61 N.J. Eq. 126 | New York Court of Chancery | 1900
Complainants are judgment and execution creditors of the defendant Perrine, and file their bill and supplemental bill to
Subsequent to the filing of the bill the mortgaged property was sold by consent of the parties, the liens being transferred to the proceeds, and the assignee defendant now holds the pro-needs of sale, about $4,700 (being less than the amount due on the mortgages to the defendants Lindslay), subject to ihe order •of the court.
All the debts upon which complainants’ judgments were recovered were incurred by the debtor previous to the recording ■of the mortgages, some of the claims, however, being debts due to others than the complainants, to whom they were assigned before recovery of judgment thereon, and one of the four judgments was assigned to the complainants after recovery. Some of the claims proved under the assignment are upon debts incurred by the insolvent debtor before the recording of the mortgage.
It is not disputed that, but for the assignment and its effect ■on their rights, the complainants (at least as to all of their judgments based on their own claims against the mortgagors) would be entitled to have the mortgages declared void under the Chattel Mortgage act (Gen. Stat. p. 2118 § U et seq.) because of the failure to record immediately. Roe v. Meding, 8 Dick. Ch. Rep. 350 (Errors and Appeals, 1895).
The first question is whether, in view of the assignment, the
Mr. Justice Van Syckel, who delivered the opinion of the court, considered the question of the right of an assignee to attack an unrecorded mortgage as having a bearing on The question in hand, and in the course of his decision (see pp. 498, 499) treated the decision in Shaw v. Glen as not overruled by either Pillsbury v. Kingon or Graham Button Co. v. Spielmann, notwithstanding the opinion of Vice-Chancellor Van Fleet, and he approved the principle declared in Shaw v. Glenn, distinguishing between the effect of involuntary and voluntary assignments in cases where there was no fraud. The court of errors and appeals affirmed the judgment in Knowles Loom Works Case, on writ of error, for the reasons given by the supreme court. 30 Vr. 586 (1896).
The question which I have now to decide is: What is the status and binding force of the decision in Shaw v. Glen, made expressly upon the point now involved, in view of the subsequent comments on that decision?
In reaching a conclusion on this point it must be observed that in neither of the subsequent cases was the question directly involved of the right of an assignee, as representing creditors, to attack -a mortgage void against creditors under the registry laws.
The subsequent expressions of disapproval of the decision in Shaiv v. Glen made by the judges of lower or co-ordinate tribunals, in cases which did not expressly require a ruling upon it, cannot therefore be taken as affecting its binding authority. Eor did the affirmance by the appellate court of the judgment and decree of the lower tribunals in the subsequent cases have the effect of extending the binding authority of the opinions in the lower tribunals to the points which were not directly involved in the decision of the case either below or on appeal. As to these points not involved, the final appellate court must, notwithstanding the general affirmance of a judgment or decree, for the reasons given in the court below, necessarily retain the power to
- I think, further, that by the comments of Mr. Justice Van Syckel, in the latter case, upon Shaw v. Glen, and by the adoption of his opinion as the reason for afSrming the judgment, the court of errors and appeals has indicated that it took this view of the effect of the Button Company v. Spielman Case upon Shaw v. Glen, and considers the question of the correctness of the latter decision as open for review when directly involved on appeal. If this view as to the effect of the later cases is correct, then Shaw v. Glen, until overruled when directly called in question, still stands as a decision of this court made expressly upon the point, and therefore binding on me. I shall so treat it for the purpose of this decision, and hold that the right to attack the mortgages did not pass to the assignee,- and in his hands the property remains subject to the mortgages in question, which were given to secure honest debts or liabilities. But inasmuch as the assignee holds subject to the unrecorded mortgages, the creditors as against whom these mortgages are void must, necessarily, be entitled to enforce their liens on the property thus held by the assignee. Otherwise the provision of the statute declaring the mortgages void, as against them, is rendered entirely ineffective, and by the method of a voluntary assignment these provisions of the registry law can be nullified as to creditors. The assignee is not a purchaser for value, and as to so much of the property in his hands as is represented by a mortgage invalid as to a creditor, such creditor is entitled to enforce his lien in preference to the mortgagee. Complainants, therefore, are entitled to so much of the fund represented by the mortgaged property as is sufficient to satisfy those claims held by them, as to which the mortgages are void under the statute.
The second question is: Does the protection of the statute extend to all of the complainants'’ claims? Complainants hold four judgments—the first, recovered on March 25th, 1898, for '$167 and costs, upon a promissory note given by Perrine, the debtor, to them on June 3d, 1897, for money loaned; the second, recovered April 16th, 1898, by Albert Courier, for $165.76, upon a debt due to Courter. before the recording of the- chattel mort
The Chattel Mortgage act (Crew. Stat. p. 2113 ¶ 52) makes an unrecorded mortgage “absolutely void as against the creditors of the mortgagor, and as against the subsequent purchasers and mortgagees in good faith.” It is contended that the effect of this provision is to confer a personal statutory privilege or lien upon the creditors, as to whom the mortgages are void, and that this privilege or lien is not assignable and does not follow an assignment or transfer of the debt. It is further contended that it has been settled by the decision in Roe v. Meding, supra, that under the statute, chattel mortgages which are void-as to creditors who became such before the mortgages are recorded, are valid as to the creditors who become such after the recording, and that as to the assigned claims, the complainants are such subsequent creditors.
No decisions upon the precise point have been referred to, but several decisions relating to the enforcement by an assignee of statutory liens, such as mechanics’ liens, are relied on, as are also decisions adverse to the enforcement of special equitable liens, such as vendors’ liens, by an assignee of the debt. These decisions do not seem to me to be applicable. The Chattel Mortgage act was not intended, and does not profess, to give creditors of the mortgagor, as such, liens on personal property, or to define who shall be creditors. The creditors’ lien on personal property of his debtor is derived solely from the issuing of
' The general rule undoubtedly is, that on the assignment of a debt, which is assignable at law and is evidenced by a writing which is actually delivered to the assignee, the right to any remedy which the assignor had as a creditor passes to the assignee. To hold that the remedy for the recovery of the debt was impaired merely by the assignment, would necessarily lessen the value of the debt in the creditors’ hands, and it would be so opposed to the general rules and policy applied to the rights of the assignors and assignees of the property that a legislative act claimed to have this effect must disclose such intention clearly. In the present statute there is certainly no express or clear declaration in the statute itself that the remedy or advantage given to the creditor for the recovery of the debt is personal to the creditor, to whom the debt was incurred, and the contention that the additional remedy for recovery of the debt given by the statute is personal and does not follow as a right belonging to the owner of the debt is rested upon expressions in the opinion in Roe v. Meding, which are claimed to indicate that the protection of the statute was personal to the creditor to* whom the debt was incurred, and did not follow the assignment of his debt. This question was neither involved nor touched on in the case, nor do I think the expressions relied on warrant this inference as to the construction of the statute.
That the assignees or representatives of the creditors, who are such by operation of law (e. g., receivers of insolvent corporations or legal representatives) can pursue the remedy is entirely settled, and so far as relates to the effect of the Chattel Mortgage act on an assignment of the debt, it is, in my judgment, impossible, on principle, to distinguish between a voluntary assignment of the debt and an assignment by operation of law. It is further insisted that the assignability of the right to declare the mortgages void comes within the scope of the rule
A reason for the extension of the remedy “to assigns” of creditors by express provision in this statute of frauds may, perhaps, be found in the fact that previous to the statute IS Miz. (the original of our statute of frauds) the title of a fraudulent grantee was good at law and the lands conveyed in fraud could only be reached by the creditor in a court of equity, and the statute was intended, and had the effect, to avoid the fraudulent title at law as well as in equity. Phelps v. Morrison, 10 C. E. Gr. 538 (Errors and Appeals, 1874, Chief-Justice Beasley, at p. 544). In equity, but not at law, debts were assignable at the time of this statute, and the express provision extending the remedy to assigns may have.been for the purpose of giving assignees of debts the same remedy at law under the statute which they previously had in equity. Since debts have become legally assignable, no such express extension to assigns would seem to be necessary, and the absence thereof would not exclude them.
I hold, therefore, that the remedy for the recovery of his debt which was possessed by any creditor of the mortgagor passes to his assigns upon the assignment of the debt.