5 N.M. 442 | N.M. | 1890
This cause is in this court on writ of error to the district court of Grant county. There Singleton M. Ashenfelter and Nettie A. Ashenfelter, his wife, brought their action to foreclose a chattel mortgage, and made parties thereto Frank J. Wright and Alvah E. Wolcott, who are the plaintiffs in error in this court. As against Wright, it is alleged in the bill of complaint that on the twenty-fourth day of February, 1886, Frank J. Wright made and delivered to Nettie A. Ashenfelter, wife of S. M. Ashenfelter, his promissory note in the sum of $250, and at the same time that he also made, executed, and delivered to her to secure said note a chattel mortgage on a library situated in Silver-City, said county; that the mortgage was duly acknowledged, and also properly recorded in time in the said county of Grant. It is also averred that the debt was, at the commencement of the action, unpaid and past due. It is further alleged that the other defendant in the action, Wolcott, also claimed to hold a lien on the same library for $1,300, but that his lien, if any existed, was for a much smaller sum, and was subsequent to that claimed by the complainants. ’ Wolcott was made a party, that he might be required to set up and establish his lien, so that the court could ascertain and discover the amount thereof, and decree as to priorities. The complainants made the usual prayer for judgment, decree fixing their priority, and for sale of the mortgaged property. Wolcott filed demurrer to the complaint, which was overruled by the court. Both Wolcott and Wright then answered the bill, and upon the answers issue was joined, and the cause referred to a master.
It is assigned here for error that the demurrer should have been sustained, but as no reason for such contention is shown in the oral argument or brief, and as we are unable to perceive any defect in the bill of complaint, we hold that assignment to be not well taken.. The master made a very careful and elaborate report. He found, and so reported to the court, that in 1883 Alvah E. Wolcott owned a building in the town of Silver City, and on the first day of October made a written lease to his codefendant, Frank J. Wright, of two certain rooms in said building, said rooms to be used by Wright for a law office, and the lease to run for two years, at $45 per month, payable monthly; that Wright occupied the two rooms until the first of February, 1886, under said lease; and at that date, on account of the nonpayment of rent for the two rooms during his occupancy under the written lease, owed Wolcott the sum of $945, as rent due and unpaid for said rooms to that date. The master further found that Wolcott, at that date, desired to make other arrangements respecting said two rooms, and so he rented them then to another tenant, who took possession of them. Wright, at that date, with Wolcott’s consent moved out of the two rooms the library, which, before that date, had been in them, and altogether ceased to occupy them as a tenant. Through the building in which the two rooms are situated is a central hall. The two rooms occupied by Wright as aforesaid are in the building on the north side of the hall, and entered from it. Wright, when' he moved his library out of the two rooms, moved into and occupied a single room on the south side of the central hall, by- and with the consent of Wolcott. Possession was taken by Wright February 1, 1886, of the single room. At that time it was verbally agreed between Wright and Wolcott that the former should pay, as rent for the single room, $20 per month, nothing being said as to the time of payment. Wright, after he moved into the single room, paid as one month’s rent therefor, in February, $20. He paid no further rent, but continued to occupy the room south of the hall to the rendition-of the decree in the court below, and at that date, for rent of the single room, was indebted to Wolcott in the sum of $420, being the rental for said room to December 1, 1887. The note and mortgage given by Wright to Mrs. Ashenfelter were executed on the twenty-fourth day of February, 1886, and the mortgage was duly recorded the next day. At that time the library described in the mortgage was situated in the single room south of the central hall, and had been there at least twenty-three days. There was then due and unpaid, as rent for the two rooms on the north side of the hall by Wright the sum of $945. All these facts are found by the master, and reported to the court. The master found and the court decreed the priorities, as between the two lienholders, Wolcott and Mrs. Ashenfelter, to be as follows: That Wolcott held, to the extent of $420, the prior and first lien over Mrs. Ashenfelter; that Mrs. Ashenfelter, to the amount of her mortgage, held the next and second lien. It seems to have been apparent to the court that, after payment of costs and expenses and the liens thus decreed, there would be nothing left; so nothing is decreed as to any residue. Wright does not assign any separate error on his own behalf separately, but joins in the assignment by Wolcott. These do not relate to any matter affecting Wright separately, but only refer to priorities.
The chattel mortgage must be regarded as if the affidavit had not been filed. Our statute provides as follows: “Section 1589. Every mortgage so filed, shall be void as against the creditors of: the person making the same, or against subsequent purchasers or mortgagees in good faith, after the expiration of one year after the filing thereof, unless, within thirty days next preceding the expiration of the term of one year from such filing, and each year thereafter, the mortgagee, his agent or attorney, shall make an affidavit exhibiting the interest of the mortgagee in the property at the time last aforesaid, claimed by virtue of such mortgage, and, if said mortgage is to secure the payment of money, the amount yet due and unpaid; such affidavit shall be attached to and filed with the instrument or copy on file to which it relates.” The record in the ease before us discloses that Mrs. Ashenfelter had not taken possession of the mortgaged property, so at the commencement of the action, in the absence of the statutory affidavit, and without possession having been taken by the mortgagee, her mortgage under the statute would be of no effect as to such creditors of Wright as were in situation to assert its invalidity. The authorities before cited give construction to a statute like our own, and under them it is clear, as against creditors who are in a position to raise the question, the chattel mortgage is void. Was Wolcott in that position in the court below? He had not reduced his claim to judgment. He had no' specific lien on the library in any form. At best, he had only the right to sue his debtor. In the meantime, Mrs. Ashenfelter had the right, if she could peaceably obtain possession, to do so, or to proceed and foreclose her mortgage. Is there any rule which would require that -she should be restrained of her right to foreclose, and wait the movements of the general creditors, so long as the mortgage remained valid as between her and the debtor? The mortgage contained a provision that, upon default in payment, she might take actual possession of the property wherever she could find it. Default was made, and her rights as against Wright to possession was perfect. If she had taken actual possession, her right under the mortgage would have been as complete as if she had filed the affidavit required by statute. Controversy arose as to possession between Mrs. Ashenfelter and Wolcott, so she procured a receiver to be appointed to hold the property, and the court decreed a sale thereof. As to the $945, Wolcott had not then procured either a judgment or lien by attachment. In this state of things, if Wright had turned over to the mortgagee,, possession, notwithstandiug her failure to comply with the statute, she would have been preferred to the general debt of Wolcott; not so as to the specific landlord’s-lien, for the single room. That, however, is decreed to be prior to Mrs. Ashenfelter’s, and is out of the-case. If, then, she could have received possession,, and thus have perfected her right, which had become-suspended by failure to file the statutory affidavit, we-can see no reason why she might not have properly invoked the aid of the court to reduce the property to cash, and apply it to' the discharge of her specific lien as against Wright, unless some lienholder, with a right-to question the legality of her mortgage, interposed. If Wolcott could attack the chattel mortgage, then any general creditor could do so. It would, to say the least, be. illegal to hold that a creditor, without any lien upon, a chattel, or right thereto, in the absence of a judgment which might by execution be enforced against such chattels, could call upon a court of equity to remove-even a void lien from the property, constituting an apparent cloud upon it. Without a specific lien on the-chattel, what benefit could such a creditor derive? He could not sell the chattel without judgment and execution. A consideration of some of the eases will indicate the construction which should be placed upon the-words of the statute, “shall be void against creditors.” In Van Heusen v. Radcliff, 17 N. Y. 580, the court say: “When a conveyance is said to be void against creditors, the reference is to such parties when clothed with their judgments and executions, or such other titles as the law has provided for the collection of debts.” Mr. Bump, in,his work of Fraudulent Conveyances, page 453, gives a clear elucidation of this subject: “It is commonly said that a fraudulent conveyance is void against creditors, but this must be taken in a limited sense. The law provides a mode for determining the rights of' all parties, and does not permit even a creditor to act as judge in his own case. A fraudulent conveyance, moreover, does- not confer any additional rights upon creditors. They can not seize the property of their debtor without any legal process, and appropriate it of their own accord to the satisfaction of their demands. * * * They may cause it to be appropriated to the payment of their debts, but can only do so in the mode which the law prescribes. * * * Consequently the-expression that a fraudulent transfer is void against creditors simply means that the rights of creditors as such are not, with respect to the property, affected by such transfer, but that they may, notwithstanding the transfer, avail themselves of all the remedies for collecting their debts out of the property, or its avails, which the law has provided in favor of creditors, and that in pursuing those remedies they may treat the property as though the transfer had not been made; that is, as the property of the debtor. The transfer is ineffectual to shield the property in the hands of the grantee from the just claims of the creditors of the grantor, when those claims are prosecuted against it in the manner pointed out by the law. His title, however, is good against even creditors, unless they protect themselves against him by pursuing that prescribed course by which alone the property can be made available for the satisfaction of debts. A ‘creditor at large,’ as it is termed, can not impeach the conveyance, but only a creditor having some process on which the property may be lawfully seized, and by which it is made liable, either immediately or ultimately, to be appropriated in satisfaction of his debt. * * * Before a creditor can impeach the transfer, he must have an execution, attachment, or some other legal process which authorizes the seizure of the property. This process may be a warrant of distress pr an'attachment, as well as on execution.” Although unable to. examine all the eases cited by Mr. Bnmp in support of this position, one which we believe to be well established, we append them for reference. Andrews v. Durant, 18 N. Y. 496; Rinchey v. Stryker, 26 How. Pr. 75; Schlussel v. Willett, 32 Barb. 615; 12 Abb. Pr. 397; 22 How. Pr. 15; Tiffany v. Warren, 37 Barb, 571, 24 How. Pr. 293.
In Owen v. Dixon, 17 Conn. 496, a well considered opinion is given, from which the following quotation is made: “It is a familiar principle that a fraudulent conveyance of property is void as to the creditors of the vendor. By this is meant that the rights of a creditor as such are not, with respect to the property, affected by such conveyance. * * * A ‘creditor at large,' as it is termed, can not impeach the conveyance, but only a creditor having some process on which the property may be lawfully seized, and by which it is made liable" * * * for the debt. We think the same rule of construction established with respect to conveyances fraudulent as to creditors should be applied to the term “void as against creditors," used in our statute. There is authority, however, more directly in point, giving that construction to statutes to the same effect as the one quoted, In New York the statute on the subject under consideration is much like our own. In Thompson v. Van Vechten, 27 N. Y. 582, in considering who might attack a chattel mortgage for want of the statutory affidavit, the court say: “It is true the mortgage can not be legally questioned until the creditor clothes himself with a judgment and execution, or with some legal process against his [the debtor’s] property; for creditors can not interfere with the property of their debtors without process." It seems to us clear that until Wolcott had by some legal means procured a lien on the property, being only a general creditor, or, as some books express it, a “creditor at large,” he could not appeal to a court of equity to remove by its decree a mortgage good against the debtor. The conclusion reached on this point is much strengthened by the terms of section 1590 of the Compiled Laws. This section and section 1589 must be construed together, as they clearly relate to the same subject. “Sec. 1590. If such affidavit be made and filed before any purchase of such mortgaged property shall be made, or other mortgage deposited, or lien obtained thereon in good faith, it shall be as valid to continue in effect such mortgage as if the same had been made and filed within the period above provided.” This must remove all substantial doubt. If the affidavit provided for in section 1589 is not filed within the thirty days required, then the mortgage is void as to creditors; but if such a creditor omits to take such action as to obtain a lien thereon before the affidavit is thereafter filed, and the mortgagee files his affidavit as required by section 1589, it operates to revive the mortgage against all creditors who have not in the meantime obtained liens. Failure to file the affidavit required within the thirty days suspends the operation of the mortgage as against general creditors, and if they reduce their debts to judgment against the mortgagor, and levy on the property of the mortgagor, while the mortgage is suspended for want of the statutory affidavit, they secure priority, or, if they levy attachments, the same result is reached; but, if they omit to take some such .action, the mortgage lien may be revived. This latter section gives construction to the term “creditors,” as used in the preceding one, and limits that term to such as may, by some legal means, secure a lien on the mortgaged property. As to the $945, Wolcott, being only a general creditor, without specific lien on the library, and being without judgment upon which execution might issue, could not attack the mortgage of Mrs. Ashenfelter, the same being good and valid against the mortgagor. We find no error in the record of the court below, and accordingly the judgment and decree there entered are affirmed.