Case ID: misc_18/html/0062-01.html
Source: Caselaw Access Project
Author: {"author": "Daly, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Michael Goodwin, Respondent, v. Elizabeth Bayerle, as Administratrix, et al., Appellant.
    (Supreme Court, Appellate Term,
    September, 1896.)
    Chattel mortgage — Eights of subsequent mortgagee as against unfiled mortgage.
    One who, with knowledge that a mortgage upon the property had been given, which was not filed, makes a loan relying on the statement of the mortgagor that such mortgage had been paid, or upon an examination of the record without inquiry of the mortgagee as to its payment or satisfaction, is not a subsequent mortgagee in good faith and is not entitled to the property as against the prior mortgagee or his bailee.
    ' Appeal by the defendant William Gubner ' from a judgment of the justice of the Third District Court, in favor of the plaintiff for the possession of personal property. ' The complaint was dismissed against the defendant Elizabeth Bayerle, administratrix of Henry Keller, deceased, btit no appeal is taken by the plaintiff from such dismissal.
    Jones Cochrane and Smith & Cochrane, for appellants.
    P. A. McManus, for respondent.
   Daly, P. J.

The plaintiff has recovered judgment against one of the defendants, William Gubner, for the possession of a horse, wagon and harness, which were mortgaged to the plaintiff by Patrick Carlin on February 1, 1896. The defendant, a livery-stable keeper, was the bailee of Mrs. Bayerle, the administratrix of Henry Keller, a prior mortgagee from Carlin, whose mortgage had' not been filed; and the issue in the case- was whether the plaintiff was a subsequent mortgagee in good faith at the time he took the second mortgage. If he were, then the unfiled mortgage was void as to him, and the judgment was proper. Laws of 1833, chap. 279; Statutes (9th ed.), 2013.

• The plaintiff is a cousin of Carlin, the mortgagor, and before he received his mortgage he knew that Carlin had bought the horse and wagon from Keller, and had given the latter a chattel mortgage for part of the purchase money. Carlin informed him of the purchase and mortgage at the time they were made, September, 1895, and when, in February, subsequently, Carlin applied for a loan and offered the property as security, he informed plaintiff that the Keller mortgage had been paid. Plaintiff had heard that Keller was dead, and before advancing the money he went to a lawyer and directed him to find out if there was any mortgage on record. The lawyer informed him that there was no mortgage on record, and, thereupon, he advanced the money to Carlin and took a mortgage for it.

Having had notice of the existence of the prior mortgage, plaintiff was bound to use diligence to ascertain if it had been paid. It was .not sufficient to inquire if it had been recorded, since he already had the notice which the filing would have given him, and the fact of nonfiling conveyed no information as to payment or satisfaction. His inquiry should have been of the mortgagee’s personal representatives to ascertain if the mortgage had been satisfied. It is true that Carlin told him it had been paid, but he did not rely upon Carlin’s statement, for he employed a lawyer to inquire if it had been recorded.

In Mack v. Phelan, 92 N. Y. 27, it is said: “ The purchasers relied alone upon the statements of the mortgagor in respect to the lien. * * * They made no inquiry of the mortgagee, nor did they go to the mills where the mortgaged property was stated in the mortgage to be, to ascertain whether there were machines there corresponding to those described in the mortgage. Under the circumstances it cannot, we think, be held as matter of law that they used due diligence in prosecuting the inquiry to ascertain whether the property purchased was covered by the mortgage.”

The plaintiff not only did not seek the representatives of the mortgagee in order to ascertain if the mortgage had been paid, but he did not even ask Carlin to produce the mortgage or the mortgagee’s receipt for payment. It may be said that plaintiff had the same authority for believing the mortgage to be paid that he had for its existence, namely, the mortgagor’s word; but he should have considered that when Carlin told of the mortgage he had no motive to misrepresent the facts and that -there might be such a motive when he desired to secure another loan upon the same property. That plaintiff appreciated the difference is shown by the fact that he did not rely implicitly upon Carlin’s statement, but employed a lawyer to make a search of the records.

It would seem, therefore, that plaintiff having knowledge of the prior mortgage, and not having made any effort to ascertain-that it was paid, cannot he déeined a subsequent mortgagor in good faith, and is not entitled to the property as. against the prior mortgagee or her bailee..

Judgment reversed.

McAdam and Bischoff, JJ., concur.

Judgment reversed.