Case ID: ad_142/html/0500-01.html
Source: Caselaw Access Project
Author: {"author": "Thomas, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William Klein and Frank O. Reisler, Respondents, v. Louis S. Cohen and Lena Kranz, Appellants.
    Second Department,
    January 20, 1911.
    Sale — conditional sale — chattels tobe annexed to building — failure to file contract before furnishing chattel — conversion — when purchaser of premises may resell without becoming liable to conditional vendor — default in performance of building contract — waiver — evidence — bona fide purchaser — burden of proof.
    A contract for the conditional sale of chattels to be attached to a building is void as against a bona fide purchaser of the premises if not filed until after they .were furnished by the vendor.
    One who has contracted to furnish and place chattels in a building under a contract of conditional sale reserving title until payment, cannot hold persons who bought the premises on foreclosure liable for' a conversion, of the chattels in conveying the property to a third party, without proof that he was not in default under his contract and was entitled to possession. The purchasers on foreclosure succeeded to" the property interests subject to the plaintiff’s rights, if any, and could sell the property before default.
    Moreover, the conditional vendor, even if not in default, should demand the property, or payment, before suing for conversion, at least in the absence of proof of a sale to a bona fide purchaser.
    The purchasers on foreclosure cannot without a.demand for the property, or for payment, be held for conversion in conveying the lands in the absence of proof that they conveyed to .a bona fide holder insome way inconsistent with the plaintiff’s rights, if any. This, because there is no presumption that the purchaser was a bona fide purchaser taking without notice of the conditional sale or that the defendants committed a tortious act.
    Appeal by the defendants, Louis S. Cohen and another, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk-of-the county of Kings on the 18 th day of April, 1910, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 19th day of April, 1910, denying the.defendants’ motion for a new trial made upon the minutes.
    
      Isador Goetz [Maurice B. Rich with him on the brief], for the appellants.
    
      Forrest S. Chilton, for the respondents.
   Thomas, J.:

On January 22, 1908, plaintiffs contracted with the owners to furnish and place all the ironwork for buildings under recons truetion, and reserved title pending payment. This contract superseded an earlier contract under which some work was done. The last material furnished by plaintiffs was prior to March 23, 1908. On June 29, 1908, the defendants bought the property on foreclosure sale. Plaintiffs had not then completed their work, and a third party, an employee of plaintiffs, contracted with somebody, presumably the defendants, to complete the ironwork, and these plaintiffs did the actual work. About December 1, 1908, the property was conveyed to one Grabscheid. Then the plaintiffs, without demanding payment or the property, sued these defendants for conversion and recovered for parts of the stairs and fire escapes. The conditional sale agreement was filed June 27? 1908. Hence it was by the terms of the statute void as to bona fide purchasers.

The court submitted on the question of liability three questions:

(1) Was the property installed under the second contract of January 22, 1908? (2) Were Cohen and Kranz bona fide holders of the property ? (3) Did the defendants sell to a bona fide holder ?

The plaintiffs’ contention that the defendants were not bona fide holders is predicated upon evidence given by Himmelstein and Arker. There was a firm called Cohen (brother of Cohen defendant), Himmelstein & Arker (Arker, wife of the witness Arker). Himmelstein and Arker testified (1) that Silverblatt held for them the second mortgage foreclosed, having advanced moneys and receiving an assignment of it. He held it as early as January 27, 1908, when it was subordinated to the present first mortgage.

(2) That Manning said to them that plaintiffs would not take off their lien and proceed with the work unless there was another contract with them; that they “ wanted me to sign a bill of sale, that there were liens on it, and they wanted to be protected.” (3) That Cohen (defendant, not the member of the firm) bought for Cohen, Himmelstein & Arker, and that Kranz represented Rich. Rich testified that, he represented Kranz and learned of the plaintiffs’ agreement from the bank before it advanced the money, and this must have been before the foreclosure sale.

It seems that the plaintiffs have sued the defendants as principals, and sought to prove that they were agents,.and bound by notice to their principals. There is no intelligible evidence that there was notice of this agreement to Cohen, Himmelstein & Arker, although Rich, representing Kranz, admits knowledge; hut as the evidence that Cohen bought for the firm is not contradicted, andas the members of the firm did not deny notice and claim a bona fide purchase, I will pass to the' question "whether the defendants were guilty of conversion in selling. ■ The plaintiffs made no demand of them for the property; they were not personally bound to pay for ■the property, nor were their principals; the plaintiffs did not demand payment of them ; the plaintiffs did. riot fulfill their, contract; they delivered nothing after March 23, 1908; they were not entitled to be paid the first payment until the stairs' were set, nor either of the subsequent payments until the fire escapes were completed; the first payment was to be $600, and they received $600 from Haight under the trust mortgage to which they were parties; the fire escapes were not completed, but after the foreclosure sale the plaintiffs actually finished the work they had contracted to do under their own contract, and did so finish as representing their employee, who had made a com tract therefor with somebody, presumably the defendants. The finishing was not done by them or at their expense. And yet these delinquent plaintiffs have recovered as if they had proven no default on . their part, and as if at the time the defendants sold there was breach of the conditional sale agreement, and thereby no salable interest left in the defendants. If the plaintiffs claimed' default, why from March 23 to December 1, 1908, did they not enforce their claim, and why, after June twenty-ninth, the date of the foreclosure sale, did they finish these stairways and fire escapes for a new, contractor brought in to do this work? I consider that, as the ease stands, the defendants had a salable interest, and were, justified in conveying their property. The plaintiffs could not recover unless they showed' that they were not in default, and were entitled to possession.

The defendants succeeded to the property interests, subject to plaintiffs’ rights, if any they had, and could sell the property, at least, before default. (Tompkins v. Fonda Glove Lining Co., 188 N. Y. 261,265; Davis v. Bliss, 187 id. 77 ; Friedman v. Phillips, 84 App. Div. 179; Powers v. Burdick, 126 id. 179 ; Hathaway v. Brayman, 42 N. Y. 322; Hamill v. Gillespie, 48 id. 556.)

The plaintiffs, even if riot in default, should have demanded the property or payment for it at least in absence of proof of sale thereof' to a bona fide purchaser. (Moran v. Abbott,. 26 App. Div. 570; Mott Iron Works v. Reilly, 39 Misc. Rep. 833; Davis v. Bliss, 187 N. Y. 77.) If default is to be considered, the plaintiffs waived it by allowing defendants to finish the plaintiffs’ work at the defendants’ expense. Hence the defendants retained the property subject to plaintiffs’ rights under their agreement. (Hutchings v. Hunger, 41 N. Y. 155; O'Rourke v. Hadcock, 114 id. 541.)

But it is said that defendants converted the property by selling it to a bona fide purchaser, and nc demand was necessary. In Industrial & General Trust, Ltd., v. Tod (170 N. Y. 245) it is said: Conversion at law is defined to be an unauthorized assumption and exercise of the right of ownership over goods, or personal chattels, belonging to another, to the alteration of their, condition, or the exclusion of the owner’s rights.’' (Bouvier’s Law Diet.) A wrongful intention is not an essential element of the conversion and it is sufficient if it appears that the owner has been deprived of his property by the defendant’s unauthorized act, in assuming dominion and control. (Boyce v. Brookway, 31 N. Y. 490.) If, in the present case, the defendants were shown to have altered the condition of the plaintiff’s property, without authority, they might be liable in conversion. (See laverty v. Snethen, 68 N. Y. 522, 526; Comley v. Dazian, 114 ib. 161, 165.)”

There is not the slightest evidence that they conveyed to a bona fide holder, ór in any way inconsistently with plaintiffs’ rights if they had any. There is no presumption that the purchaser was a bona fide purchaser, taking without notice of the conditional sale. The presumption is that the defendants committed no tortious act, and the burden was on the plaintiffs to overcome it.

There is a finding by the jury of sale to a bona fide holder, but no evidence to support it, and so the case is as if there was no finding of such fact, and falls within Hale v. Omaha Nat. Bank (64 N. Y. 550, 556). Plaintiffs rely upon MacDonnell v. Buffalo L. T. & S. D. Co. (193 N. Y. 92), but there bonds held for a trust use were converted to a private use, and the case has no application. .

The judgment and order should be reversed and a new trial granted, costs to abide the event.

Jenks, P. J., Bure, Carr and Rich, JJ.,. concurred.

Judgment and order reversed and new trial granted, costs to abide the event. -