Case ID: ny-super-ct_26/html/0438-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court, Moncrief, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

David Jones, plaintiff and respondent, vs. William Howell, defendant and appellant.
    1. It seems that a chattel mortgage, unless renewed from time to time, by filing copies thereof, as required by law, is of no avail, as against the claim of one who acquires a lien upon the property by virtue of a subsequent mortgage, though it be with notice of the former.
    2. A party accepting a transfer of personal property, expressly subject to a mortgage thereon, held by another, is estopped from claiming a prior lien upon the property by virtue of a previous mortgage, not properly renewed.
    3. Nor can he set up such prior lien as a defense to an action by the subsequent mortgagee after having voluntarily become the bailee of the latter, by accepting possession of the property as belonging to, and promising to return the same to him, on demand.
    (Before Moncrief, Monell and McCunn, JJ.)
    Heard December 12, 1865;
    decided December 30, 1865.
    
      This action was brought to recover the value of certain personal property, consisting principally of household furniture, of which the plaintiff claimed to be the owner, and which, as he alleged, the defendant had unlawfully converted to his own use.
    The plaintiff made title to the property by virtue of a chattel mortgage, executed to him by Augustus Smith. The execution of the mortgage was admitted, and the articles mentioned in the complaint were described in the mortgage. This mortgage was dated December 31, 1860, filed in the register’s office, in the city of New York, 2d January, 1861, and renewed on the 30th December, 1861. It appeared on the trial, that Augustus Smith was the owner of the property at the time of the execution of the mortgage, and that it was then situated in Beekman street, in the city of New York. The mortgage was payable on demand, and payment of the indebtedness intended to be secured by it, was demanded. On the 28th September, 1861, Smith, the mortgagor, assigned and transferred to the defendant, among other things, the furniture specified in the mortgage given to the plaintiff, subject to the payment thereof, &e. and the defendant thereupon took possession of said property under such assignment, and continued the business with Smith. The plaintiff, claiming title to, and the right to possess himself of the property under his mortgage, default having been made in the payment thereof, on the 2d day of April, 1862, permitted the defendant to have possession thereof, who promised to keep it for the plaintiff, and to surrender it to him when requested. On the 25th of April, 1862, the plaintiff demanded the property of the defendant, who refused to surrender it; whereupon this action was commenced. The case came on for trial before one of the justices of this court, and a jury. The defendant offered in evidence, as a defense to the action, the leases of Rainbow Hotel and the. assignments thereof from the defendant to Smith and Stone, and a chattel mortgage, dated April 1, 1857, executed by Smith & Stone to the defendant, upon the property in. question, to secure the payment of certain promissory notes, and the rent due, and to- become due, upon the leases ) and proposed to prove that the rent was in arrear from July to December, 1861, and was paid by the defendant out of his own money, and that at the time the plaintiff took his mortgage, he had notice of the defendant’s ■ mortgage, fthe learned justice excluded this defense and offer, and limited the defendant to proof of the value of the property. The jury,- under a charge from the court, • to which there was no exception, found a verdict for the plaintiff, for the sum of $2620.16. A motion was made, at special term, for a new trial, and denied. From the judgment entered upon such verdict, and from the order denying such motion for a new trial, which was made solely upon the minutes of the learned justice presiding at the trial, the defendant appealed.
    
      John Townshend, for the appellant.
    I. The verdict does not warrant the judgment. The verdict does not find what damages the plaintiff sustained, or was ■ entitled to; but merely the value of the property in question. . The action is to recover damages for the detention of the property, and the damages may be more or less than the value of the property. (Sedgwick on Damages, 496.)
    1. The verdict is in the nature of a special verdict, and should have found all the facts necessary to support the judgment, or a new trial will be ordered. (Eisemann v. Swan, 6 Bosw. 669. Barto v. Himrod, 4 Seld. 483.)
    2. The defect is not a mere irregularity. It vitiates the judgment. (Loeschigk v. Addison, 3 Robertson, 331.)
    II. The demand and refusal proved were not sufficient to constitute a conversion, because the demand was too broad ; it included more than the plaintiff had any pretense to claim, and the motion for nonsuit should have been granted. (2 Hilld. Torts, 264. Abington v. Lipscomb, 1 Adol. & El. N. S. 776. Rushworth v. Taylor, 3 id. 699. Wilde v. Waters, 32 Eng. Law and Eq. R. 422.)
    ■ III. The omission to refile or file a copy of a chattel mortgage, as prescribed by law, does not affect its validity against a subsequent mortgagee with notice; such a subsequent mortgagee is no.t a ■ bona fide mortgagee, and consequently is not within the protection of the statute. (Hill v. Beebe, 3 Kern. 556, 561. Farmers’ Loan and Trust Co. v. Hendrickson, 25 Barb. 484. Manning v. Monaghan, 10 Bosw. 231.) The like rule applies as between the parties. (Bryant v. Woodruff, 5 N. Y. Leg. Obs. 139.) As against the plaintiff, therefore, and the mortgagors, the mortgage to the defendant was not affected by the omission to file it year by year. It is not disputed that at the time the mortgage was given to the plaintiff, the mortgage to the defendant was in full force.
    IV. A mortgage of chattels differs from a mortgage of land among other things in this : that whereas a mortgage of land “ is a mere security or incumbrance,” leaving the legal title in the mortgagor, a mortgage of chattels vests the whole legal title in the mortgagee, which can only be revested in the mortgagor by a performance of the condition in the mortgage,. or by release, or re-assignment by the mortgagee. (Power v. Lester, 23 N. Y. Rep. 531, 533. Kortright v. Cady, 21 id. 347. Butler v. Miller, 1 id. 500. Hill v. Beebe, 3 Kern. 565.) Smith did not perform the condition of his mortgage to the defendant; he made default in payment of rent.
    V. The agreement dated September, 1861, made between Smith and the defendant, did not satisfy nor extinguish the defendant’s mortgage. (Hill v. Beebe, 3 Kern. 565, 563-568. Kellogg v. Rand, 11 Paige, 59. Sparrow v. Kingman, 1 Comst. 253. Catlin v. Grote, 4 E. D. Smith, 296. Van Dyne v. Sayre, 19 Wend. 170. Brown v. Rich, 40 Barb. 31, 32.) The fact that such agreement was made expressly •subject to the plaintiff’s mortgage did not alter its legal effect. With or without those words the effect would have been the same. The words operated only as notice of the existence of the mortgage. (Hull v. Carnley, 1 Kern. 506. Trotter v. Hughes, 2 id. 74. Jewell v. Harrington, 19 Wend. 474. Walrath v. Redfield, 18 N. Y. Rep. 461.)
    VI. The defendant was not estopped by the agreement with Smith in September, 1861, because in the first place the plaintiff was not a party or privy to or bound by it. There was no intention to mislead him, and he was not misled. He did not act thereon, and was not influenced thereby.
    1. Only one bound by or who is a party or privy, can avail himself of an estoppel. (Lansing v. Montgomery, 2 John. 382. Welland Canal Company v. Hathaway, 8 Wend. 480. Jackson v. Brinckerhoff, 3 John. Cas. 101. Campbell v. Hall, 16 N. Y. Rep. 578.)
    2. To constitute an estoppel in pais there must be an intent to mislead ; the party must have been misled, and he must be influenced thereby. (Carpenter v. Stilwell, 1 Kern. 73. Lawrence v. Brown, 1 Seld. 401. Walrath v. Redfield, 18 N. Y. Rep. 460. Jewett v. Miller, 6 Seld. 402. Chautauque County Bank v. White, 2 id. 252. Wright v. Douglass, 10 Barb. 97. Griffith v. Beecher, Id. 432. Ryerss v. Farwell, 9 id. 615.)
    VII. At the time the plaintiff accepted his mortgage, with notice of the defendant’s mortgage, Smith had nothing to convey but his right to redeem, and the plaintiff took nothing else. The mortgage containing no warranty, no subsequent act of estoppel of the defendant, or revesting of property in Smith, could vest a property in the plaintiff. (Powers v. Lester, 23 N. Y. Rep. 532. Pike v. Acker, Hill & Den. Sup. 90. Jackson v. Hubble, 1 Cowen, 613. Jackson v. Wright, 14 John. 193. Jackson v. Bradford, 4 Wend. 619. Hill v. Beebe, 3 Kern. 565, 566.). The action is in trover, and the plaintiff cannot recover without establishing property in himself. (Hill v. Covell, 1 Comst. 523. Hill v. Beebe, 3 Kern. 567.)
    VIII. The proofs offered.and rejected constitute a complete answer to the plaintiff’s case, and their rejection entitled the defendant to a new trial, with costs.
    
      P. G. Clark, for the respondent.
    I. The plaintiff’s mortgage, dated 31st .December, 1860, was payable on demand. Payment was demanded as early as July 1, 1861, putting Smith then in default. After default, the plaintiff’s title to the property became absolute, and he was entitled to maintain an action therefor, either of replevin in the cepit or detinet or of trover. (Fuller v. Acker, 1 Hill, 473. Burdick v. McVanner, 2 Denio, 170, and cases cited. Butler et al. v. Miller, 1 Comst. 496. Edgerton v. Thomas, 5 Seld 40.)
    II. The property was in possession of the defendant, at the time of demand, and was duly demanded. .The defendant refused to deliver it. The plaintiff's right of action was therefore complete.
    III. The court decided correctly in excluding the defense offered, and the evidence to support it. The defendant only offered to prove title in himself under the mortgage executed to him on the 1st day of April, 1857, which was never renewed.
    1. The evidence showed this mortgage to he paid. That fact the defendant did not propose to controvert. He merely offered to prove that the rent was in arrear from July to December, 1861, and that he paid it out of his own money. He did not propose to show that it was not paid to him, or that there was any thing due him at the time he consented to keep the property for the plaintiff, or at the time of the demand, or at the time of the trial. Smith testified that the rent had been paid, and there was nothing due on the mortgage. The mortgage having been paid, it could not be used as evidence of title, either as against Smith or the plaintiff. Such payment, though after default, extinguished all right and interest of the defendant in and t^ the property mortgaged. (Charter v. Stevens, 3 Denio, 33.)
    
      2. The defendant is estopped from denying the plaintiff's title to the property in question, (a.) By the agreement dated 28th September, 1861, by which, Smith transferred the property to the defendant, subject to the arrears of rent, and to the mortgage of the plaintiff, and the defendant received and accepted the property under this agreement, thereby directly recognizing the validity of the plaintiff’s mortgage, and becoming liable to the payment of the rent at least. It is for such rent only he claims his mortgage to have been valid. (Burr v. Beers, 24 N. Y. Hep. 178. Horton v. Davis, 26 N. Y. Rep. 495.) (6.) By accepting; said property from the plaintiff, agreeing to take charge of it for the plaintiff; to keep it for him and deliver it to him when requested, which was on April 2d, 1862.
    3. This testimony is not controverted. The estoppel is therefore perfect. (Kennedy v. Strong, 14 John. 128. Welland Canal Co. v. Hathaway, 8 Wend. 483. Presbyterian Congregation v. Williams, 9 Wend. 147. Dezell v. Odell, 3 Hill, 215. Jackson v. Ayers, 14 John, 224. Ingraham v. Baldwin, 5 Seld. 45. McGaw v. Adams, 14 How. Pr. 461. Bursley v. Hamilton, 15 Pick. 40. Stonard v. Duncan, 2 Camp. 344. Gosling v. Birnie, 7 Bing. 339, 341, 344. 11 Paige, 376. 37 Barb. 122.) By the defendant’s own act he induced the plaintiff, First, To leave the property in his, defendant’s, possession, and promised to surrender it when demanded. Second. He drew him into the expense of an action, and upon the trial; for the first time, set up. a .claim to the property under an old mortgage, to defeat the. claim of the plaintiff, which he had solemnly acknowledged.
    IV. The evidence on the question of value was conflicting. The jury determined the question upon the evidence, most favorable for the defendant, and their finding should not be disturbed.
   By the Court, Moncrief, J.

The plaintiff did not claim the property in question as a purchaser. Hence no question of. good faith could arise, save as to the fact of an actual indebtedness to him by Smith the mortgagor, and as to this there was no controversy or dispute. The mortgage to the defendant, of April, 1857, never having been renewed, as against the claim of the plaintiff under his subsisting lien, was of no avail, and. could not override it. • Again, the mortgage to the defendant had been canceled by-payment. Moreover, the claim paade by the defendant arises under a mortgage executed by Smith and one Sherman T. Stone, and the defendant,. subsequent to the execution and delivery thereof, accepted a transfer and entered into the possession . of the property, subject to a mortgage-made by Smith alone,. by a conveyance executed by him. . There was no evidence offered tending to controvert the fact of the payment of the defendant’s mortgage. The defendant was estopped from claiming a priority for any indebtedness to himself, by accepting the transfer of the property expressly subject to the mortgage held by the plaintiff. (Horton v. Davis, 26 N. Y. Rep. 495.) Even if this were not so, the defendant voluntarily became the bailee of the plaintiff, accepting possession of the property as belonging to, and promising to return the same to him, when requested so to do. There was no new condition of things tending in any degree to change either the facts within the knowledge of the defendant, or the relation of the parties to each other ; the law as well as justice requires, and good morals demand, that the defendant shall fulfill his promise and restore the property to the plaintiff. There was, therefore, no error in excluding the proffered evidence, as it would not constitute a defense.

Finding no error, and the exceptions taken to be untenable, I am of opinion that the judgment and order should be affirmed.

Judgment and order affirmed.