24 Wend. 115 | N.Y. Sup. Ct. | 1840
By the Court,
The statute under which the plaintiff claims title, 2 R. S. 70, 2d ed. § 5, declares, among other things, that every assignment of goods and chattels by way of mortgage or security, or upon any condition whatever, unless the same be accompanied with an immediate delivery, and be followed by an actual and continued change of possession of the things mortgaged or assigned, shall be presumed to be fraudulent and void, as against the creditors of the person making such assignment, or subsequent purchasers in good faith; and shall be conclusive evidence of fraud unless it shall be made to appear on the part of the persons claiming under such assignment, that the same was made in good faith, and without any intent to defraud such creditors or purchasers. Subsequent sections 9 and 10, id. 71, declare such a mortgage absolutely void without any qualification, unless it be filed in the clerk’s office of the town where the mortgagor resides. In the case at bar, the mortgage being filed, must stand or fall by the 5th section, unless it come within the 7th, id. 70, concerning bottomry and respondentia, and assignments and hypothecations of vessels at sea, or in foreign ports.
^Taking the case upon the 5th section, it comes to us with a [ *122 ] shade of difference from those which have heretofore been presented for our consideration. Is this a mere difference of fact or principle ? The vessel being, at the time when the mortgage was executed, abroad on her trip to Oleaveland, an immediate delivery was impracticable, and this doubtless furnished a legal excuse for postponing the time. The statute required the immediate delivery in general terms, but allowed the defendant to excuse it by showing circumstances tending to neutralize the presumption of fraud, which would otherwise be derivable from the omission to comply; and, that the vessel was abroad on the lake, perhaps in a distant port, was calculated at once to relieve the mind from suspicion. But clearly this could no longer be so, when the excuse ceased to operate, by the return of the vessel into the port of Oswego, much less in all future time during her repeated ar
But other arguments are adduced! The vessel was owned in common, the Demings residing at Oswego, the other owners at a distance. The previous arrangements for the season had led to the common appointment of a master, who had entered into an engagement to sail the vessel under the direction of the Demings, on joint account. It is difficult to perceive what reasonable obstacle was presented by any of these considerations to the change of possession, so far as the Demings were concerned. Surely one tenant in common may sell and deliver, or relinquish the control of his interest to another, in spite of any objections from his co-tenants. If the master was under contract, the transfer might have been subject to that, or he might have been released or discharged, or his powers revoked, if there were any dissatisfaction with the change. The registry and other papers might have been altered; and in short the Demings might have given all their control into the hands of Weed and Thurman, the mortgagees. But no at tempt was made to do any of these things. How do we know that the Utica owners would have been dissatisfied with the change ? How that the master
Again: it is said the plaintiffs had notice of the lien by mortgage. This is an objection of a very ancient date—one which has been often made, but never without being overruled. The obvious consequence of listening to it would be, to furnish a ready expedient for protection to fraud of *the kind now alleged in all cases. A creditor having notice of a [ *124 ] fraudulent mortgage is a reason why he should bestir himself to avoid it.
We are now told that the plaintiffs conceded the mortgage to have been bona fide. If that were indeed so, I admit we could not hold otherwise. But the argument misconstrues the admission. It was, that the debt was due at the time when the mortgage was given, that this ivas entered into at the solicitation of Weed & Thurman, and that it was duly filed at the clerk’s office. When it is established as a legal consequence that a debt actually due, secured by a mortgage given on the creditor’s solicitation, and filed, necessarily overcomes all evidence of fraud, or, in other words, that it necessarily cuts off all force from the debtor still holding his property, the argument will be conclusive. But the real debt of a favored creditor, a friend or connection, is known in practice to be a very common instrument of fraud. Why should the debtor still hold on to his property ? Doubtless, because it is for his own convenience—probably because the creditor soliciting the preference promises that he will be indulgent to the calls of that convenience; and thus the debtor is still allowed to continue the man of ostensible fortune and business, drawing in the world to credit him. Thus he is enabled to go on, concealing or pocketing his other effects, till his purposes are still farther subserved by winding up his affairs at the convenient season, and defrauding his tens or hundreds, where otherwise he could have deceived nobody. The mortgagee thus makes himself a party to the false pretences or appearances by which frauds may be and commonly are multiplied; and what is the excuse ? The debt was a fair one. But the parties fly in the face of the law. They refuse to comply with those forms of business which the law has devised to prevent them from becoming parties to a fraud on their neighbors, and for the more general and enlightened purpose of preventing fraud in general. We have only to ask which is the more important—that the creditor’s particular debt shall be saved ? or that the world shall be protected by nullifying the act ? The law must proceed by *gen- [ *125 ] eral rules. If it allow a non-delivery in one case, it must be allowed in all similar cases. It therefore calls for an open, honest course in all, or gives way only for reasons most strong and satisfactory. It is not the debt which the law condemns for the omission, but the fraudulent means resorted to in obtaining the security. It therefore throws the creditor back
It is insisted that this mortgage is within the 7th section, 2 R. S. 70, 2d ed. concerning bottomry, &c., which declares, that “ nothing contained in the two previous sections (the 5th and 6th,) shall be construed to apply to contracts of bottomry or respondentia, nor to assignments or hypothecations of vessels or goods at sea, or in foreign ports.”
First, is this a bottomry contract ? Bottomry is generally defined in -the English books as in 2 Black. Comm. 457. He says it is in the nature of a mortgage of a ship. It is when the owner takes up money to carry on his voyage, and pledges the keel or bottom of the ship (partem pro to to') as security for the repayment. In which case, it is understood, that if the ship be lost, the lender loses also his whole money ; but if it return in safety, then he shall receive back his principal, and also the premium or interest agreed upon, however it may exceed the legal rate of interest. This defini
The clear principle of the 7th section is, that in bottomry, the loan being usually, if not always, made for the purpose of enabling the borrower to prosecute some maratime adventure of his own with the aid of the very ship which is put under pledge, the nature and object of the transaction thus implies that the pledgor should keep possession. Indeed, his possession is an element without which the contract loses its distinctive character. And it being quite useful, not to say essential, to the exigencies of foreign commerce, though much less common than formerly, vide McCulloch's Com. Dict. Bottomry, it was feared, I think without reason, that the 5th section, though it merely fixed the conditions on which chattel mortgages could be taken, might be construed to interfere with bottomry. Thus the statute might have repealed an important branch in the system of protection accorded by our laws to trade upon the high seas. How little danger of this there was, however, may be inferred from The Braco, 2 Sumn. 157, which held that a statute requiring the registration of personal mortgages, though without exception, did not extend to a bottomry bond.
The view we have thus taken of the attempt to make bottomry out of the ' mortgage in question, will enable us to appreciate the objection, [ *129 ] that, if not bottomry, it comes *within some other term of exception in the 7th section. That it is touched by the word respondentia is not pretended, that signifying a pledge of the cargo, or goods to be transported. 2 Black. Comm. 458. It is the same to the cargo as bottomry to the ship. McCulloch's Com. Dict. Bottomry. The principle of the exception will here, therefore, be found exactly identical with that which saves bottomry. The goods must remain with the pledgor; and see per Story, J. Conard v. The Atlantic Ins. Co. 1 Pet. 436, 7. The last exception in the section is of assignments or hypothecations of vessels or goods at
I have already adverted to the essential importance of certain forms, as measures of protection against fraud. A few remarks more shall close all I have to say in respect to the general points of defence. They all come down to excuses which are not founded in any real necessity. They insist that excuses arising from the convenience of the parties concerned, or the conveniences or purposes of business, should be allowed. They mean in j] *132 ] principle, therefore, that any excuse which the parties interest
Another learned senator, brother Verplanck, who also sat with us in Stoddard v. Butler, and whose opinions are always heard and read with pleasure and edification, amplified the principle of evidence. At page 551, he says, “ If then there be positive evidence of a fair and full consideration paid, of the existence of reasonable motives for not requiring delivery, such as may and do sivay honest men•—for instance, filial, or parental or brotherly affection, or the convenience and usages of business, together with that publicity which excludes the idea of intended evasion of law, or holding out false credit, all the requisites of the statute seem to me tp be fully complied with, in the strictest agreement with its letter and in perfect conformity with its spirit, intention and policy.” The letter of the statute is very general, and
“ The center moved, a circle straight succeeds,
“ Another still and still another spreads ;
“ Friends, parents, kindred, first it will embrace,
“ The county next.-”
The objection is, in short, that when the conveniences and usages of business, and of charity to debtors are recognized as within the range of evidence proper to submit to a jury, they to be told that either of these may be allowed as an answer to the presumption, every fraudulent transfer will be clothed with the concocted appearance of one or the other, to be, if necessaT *140 1 sus^a™cc*- by perjury. Accordingly the disallowance of such L J evidence has, to most judges, *seemed necessary. There is, I admit, one English case where the principle of charity was allowed : Kidd v. Rawlinson, 2 Bos. & Pull. 59. The debtor’s brother-in-law purchased in his goods under an execution, paid the money and allowed them to remain
If Rood was to be believed, no serious question can be made that the levy was complete. ‘ There was an actual entry, the vessel being in the sheriff’s power, and notice to the defendants in the execution. These acts were never doubted to be suEcient. No formal inventory is necessary. Haggerty v. Wilber, 16 Johns. R. 287. Wood v. Vanarsdale, 3 Rawle, 401, 405, 6. That the witness was not worthy of confidence it is impossible for us to pronounce, since his credibility has been sanctioned by the jury under a proper charge from the court.
The sale took the usual course of one where the debtor has, in conjunction with some friend, been tampering with the title. The deputy sold the right of the Demings. What was that ? The mortgage being void for fraud,
It is said the inference that the plaintiff intended to purchase an equity of redemption merely, is strengthened by the late statute. 2 R. S. 290, 2d ed. § 20. That section declares that when goods or chattels shall be pledged, the right and interest of the pledgor may be sold on [ *142 ] execution, *and that the purchaser may take possession on complying with the terms and condition of the pledge. The reasoning is this : as there were two intents open to the plaintiff, one to purchase absolutely, the other subject to the mortgage, it should rather be intended, considering especially the notice of the mortgage given, and the smallness of the bid, that the latter intention was the true one. The reasoning would be strong, upon two suppositions : first, if the defendants’ counsel construe the 20th section rightly ; and secondly, if the mortgage had been really valid in respect to creditors; White, the plaintiff, might then have said in an action against him, “ As between a lawful and unlawful intent, I claim that the former shall be presumed and he could certainly have no objection that the rule of presumption should apply here. Even then, however, it might be overcome, and would be clearly overcome by the evidence here that he acted in the purchase adversely to all claim of the mortgagees ; and all possible doubt is dissipated, when the mortgage is found to be fraudulent.
Beside it is by no means clear that the word pledge, the only word used in the 20th section, when applied to goods and chattels, comprehends a mortgage, though it may when applied to real estate. 2 Black. Comm. 157. In the latter case, however, the equity of redemption, according to the doctrine of this court, is the subject of salo independent of any statute. Waters v. Stewart, 1 Caines' Cas. Err. 47. A pledge, taken in its strict sense as ap-plied to chattels, is a bailment, that is, an actual delivery of the thing, for the security of some engagement. But by a grant or conveyance of goods in gage or mortgage? the whole legal title passes conditionally to the mortga
The only remaining question respects the ' competency of W. F. Deming, one of the mortgagors. He was offered as a witness for the defendants, but was rejected by the judge as interested to testify in their favor.
Under the peculiar circumstances of this case, he was, we think, clearly incompetent, for the reason which governed the learned judge in excluding him. If the defendants maintain their position, that makes the vessel and furniture worth about $2000 to the witness by way of discharging his debt due to Weed and Thurman. If the credit of that sum be displaced, then the same property cannot avail him more than three dollars, and both he and his mortgage creditors were privy to the concourse of circumstances from which his interest arose. It is supposed that as between him and the mortgagees, the credit is conclusive. If that were so, I admit his interest would lay the other way, and he would be technically competent But we think that the mortgage failing to hold, the credit arising under -that may be withdrawn, the same as it may confessedly be in respect to the execution. Had the mortgage itself been given and accepted as an absolute payment for the $2000 ; had so much of the debt then been extinguished by the joint agreement of the parties, though the act were fraudulent; yet the law would never allow the credit to be disturbed as 'between [*144] them. It would not interfere as between them, to disturb any contract completely executed. It will insist on holding parties to the position in which they have fraudulently placed themselves. So far as the contract, or any part of it, remains executory, it will not be enforced. Nel
The result is, that a new trial must be denied.
See Smith & Hoe v. Acker, 23 Wendell, 653, decided subsequent to this case, although reported previously.