Case Name: MARY C. PORTER, Executrix of the last will of Giles R. Porter, Deceased, Plaintiff and Respondent, v. ELIZA PARMLY, Defendant and Appellant
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1873-05-04
Citations: 2 Jones & S. 398
Docket Number: 
Parties: MARY C. PORTER, Executrix of the last will of Giles R. Porter, Deceased, Plaintiff and Respondent, v. ELIZA PARMLY, Defendant and Appellant.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 34
Pages: 398–415

Head Matter:
MARY C. PORTER, Executrix of the last will of Giles R. Porter, Deceased, Plaintiff and Respondent, v. ELIZA PARMLY, Defendant and Appellant.
Chattel Mobtgage—Refiling of.
Omission to reflle, when it will not impair the rights of the mortgagee.
1.' When, after default by the mortgagor, an actual change of possession of the property has taken place, or the rights of the parties have been changed by some new act or contract in relation to the property, which would render a refiling an idle ceremony.
Application of above principle.
Where the property mortgaged consisted of hotel furniture situate at the time in a hotel, and the mortgagor and A. B., as partners, carry on the hotel business in that hotel, using, in the conduct of the business, the mortgaged property as part of the hotel equipments, and, after default by the mortgagor, the mortgagee declared he would not trust the mortgagor with the property, and thereupon he, with the consent of the mortgagor, placed the property in the possession of A. B. for him, but did not remove it from the hotel, and it remained in the hotel from the date of the mortgage until its sale under the mortgage, the partners during the whole time carrying on in the hotel the hotel business, using in the business the property as part of the hotel equipments, and no notice was posted about the hotel, nor any variation in the mode of the conduct of the business which indicated a change of ownership, or of possession,—
Held, that as against a creditor of the mortgagor, whose demand did not ripen into a judgment until after the expiration of one year from the filing of the mortgage, the rights of the mortgagee were not prejudiced by the non-refiling of the mortgage.
2. Change of possession, and delivery.
Held, that there was a sufficient delivery and change of possession to prima facie satisfy the statutes concerning fraudulent conveyances.
3. Fraud.
Although the omission to refile does not, under the above circumstances, prejudice the mortgagee’s right, yet the mortgage and the whole transaction may be attacked for fraud on the ground that it was entered into or carried out with intent to hinder, delay, or defraud the mortgagor’s creditors.
4. Question of fact.
This, however, is a question of fact, and where, in addition to the above matters, it appears that the mortgage was given on a sale by the mortgagee to the mortgagor of the property for a part of the purchase money, and the referee does not find as matter of fact that the transaction was entered into or carried out with a fraudulent intent, and was for that reason fraudulent against creditors, he is not justified upon the above facts in adjudging as matter of law that the arrangement entered into between the parties upon default was fraudulent and void against one who was not misled thereby.
Before Monell, Freedman and Curtis, JJ.
Decided May 4, 1873.
Appeal from judgment entered upon the report of a referee.
The action was brought by Giles W. Porter against the defendant for the wrongful seizure and sale of personal property, the alleged property of said Porter.
The defendant interposed a general denial.
During the pendency of the action, Giles W. Porter died, and the action was continued by and in the name of Mary C. Porter, acting executrix of the last will and testament of said Giles W. Porter, as plaintiff.
The issues were referred, by consent of parties, to a referee to hear and determine the same, who found the following facts and conclusions of law:
PACTS.
First. That for sometime prior to June 1,1850, the defendant in this action was the ownerfof certain furniture then being in a certain hotel, situated in the city of blew York, known as Rathbun’s Hotel; such furniture then being in the possession of one Benjamin Rathbun and John F. Porter, who were then conducting the business of keeping said hotel as partners, and such furniture being part of the equipment of said hotel and used in conducting said business.
Second. That at some time prior to the first day of June, 1850, an agreement was made between the defendant and the said John F. Porter, by which the said defendant sold to said Porter, and the said Porter purchased of said defendant the said furniture above mentioned for the sum of eight thousand seven hundred and fifty-seven dollars and four cents, the said sum to be secured to and to be paid to said defendant by the said Porter, by executing and delivering to said defendant the bond of said Portér conditioned for the payment of said sum on demand, and also by a mortgage on said furniture, to be executed by said Porter to the defendant.
Third. That said agreement was carried out on or about June 1, 1850, by the execution and delivery by said John F. Porter of his bond conditioned for the payment of eight thousand seven hundred and fifty' seven dollars and five cents to the defendant on demand, with interest from May 1, 1850, and by the execution and delivery to the defendant of a mortgage on said furniture, which expressed that it was on condition that the same should be void if said Porter should pay the amount secured by said bond on demand with interest as aforesaid, and also the sum of fifty-five hundred dollars on demand, with interest, which mortgage contained a power of sale in case of default in payment, and a provision that, until default, said Porter was to remain in possession of the property therein described ; which said bond and mortgage were respectively dated on June 1, 1850, and which mortgage. was duly filed on June 15, 1850, in the office of the register of the city and county of New York.
Fourth. That on the same day of the execution of said bond and mortgage, and also some time in the month of April, 1851, the amount mentioned in and secured by said bond was demanded of the said Porter | and payment thereof required, and possession of the property described in said mortgage was also demanded, but on neither of said occasions was the amount ¡paid. That on one of said occasions it was agreed ¡between the said defendant and said Porter that the ¡said Rathbun should be and remain in possession of Isaid property for the defendant—he, the defendant, Istating on that occasion that he would not trust said >orter with the property.
Fifth. That said Benjamin Rathbun and John F. orter continued to be« partners engaged in carrying on ¡the business of keeping said hotel from the time of the Execution of said mortgage up to the time of the sale inder said mortgage hereinafter mentioned, and that laid property so mortgaged, continued to remain in laid hotel as the equipment and furniture thereof, and lo be used in the carrying on such partnership business [Luring the same period.
Sixth. That the said mortgage was not refiled in the Iffice of the register aforesaid, within thirty days next preceding the expiration of one year from the first filig thereof, but was so refiled on July 3,1851-v
Seventh. That on July 3, 1851, the said John F. Porter, by Ms statement, made, signed and verified by Mm, confessed a judgment in favor of Giles W. Porter, assignee of Porter & Ballard, for the sum of thirteen thousand and sixty dollars and eighty-two cents, which statement was filed in the office of the clerk of the city and county of New York, and a judgment was entered thereon in the supreme court for said amount on the last mentioned day.
Eighth. That on July 3, 1851, an execution against property was issued on said judgment, and delivered to the sheriff of the city and county of New York. By virtue of which execution the said sheriff levied upon, and afterwards and on July 21, 1851, sold at public vendue to the said Giles W. Porter all the right, title and interest which the said John F. Porter had on July 2, 1851, or at any time afterwards, of, in and to all the furniture, goods and chattels on the premises known as Eathbun’s Hotel in Broadway, in the city of New York, and all interest in such property, which the said sheriff was authorized to sell, and executed and delivered to said Giles W. Porter a bill of sale therefor ; that the price at which the same was sold was the sum of six thousand dollars, but that no money was paid on account thereof—said amount, less sheriff ¡ fees, being credited on the execution. That on saic sale said right, title and interest, was put up and sole as one lot, and not in detached parcels, and that sai< sale took place in or upon some portion of said hotc where the property was situated, the same being dig tributed throughout various rooms in said hotel in th customary places for use.
Ninth. That before said confession of judgmen said Giles W. Porter knew of the existence of tl mortgage hereinbefore mentioned.
Tenth. That the said defendant did, by an instn ment in writing indorsed on said mortgage, and bearii date July 1, 1851, make, constitute and appoint Abr ham T. Hillyer his true and lawful attorney for him, and in his name to take possession of the goods and chattels and property mortgaged and described in said mortgage, and in the inventory thereunto annexed, and to sell the same by virtue of the power of sale therein contained, and to take all proper ways and means to foreclose said mortgage and collect the moneys due thereon, and confirming all he might lawfully do by virtue thereof; and thereupon said mortgage, with said instrument indorsed thereon, was delivered to said Hillyer. That the said Hillyer at that time was one of the deputies of the sheriff of the city and county of Hew York, and the same who made the sale on execution hereinbefore mentioned.
Eleventh. That no possession was taken by said Hillyer under the power indorsed on said mortgage until after July 2, 1851; but that on some day subsequent thereto he did take possession under said mortgage of all the property mentioned in said mortgage then in said hotel, and also did, without authority, direction or consent from the defendant, take possession of other property in said hotel not covered by or included in said mortgage, and on August 6, 1851, he caused all of said property so taken possession of by him to be exposed for sale at public auction, and the said public sale of said property was commenced on that day, and was continued for some days thereafter, until the whole of the said property was sold. That after said sale said property was removed by the purchasers, and the proceeds were received by said Abraham T. Hillyer. That the defendant did not in any manner authorize, direct or ratify the sale by said Hill-yer of any property other than such as was covered by said mortgage.
. Twelfth. That the value of the property mentioned in said mortgage and so sold by the said Hillyer was the sum of eleven thousand and eighty-five dollars and forty-five cents, and that the interest on said sum, from August 15, 1851, to the date of this, my report, is the sum of fifteen thousand three. hundred and forty-one dollars and fifty-two cents.
Thirteenth. That said Giles W. Porter departed this life some time in the year 1859, leaving a last will and testament, which was duly admitted to probate by the surrogate of the proper county, and letters testamentary issued thereon to the plaintiff, the only executor named in said will who qualified.
And from the said facts so found .by me, I have arrived at and do hereby report the following as my
COXCLTTSIOXS OF LAW.
First. That as at the time the said agreement between the defendant and John F. Porter and Benjamin Rathbun, in the fourth conclusion of fact mentioned was entered into, the said John F. Porter 'and Benjamin Rathbun were partners, and as the mortgaged property at that time was used in carrying on such partnership business, and as such partnership and such use of said mortgaged property continued after such agreement was made, there was not, in judgment of law, an actual change of possession of the mortgaged property.
Second. That although payment of the amount secured by said mortgage was demanded and refused, yet as there was no change of possession of said' mortgaged property, the title to the same .was not absolute at law in the defendant after the expiration of one year from the filing thereof as against the creditors of John F. Porter.
Third.. That the mortgage executed by the said John F. Porter to the defendant, not having been refiled within the thirty days next, preceding the expiration of one year from the time of the original filing, the same ceased to be valid as against the creditors of John F. Porter, and, was, on July 2, 1851, void, and of no effect as against Giles W. Porter, assignee of Porter & Ballard, a creditor in whose favor judgment was, on that day, entered against John F. Porter, and execution issued thereon.
Fourth. That although at the time of the sale to Giles W. Porter, upon the execution on said judgment, the said mortgage was valid and subsisting as between the defendant and John F. Porter, and although said sale was expressly made of the right, title and interest of John F. Porter in the property, yet the said Giles W. Porter was not, by reason of his purchase on said sale, estopped from setting up the invalidity of such mortgage as against him.
Fifth. That as the mortgage held by the defendant had ceased to be valid at the time of sale as against Giles W. Porter, he did, by the sale to him of the right, title and interest of John F. Porter in the property, acquire the title to and become the absolute owner of the mortgaged property itself, free and clear, and discharged of any lien of the defendants’ mortgage.
Sixth. That the sheriff, in making such sale, complied with all the requirements of law in relation to sales of personal property on execution, and that the sale of the right, title and interest, was properly made in one parcel.
Seventh. That the defendant has no right to object to the manner in which said sale was made, or as to any of the proceedings connected therewith.
Eighth. That the defendant became liable to Giles W. Porter in damages for the acts of Abraham T. Hilllyer, in taking possession of, selling and disposing of [the property mentioned in said mortgage, but he did mot become liable for his acts in taking possession, selling or disposing of any property not mentioned in said Inortgage.
Ninth. That the measure of damages to be recovered in this action is the value of the property described in said mortgage so sold and disposed of by said Hill-yer, with interest thereon from the time of sale.
• Tenth. That after the death of Giles W. Porter, and the issuing of letters testamentary on the will, tlm right of action possessed by Giles W. Porter, in his lifetime, became vested in the present plaintiff, and this action was properly continued in her name.
Eleventh. That the plaintiff in this action is entitled to judgment against the defendant for the sum of eleven thousand and and eighty-five dollars and forty-five cents, with interest thereon from August 15, 1851, to the date of this report—being the sum of fifteen thousand three hundred and forty-one dollars and fifty-two cents, making in the whole the sum of twenty-six thousand four hundred and twenty-seven dollars and twenty-two cents, besides the costs of this action.
Judgment was entered upon said report in favor of the plaintiff against the defendant, for twenty-eight thousand three • hundred and twenty-two dollars and twenty-three cents damages and costs, and the defendant appealed from such judgment.
Marsh & Wallis, counsel for appellant.
A. R. Dyett, counsel for respondent.

Opinion:
By the Court.—Freedman, J.
Although the evidence in this case is amply sufficient to sustain the findings of fact made by the learned referee who tried the cause, I cannot see how, upon the facts as found, his conclusions of law, with the exception of the sixth, seventh, and tenth, and the judgment founded thereon, can be upheld.
In Stoddard v. Denison, 2 Sweeny, 54, we held that a mortgage of personal chattels is a sale on condition. Under it the legal title to the chattel is vested in the mortgagee, subject to the right of the mortgagor to perform the condition. Until default there is no doubt of the mortgagor's right to perform, and, upon performance, to re-invest himself with the legal title.
Upon breach of the condition of a chattel mortgage, valid in its inception, the legal title becomes absolute in the mortgagee, leaving a mere equity in the mortgagor. The mortgagee may thereupon take possession of the property, and, so far as the legal rights of the parties are concerned, he may thenceforth treat it as his own, and squander, destroy it, or give it away. By pursuing this course he waives his claim for any deficiency that might otherwise arise.
But, whenever, in addition to his legal rights, the mortgagee desires to extinguish the equity remaining in the mortgagor after forfeiture, then, and not until then, must he make a fair and bona fide sale under the power contained in the mortgage or have recourse to actual foreclosure of the equity by judicial proceedings.
All legal claim of the mortgagor being gone, after forfeiture, he cannot sue for the property, nor sell it, > or give another valid mortgage or lien upon it. Nor, after forfeiture, is the mortgagee bound, at law, to receive the amount of the mortgage debt, and restore the property to the mortgagor (Charter v. Stevens, 3 Denio, 33; Hulsen v. Walter, 34 How. 385).
While the mortgagor retains possession, before default, he may sell and deliver the property, and the purchaser takes all the interest the mortgagor had thereto, and holds it subject to the mortgage. Such purchaser may again, before default, sell and deliver to another with the like effect, and in such case the remedy of the mortgagee, upon maturity of the mortgage debt, is to follow the property and recover it from the possession of the last purchaser (Hathaway v. Brayman, 42 N. Y. [3 Hand] 322).
If, after default, the mortgagor is allowed to remain in possession, he may transfer such possession, together with his equity of redemption. That is all the interest he has in the property, and all he can transfer, even to a tona fide purchaser for full value. But the mortgagee may, at any time take the property out of the possession of such tona fide purchaser. In case of sale by the mortgagee, to foreclose the equity of redemption, if there be a surplus after paying the mortgage debt, that would belong to the mortgagor or his vendee or assignee. But, after default,, and until such sale or redemption, the title is in the mortgagee (Farmers' Bank of Washington Co. v. Cowan, 2 Keyes, 218).
Until a chattel mortgage becomes an absolute bill of sale by the non-performance of the condition contained therein, the mortgagor usually retains not only the possession, but has such a. possessory right for a definite period in the chattels mortgaged, against the ' mortgagee, coupled with the right of redemption, as is liable to levy and sale on execution. In such case the purchaser, at the sale on execution, takes the property subject to the mortgage, and acquires, with it a right to redeem it by payment of the amount due on the mortgage (Hull v. Carnley, 1 Kern. 501; Hull v. Carnley, Executrix, 17 N. Y. 202 ; Goulet v. Asseler, 22 N. Y. 225 ; Manning v. Monaghan, 23 N. Y. 539).
But, after the mortgagee has acquired an absolute title to the property, by reason of the mortgagor's default, there is not left such a possessory right or 4 interest in the mortgagor as is liable to be sold under an execution against him (Baltes v. Ripp, 3 Keyes, 210); and the rule is the same though the mortgagor is allowed to remain in possession after the default. In such case his. possession is merely by the sufferance, and as the bailee, of the mortgagee (Champlin v. Grant, 39 Bart. 606 ; Stewart v. Slater, 6 Duer, 99).
These rights of the mortgagee; as defined and laid down, are affected, however, and may become impaired and, in some instances, even wholly lost as against creditors, by reason of the mortgagee's failure to comply with certain statutory requirements enacted for the. protection of the creditors of the mortgagor against fraudulent conveyances and mortgages.
Under the act concerning fraudulent conveyances and contracts (2 Rev. Stat. 136; 3 Id. 5 ed. 222), every sale made by a vendor, of goods .and chattels in his possession or under 'his .control, and every assignment of goods and chattels by way of mortgage or security, or upon any condition whatever, is to be presumed fraudulent and void as against the creditors of the vendor, or the creditors of the person making such assignment, or subsequent purchasers in good faith, unless the same be accompanied by an immediate delivery, and be followed by an actual and continued change of possession of the things sold, mortgaged or assigned; and shall be conclusive evidence of fraud, unless it shall be made to appear on the part of the persons claiming under such sale or assignment, that the same was made in good faith and without any intent to defraud such creditors or purchasers.
The act of 1833 introduced an additional feature into the law, by providing that every mortgage or conveyance intended to operate as a mortgage of goods and chattels hereafter made, which shall not be accompanied by an immediate delivery, and followed by an actual and continued change of possession of the things mortgaged, should 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, be filed as required by said act—such • filing in the city of Hew York to be in the office of the register. The act further provides that every mortgage filed in pursuance thereof shall cease to be valid as against the creditors of the person making the same, or against subsequent purchasers or mortgagees in good faith, after the expiration of one year from the filing thereof, unless within thirty days next preceding the expiration of the said term of one year a true copy of such mortgage, together with a statement exhibiting the interest of the mortgagee in the property thereby claimed by him by virtue thereof, shall be again filed in the office of the clerk or register aforesaid, of the town or city where the mortgagor shall then reside (Laws of 1833, ch. 379, § 1, 2, 3).
I agree with the learned referee that the act last mentioned does not repeal the statute as to fraudulent conveyances above referred to, but imposes on the mortgagee, who is willing that the mortgaged property should remain in the possession of the mortgagor, the duty of giving notice of the existence and continuance of his mortgage, by having the same filed and refiled, as provided for in the act. The object of this act was to create an additional guard against fraud or collusion between the mortgagor and mortgagee; and the presumption of fraud created by the statute, as against a mortgagee of chattels, where its execution was not followed by an immediate delivery and an actual and continued change of possession, was not in any way affected by the act of 1833.
The filing of a mortgage does not of itself excuse the want of possession of the property mortgaged, but by its means the. mortgagee is placed in a position which entitles him to .show, as against creditors and subsequent mortgagees and purchasers, that the mortgage was given in good faith, without intent to hinder or defraud creditors.
Such filing is made essential in all cases where there is not an immediate delivery and- actual change of possession, and in such cases every mortgage not so filed is declared by the act to be absolutely void against creditors, whose rights, in such case, date from the delivery of the execution to the sheriff, and against subsequent mortgagees or purchasers in good faith (Hale v. Sweet, 40 N. Y. [1 Hand] 97).
Now, in the present case it is fully conceded that the chattel mortgage was a valid one in its inception, that it was duly filed before the rights of any creditor attached, and that payment of the amount secured by it, and possession of the furniture have been duly demanded within the first year. But the referee holds that it ceased to be valid as against the plaintiff, representing a creditor of the mortgagor, because not refiled within thirty days next preceding the expiration of one year from the first filing.
Tiiat this would be so, in case no default had occurred in the performance of the condition, is too clear for argument. But it seems to me, that it may well be doubted, whether that provision applies after default. As above shown, the title of the mortgagee becomes absolute at law, upon default, not only against the mortgagor but also his creditors, and the mortgage, which has fulfilled its object, is thereupon turned into an absolute bill of sale. The claim, therefore, that such absolute title, once acquired, can be made to cease, by operation of law and without actual fraud, to have any value whatever after the expiration of one year against the creditors of the mortgagor then existing, appears not only illogical but unreasonable. Before it can be allowed, the language of the statute must be found to be so clear and imperative as to leave no choice. In Newell v. Warren, 44 N. Y. (5 Hand) 344, the commission of appeals held that, under the statute referred to, it was unnecessary to require more than the legislature did, and that consequently a mortgage once refiled at the end of the first year continues valid with- ' out further refiling in subsequent years. And in Hulsen v. Walter, 34 How. Pr., 385, Van Vobst J., inti mated that a refiling, after default, may, in some instances, even be improper. He says: A person ignorant that a forfeiture had occurred, and who had acted upon such refiling as an acknowledgment, on the part of the mortgagee, that his title had not .become absolute, might make a claim on that ground.
How, from the language of the statute it is by no means clear that the requirement as to a refiling is intended to apply to a chattel mortgage after forfeiture. The cases of Ely v. Carnley, 19 N. Y. 496, and Levin v. Russell, 42 N. Y. (3 Hand) 251, do- not go to the full 'extent of deciding authoritatively that it does so apply. In the first case, the mortgage was payable on demand, and no demand had been made at the time of delivery by the creditor of the execution to the sheriff. Consequently a refiling was absolutely necessary. The additional remark, made by the learned justice who delivered the opinion of the court, that .when the title to the property has absolutely vested in the mortgagee, by the mortgagor's failure to perform the condition, a refiling is necessary to preserve the title of the mortgagee, when there has been no change of-possession, is merely the expression of a judicial opinion, although entitled, as such, to great respect. And even that is followed up by the further qualification : Once a mortgage, it so continues for the purpose of filing, until the rights of the parties have been changed by some new act or contract in relation to the property.
In the second case, more -than a year had expired after the filing of plaintiff's mortgage, before he took possession, and no statement exhibiting the interest claimed by him had been filed at the expiration of the first year ; but plaintiff took possession before the lien of any creditor attached. Upon these facts it was held by the court (the same learned judge who had delivered the opinion in the case of Ely v. Carnley, supra, delivering the opinion .in this case), that the omission of the plaintiff to file a statement of his interest in the property, the mortgage, as required by statute, to preserve his lien against the creditors of the mortgagor, was obviated by the proof showing that the plaintiff took possession of the property by virtue of his mortgage in the lifetime of the mortgagor and before the lien of any creditor had attached, and that he retained such possession until the property was taken from him by the defendant.
If this last decision is to be strictly followed, as an authority, in all cases which come within the language of it, the following question still remains unanswered, viz : How can a mortgagee, who has omitted to refile, take possession after the expiration of one year from the original filing, and maintain such possession against the creditors of the mortgagor, who levy upon it the day after he has. taken possession, if his mortgage, by reason of non-compliance with the statute, had already cea,sed, by force of the statute, to have any validity whatever against such creditors %
In Dillingham v. Bolt, 37 N. Y. 198, to which I have been referred, there is no evidence of any default, and the decision made is an authority only upon the point that the removal of the mortgagor from the State within the year makes compliance with that provision-of the statute which requires the refiling to be made in the office of the clerk* of the town where the mortgagor then resides, impossible, and that, upon such contingency, the mortgagee must-, as against the creditors and purchasers named in the section, take advantage of his mortgage within the year, or lose the benefit of it as against them.
But as I do not find it necessary to the decision of this ca^e to go to the extent of holding that such refiling is wholly unnecessary, after default, I shall refrain from placing my decision upon that ground. There is an abundance of authority to sustain the proposition that such refiling is unnecessary for the preservation of the mortgagee's rights acquired upon the mortgagor's default, whenever an actual change of possession of the property has taken place or the rights of the parties have been changed by some new act or contract in relation to the property, which would render a refiling an idle ceremony. That such a change has taken place in this case, appears not only in evidence, but is established by the findings of the referee. The testimony shows, and the referee substantially found, as matters of fact, that after the executio'n of the mortgage a demand was made on Porter, the mortgagor, for payment of the amount secured by it, and possession of the furniture demanded; that the amount was not paid ; and that thereupon, as the mortgagee would not trust Porter with the property, Benjamin Rathbun was placed in possession of the property for the mortgagee, with the mortgagor's consent, and that he continued in such possession until the mortgage sale. This worked all the delivery and change of possession of which the property was capable, and was prima facie a compliance with the statute concerning fraudulent conveyances. The mortgagee was not bound to remove it, for, having the absolute title, he had a right to hire it out with or without compensation. ¡Nor was he bound to make the change more conspicuous by affixing a written or printed notice of his right of ownership to each article of furniture. If the mortgage was valid in its inception, and the original condition, whereby the mortgagor was allowed to remain in possession until default, not fraudulent against the mortgagor's creditors, the new arrangement made between the parties upon the occurrence of the default cannot, as matter of law, be deemed fraudulent against a creditor of the mortgagor, whose demand did not become merged into judgment until after the expiration of one year from the filing of the mortgage.
The whole transaction between mortgagor and mortgagee may, in such case, be attacked by such creditor, as seems to have been done in the case of the Farmers' Bank of Washington County v. Cowan, 2 Keyes, 217, 219, upon the ground that it was entered into or carried out with intent to hinder, delay, or defraud the mortgagor's creditors, which is a question of fact.
But as the referee in this case has recognized the good faith of the parties to the original transaction and failed to find, as matter of fact, that such transaction was entered into or carried out with a fraudulent intent, and was for that reason fraudulent against creditors, be was not justified to adjudge, as matter of law, that the arrangement entered into between the parties upon default was fraudulent and void against the original plaintiff in this action, who, it appears, was not misled thereby, and at the time of the recovery of his judgment had full notice of said mortgage. The mere fact that Bathbun and Porter were copartners cannot be made to work such a result. It is only one of the many circumstances that may be looked at and considered on the determination of the question of actual fraud.
Upon the proof, and the facts as found, John F. Porter, at the time of the confession of judgment and of the sale on execution, had no interest in the property subject to levy and sale ; the title to the property was absolutely vested in the defendant, Parmly; and the sheriff's sale of the right, title, and interest of John F. Porter in said property conveyed nothing to the purchaser.
The judgment must be reversed, the order of reference vacated, and a new trial ordered, with costs to the appellant to abide the event.
Moeell and Curtis, JJ., concurred.