Source: https://law.justia.com/cases/federal/appellate-courts/F2/360/704/390924/
Timestamp: 2020-01-18 02:35:40
Document Index: 292346435

Matched Legal Cases: ['§ 180', '§ 184', '§ 183', '§ 184', '§ 180', '§ 67', '§ 120']

John Susi, Appellee-cross-appellant, v. Belle Acton Stables, Inc., and Harold Rosenberg, Appellants, Andjack Stahl and Rona Plastics Corp., Now Known As Stahl Liquidating Corp., Cross-appellees, 360 F.2d 704 (2d Cir. 1966) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 1966 › John Susi, Appellee-cross-appellant, v. Belle Acton Stables, Inc., and Harold Rosenberg, Appellants,...
John Susi, Appellee-cross-appellant, v. Belle Acton Stables, Inc., and Harold Rosenberg, Appellants, Andjack Stahl and Rona Plastics Corp., Now Known As Stahl Liquidating Corp., Cross-appellees, 360 F.2d 704 (2d Cir. 1966)
US Court of Appeals for the Second Circuit - 360 F.2d 704 (2d Cir. 1966) Argued December 10, 1965
COPYRIGHT MATERIAL OMITTED Julius M. Gerzof, Freeport, N. Y. (Allinson & Gerzof, Freeport, N. Y.), for defendants-appellants, Belle Acton Stables, Inc. and Harold Rosenberg.
We are confident that New York would not give effect to the Maine foreclosure as against persons who had purchased or loaned money on the security of the horses without knowledge of the foreclosure, even though they knew of Susi's mortgage and their interests would thus be subject to it as a prior lien. One objective of New York's generally requiring the foreclosure of chattel mortgages by judicial proceeding was that persons who dealt with the mortgagor as an owner, even of encumbered chattels, should not find themselves liable as converters because of events of which they were unaware. But it does not follow that New York would have taken the same view as to the effect of strict foreclosure on an out-of-state mortgagor who had full knowledge thereof. The mortgage here was executed in Maine, between two Maine residents, to secure a short-term indebtedness payable in Maine; it followed the Maine form of being a bill of sale, reserving to Landers only the right of possession until condition broken, and was promptly recorded in Maine. Although the parties did not state in so many words that they intended Maine law to apply, such a combination of circumstances suggests that they did, and we perceive no basis for doubting that as between themselves New York would give effect to their desire. Cf. Youssoupoff v. Widener, 246 N.Y. 174, 190-191, 158 N.E. 64, 69-70 (1927); Wyatt v. Fulrath, 16 N.Y.2d 169, 264 N.Y.S.2d 233, 211 N.E.2d 637 (1965). See generally Ehrenzweig, Conflict of Laws 623-24 (1962); Cavers, The Conditional Seller's Remedies and the Choice-of-Law Process, 35 N.Y.U. L. Rev. 1126 (1960).
We must confess some uncertainty where this leaves us. Would New York say that, absent actual knowledge by the defendants of the effect of a Maine foreclosure, it will apply its local law as to how chattel mortgages are to be enforced? Or would it say that the defendants knew enough to charge them with a duty of inquiry and, failing in that, are to be treated as Landers would have been and must look to him for redress? What indeed would we say if the role assigned federal judges in such cases allowed us to make a choice rather than a considered guess? Indeed, are we not doing pretty much that when the state precedents are such an uncertain trumpet? After "prolonged cerebration," see Cooper v. American Airlines, Inc., 149 F.2d 355, 359, 162 A.L.R. 318 (2 Cir. 1945), but without profound conviction, we think New York would place the defendants in Landers' shoes. Although Landers' statement that Susi had foreclosed would not necessarily mean the equity of redemption had been extinguished, it could mean that, and the defendants and the attorneys who represented them in the transaction thus could not simply assume that payment of Susi's debt would end the matter.7
We disagree that the stableman's lien was not susceptible of assignment. New York recognizes that the closely related artisan's lien, Lien Law § 180, will pass with transfer of the debt and possession of the bailed articles. Nash v. Mosher, 19 Wend. 431 (1838); Goyena v. Berdoulay, 154 N.Y.S. 103 (App.T. 1st Dept. 1915); Lieberman v. Mulhern Steam Heating Co., 159 N.Y.S. 43 (App.T. 1st Dept. 1916); Triple Action Spring Co. v. Goyena, 93 Misc. 171, 156 N.Y.S. 1064 (App. T. 1st Dept. 1916). In the case of Dealer Plan Corp. v. Automotive Wholesalers, Inc., 9 Misc.2d 1052, 164 N.Y.S.2d 516 (1st Dept. 1957), the Appellate Division held similarly with respect to the garageman's lien under § 184, distinguishing on their facts two contrary decisions of lower courts which had ruled such a lien not assignable where transfer would constitute a breach of the lienholder's contract of bailment. Koroleff v. Schildkraut, 179 N.Y.S. 117, 119 (App.T. 1st Dept. 1919); General Motors Acceptance Corp. v. Barnett, 142 Misc. 192, 254 N.Y.S. 166, 175 (Mun.Ct.1931). To be sure, in Fitchett v. Nanary, 59 Super. 383, 27 J. & S. 383, 14 N.Y.S. 479 (1891), aff'd, 131 N.Y. 664, 30 N.E. 868 (1892), a stableman's lien was held unassignable where the bailee transferred the stable and horses to a new keeper, but that decision is distinguishable on the Dealer Plan rationale that such a transfer was inconsistent with the bailment. Susi's attempt to distinguish Dealer Plan because of the presence in § 183 of the words "dependent upon the possession" which are not found in § 184 must be rejected; the quoted words scarcely differ from the "while lawfully in possession thereof" used in § 180 with respect to the artisan's lien, which New York has held to be assignable, and seem designed only to emphasize that the lien is lost by delivery of the goods to the bailor or to any other person not acquiring the debt. See Johanns v. Ficke, supra, 224 N.Y. at 518-521, 121 N.E. 358.
While complete reconciliation of the decisions may not be possible, we think that, as to all the historic possessory liens of bailees other than that of an attorney, New York today would follow the rule that the lien will pass upon assignment of the claim and transfer of possession, save when the transfer is of such a character as to constitute a material breach of the bailment. Restatement, Security § 67(1), at 195 (1941), contrast illustrations 1, 2, 3, with illustrations 4, 5, 6, id. at 196-99; see explanatory notes in Tent. Draft No. 3, 168-73 (1939); and Brown, Personal Property § 120, at 595 & n. 20 (2d ed. 1955). Although the case would stand differently if Rosenberg had carted the horses off to California, a plan whereby Haughton was to retain physical possession as the assignee's agent was not such a breach; the horses remained exactly where Landers had placed them and Susi had been content to leave them and were handled as they had previously been. Compare Park v. Hull of the Edgar Baxter, 37 F. 219 (S.D.N.Y. 1888). The acceptance of legal possession under the assignment of Haughton's lien on August 2 thus did not, in and of itself, constitute a conversion.
This brings us at long last to the cross-appeal from the dismissal of the complaint against Stahl and his corporation, Rona Plastics. The issue is whether Stahl merely brought the parties together, or whether he and the corporation were the true principals for whom his son-in-law Rosenberg was acting as an agent or front. Landers testified that all the dealings were with Stahl, who had shown an interest in the horses before Rosenberg appeared at all. The funds used by Rosenberg to pay Haughton were an interest free advance from Stahl and Rona Plastics, which Stahl admitted he did not classify as a loan.12 Bills for stabling the horses after August 2 were sent directly to Stahl and paid by him. Stahl, not Rosenberg, made the sale of Belle Acton. Finally a sufficient motive for having Rosenberg appear as the registered owner of the horses was shown in Stahl's wish to avoid having to apply for a license from the New York Harness Racing Commission. Under these uncontroverted facts, Rosenberg must be considered to have acted as Stahl's agent, rendering Stahl and Rona Plastics also liable for the conversion. See Aeroglide v. Zeh, 301 F.2d 420, 422 (2 Cir.), cert. denied, 371 U.S. 822, 83 S. Ct. 38, 9 L. Ed. 2d 61 (1962); Passaic Falls Throwing Co. v. Villeneuve-Pohl Corp., 169 App.Div. 727, 155 N.Y.S. 669 (1st Dept. 1915).