127 N.Y. 53 | NY | 1891
This action was brought by the plaintiff as a judgment creditor of Samuel S. Lowery and George M. Lowery to set aside a general assignment for the benefit of creditors and two chattel mortgages made by them.
Samuel S. and George N. Lowery were copartners doing business under the firm name of S.S. Lowery Son, and on the 24th day of December, 1883, they executed and delivered to the defendant Sheard a chattel mortgage on certain machinery and other personal property owned by them to secure him for his accomodation indorsements for the firm. The mortgage was filed August 24, 1885. The defendant Sheard at their request indorsed the notes of the firm to the amount of fifteen thousand dollars which notes at their maturity were protested and thereafter taken up and paid by him. On the 1st day of September, 1884, the firm executed and delivered to the defendant Nora K. Lowery a chattel mortgage on the same property which by its terms was made subordinate to the Sheard mortgage. It was given to secure an indebtedness from the firm to her which has not been paid. This mortgage was also filed August 24, 1885.
On the 24th of August, 1885, the defendants Samuel S. and George N. Lowery made a general assigment of all their property to one Bartlett in trust for the benefit of their creditors. This assignment was recorded on the same day, but after the filing of the chattel mortgages given to Sheard and Nora K. Lowery. The debt of Nora K. Lowery is preferred in the assignment, it being stated therein that she holds as collateral security the chattel mortgage above referred to subject however to the prior mortgage to Sheard. The assignors delivered to the assignee all of their property including that covered by the chattel mortgages, and thereafter made and filed an inventory and schedules in which they stated that the debts of Sheard and Nora K. Lowery were secured by the two mortgages, and that the property described in the mortgages was encumbered by such mortgages. On November 19, 1885, the defendant Sheard took the property under his mortgage, advertised and sold it at public auction for the sum of eight thousand dollars. *59
The trial court found that the mortgages and assignment were made in good faith for an honest purpose without any intent to hinder, delay or defraud the creditors of the firm of Samuel S. and George N. Lowery individually.
It is contended on the part of the appellant that the assignment is fraudulent for the reason that it in effect transferred to the assignee the mortgaged property subject to the payment of the chattel mortgages as though they were in all respects valid; while in fact and in law they were void as to the plaintiff's debt for the reason that they were not filed as required by the statue. Assuming the effect to be as stated, we do not understand that the assignment would be fraudulent. Whilst the mortgagee of chattels is deemed the owner and has the right to reduce them to possession, the mortgagor has the right to redeem before sale or to receive the surplus if any that shall arise upon a sale. He has an interest in the property which is assignable and such interest under a general assignment for the benefit of creditors passes to the assignee. (Sullivan v. Miller, 40 Hun, 516-519; S.C.,
It follows that whatever interest the firm had in the mortgaged property passed to the assignee under the assignment. As to the mortgagors, the mortgages were valid and subsisting liens. The indebtedness which they were given to secure was honest and just, and the same could lawfully be paid out of the assets of the firm, and the assignors had no right or power to deprive the mortgagees of the lien which they had acquired by virtue of their mortgages.
It remains to be determined whether this action can be maintained by the plaintiff to set aside the mortgages and compel the mortgagee Sheard to account for the property taken under his mortgage. They may be void as to creditors for the reason that they were not filed at the time their credits were given, but if creditors neglect to avail themselves of the means provided by the statute to secure the payment of their claims until the mortgagor has transferred his interest to an assignee, they thereby lose the advantage which they otherwise might have gained. In such a case the assignee acquires a superior right *60 to the individual creditor and takes the same in trust for all the creditors. Before such transfer, the creditor, upon obtaining judgment, might have secured a lien upon the personal property of the judgment debtor by the levy of an execution thereon. He might also have obtained a lien by a like levy upon the property covered by the mortgage. The mortgage being void as to him, the property would be regarded as that of the judgment debtor, and the levy would have the same force as if no mortgage existed. But waiting until after the assignment, he loses his right to acquire a lien by levy.
As we have seen, the plaintiff has neglected to perfect any lien as against the mortgaged property by the levy of an execution thereon. The commencement of this action does not operate to create a lien upon such property; whilst the commencement of an action in the nature of a creditor's bill creates a lien upon the choses in action and equitable assets of the judgment debtor. It does not create a lien upon his tangible personal property subject to a levy by an execution, unless he procures a receiver to be appointed. (Albany City Bank v. Schermerhorn,
1 Clarke's Ch. 297; Davenport v. Kelly,
A creditor can only avail himself of the omission to file a mortgage when he has a judgment and proceeds upon that to obtain a lien upon the property, either by a levy of an execution or the commencement of an action in which he obtains the appointment of a receiver. (Jones v.Graham,
The mortgagors by their assignment have transferred all of their interest therein to the assignee. The mortgagee Sheard has taken the property under his mortgage and sold it. The property mortgaged has now passed into the hands of the purchasers under such sale, and whatever rights the plaintiff *61 may have had, none remain that are available to afford him relief.
These views render it unnecessary to consider the question as to whether the action can be maintained by the plaintiff without first demanding of the assignee that the action be brought by him as a trustee for the creditors, under chapter
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.
