Case ID: ny-st-rep_34/html/0588-01.html
Source: Caselaw Access Project
Author: {"author": "Euger, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Ellen Spaulding, Resp’t, v. Marquis L. Keyes et al., App’lts.
    
    
      (Court of Appeals,
    
    
      Filed December 16, 1890.)
    
    Chattel mortgage—When void for fraud.
    Where a mortgage was given for a good and valuable consideration, the fact that the mortgagor remained in possession after the execution of the mortgage, and continued to sell the property as he did previous thereto, and the further fact that certain other transfers of property were made to other parties by the mortgagor about the time of making of the mortgage in question, even if they were proven to be fraudulent as to creditors, would not as a matter of law prove that the mortgage in question was. fraudulent.
    Appeal from judgment of the supreme court, general term, fourth department, affirming judgment for plaintiff entered on verdict of jury, and order denying new trial on judge’s minutes.
    
      J. A. Lynes, for app’lts; Burr Mattice, for resp’t.
    
      
       Affirming 23 N. Y. State Rep., 454.
    
   Euger, Ch. J.

This action'was brought to recover damages for the conversion of personal property. The plaintiff claimed title to the property through a chattel mortgage given to her by her husband, and the defense was that the mortgage was given with intent to hinder, delay and defraud the creditors of the mortgagor, and was, therefore, void as against such creditors.

The defendants justified the taking under an execution upon a judgment against the mortgagor. The verdict of the jury was for the plaintiff, and all disputed questions of fact were thereby determined in her favor. The general term affirmed the judgment of the trial court, and that being the last tribunal entitled to review questions of fact passed upon by a jury, precludes this court from considering any questions except those of law arising upon uncontroverted evidence.

There being no material exception to the.admission or exclusion of evidence or to the charge of the court, the only question for review here is, therefore, whether the uncontroverted evidence established that the mortgage was given for the purpose of hindering, delaying or defrauding creditors. The verdict of the jury determined, beyond the possibility of controversy in this court, the fact that the mortgage was given to secure a debt which the mortgagor honestly owed to the mortgagee; and this leaves as the only question remaining for discussion, whether the evidence in the case establishes the existence of a fraudulent intent, as matter of law, notwithstanding the mortgage was given for a good and valuable consideration. It is attempted to support the claim of a fraudulent intent from the fact that the mortgagor remained in possession of the mortgaged property after the execution of the mortgage, and continued to sell the property as he did previous thereto, and the further fact that certain other transfers of property to other parties made by the mortgagor about the time of the making of the mortgage in question were made with intent to defraud the mortgagor’s creditors.

It may be said of these contemporaneous transfers that there is no evidence in the case which establishes, as matter of law, that they were fraudulent, and much of the evidence as to their fraudulent character admitted on the trial was objected to by the defendant and was clearly inadmissible. The trial court subsequently struck out some of this evidence, but still left in the case much evidence which had been erroneously permitted to be given. The declarations of the mortgagor, after the execution of the mortgage, as to the intent with which these several transfers of property were respectively made, and as to his pecuniary condition, were clearly inadmissible as against the mortgagee in this case, and these declarations constituted a material part of the evidence against the plaintiff. But assuming, even, .that the several contemporaneous transfers were proved to have been fraudulent as to creditors, it does not follow, as matter of law, that the mortgage in question was fraudulent They might all have been fraudulent and yet the mortgagor was still capable of transferring his remaining property to his creditors, or others, as he chose, provided such transfers were honestly made. The fact that other transfers of property had been made by a debtor, apparently with the same general intent as part of a scheme to dispose of property with intent to defraud creditors, does not constitute conclusive evidence that other conveyances made about the same time were infected with the same dishonest intent. It is competent for a creditor to prove the fact of contemporaneous fraudulent transactions with a view of raising an inference of fact that other transactions, made at about the same time, and which are the subject of litigation, were made for a similar purpose and with similar intent; but this is not a legal inference and it simply raises a presumption of fact which iscapa"ble of being repelled and overthrown by evidence of good faith. The fact that the mortgagor was honestly indebted to his wife and was unable to pay all of his debts in full, afforded a sufficient justification to him for giving this mortgage, provided he was honest in his desire to secure the payment of that debt and had no dishonest motive to promote.

Suppose in this case the mortgagor had first given this mortgage to his wife, and subsequently had conveyed the remainder of his property with a clear intent to defraud his creditors, could it have been claimed, as matter of law, that his subsequent dishonest intent should be imputed to the former transaction ? We think not. Is it not just as clear that after making a fraudulent transfer it is still possible for the debtor to make an honest transfer, and one which shall be determined by the facts which legitimately affect it? We think that he may do so. With reference to the fact that the mortgagor was suffered to remain in possession of the mortgaged property, and dispose of it in the regular course of business, it is sufficient to say that this was done under an express agreement, contained in the mortgage, that he should remain in possession of the property, .and in case he made sales thereof that he should account and pay over to the mortgagee the entire proceeds of such sales. The mere fact that the mortgagor failed in some respect to perform this agreement, does not, as matter of law, authorize a court to find that the parties had an intention contrary to that expressed in the written agreement, and not only that, but contrary to the intent which, upon all of the evidence in the case, the jury have ascribed to the parties.

We are of the opinion, upon the whole case, that the questions therein were for the jury, and that whatever view we might have taken of the weight of evidence, if that question had come to us as an original question, we have no authority to review the questions determined by the tribunal appointed to try questions of fact.

The judgment should be affirmed.

Judgment affirmed, with costs.

All concur.