Case ID: misc_16/html/0072-01.html
Source: Caselaw Access Project
Author: {"author": "McAdam, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Beadleston & Woerz, Respondent, v. Henry Morton et al., Appellants.
    (Supreme Court, Appellate Term,
    February, 1896.)
    Landlord and tenant — Taking possession of mortgaged-chattels no defense to action for rent.
    Upon the purchase of a saloon; defendants assumed payment of'a chattel mortgage on the lease and fixtures, given by their vendor to plaintiff, and assumed payment of rent under the lease for which it was given as security. They subsequently sold to another, to whom they gave-.possession, and upon an attempted removal of the fixtures by the latter the plaintiff took possession thereof. Held, that as such possession was taken for the purpose of protecting the mortgage security from conversion, and without any intention of immedíate foreclosure, it did not operate as an accord and satisfaction of the mortgage debt, and-furnished no defense to an action for rent.
    Appeal- by defendants from judgment rendered in the Third Judicial District Court.
    Buys & Greenbaum, for appellants.
    Guggenheimer, Untefmyef.& Marshall, for respondent;
   McAdam, J.

The defendants purchased the saloon No. 9 Muís ray street, on which there was a chattel mortgage held by plaintiff, a domestic corporation. The mortgage was made by the former proprietor, Gertrude A. Fox, for the sum of $6,750, and covered the lease, goods, chattels and fixtures of the place.

The plaintiff entered into a written agreement with the defendants by which certain clauses in the mortgage were modified and the time. of. payment extended, and the defendants assumed the mortgage to the extent of $2,400. By the third paragraph of said agreement defendants.promised to promptly pay on the first -day of each month in advance all rent to accrue under a certain indenture of lease made bv the plaintiff, to said Gertrude A. Fox, ■of which the defendants were the assignees, and agreed shat if default should be made in the payment of such rent it should be the privilege of the plaintiff, at its option, to immediately demand payment of said mortgage, and in default thereof foreclose the same. Thus, the defendants were more than guarantors; they assumed the debt, made it their own, and unconditionally agreed to discharge it.

The first installment of rent became due May 1, 1895, and the second on the following June 1, and neither was. paid. The answer was a mere general denial, and there was no plea of payment or of accord and satisfaction, and no evidence that would have justified either.

Some time in June the defendants gave up possession of the premises without notice to the plaintiff. It then appeared that they had sold out to another party.. About a week or ten days after defendants’ vendee "went into possession he moved out and attempted to take with him part or all of the property and fixtures mortgaged to the plaintiff. The plaintiff thereupon sent Mr. Pottberg down to the place for the purpose of restraining defendants’ assignee from taking the property on which it held the mortgage; Mr. Obermeier, one of the defendants, was also present, and picked out goods belonging to them. After the removal of defendants’ vendee the mortgaged property was left, in the building and the place closed up.

Appellants claim that the effect of taking possession of the property is to satisfy the plaintiff’s debt or to suspend all remedies thereon until the property is sold by foreclosure, the equity ef redemption extinguished, and the amount of deficiency ascertained, and that for such deficiency, and no other, the defendants are liable. The appellants cite Olcott v. R. R. Co., 40 Barb. 179; 27 N. Y. 546; but there the property had been sold, bought in by the mortgagee, and the proceeds of sale credited on the mortgage debt. No .sale has been had here, and there is no evidence that the value of the chattels equals or exceeds the debt, or would be likely to satisfy it if a sale were had.

The respondent, on the. other hand, contends that in taking possession of the mortgaged property upon the attempted conversion of it by the defendants’ assignee, the plaintiff was merely ■exercising its rights to protect the mortgage security, and that such possession did not in any way operate as an accord and satisfaction of the debt.

The case is somewhat similar to Lathers v. ■ Hunt, 16 Daly, 135. There the mortgaged chattels consisted óf furniture mortgaged to secure rent due upon the premises. The mortgagor abandoned the property and the plaintiff assumed possession of it, and while thus in possession brought his action to recover from the defendant the amount of arrears of rent to secure the payment. of which the mortgage was given. Upon, the trial defendant contended that the possession of the" mortgaged chattels by the mortgagee operated as a satisfaction of the mortgage debt. The trial justice sustained the contention, and rendered judgment in favor of the defendant; from which an appeal was taken, and the decision of the court below reversed upon the ground that the action was maintainable.

The plaintiff in .this action, as in Lathers v. Hunt, supra, took possession of the chattels for the purpose of protecting them, rather than in the exercise of any option of foreclosing.- The promise made by the defendants being an unconditional one to pay $3,406 in monthly installments of $100 each, we think the justice properly rendered judgment in favor, of the plaintiff. Whatever -sums -the defendants pay will go. in mitigation of the debt they assumed; and, when the plaintiff exercises its option of foreclosure, reduce the deficiency, if there be one,' or increase the surplus, if any, arising from the sale. The mortgaged property "being saloon fixtures. of precarious value,, the plaintiff is probably awaiting a favorable opportunity before. attempting a. sale, at which the property may he sacrificed.

The judgment must, therefore* be affirmed* with costs.

Bischoff, J., concurs.

Judgment affirmed, with costs.