Case Name: The Schwab Manufacturing Company, Appellant, v. Jacob Aizenman, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1905
Citations: 106 A.D. 478
Docket Number: 
Parties: The Schwab Manufacturing Company, Appellant, v. Jacob Aizenman, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 106
Pages: 478–482

Head Matter:
The Schwab Manufacturing Company, Appellant, v. Jacob Aizenman, Respondent.
Chattel mortgage—failure to refile it what action must be taken by a subsequent creditor to give him priority oner it—• right of the holder of a second mortgage.
Where, within - a year after the execution and filing of a chattel mortgage, a second chattel mortgage is executed covering the same property, the failure to refile the first mortgage at the expiration of the year, as required by sections 92 and 95 of the Lien Law (Laws of 1897, chap. 418, as amd. by Laws of 1901, chap. 219), does not render the first mortgage inoperative as against the second mortgage or make its lien subordinate ,to that of such second mortgage.
While the failure to refile the first mortgage at the end of the year renders it unenf Orcible as against subsequent creditors, a subsequent creditor must, before he is in a position to assert the unenforcibility of the. mortgage as against him, invoke the judicial process of the court, either by levying upon the property under execution or by placing it in the custody of the court through the medium of a receiver.
A second mortgagee may seize and sell, subject to the first mortgage, the mortgaged property.
Appeal by the plaintiff, The Schwab Manufacturing Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 6tli day of December, 1904, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 15th day of December, 1904, denying the plaintiff’s motion for a new trial made Upon the minutes.
S. S. Myers, for the appellant.
Abraham. Brekstone, for the respondent.

Opinion:
Hatch, J.:
The judgment demanded in the complaint was for a return^ off property converted, or, in case possession of the same, could not be given, that a recovery be had in damages for the value. The action is essentially an action for conversion. It appeared that the propr erty converted was a Sanborn embossing press, owned by the firm of Spiegel & Bresant. Upon the 24th day of May, 1901, a chattel mortgage was executed covering the said press by Spiegel & Bresant to the defendant to secure the payment of $100. Said mortgage was filed upon the same day in the office of the register of the county of New York. It was subsequently assigned to Herman Radizinsky,' and at the time of the conversion of the property Radizinsky was the owner. On the 14th day of October, 1901, another chattel mortgage was.executed by Spiegel & Bresant to Louis Weiler. It covered the property in question. On the 17th day of January, 1902, this mortgage was assigned to the plaintiff, but the assignment was not delivered to it until some time in the following June, and it was recorded on the eighteenth day of that month. Upon the 22d day of June, 1902, the plaintiff, by a city marshal acting as his agent, took possession of the said press by virtue of the mortgage thus assigned to it. The marshal left it in the care of Morris Spiegel until he could arrange for its removal: He instructed Spiegel to notify all persons that the press was in his possession by virtue of the mortgage owned by the plaintiff. After the plaintiff had thus taken possession of the press the defendant made claim to the same by virtue of his mortgage of May 24,1901. He was informed by Spiegel that the marshal had taken possession of the press for the. plaintiff under his mortgage. The defendant, nevertheless, seized the press and removed it from the premises.
The mortgage held by Radizinsky had not been refiled, as required by sections 92 and 95 of the Lien Law (Laws of 1897, chap. 418, as amd. by Laws of 1901, chap. 219), and the plaintiff claims that the failure to refile' rendered such mortgage inoperative as a lien against its mortgage under which it took possession, and that plaintiff's mortgage became a lien to which the defendant's mortgage was subordinate. This contention upon the part of the plaintiff was long ago exploded. (Meech v. Patchin, 14 N. Y. 71; Beskin v. Feigenspan, 32 App. Div. 29.) The plaintiff also claims that it is a creditor of Spiegel & Bresant, and, therefore, had the right to take the, property independent of .its mortgage. While the failure to refile the defendant's mortgage made it unenforcible as against subsequent creditors and mortgagees, yet before such creditor acquires a lien upon the property which he can enforce as against the mortgage, he must have invoked the judicial process of the court, either by obtaining a judgment and levying upon the property by execution, or by placing it in the custody of the court through the medium of a receiver. • (Kitchen v. Lowery, 127 N. Y. 53.) Such doctrine is announced in Stephens v. Perrine (143 N. Y. 476), relied upon by the plaintiff, where it was held that until a general creditor obtained alien upon the property, the'mortgagor could give good title to the mortgagee holding the untiled mortgage, where such transfer was in payment of a bona fide debt. None of the authorities' contravene this rule. . '
The plaintiff, however, acquired perfect title to the mortgage which was assigned to it. At the time of such, assignment the mortgage was a valid lien upon this property, subject only to the defendant's right under his mortgage, and it so remained in the hands, of the plaintiff. It had the right, subject to the interest of the first mortgagee, to seize and sell the property, and no one, unless he held a prior claim, could interfere with it. The plaintiff could not make such mortgage operate as a lien, in its favor for a subsequent indebtedness: not covered by its terms. As to that debt, it stood as a general creditor, having no lien upon the property; but as to the debt represented by the mortgage it was the owner,, and for such debt it could enforce the mortgage. This it attempted to do as there was no claim that it seized the property upon any other right or lien aside from the mortgage. As the matter stood, the defendant, had he been'the. owner of the mortgage and acting thereunder, could have seized and taken possession of the property by virtue .thereof, even though, it was untiled, as the lien thereof was superior to that of the plaintiff. . The difficulty with, the defendant's position,, however, is that he was not the owner of the mortgage and stood in relation thereto as a mere stranger. By his answer lie' averred that the mortgage held by him had been assigned to Herman Eadiziusky, and that thereby he had transferred all of his right, title and interest in and to the same. Being interrogated upon, the trial concerning this assignment and as to the whereabouts of the assignee, his- counsel stated: " I will concede for the purpose of this action that we are responsible for taking that machine out. We are willing to- take that responsibility. The Court: I shall so charge and that it matters not who owns the mortgage (defendant's), and if you are entitled to recover at all, yon are entitled to recover, against this man." .
The effect of this admission and ruling of tlie court was,, that if the defendant's assigned' mortgage was valid as against plaintiff's mortgage, there existed in the defendant the right to seize and take the press from the possession of the marshal even though he had no interest in such mortgage. In this regard, the court further held and stated, upon a motion for the direction of a verdict by the plaintiff, " that the Weiler mortgage is out of the case. I do not see how it can have any standing here." In the charge to the jury the court said, speaking of the plaintiff's and of the Weiler mortgage : " They could not keep that mortgage alive by transferring it from Weiler's debt" as a security for that debt to the plaintiff's debt; and that attempt was a failure." And again, in speaking with reference to the plaintiff and the mortgage, the court said: " They got no more rights than Spiegel had, and consequently Spiegel could not defeat the defendant's mortgage because it was not refiled." The learned court was clearly wrong in this ruling. The assignment from Weiler carried with it all his rights to enforce the mortgage. The notes for which it was security were also transferred so that the plaintiff did not stand in the shoes of Spiegel & Bresant; it stood in the shoes of Weiler and this without regard to its unsecured debt. Consequently it had the legal right to seize the property under that mortgage so far as the defendant was concerned.'
The latter, so far as appears by this record, had become a mere stranger to the mortgage formerly held by him. He had parted with the title and no longer had any interest in it. Consequently, when he seized the press and took it from the possession of the marshal, he was .a wrongdoer and was guilty of an act, of con version, for, as between himself and the plaintiff, the latter was entitled to the possession of the property and the possession of the marshal could only be defeated . by showing a superior title. This the defendant did not do.
This error was not cured by the testimony of. the defendant's attorney respecting the demand, in view of the express concession made by the defendant and the ruling of the court in connection therewith. Such holding shut off further inquiry by the plaintiff as to the Radizinsky assignment and forestalled any attack thereon. The statement of counsel that he represented in making the demand both the defendant and Radizinsky was in direct contradiction of his admission, and was incompetent under the ruling of the court, It is also evident that he did not know Eadizinsky and had had no-communication with him. ' The case went to the jury upon the-theory that the plaintiff was a mere ti'espasser .and had no rights, under its mortgage. In point bf fact and law it had the clear legal right to seize thereunder, while it stands admitted that the defendant was a stranger, and, therefore, a wrongdoer.
It follows that the judgment and order should be reversed and a. new trial granted, with costs to the appellant to abide the event.
O'Brien, P. J., Patterson, Ingraham and McLaughlin, JJ., concurred.
Judgment and order reversed, new trial ordered, costs to appellant to abide event.