37 A. 537 | R.I. | 1897
The mortgage, under which the plaintiffs claim the proceeds of the property attached by the *107 defendant in the suit of I.M. Lincoln Co. v. Charles E. Greene Co., was originally taken from Greene Co. by Thomas J. Gurry, a salesman of the plaintiffs, in his own name, but for the benefit of the plaintiff. It was put on record by Gurry, and subsequently transferred by him to the plaintiffs. The attachment was not made until more than sixty days had elapsed from the date of the record of the mortgage. The defendant resists the plaintiff's right to recover on the ground that the taking and recording of the mortgage of the plaintiffs in the name of Gurry operated as a fraud on the rights of the attaching creditors, because if it had appeared on the record as a mortgage to the plaintiffs, the attaching creditors might have suspected that it had been given as security to the plaintiffs for an indebtedness of the mortgagors to them, and could have proceeded against Greene Co. in insolvency within the sixty days to have the mortgage set aside.
We do not think that the taking and recording of the mortgage in the name of Gurry can be regarded as a fraud upon the rights of the attaching creditors. The mortgage, having been put on record, was notice to all the world that the property of the mortgagors included in it was subject to the encumbrance, and was enough to have put all persons interested in the affairs of the mortgagors upon inquiry. It is not denied but that the plaintiffs had a valid claim against the debtors to the amount for which the mortgage was given, and it was no fraud upon the rights of the others for them to take security from the debtors if they could obtain it, even if the giving of the security might result in a preference to them unless proceedings in insolvency were seasonably taken to avoid the security. Except for such proceedings a transfer of property which operates as a preference is good. Elliott v. Benedict,
The petition for a new trial is therefore denied, and the case is remitted to the Common Pleas Division with direction to enter judgment on the verdict.