Talman v. Smith

| N.Y. Sup. Ct. | Mar 2, 1863

By the Court,

Welles, J.

The justice at the circuit instructed the jury that as possession of the property in question was not changed at the time the mortgage was given by J ames W. Sawyer to S. M. Spencer & Co., the burthen was on the plaintiff of showing that the mortgage was made in good faith and without any intent to defraud creditors ; because Mrs. Sawyer purchased the property of the Spencers while the same was in the possession of Mr. Sawyer, and therefore she and the plaintiff, in reference to the property, stood in the same position as S. M. Spencer & Co. would, if they were prosecuting this action, and no better. In these respects I «think the learned justice fellinto'an error.

The mortgage vested the legal title to the property in the Spencers, as against Sawyer the mortgagor, subject to be defeated by performance of the condition of the mortgage. The condition not having heen performed", the title at law, as between the parties to it, vested absolutely in the mortgagees, divested of the condition of the grant contained in the mortgage ; leaving only an equity of redemption in the mortgagor. "When Sawyer was in default in not paying the note to secure which the mortgage was given, at its maturity, the Spencers had a right to take the property into their possession and dispose of it at their pleasure." This right continued until they sold the property to Mrs. Sawyer, on the 24th of December, 1858, a few days, only, after the forfeiture of the condition of the mortgage. The sale was with the consent of the mortgagor, which was equivalent to a formal foreclosure of the equity of redemption. The right of the mortgagees to the property, as the legal owners, and to take it into their possession, was as perfect upon the failure of the mortgagor to perform the condition of the mortgage as it would have been in case they had sold it under the mortgage and become the purchasers at such sale. These propositions, I apprehend, cannot be controverted. Up to the time of Mrs. Sawyer’s purchase, the creditor at whose instance the ■ property was afterwards seized by the defendant, had no judgment against Sawyer the mortgagor, and ’ did not obtain one until three months thereafter. He therefore had no lien upon the property in question, when Mrs. Sawyer purchased. At this time the failure of Spencer & Co. to take possession could not be alleged by this creditor, as he had no judgment or execution to enable him to attack the validity of the mortgage. Before the sale by the Spencers to Mrs. Sawyer, the actual .possession was in James W. Sawyer, her' husband, and upon the sale the possession became, eo instanti, transferred, by operation of law, to Mrs. Sawyer. Ho manual change or handling or moving of the property was necessary. Her possession was all that the nature of the case admitted. She and her hus-0 band lived together, and kept hpuse for years before and at the time of these transactions, in the same house, the title of which was in Mrs. Sawyer, where the property had always been, so far as the case shows.

Mrs. Sawyer’s title to the property in-question having thus been acquired from the Spencers at a time when the creditor now attempting to impeach it had no lien upon the property by judgment or execution, and was therefore not in a condition to assail its validity as against the Spencers, and she having been in the actual possession ever since her purchase, she was, prima facie, the absolute owner, until she conveyed the property to the plaintiff, who was not bound in the first instance to go further, and account for the possession of Saw-3er during the existence of the mortgage, and before the purchase of Mrs. Sawyer. Ho presumption of fraud in her purchase existed by reason of such previous possession of her husband. And if not, the defendant held the affirmative, and was bound to establish the fraud by proof.

The charge, however, cast the burthen upon the plaintiff of proving that there was no fraud, and if he had given no evidence to overcome such assumed presumption, or not sufficient, in the opinion of the court, to be submitted to the jury, the plaintiff should have been nonsuited. The effect of the instruction to the jury was, that they were to start, in their examination, with the assumption that the mortgage was fraudulent, by reason of the want of possession in the mortgagees,. and then to examine the evidence and see whether the plaintiff had proved that it was given in good faith and without a fraudulent intent. Instead of that, they should have been advised that the want of possession in the mortgagees was not sufficient evidence, of itself, under the circumstances of the case, to authorize the presumption of fraud. The late case of Allen v. Cowan, in the court of appeals, (23 N. Y. Rep. 502,) is very much like the present, in its leading features, and, as it seems to me, clearly sustains the foregoing views.

[Monroe General Term, March 2, 1863.

Johnson, J. C. Smith and Welles, Justices.]

If, in the case at bar, the Spencers had not sold the property, or taken possession of it, and they had brought the action against the defendant for seizing it, the rule invoked by the defendant in this case would have been directly applicable, and the plaintiff in the case supposed would have been, beyond all controversy, required to account for the possession in Sawyer, and show that the mortgage was given in good faith and without any intent to defraud.

But in this case the Spencers have sold the property to a purchaser who took immediate possession, and at a time when there was no creditor who was in a situation to object to the sale, and she has continued in possession until it was taken by the defendant.

The charge of the judge that Mrs. Sawyer and the plaintiff stood in the same position as the Spencers would, if they were prosecuting the action, and no better, was therefore also erroneous.

As the foregoing views lead inevitably to a new trial, it becomes unnecessary to decide the other questions raised and discussed upon the argument.

A new trial should therefore be ordered, with costs to abide the event.