Court Opinion

ID: 6409052
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:51:13.699526+00
Date Added: 2024-06-11T15:51:18.688087
License: Public Domain

Dewey, J.
The mortgage to the plaintiff was valid as between the parties to it, and also as to third persons, so long as there were no proceedings in bankruptcy affecting it. The mere existence of the bankrupt law, although containing provisions that might affect the mortgage, and in reference to 'which it might be illegal and invalid, if no proceedings had been instituted under it, would furnish no defence to a stranger, who should intermeddle with the property, not exercising or claiming to exercise any authority over it, as an assignee or other agent clothed with authority under the bankrupt law. Atkins v. Spear, 8 Met. 490; Dodge v. Shelden, 6 Hill, 9.
*2411. At the time of the making of the attachment by the defendant, which is the act of trespass for which this action was instituted, no proceedings in bankruptcy had been instituted against Maynard, and it could not have been foreseen with certainty, that any such proceedings would take place, or that the property of Maynard would be sequestered for distribution under the bankrupt law. The mortgage to the plaintiff, therefore, was so far effectual as to pass the property, and to entitle the mortgagee to the possession, as against the mortgagor and third persons; liable, however, to be defeated, if the mortgagor should be declared a bankrupt, and the title should be shown by the assignee of the bankrupt to have been acquired by the plaintiff in violation of the provisions of the bankrupt law.
2. Had the district court jurisdiction over the subject matter of the mortgage, to examine into its validity, as in contravention of the bankrupt law, and is the decree of that court binding upon the mortgagee ? Clearly, the district court had ■su-.h authority, to the extent of deciding whether the mortgage was to be so far set aside, as to require the assignee, in whose possession the property was, to convert the same into money, and to make it a part of the assets of the mortgagor for distribution among his creditors. Act of Congress, 1841, c. 9, §. 6; Norton v. Boyd, 3 How. 426, 437. The proceeding before the district court was binding upon all persons concerned, so far as to justify the defendant in making the application of the avails of the mortgaged property, in pursuance of such order and decree.
3. This action having been instituted against the defendant, at a time when the plaintiff had a right to the property, subject only to the contingency, that at a future day, his title might be defeated by proceedings agajnst his mortgagor in bankruptcy, and therefore maintainable ; the further question is, whether the defendant can show, in mitigation of damages, that the property, thus wrongfully taken by him from the possession of the plaintiff, was liable to be sequestered for the debts of the mortgagor, upon the ground of its having been *242transferred to the plaintiff, in violation of the provisions of the bankrupt law, and has in fact been thus sequestered, and and that he has as assignee, under the decree of the district court to that effect, accounted for the avails thereof, as a part of the assets of the bankrupt to be distributed among his creditors. The plaintiff insists, that if the defendant was a wrong-doer, in the original taking of the property, he must now be charged with the whole value of it; and this irrespective of the proceedings in bankruptcy, and of the fact that he has been required to account therefor as assignee of Maynard. It is, no doubt, true, that the possession of personal property is sufficient to entitle a party to maintain trespass against the wrong-doer, and to recover the whole value of the property; and that it would constitute no legal defence either to the action, or to the damages, to show merely an outstanding title in a third person, or that the plaintiff had a special property in the articles, whilst the general property was in another.
Some of the cases cited by the counsel for the plaintiff, particularly that of Hanmer v. Wilsey, 17 Wend. 91, seem to go much further and to hold, that in a case where the original taking was unlawful, the plaintiff would be entitled to recover the full value of the property taken, and that evidence of the appropriation of the proceeds of the property to the use of the plaintiff, or a surrender of it, or of its proceeds, to other persons having a legal right thereto, would not be competent in mitigation of damages. We think a different rule has been adopted in Massachusetts. In the case of Pierce v. Benjamin, 14 Pick. 356, where the action of trespass was maintained, the sale of the property being held illegal, yet the defendant was allowed to give in evidence the application of the proceeds to the payment of taxes due from the plaintiff, in reduction of the damages. In the case of Kaley v. Shed, 10 Met. 317, the defendant was allowed to show, in mitigation of damages, that the property had been taken from him.by an attachment in an action against the plaintiff as the plain.ifF’s property. The case of Squire v. Hollenbeck, 9 Pick. *243551, is more in point, because it presents a case, where, as in the case at bar, the avails of the property did not go to the use or benefit of the plaintiff. The damages were allowed to be reduced, by showing that a third person had an interest in the property; and that although the possession of the ulaintiff was violated, for which violation he might maintain an action; yet that there was a third person having a paramount title, and that the avails of the property, or the property itself, had gone to his use. The application of the principle, which was settled in that case, seems to authorize the ground assumed by the defendant, in the present case, as to the reduction of the damages.

Judgment for the plaintiff for nominal damages.