Court Opinion

ID: 5497151
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:54:01.65706+00
Date Added: 2024-06-11T08:33:50.570436
License: Public Domain

Merwin, J.
It was held by the court below that, as long as the assignment was valid, the plaintiff was not in a position to maintain an action to set aside the chattel mortgages. This proposition was distinctly held in the ■case of Sullivan v. Miller, 40 Hun, 516. A rule somewhat analogous was held in McCarthy v. Kelly, 12 Wkly. Dig. 539. That was an action for conversion. The plaintiffs held under a chattel mortgage given to them on 29th May, 1866, but not filed till December 6, 1866. The defendant, as sheriff, justified under attachments against the mortgagor obtained by creditors as against whom the chattel mortgage was void for want of filing. Before the obtaining of the attachments, and after the filing of the mortgage, the mortgagor made a general assignment, giving the plaintiffs a preference for the liability due them, after applying the proceeds of the property covered by the mortgage, and providing that nothing therein contained should affect their rights under the mortgage. After the assignment, and before the levy under the attachments, the plaintiffs took possession of the property. It was held that the issue was whether the assignment was fraudulent, and that this was a question of fact for the jury, and that, although the object may have been to prefer a debt and secure its payment through the instrumentality of a void mortgage, that act was not per se fraudulent, the debt not being fictitious. The inference would be that, if a mortgagor by an honest assignment disposed of the property before the creditor acquired a lien, such disposition would end the right of the creditor. Were it not for the assignment, an attaching creditor could assert the right. Siedenbach v. Riley, 111 N. Y. 567, 19 N. E. Rep. 275. In Wheeler v. Lawson, 103 N. Y. 40, 8 N. E. Rep. 360, it was held that a levy on an execution upon a judgment recovered against an assignor after a general assignment was no justification to an action of trespass brought against the sheriff by a mortgagee under a chattel mortgage, who, after the assignment, took possession under his mortgage, although by reason of the non-filing of the mortgage it was void as against the plaintiff in the judgment and execution. The rule laid down in Spring v. Short, 90 N. Y. 538, was applied. There it was held that a judgment ■creditor, who did not have judgment and execution until after a general assignment, could not maintain an action to set aside a prior mortgage as fraudulent, as long as the assignment was not attacked, it being said that the assignment constituted a prior and better title, which is entitled to a preference. The Sullivan Case was affirmed in the court of appeals, (106 N. Y. 635, 13 N. E. Rep. 772,) but upon another ground. It was, however, said by Huger, <3. J., that the general creditors of a mortgagor of chattels have no right to assail a mortgage or other conveyance of property made by him as invalid until they have secured a lien thereon by levy under a judgment and execution, or by some other method acquired a legal or equitable interest in the property. In Southard v. Benner, 72 N. Y. 424, it is said that, until a creditor by simple contract has a judgment and a lien, or a right to a lien, upon the specific property, he is not in a condition to assert his rights by action as a creditor. If the assignment is valid, and becomes operative before any proceeding by the creditor, there is nothing left upon which the creditor can make a claim, or in which he can acquire an interest, or upon which he has any right to a lien. But it is said that the assignee cannot attack the mortgage for non-filing, and that therefore the right must be in the creditor. Assume the premise to be correct, does the conclusion follow? The statute only makes the mortgage void; it does not affect the debt. That the debtor has the right to pay, or to prefer in the assignment, if there is no fraud about it. If the debt *870is paid, the creditor has no claim after the assignment on the property covered by the mortgage, except as he may have it under the assignment. If the debtor can pay or prefer it makes no difference in the result to the general creditor whether it is done by allowing the mortgage to be enforced or by applying funds from other sources. If the statute of 1858 is not broad enough to permit the assignee to attack a chattel mortgage for non-filing, that is hardly sufficient ground for changing a well-settled rule as to the enforcement of creditors’ claims. When this action was commenced the property was in the possession of the assignee. The plaintiff could not then, or after it was taken by Sheard, have reached it by execution, according to the rule laid down in the Wheeler Case, above cited.
In view of the adjudications above referred to, we are of the opinion that the special term correctly held that the plaintiff was not in a position to maintain the action, unless he could have the assignment set aside. In this contingency the appellant claims that the assignment and schedules afterwards filed, by reason of the recitals in them, are confirmatory of the chattel mortgages; that the assignment, by reason of this confirmation, cannot be executed without devoting the mortgaged property to their payment; and that therefore it should be set aside as interfering with the right of plaintiff to take advantage of the non-filing, and therefore fraudulent as against the plaintiff. We think this contention cannot be sustained. The debts were not fictitious, and the debtor had a right by an assignment to make preferences. The manner of preference may be a circumstance on the question of fraud, and that is a question of fact disposed of by the court below. Its finding on that question should not be disturbed. The duty of filing was not on the debtors; their act or failure did not give the plaintiff any rights. According to the evidence, they knew nothing of the creditors’ neglect. There is nothing, therefore, in the recitals from wrhich it can be said as matter of law that the assignment was fraudulent or invalid, or that would require that inference as a matter of fact. There is nothing in the recitals that would interfere with any rights the assignee might have under the law of 1858. Whether an assignee has any right under that statute to take advantage of the non-filing of a chattel mortgage is not here for decision. This action is not brought in aid of the assignment. These considerations lead to an affirmance of the judgment, with costs. All concur.