Case Name: SHELDON v. WICKHAM et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1898-03-02
Citations: 50 N.Y.S. 314
Docket Number: 
Parties: SHELDON v. WICKHAM et al.
Judges: 
Reporter: West's New York Supplement
Volume: 50
Pages: 314–318

Head Matter:
SHELDON v. WICKHAM et al.
(Supreme Court, Appellate Division, Third Department.
March 2, 1898.)
Chattel Mortgage—Filing.
A mortgage given on a factory, and the machinery therein, is a chattel mortgage as to said machinery, and, unless filed as such, is void as to creditors of the mortgagor.
Putnam and Merwin, JJ., dissenting.
Appeal from judgment on report of referee.
Action by Edwin B. Sheldon against Bichard Wickham and another, as assignee for benefit of creditors, to foreclose a mortgage on a factory and the machinery therein. Judgment for defendants. Plaintiff appeals. Affirmed.
This action was brought to foreclose a mortgage executed on the 15th day of April, 1891. The mortgagor, Richard Wickham, had, in 1875 or 1876, erected for one Arnold a building in the city of Albany, and immediately thereafter occupied the same as a carpenter shop, as the tenant of the owner, and continued such tenancy until the time of the execution of said mortgage. While thus the occupant of said building as tenant, Mr. Wickham placed therein certain machinery, which is the subject of the controversy in this action. He testified on the trial that "it was part of the arrangement under which I built it that if Mr. Arnold decided to make it into a shop, that it would be occupied by me. There was some arrangement with Mr. Arnold that I should ultimately purchase it. In putting the machinery into the building I had in view the possibility of my permanently occupying it as a carpenter and building shop; and I expected that, as soon as I occupied that building, to habitually use that machinery, and make a profit out of the use of it.” In February, 1891, Mr. Wickham applied to Eugene M. Jerome, the agent of the plaintiff, for a loan of $12,000 to enable him to purchase the mortgaged premises from the Arnold estate, and, after negotiations, the mortgage sought to bo foreclosed was executed to secure a loan of $12,000 made by the plaintiff. Mr. Wickham testified as follows in reference to such loan: “At the time I gave this mortgage I had an arrangement with the executors of Mr. Arnold to purchase that property. This mortgage to Mr. Sheldon was a purchase-money mortgage. Sheldon advanced the money, that I could purchase the property from the Arnold estate. It was then my intention -when I gave this mortgage to continue in business on this real estate, and to use my machinery in connection with the business, and to make a profit 'out of the real estate and machinery, and I expected to habitually use that machinery in connection with the real estate for the benefit of my business.” The mortgage in question, under the description of the real estate, contained the following clause: “Together with the buildings, machinery, and all other fixtures thereon.” About the same time, but subsequent to this loan, Mr. Wickham made a further loan of the plaintiff of $4,000, secured by a .chattel mortgage which has since been paid. This mortgage covered the same machinery which is the subject of the controversy in this action and other personal property. At the end of Schedule A of said mortgage, whiell contained a list of such machinery, was the following clause: “The aforesaid buildings and machinery being included in this chattel mortgage, subject expressly to all the right of the said Edwin B. Sheldon, under a real-estate mortgage covering the said premises, and the buildings, machinery, and fixtures thereon, it being intended to hereby include all property not passing under the aforesaid real-estate mortgage.” The plaintiff in this action alleged and claimed that the said articles of machinery, at the time of the execution of such mortgage for $12,000, were intended to be, and were, made fixtures and a part of the realty, and included in and conveyed by said mortgage. The respondent William ,T. Hillis, as assignee in trust for the creditors of said Richard Wickham, denied said allegation. The referee, to whom the issues in the action were referred, found: “(1) That the title to the articles set forth in finding No. 8 of fact [being the machinery in question] passed to the defendant William H. Hillis, as the assignee for the benefit of the creditors of said Richard Wickham, and that they did not become a part of the realty under said mortgage. _ (2) That the other machinery—boiler, engine, shafting, gearing, belts, and piping— did become a part of said realty, and, with the buildings and other fixtures, are covered by said mortgage to the said plaintiff.” From that part of the judgment entered on such report having reference to said machinery, the plaintiff has appealed to this court.
Argued before PAEKEE, P. J., and LANDON, HEEEIOK, PUTNAM, and MEEWIN, JJ.
Montignani, Mallory & Elmendorf (George H. Mallory, of counsel), for appellant.
McCall & Dyer (Zeb A. Dyer, of counsel), for respondents.

Opinion:
LANDON, J.
I think, under Stephens v. Perrine, 143 N. Y. 476, 39 N. E. 11, we must hold that, as the plaintiff did not file his mortgage, it was void as to creditors, to the same extent as if it was nonexistent. The mortgagor could therefore assign or transfer the property to satisfy his existing bona fide creditors. He did that by assigning to Hillis for their benefit. Whatever rights the creditors had, Hillis has, and the only obstacle to his title is a void or nonexistent mortgage; therefore none at all. If we say that the mortgagor could not assign except subject to the plaintiff's rights, that does not help the; plaintiff, because he had none against the creditors. Hence plaintiff's mortgage is invalid as to personal property, and the judgment should be affirmed.
HEEEIOK, J., concurs. PAEKEE, P. J., concurs in the result.