Court Opinion

ID: 3631360
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:10:47.952435+00
Date Added: 2024-06-11T14:07:40.997319
License: Public Domain

It is quite clear, that the discharge presented, was of no avail. The officer granting it did not have jurisdiction of the parties.
An insolvent can only be discharged of his debts, under our State laws, by proceedings under article 3, title 1, chapter 5, part 2 of the Revised Statutes, and jurisdiction to set the officer in motion can only be by petition, signed by at least two-thirds in amount of his creditors. Section 11, article 7, of the same title (2 R.S., 37), declares, that a creditor, who has, in his own name, or in trust, any mortgage, judgment, or other security, for securing the payment of any sum of money upon any real or personal estate of the debtor, in respect to whom, or whose estate, he is a petitioner, cannot, *Page 102 
under said third article, become a petitioner in respect to the debt so secured, unless he shall add to his signature to the petition a declaration, in writing, that he relinquishes to the assignees, or trustees, who shall be appointed, pursuant to said petition, such mortgage, judgment, or other security, for the benefit of all the creditors of such debtor. Two of the petitioning creditors had their claims in judgment; their petition contained no such declaration or relinquishment, as required by said eleventh section of the statute; hence, as to the debts so secured, they were not petitioners, and, without those two sums, the petition did not contain two-thirds in amount of all the creditors of the insolvent. The officer was not, therefore, invested with jurisdiction to entertain the proceedings, or grant the discharge. (Morewood v. Hollister,6 N.Y., 309, 330.)
These proceedings, upon their face, were also deficient in another particular necessary to invest the officer with jurisdiction. The affidavit of the insolvent did not conform to the requirements of the statute, in an important and material particular. The theory of the statute is, that upon the surrender by an insolvent, of all of his estate, for the benefit of his creditors, he may be discharged from his debts on the petition of two-thirds. To ensure such surrender, the insolvent is required to annex to his petition an affidavit, that the account of his creditors, and the inventory of his estate, annexed, are true, and that he has not, at any time, or in any manner whatever, disposed of, or made over, any part of his estate, for the future benefit of himself or his family, c. (2 R.S., 17, § 7.) The affidavit of the insolvent, annexed to the petition, was in the conjunctive instead of the disjunctive, so that, even though he had made over the whole of his property for the future benefit of himself, or his family, the affidavit would be true, and the purpose of the statute defeated. (Rusher v. Sherman, 28 Barb., 416; 1 Selden, 107, 117; Stanton v. Ellis, 2 Kern., 575.)
Whenever an execution is issued, against the property of a judgment debtor, his goods and chattels, within the jurisdiction *Page 103 
of the officer, to whom the execution is delivered, are bound, from the time of the delivery of such execution, to be executed. (2 R.S., 365, § 13.) At common law, such property was bound from the teste of the fi. fa.; and the statute has only restricted the common law rule, as to time, and afforded protection to bonafide purchasers of property, between the time of delivery, and actual levy. (Id., § 17.)
The execution, in this case, came to the hands of the sheriff, on the 29th, and the boat was within his jurisdiction, on the 31st of October, 1862. The boat thereby became bound, by the execution, unless held by the chattel mortgage.
There was no pretence, but the mortgage was valid in its inception. Not being filed, on the 31st of October, 1862, it had no preference, as against said execution, unless the boat was, at that time, in the actual possession of the mortgagee. The subsequent filing did not supersede any rights, which had previously attached, under the execution.
As between mortgagor and mortgagee, the instrument was a valid and binding security, notwithstanding the omission to file. A breach of its conditions, entitled the mortgagee to take possession of the property mortgaged, and, if he did so before any lien of a creditor of the mortgagor, attached, such possession would hold the property. It was shown that the conditions of this mortgage had not been performed, and it is claimed that, the mortgagee took possession of the mortgaged property, for condition broken, on the 9th day of October, 1862, and held it, until the acts complained of. If so, all that remained to the mortgagor, was a naked equity of redemption, not liable to levy and sale, on execution. (Hill v. Beebe,13 N Y, 556; Sawyer v. Eastwood, 19 Wend, 515; Fulton v.Acker, 1 Hill, 473; Dane v. Mallory, 16 Barb., 46;Burdock v. McVanner, 2 Denio, 170; Hull v. Carnley,11 N Y, 501; Marsh v. Lawrence, 4 Cow., 461; Bailey v.Burton, 8 Cow., 347.)
The testimony was, that plaintiff took possession of the boat, on the 9th day of October, 1862; that he put it in charge of an agent, named Hatch, to run for him; that Hatch did run *Page 104 
the boat, making trips to Albany, New York, and Buffalo; was in possession on said 31st day of October, and on the 14th of November. It further appeared, that after October 9th, Jones was, occasionally, on the boat; that the bills of lading and clearances were in his name; and that he once collected some part of the freight money, earned by said boat.
But, it does not follow, because plaintiff and Jones were partners in running the boat, before the 9th of October, that such partnership continued, or that the boat was still in the joint possession of the two; nor is the fact, that Jones was, occasionally on the boat after that, or once collected freight, or that the clearances and bills of lading were in his name, conclusive that the possession of Hatch was collusive, a mere pretence to cover the interest of Jones against his creditors. It would be proper evidence for the consideration of a jury; but not conclusive of a fraudulent intent.
Upon this question, the evidence was conflicting. It was a material question. If the plaintiff had, in good faith, taken actual possession of the boat, under authority of his mortgage, with a view to secure its unpaid balance, and retained it, he was its owner, in possession, at the time of the levy; there was evidence, from which a jury might so find, and, therefore, the plaintiff was entitled to have this question submitted. Refusing such request, and directing a verdict for the defendant, was error.
Judgment should be reversed, and new trial granted, costs to abide the event.
HUNT, Ch. J., WOODRUFF, LOTT, MURRAY, and DANIELS, JJ., were for affirmance, on the grounds stated in GROVER'S opinion.
MASON, J., concurred with JAMES, J., for reversal.
Judgment affirmed. *Page 105