural and probable consequence of the act was to defraud Mordey—the judge told the jury that there was sufficient evidence of the intent for them to convict the prisoner: and the conviction was afterwards approved by the twelve judges.
The judge also told the jury that they must pass upon the question whether sufficient reason or excuse had been given for permitting Burdick to have possession of the goods ; when, in truth, no reason or excuse whatever had either been given or offered. This was no better than telling the jury that they might guess that there was a good reason for the unchanged possession.
Although some of the points which have been noticed are not so raised by the bill of exceptions that we can act upon them by [594] way of review, there was an exception to the refusal. of
Ruggles, Jewett and McCoun, Js. concurred in the opinion that the mortgage was void on its face on the ground that it authorized the mortgagor to retain and dispose of the goods as the owner thereof^ and they therefore were for reversal.
Concurrence Opinion
I cannot concur with the Chief Justice in holding that this instrument, as a chattel mortgage, is upon its face void in law. I admit, that if it contained a provision allowing the mortgagor to retain possession of the goods, and sell and dispose of them at his- pleasure, it would not be a mortgage, or create any lien on the property, as against subsequent purchasers and perhaps creditors, (Lowry v. Wood, 17 Wend, 492,) but no such provision appears on the face of the paper, and if it required a resort to other evidence to prove it, the question became one of fact for the jury to decide.
But the principal ground on which the alledged invalidity of this mortgage is founded, is that it contains a stipulation which, in effect, permitted the mortgagor to retain possession of the mortgaged property until default should be made in some one of the payments secured by it. The question presented by this proposition has produced much forensic discussion and some diversity of judicial opinion, in this state, but it is generally considered satisfactorily settled by the court of last resort, in the case of Smith and Hoe v. Acker, (23 Wend. 658,) though the counsel who tried this cause for the defendants seems disposed to revive the controversy. The arguments on both sides of this question have long since been exhausted, and it is quite apparent that they can never be reconciled, for they originate in different principles and designedly tend to different conclusions. On one side it is attempted to make the possession of personal property absolute evidence of ownership, and all conveyances attempting to create a title inconsistent with that possession, absolutely void, as against creditors and purchasers. While [955]
By the common law, personal property is the first and appropriate fund for the payment of debts. And all conveyances of such property, made by a debtor, for the purpose of defrauding his creditors, or preventing the application of his property to the payment of his debts, were void as against such creditors. They [596] were considered as no conveyances as against them, but a
It appears to me strange that this section could be made the cause of so much difference of opinion as has sprung up under it. The subject of inquiry, in the class of cases to which it relates, is the intention, design or purpose with which the sale or assignment was made, and the fact attempted to be established is, that it was made with the intention of defrauding creditors, and the statute referred to makes a mere naked sale or assignment, unaccompanied by the delivery of the property and actual and continued change of possession presumptive evidence of that fraudulent intent, and conclusive evidence of such fraud, unless it shall be made to appear on the part of the person claiming under such sale or assignment, that the same (the sale or assignment) was made in good faith and without any intent to defraud such creditors or purchasers. The whole effect of the statute is to change the burden of proof and to throw it on the party claiming to sustain the suspected sale or assignment, by making the fact of unchanged possession, which before was a mere sign of fraud, strong presumptive evidence of the alleged fraud, to be rebutted only by proof that the sale or assignment was made in good faith and without any intention to defraud creditors or purchasers. How can the trial of this question, which involves only the intention, design or purpose with which the sale or assignment was made, be drawn off from the true issue and perverted into an inquiry about the motives, reasons or excuses for not changing the possession? There is no reason or excuse, except that the property was not in the possession or under the control of the vendor or assignor, which will prevent the fact of unchanged possession from being presumptive evidence that the sale or assignment was fraudulent. So long as that fact stands uncontradicted, it creates a statutory presumption that the sale or assignment was fraudulent; not that the possession is fraudulent in itself, but is presumptive evidence that the sale or assign-[598] ment was fraudulent. And the statute declares that such presumption shall become conclusive evidence of fraud, unless
How then can a chattel mortgage be void upon its face, unless it contains an admission that it was made to defraud creditors ? Whether the fact of unchanged possession appear upon the face of the mortgage or otherwise, the presumption of fraud arising from that fact, may be rebutted by proof of good faith. It is true that wherever the fact of unchanged possession appears, whether on the face of the mortgage or otherwise, and there is no evidence to rebut the presumption of fraud arising from that fact, it is the duty of the court to enforce the statute presumption, and decide that point without submitting it to a jury. It is then a question of law. But if there is any material evidence in the case tending to show that the mortgage was made in good faith and without any intention to defraud creditors, that raises a question of fact which it is the duty of the court to submit to the jury. (2 R. S. 137, § 4.)
In the case under consideration it was clearly proved, not only by the instrument containing the mortgage, but by other evidence, that Burdick purchased a quantity of goods and rented a store from Griswold, and simultaneously with taking [599]
But the statute of 1833 (p. 402,) makes every chattel mortgage, when the possession of the mortgaged property is not delivered, absolutely void as against creditors of the mortgagor, &c. and unless the mortgage, or a true copy thereof, is filed in the proper office mentioned in the statute, (in this case the town clerk’s office,) and requires that such mortgages shall be deposited in the office, to be kept there for the inspection of all persons interested. The object of filing the mortgage is to give notice of its existence to all persons who choose to inspect it, and when properly filed it is legal presumptive notice, binding on all persons interested. This mortgage was written in the inside of a five quire account book, partly filled with accounts and labelled “ Day Book.” It was incapable of being put into the pigeon holes where the other chattel mortgages were kept, and was therefore laid away in the desk under them. It appears to me that nobody would be likely to look into this old account book for a chattel mortgage, and that such a filing was not fair notice to those interested, nor sufficient to charge them with a knowledge of the mortgage, and as there was no proof of actual notice to these defendants, I feel myself bound to concur in the decision granting a new trial, for this reason.
Gardiner and Paige, Js. concurred with Mullett, J. upon the question of fraud, but they were of opinion that the mortgage was duly filed, and therefore they voted for affirmance.
Judgment reversed, and new trial granted.