Court Opinion

ID: 5291368
Source: CourtListenerOpinion
Date Created: 2022-01-08 02:29:03.809168+00
Date Added: 2024-06-11T08:28:56.170360
License: Public Domain

Davis, J.
(dissenting). The trial court made findings of fact on evidence consisting of stipulated facts and exhibits. On these findings no conclusion can be reached other than that the judgment should be affirmed. The record indicates that the defendant Decker proposed no findings of fact and took no exceptions to those found. The findings made were satisfactory to him. He is aggrieved only by the first conclusion of law found by the trial court; and he has not asked that new findings be made here. Nevertheless, for the purpose of reversal new findings are being made. The authority given an appellate court to make such findings is statutory (Civ. Prac. Act, § 584; Rules of Civil Practice, rule 239; Ely v. Barrett, 224 N. Y. 550) and is an innovation in practice. This right is usually exercised when by reason of insufficient findings in the court below due to inadvertence, inconsistency or some other reason, it is necessary to make new or additional findings to support the judgment. (Fraser v. Kent, 194 App. Div. 742, 749, 752; Reich v. Cochran, 196 id. 248, 254; appeal dismissed, 236 N. Y. 576; Leeds v. Joyce, 202 App. Div. 696, 700; affd., 235 N. Y. 620; Sweeney v. Modern Woodmen of America, 206 App. Div. 730; revd. on other grounds, 237 N. Y. 536; Ely v. Barrett, supra.) New findings may also be made when the evidence is in dispute, and on appeal the court deems the findings against the weight of evidence, and reverses the findings of fact made on the trial, (Caldwell v. Nicolson, 235 N. Y. 209; McDougall v. Shoemaker, 236 id. 127.)
The making of new findings on appeal, unasked, for the purpose of reversal, some based on evidence which the unsuccessful party on the trial ■ apparently deemed immaterial, and some being mere legal conclusions, is at least very unusual, and of doubtful propriety. (See Rives v. Bartlett, 215 N. Y. 33, 38.)
The free traffic in goods and chattels depends largely upon the giving of credit. The financing of all sales on a cash basis under present economic conditions is impossible. Ordinarily, to obtain credit there must be security in some form. Legislative enactments in aid of such a policy are general, having for their purpose the security of the seller ór lender and the protection of the buyer, *143borrower and subsequent innocent purchasers. The form of security may be: (1) The indorsement or guaranty from a third person; (2) a lien upon property other than that sold; and (3) a lien upon the property sold.
The latter form is common. There may be a conditional sale of property with title retained in the seller. (Pers. Prop. Law, § 64, as since amd. by Laws of 1925, chap. 561; Uniform Conditional Sales Act.) There may be a sale or loan secured by a mortgage on the property sold (Lien Law, art. 10) or there may be a sale or release of possessory lien with notice of lien filed and other notices posted in the building where the goods are located. (Pers. Prop. Law, § 45.) All methods are attended by some inconvenience and occasionally by hardship and loss.
Here the parties to the original contract selected the chattel mortgage form of security. The mortgage in question covered four automobiles sufficiently described by name and number so that they might be readily identified. They were, so it is now found, part of a stock of merchandise, yet by the terms of the mortgage their sale, rental or loan was forbidden except by the written release from the mortgagee, and their use was limited to exhibition purposes. The mortgage was given for the purchase price of the automobiles and was duly filed. The release for sale was to be given only upon payment to the mortgagee of the definite sum stated as release value.
If we assume that these four automobiles, so limited in their use, constituted merchandise in the commercial sense of the term or were part of a stock of goods (to which propositions I do not assent), the mortgage was not thereby rendered invalid. A mortgage on a shifting stock of goods, where there is an agreement either contained in the mortgage or outside of it that the mortgagor may freely sell and dispose of the goods for his own benefit, is void as a matter of law against creditors, subsequent incumbrancers or purchasers in good faith without notice. (Edgell v. Hart, 9 N. Y. 213; Ford v. Williams, 13 id. 577; Southard v. Benner, 72 id. 424; Skilton v. Codington, 185 id. 80.) But the mere fact that certain goods are sold by the mortgagor in the absence of proof of an agreement therefor, even with knowledge of the mortgagee, ' does not make the mortgage void as a matter of law, although it may as a question of fact. (Frost v. Warren, 42 N. Y. 204.) Nor is such a mortgage void as a matter of law if certain limited sales are permitted (Brackett v. Harvey, 91 N. Y. 214; Spaulding v. Keyes, 125 id. 113); or because permission is given for the use and partial consumption of the property. (Spurr v. Hall, 46 App. Div. 454; affd., sub nom. Spurr v. Pisher, 168 N. Y. 593.) In the *144case under consideration sale was forbidden and the mortgagee could not well contemplate that the mortgagors Would violate their agreement and commit a crime. (See Penal Law, § 940.) An unauthorized sale by the mortgagors would not vitiate the mortgage. (Griffin & Curtis Chat. Mort. [4th ed.] 115.)
The rule varies in different jurisdictions depending no doubt upon the terms' of particular statutes and general grounds of policy adopted by the courts. (Jones Chat. Mort. [5th ed.] § 379 et seq.) The United States Supreme Court accepts the settled law of each State as decisive in respect to any case arising therein but it approves as sound the doctrine that a chattel mortgage is not necessarily invalid because the property covered thereby is a stock of goods with permission to the mortgagor to sell under some limitations. (Etheridge v. Sperry, 139 U. S. 266; Jones, supra, § 410-a.) As instances of the varying rule, in Virginia a chattel mortgage given on goods actively used in trade is “ null and void as against creditors and purchasers.” (Boice v. Finance & G. Corp., 127 Va. 563, 569.) Substantially the same doctrine prevails in Colorado, Missouri, New Hampshire, Tennessee and a few other States. In Massachusetts, Illinois, Iowa and many other States a doctrine similar.to that in this State prevails or is even more liberal toward the validity of such mortgages. (See Jones Chat. Mort. [5th ed.] § 382 et seq.)
The filing of the mortgage was constructive notice to appellant not only that there was a mortgage lien on the property but “ it was notice of all its terms.” (Zartman v. First Nat. Bank, 189 N. Y. 267, 271.) The interests of the mortgagee and that of possible purchasers were safeguarded by giving notice of the only terms on which the property could be bought.
But as I read the prevailing opinion, the mortgage is held invalid against a subsequent purchaser in good faith because it is not authorized by statute. In other words, since the enactment of section 45 of the Personal Property Law, a person who sells or extends credit on any goods or chattels to a person engaged in trade, may have no choice in his method of security — if the property falls under some general definition - of “ merchandise.” He may neither make a conditional sale nor take a chattel mortgage, but must adopt and follow exclusively the provisions of section 45.
With this doctrine I do not agree; and do not so interpret the intent of the Legislature. I look upon that section as furnishing an additional method of security through liens on merchandise in the ordinary commercial meaning of the term. By statute, factors, agents and others in possession of merchandise or of documentary evidence of title, have a lien thereon for any money advanced or *145negotiable security given, and the right to sell the property. (Pers. Prop. Law, § 43, as amd. by Laws of 1915, chap. 273; Lien Law, § 182.) This lien depends upon possession of the goods or documents (Howland v. Woodruff, 60 N. Y. 73) and is lost upon parting with possession without protecting it in some way. (Hollins v. Hubbard, 165 N. Y. 534, 542.)
The main purpose of section 45, as I read it, is to extend the lien to include commissions of factors and others and to preserve the lien although possession is lost. (Heyman v. Kevorkian, 193 App. Div. 859.) . Possibly others may avail themselves of the provisions of this statute in taking security. It would not seem to be a practical Way of securing long term credit. Buyers would not naturally be attracted to a store where notices of liens were posted. If the section provides a form of security for a general loan, it probably is intended to furnish a legal method of selling goods from the stock for cash or on credit for the benefit of the lender and in reduction of the lien Without affecting the validity thereof. Heretofore there has been much confusion in the authorities regarding the effect of sales by the mortgagor in possession on the validity of the mortgage. This statute may represent a legislative intent to settle the matter.
Even if we assume that the term “ merchandise ” as used in said section, applies to separable, distinct articles of large value, like automobiles, and that sellers or lenders may in giving credit avail themselves of the provisions of this section, I do not believe they are limited exclusively to that method of taking security. The statute says: “ This article [providing for filing] shall not apply to agreements creating liens upon merchandise * * * for the purpose of securing the repayment of loans or advances made or to be made upon the security of said merchandise and the payment of commissions or other charges provided for by such agreement, where the conditions specified in section forty-five of the Personal Property Law are complied with.” (Lien Law, § 230.)
That language lacks much of saying any other agreement for a lien is void. It permits election and is not exclusive. A chattel mortgage on certain personal property owned by a merchant may or may not be void, according to the limitations on the right to sell; but it is not necessarily void because the lienor did not avail himself of the provisions of section 45. The provisions of the Lien Law (§ 230) are not applicable to other methods of giving security, as the statute was amended in 1911 and is since amended by chapter 419 of the Laws of 1921. Further requirements are imposed upon persons mortgaging stocks of goods by section 230-a *146of the Lien Law, added by chapter 462 of the Laws of 1921, as amended by chapter 137 of the Laws of 1922. These subsequent enactments indicate that in the legislative mind the chattel mortgage has at all times been regarded as a useful and available instrument of credit and security, and there was no intent to forbid its use, though other methods were permitted.
■If defendant failed to take advantage of the filing statute by making examination of the records and satisfying himself concerning the seller’s title before making the pinchase, the consequences are his own fault.
I dissent both from the decision to reverse and the proposed new findings.
Judgment reversed on the law, with costs, additional findings made, and complaint dismissed, with costs.