Case ID: ny-st-rep_5/html/0410-01.html
Source: Caselaw Access Project
Author: {"author": "Haight, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Nelson L. Button, Plff. v. Rathbone, Sard & Co., Deft.
    
      (Supreme Court, General Term, Fifth Department,
    
    
      Filed January 25, 1887.)
    1. Chattel mortgage — Void ip wot piled as to judgment creditors— Yalid between parties and creditors — 3 Rev. St at., 7 th ed. 2249.
    An action was brought to recover the value of a number of stoves, alleged to have been wrongfully converted by the defendant B. S. and Co. The plaintiff, Button, claimed title to the stoves through a chattel mortgage executed by one Tulley. E. S. and Co., a corporation, claimed title as creditor of Tulley, tbe stoves having been turned over to it in satisfaction of a pre-existing debt. E. S. and Co. took possession of the stoves and removed them, although Button forbade their removal, and at that time informed them of his chattel mortgage, which was not recorded until after such removal. Held, that the mortgage was as between the parties, a valid mortgage of the chattels, but was void because not recorded as a chattel mortgage, except as against creditors and purchasers in good faith. That E. S. and Co. not having a judgment and execution, was not a creditor within the statute and could not attack the mortgage as fraudulent, 3 Eev. Stat. 7th Ed., 2249. (Eeynoldsv. Ellis,) 1KT. Y. State Rep. 786, distinguished.
    
    2. Same — When creditor can depend possession op goods against MORTGAGEE.
    The statute requiring that E. S. and Co. procure a judgment establishing the validity and amount of their claim before they could proceed by process against the goods, they must have their claims established by a judgment, in order to defend the possession of the goods removed without process after having been forbidden to do so by Button.
    Motion for new trial by tbe defendant on exceptions taken at tbe Monroe circuit and ordered to be beard at tbe general term in tbe first instance.
    
      Horace Me Gruiré, for plff ; Gr. L. Stedman, for deft.
   Haight, J.

Tbis action Avas brought to recover tbe value of a number of stoves, alleged to have been wrongfully converted by tbe defendent. Tbe plaintiff claimed title to the stoves, through a chattel mortgage executed by one Tulley. The defendant, a corporation, claimed title as a creditor of Tulley, tbe stoves having been turned out to it in satisfaction of a pre-existing debt. The defendant took possession of the stoves, and removed them to tbe city of Albany. Tbe plaintiff forbade their removal and at that time informed the defendant’s agent of bis chattel mortgage. The chattel mortgage Avas not filed until after such removal. Tbe defendant’s claim bad never been reduced to judgment. Tbe parties having agreed that tbe value of tbe property was $850, at tbe conclusion of the evidence the court directed a verdict in favor of tbe plaintiff for that amount.

It is now claimed, first, that tbe chattel mortgage was absolutely void, as against the defendant, the creditor of the mortgagor, in possession of the property before the mortgage was filed; second, that the court erred in refusing to allow the defendant to show that the mortgage was fraudulent.

The statute provides that a mortgage or conveyance intended to operate as a mortgage of goods and. chattels which shall not be accompanied by immediate delivery, etc., shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers, and mortgagees in good faith, unless the mortgage or a true copy thereof, shall be filed as directed by the statute (3 R. S., 7 Ed., 2249).

The question necessarily turns upon the construction of this statute. In the case of Southard v. Benner, 72 N. Y., 424, AlleN J., in delivering the opinion of the court, says: “ A creditor at large cannot assail an assignment or other transfer of property by the debtor as frandulent against creditors, but must first establish his debt by the judgment of a court of competent jurisdiction, and either acquire a lien upon the specific property or be in a situation to perfect a lien thereon, and subject it to the payment of his judgment upon the removal of the obstacle presented by the fraudulent assignment or transfer.” And after referring to the. statute he again proceeds saying, “ The term ‘ creditors,’ as used in the statute, includes all persons who are creditors of the vendor or assignor at any time, whilst the goods remain in his possession or under his control. 2 R. S., 136, sections 5, 6. A creditor by simple contract is within the protection of the statute as much as a creditor by judgment, but until he has a judgment and a lien, or a right to a lien upon the specific property, he is not in a condition to assert his rights by action as a creditor.” [See also Thompson v. Van Vechten, 27 N. Y., 568; Stewart v. Beale, 7 Hun. 405; same case affirmed, 68 N. Y., 629; The Manufacturers, National Bank v. Rober, 19 Weekly Digest, 476; Niagara County National Bank v. Lord, 33 Hun, 557. 564.]

But it is contended on the part of the defendant that it is not proceeding to seize and take into its possession the mortgaged propertjq that it is simply defending the possession previously acquired, and that to defend such possession it is not necessary that it should be a judgment creditor. We are, however, inclined to the view that no such distinction exists in the defendant’s favor. The fact that it took possession of the goods and removed them, without process, after having been forbidden so to do by the plaintiff, does not improve or strengthen its position, or make defenses available that did not previously exist. Had the plaintiff forcibly resisted the taking of the goods, the defendant would have had to proceed by process or else violate the public peace. If it was required to first procure a judgment establishing the validity and amount of its claim before it could proceed by process against the goods, it would seem to follow tbat it should have its claim established by a judgment, in order to defend the possession of the goods.

In the case of Jones v. Graham, 77 N. Y., 628, the plaintiff claimed under a mortgage upon an engine, boiler, saw-mill, planer, belts, saws, tables and other machinery. The mortgage was not filed as a chattel mortgage. The defendant claimed under the two subsequent mortgages which were filed, one of which was given to hinder, delay and defraud creditors, and the other was given to secure a pre-existing debt. The defendant removed the planer from the mill and converted it to his own use. It was held that the plaintiffs were entitled to recover; that the mortgage to Jones was, as between the parties, a valid mortgage of the chattels therein mentioned and was void because not recorded as a chattel mortgage only as against creditors and purchasers in good faith; that the defendant not having a judgment and execution was not a creditor within the statute, etc. This case appears to be squarely in point and we think must control the question under consideration. The defendant not having a judgment is not in position to claim the benefit of the statute and could not attack the mortgage as fraudulent.

Our attention has been called to the case of Reynolds v. Ellis, 34 Hun, 47. In that case we held that a lease containing a mortgage clause, which was not filed in accordance with the provisions of the statutes, was void as against an assignee for the benefit of creditors. This case has recently been affirmed in the court of appeals. 2 N. Y. State, Rep., 786. Danfoeth, J., in delivering the opinion of the court, says: “ The defendant (the assignee) represents creditors and may treat as void all claims made in fraud of their rights. Laws of 1858, chapter 314. He has greater power for this purpose than the creditor himself. The creditor can assert no right until by judgment and execution he has a lien, or a right to a lien, upon the specific property, but in favor of an assignee for his benefit, the legislature having substituted a statutory right in place of these conditions.” This distinction may also serve to harmonize the authorities cited by the defendant’s counsel bearing upon the question of attaching creditors where the sheriff is proceeding under special power given by the statute.

No other question is presented which we consider it necessary to discuss.

The motion for new trial should be denied and judgment ordered for the plaintiff upon the verdict.

So ordered.

Beadley and Childs, JJ., concur; Angle,!., not sitting.