Court Opinion

ID: 3625858
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:06:28.619725+00
Date Added: 2024-06-11T09:22:05.109092
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 297 
[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 298 
The principal questions presented for consideration in this case arise upon the motion for a nonsuit.
It is claimed on the part of the appellant, that such motion should have been granted for the following reasons:
1. That the mortgage was presumptively fraudulent, in consequence of the continued possession of the property in the mortgagor, and that the plaintiff failed to remove the presumption.
2. The amount or consideration mentioned in the mortgage being $25,000, and the actual amount of liabilities and indebtedness at the date of the mortgage being only $13,700, the including of the sum of $11,300 beyond the actual liability was an act of bad faith toward the creditors, intended to deceive and keep them at bay.
3. That the agreement to sell for cash only, and for the plaintiff's exclusive benefit, rendered the mortgage void.
As to the first ground, it is clear that the question of fraudulent intent belonged exclusively to the jury, as a question of fact, and it would have been improper for the court to have withdrawn it from their consideration. The burden was cast upon the plaintiff to make it appear to the jury that the mortgage was made in good faith, and without any intent to defraud creditors or subsequent purchasers. Evidence had been given of the bonafides of the parties to the transaction, and it was for the jury to determine whether or not the plaintiff had removed the presumption of fraud. The verdict of the jury on that question is conclusive in plaintiff's favor. *Page 299 
Neither was the amount or consideration named in the mortgage, being larger than the actual amount of indebtedness and liabilities existing at the date thereof, any legal evidence that the same was fraudulent. If that amount was put in there with a fraudulent intent to magnify the plaintiff's debt or liability beyond the actual amount thereof, and to keep the creditors of Ramsdell at bay, such circumstance was a proper element for the consideration of the jury in determining the bona fides of the transaction. It afforded no legal presumption of fraud, coupled as it was with the declaration upon the face of the mortgage, that it was given and intended as a security, not only for any debt, demand or liability then incurred or held, but such as might thereafter be incurred or held by the plaintiff on account of Ramsdell. This was full notice that the sum named did not cover, and was not intended to cover only the actual indebtedness or liabilities existing at the date of the mortgage, but in addition, such as might thereafter be incurred by the mortgagee on account of the mortgagor. But on a security of this character, the sum or amount named as the consideration is of no moment, as the mortgage stands as a security for the amount of liabilities or indebtedness, whatever the sum may be, and it is not essential even that any amount should be named in the security. This point was distinctly ruled in Robinson v. Williams (22 N.Y., 380). The consideration named in the mortgage given in that case was $1, and it was given to the Hollister Bank to secure further discounts and advances by the bank to the mortgagor. We then held, that a mortgage of land to secure further advances, the limit of which is not defined, is good for the amount of the advances thus made, as against a creditor by judgment recovered before such advances become due. The cases referred to in the opinion in that case abundantly sustain the doctrine enunciated.Shirras v. Craig (7 Cranch, 34), is not unlike the present case. In that case, the real transaction did not appear on the face of the mortgages. The trust deed in that case purported to secure a debt of £ 30,000, due to all the mortgagees. It was really intended to secure different sums, *Page 300 
due at the time to particular mortgagees, advances afterwards to be made and liabilities to be incurred to an uncertain amount. Chief Justice MARSHALL said that it is not denied that a deed which misrepresents the transaction it recites, and the consideration on which it is executed, is liable to suspicion. It must sustain a rigorous examination. It is certainly always advisable, fairly and plainly to state the truth. But if, upon investigation, the real transaction shall appear to be fair, though somewhat variant from that which is described, it would seem to be unjust and unprecedented to deprive the person claiming under the deed, of his real equitable rights, unless it be in favor of a person who has been in fact injured or deceived by the misrepresentation. The doctrine of these cases has been approved in McKinstee v. Babcock (26 N.Y., 378). The party claiming under the mortgage had a right to go to the jury to establish the good faith of the transaction, and if it appeared to them on a rigorous examination, that all that had been done was honest and fair, and that the parties claiming adversely had not been injured or deceived by anything contained in the mortgage inconsistent with the truth, then the jury were warranted in finding that there was no fraud.
It is also claimed that the mortgage was rendered fraudulent by the agreement between the mortgagor and mortgagee that the latter should sell the mortgaged property for cash only, for the exclusive benefit of the mortgagee.
The precise point covered by this objection was decided by this court in Ford v. Williams (24 N.Y., 359), when it was held that an agreement upon the mortgage of chattels, that the mortgagor should keep possession of the mortgaged property, and retail the goods for cash only, paying over the proceeds toward the discharge of the debt which the mortgage was given to secure, is not fraudulent in law, but presents a question of good faith for the jury, and was also held that when the transaction, through suspicion, was capable of a construction consistent with fairness and the absence of fraud, it must be passed upon by the jury. *Page 301 
These views dispose of the motion for a nonsuit, and show that it was properly refused.
I am unable to perceive any error in the exclusion of the offer by the defendant to prove that before and at the time of the dissolution of the firm of Ramsdell  Miller, and from thence down to, and at the time of the trial, the plaintiff was indemnified by said David S. Miller, against any loss by reason of his indorsements and liabilities for said firm of Ramsdell 
Miller, and for said Ramsdell, and also against any loss by reason of the indebtedness of said firm and of said Ramsdell to him, including the debts and indorsements which had been proved at the trial. Assuming the fact to be that the plaintiff had such indemnity, it would not follow that he could not enforce the rights secured to him by this mortgage. Nothing appears which would have justified the court in holding that the existence of such indemnity would preclude him from looking to his mortgage security. It may well be that such indemnitor for the liabilities of Ramsdell, — and it was proven on the trial that he held the mortgage for Ramsdell's individual indebtedness, — could have compelled the plaintiff to have resorted to his mortgage security, before calling on him on his indemnity. However that may be, the fact of such indemnity existing created no obstacle to the right of the plaintiff to claim the security of his mortgage, neither would the proof of the fact that such indemnity had been given by the brother of the plaintiff, have warranted the jury in discrediting the testimony given by the plaintiff on the trial. The offer was, therefore, properly overruled. The charge to the jury seems to be unobjectionable. It stated the principles of law correctly, which should govern the jury, and the legal result, if they should find that the mortgage was not fraudulent in fact.
The two requests to charge were properly refused upon the authority heretofore commented upon. The verdict of the jury disposing of the question of fraud in fact adversely to the defendants, the judgment was correct, and should be affirmed.