185 N.Y. 80 | NY | 1906
This action was brought to enforce a chattel mortgage executed on October 4th, 1897, by William J. Barron to the plaintiff and his deceased partner. On that day the plaintiff's firm sold to Barron all the stock and fixtures of a plumbing and rooting establishment, in the city of Geneva, for the sum of six thousand dollars. Part of the purchase money was represented by a note executed by the vendee to the vendors for the sum of twenty-five hundred dollars to be paid five years from date with interest payable semi-annually. To secure that note it was provided that the vendors should have a lien upon all the goods, wares, merchandise and chattels so sold and upon all other personal property, goods and merchandise which might be used or put on the premises by the vendee, such lien in case of default in payment to be enforced in the same manner as in the case of a chattel mortgage. It was agreed that the vendee, his executors or assigns "may sell and dispose of said property and apply the proceeds of such sale to the payment of the debt hereby secured," and the vendee covenanted for himself and his assigns "that as said stock is sold and disposed of by him or them, he or they *84 will apply the proceeds to the payment of such debt, excepting such portion thereof as is necessary for the expenses of the business or as he or they may need to replenish or increase the said stock of goods, wares and merchandise, it being understood and agreed that in such case the substituted stock shall take the place and be instead of the stock so sold, and it being also understood and agreed that no part of said stock or of the proceeds of such sales shall be used or disposed of by" the vendee or his assigns, "except as hereinbefore set forth." The vendee further covenanted that he would keep the said stock "replenished, renewed and of a value at least equal to its then value." This agreement was first filed on October 2d 1902, in the office of the clerk of the city of Geneva. On November 7th the plaintiff demanded the possession of the goods and chattels mentioned in said agreement or chattel mortgage, which was refused. On November 25th, 1902, Barron, the vendee, was adjudicated a bankrupt. The defendant, as trustee in bankruptcy, under an order of the bankrupt court which directed that out of the proceeds of the sale the sum of twenty-six hundred dollars be reserved by the trustee for the benefit of any liens or claims that might be established on the property, sold the stock and fixtures of the bankrupt and out of the proceeds held on deposit the amount prescribed by the order. Theupon the plaintiff brought this action in the Supreme Court to recover the amount due him on the note and mortgage. The foregoing facts appear in the findings of the learned trial court, which awarded judgment for the plaintiff. That judgment was affirmed by the Appellate Division, and from that affirmance an appeal is now taken to this court.
The first contention of the appellant is that the state court had no jurisdiction of the cause of action, because the fund was in the possession of the bankrupt court. We think it had jurisdiction of an action to determine and establish the plaintiff's lien. It is settled by the decision of the Supreme Court of the United States in Bardes v. Hawarden Bank
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On the merits of the controversy, however, we are of opinion that the judgments below were erroneous. By reason of the failure to file the chattel mortgage for five years, that mortgage was void as against creditors whose claims accrued prior to such filing. (Lien Law, §
Since the foregoing was written the Supreme Court of the United States has decided the case of York Manufacturing Co. v.Cassell (
Though the trial court found that the mortgage was made in good faith we are of opinion that by reason of its provisions it was fraudulent as a matter of law and void as *90
against creditors. A chattel mortgage otherwise valid is not rendered void because it professes to include property that may be subsequently acquired. (Gardner v. McEwen,
The judgment should be reversed and complaint dismissed, with costs in all courts.
GRAY, EDWARD T. BARTLETT, WERNER and CHASE, JJ., concur; O'BRIEN, J., absent; HISCOCK, J., not sitting.
Judgment reversed, etc.