Court Opinion

ID: 7333963
Source: CourtListenerOpinion
Date Created: 2022-07-25 22:25:45.67767+00
Date Added: 2024-06-11T16:20:11.556202
License: Public Domain

MERWIN, J.
On February 1, 1887, the Saratoga Gas & Electric Company, as security for its bonds to the amount of $300,000, executed and delivered to the American Loan & Trust Company, as-trustee, a mortgage upon property described as follows:
“All the corporate property, real, personal, and mixed, including all lands,, easements, rights of way, buildings, fixtures, materials, supplies, machinery, and plant, franchises, contracts, and dioses in action, whether now owned or hereafter acquired or constructed by said gas company, together with the appurtenances thereto, and all rents, tolls, issues, income, and profits of said gas company, present and future.”
In May, 1892, the New York Security & Trust Company was duly substituted as trustee -in place of the loan and trust company. Om August 1, 1893, the light company made default in the payment of interest on the bonds. This default having continued for GO days, the whole principal was thereupon, in pursuance of the terms of the mortgage, declared to be due. On November 11, 1893, an action to foreclose the mortgage was commenced. At special term, on November 16, 1893, L. B. Gleason was appointed receiver of the mortgaged property. At the same time, by the same court, W. V. Reynolds was appointed receiver in a sequestration action commenced by one Andrews against the light company, on the 16th October, 1893, based upon a judgment recovered by Andrews against the company on October 12, 1893, for the sum of $120.56. In the order appointing Reynolds it was provided that he should not, except upon the further order of the court, take into his nossession any of the property committed to the custody of the receiver in the foreclosure action. Both orders were in fact made on the 29th November, 1893. On that day, Gleason, as receiver, took possession of the plant, and operated it until April 2,1896, when it was transferred to the purchaser upon the foreclosure sale. -Thereafter Receiver Gleason filed an account of his proceedings, crediting himself as receiver, among other things, with certain payments to Reynolds, as receiver, to the amount of $4,770.22. The plaintiff, the security and trust company, excepted to the allowance of these payments. All of these payments had been made to the respondent Mr. Paige, who was the attorney for Receiver Reynolds, and the moneys remained in his hands. Thereupon the plaintiff made a motion, returnable at the same time and place as the final hearing upon the settlement of the accounts of Receiver Gleason, for an order requiring Mr. Paige to repay to Receiver Gleason, or to the plaintiff, the substituted mortgagee and the trustee for the bondholders, the said sum of $4,770.22. Upon the hearing of these proceedings, the motion for repayment was denied, and the exceptions of the plaintiff to the receiver’s account were overruled. The plaintiff appeals from the order denying its motion for repayment, and also from so much of the order, made upon the final accounting of the receiver, as allowed and approved the payments excepted to and overruled the exceptions. There is a large balance still unpaid on the mortgage. Of this sum of $4,770.22, the sum of $861.51 was paid to Receiver Reynolds or Mr. Paige on February 27, 1895, in pursuance of a special term order made January 23, 1895, after a hearing of counsel upon both sides; and the direction is that the amount be paid “on account of moneys *751due the latter from the former.” This order was not appealed from. This item, as well as the items of §193.47, and §151.20, part of the total of §4,770.22, seems to be within the class of cash items received by the light company before the commencement of the action, in its general course of business, and representing money to be used in the ordinary running of the business, and therefore, according to the concession of appellant’s counsel, not within the lien of the mortgage.
The main question is over the balance of the fund, being the sum of §3,564.04. The source of these moneys, as stated in the affidavit of the respondent in opposition to the motion, is as follows-.
“The moneys spoken of in these matters were moneys due the Saratoga Gas & Electric Light Company for manufactured gas and electricity, the produce of its labor, and sold and delivered by it to various parties, and the consideration therefor due to it before the appointment of either receiver.”
The question then is this: Can the debts or accounts due to the-corporation upon the sale of the products of its plant be reached under the mortgage, as against the sequestration receiver? The claim of the respondent seems to be that the rule applicable to the distribution of equitable assets in judgment creditors’ actions is applicable here, and gives the sequestration receiver the prior claim, as that action was commenced before the foreclosure action. That, as it seems to me, is not the point here, but the point is whether, under and by virtue of the-operation of the mortgage, the mortgagee, and through it the mortgage receiver, had on these debts or choses in action an equitable lien, that was not cut off or affected by the sequestration action. “An equitable mortgage may be constituted by any writing from which the intention so to do may be gathered.” Payne v. Wilson, 74 N. Y. 348, 351. “Every express executory agreement in writing, whereby the contracting party sufficiently indicates an intention to malee some particular property, real or personal, or fund, therein described 'or identified, a security for a debt or other obligation, or whereby the party promises to convey or assign or transfer the property as security, creates an equitable lien upon the property so indicated, which is enforceable against the property in the hands, not only of the original contractor, but of his heirs, administrators, executors, voluntary assignees, and •pm’chasers or incumbrancers with notice.” 3 Pom. Eq. Jur. § 1235, and cases cited. This rule is said to be applicable to property not yet in being at the time when the contract is made. In section 1236, in the same book, it is said to be well settled that an agreement to charge or to assign or to give security upon or to affect property not yet in existence or in the ownership of the party making the contract, or property to be acquired by him in the future, constitutes an equitable lien upon the property so existing or acquired at a subsequent time, which is enforced in the same manner and against the same parties as a lien upon specific things existing and owned by the contracting party at the date of the contract. “Whenever a positive lien or charge is intended to be created upon real or personal property not in existence, or not owned by the person who grants the lien, the contract attaches in equity as a lien or charge upon the particular-property as soon as he acquires title or possession of the same.” 1 Jones, Liens, § 42, and cases cited. In Wisner v. Ocumpaugh, 71 *752N. Y. 113, it was held that an agreement in a lease that the lessor should have, as .security for the rent, a lien on any property which might thereafter be brought upon the premises, created an equitable lien upon property thereafter brought thereon, which attached as soon as the property was acquired by the lessee and brought upon the premises. “In equity, there is no difficulty in enforcing a lien, or any other equitable claim constituting a charge in rem, not only upon real estate, but also upon personal estate, or upon money in the hands of a third person, whenever the lien or other claim is a matter of agreement, against the party himself and his personal representatives, and against any persons claiming under him voluntarily or with notice, and against assignees in bankruptcy who are treated as volunteers; for every such agreement for a lien or charge in rem constitutes a trust, and is accordingly governed by the general doctrine applicable to trusts.” Fletcher v. Morey, 2 Story, 555, 565, Fed. Cas. No. 4,864; 1 Jones, Liens, § 93. Assignees in bankruptcy take the property of the bankrupt subject to all equities against it in Ms hands. Kelly v. Scott, 49 N. Y. 595, 602; Cook v. Tullís, 18 Wall. 332. This rule is applicable to receivers of corporations. Beach, Rec. § 219; Gluck & B. Rec. (2d Ed.) 19.
The case of Distilling Co. v. Rasey, 142 N. Y. 570, 37 N. E. 632, related to the right at law of an execution creditor to reach chattels not in existence actually or potentially at the time of the giving of a chattel mortgage. That case does not, I think, apply here. See, also, New York Security & Trust Co. v. Saratoga G. & E. L. Co., 88 Hun, 569, 588, 34 N. Y. Supp. 890. The controversy here relates simply to equitable assets. The debts or accounts from which the moneys in controversy were derived were within the description of the property covered by the mortgage. They were choses in action, arising from sales of the product of the plant. The mortgagee had, within the principles above referred to, an equitable lien thereon, which attached as soon as they came into existence, and which was operative as against the sequestration receiver or the respondent. It is not suggested that the respondent has any better rights than the receiver, for whom he acted. It follows that the motion of the appellant should have been granted as to the sum of $3,564.04.
Orders, so far as appealed from, reversed, with $16 costs and disbursements, and motion for payment to the plaintiff by the respondent-Paige of the sum of $3,564.04 granted. All concur.