Court Opinion

ID: 3577130
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:28:57.956585+00
Date Added: 2024-06-11T13:52:02.983372
License: Public Domain

The judgment of the special term, in favor of the plaintiffs, was reversed by the general term, upon the sole *Page 356 
ground that the mortgage was fraudulent and void, as to subsequent creditors, on the ground of vagueness and uncertainty in respect to the debts it was intended to secure.
It is conceded that a mortgage given to secure future contingent liabilities may be valid, but the position is, that, in case the debt exists or the liability has been incurred at the time the mortgage is executed, it must be truly stated, so as to enable creditors, upon examining the record of the mortgage, to ascertain the amount of the debt or the nature and character of the liability assumed.
The validity of the mortgage is not questioned upon the ground that there was, in fact, no valid consideration between the parties to it. In my opinion, the court erred in reversing the judgment. There was a good and sufficient consideration for the mortgage. The consideration expressed was $2,400 money; but this was not the true consideration. It has long and often been held, in this State, that the real consideration of mortgages or deeds may be shown by parol, though different from that expressed in the instrument; and this court, in McKinster v. Babcock
(26 N Y, 378), applied the rule to a chattel mortgage, in which the consideration expressed was money, when, in truth, the real consideration was the indorsement of the note of the mortgagor, and the mortgage was given by way of security. This court sustained the mortgage, the referee having found as a fact that it was executed in good faith, and not with intent to hinder, delay or defraud creditors. So in this case, the parol evidence upon the trial showed what the consideration actually was, and it was sufficient, viz., liabilities assumed by the mortgagee for the mortgagor, and the amount which had been paid of such liabilities. It may be said in this case, as was said in the case just referred to, and also in Shiras v. Craig (7 Cranch, 34), by Chief Justice MARSHALL, in which the real transaction did not appear on the face of the mortgage, that such cases are liable to suspicion; that they must sustain a rigorous examination, and that it is always advisable fairly and plainly to state the truth. And in this case, I will say that it would have been far better to *Page 357 
have specified the liabilities assumed, so that the creditors of the mortgagor or others interested would be able more readily to examine into the facts, and ascertain whether they were true or fictitious. But, if the consideration is actually valid and sufficient, and it is found as a fact, upon sufficient evidence, that the instrument was not executed with intent to hinder, delay or defraud creditors, the court cannot declare the instrument void, as to creditors, upon the ground that the consideration, as expressed, is vague and uncertain. (See Robinson v. Williams,22 N.Y., 380, in which many of the cases are referred to.)
The judgment of the general term should be reversed, and that of the special term affirmed.
DENIO, Ch. J., DAVIES, WRIGHT, SELDEN, EMOTT and BALCOM, Js., concurring,
Judgment accordingly.