Court Opinion

ID: 3621118
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:02:52.411915+00
Date Added: 2024-06-11T13:55:12.759351
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 106 
There is but one important question of law upon this appeal, which we need briefly consider, and that relates to the right of the plaintiff to maintain this action. When he became the general assignee of M. and L. Allison for the benefit of their creditors, on July 21st, 1884, he found an existing indebtedness to his assignors from Isaac Allison. Isaac had executed an instrument in the nature of a chattel mortgage to secure his indebtedness; which, the referee found, though made in good faith, had become void through the conduct of the parties with respect to the property so mortgaged. A few days subsequent to the assignment, however, Isaac, upon the demand of the plaintiff, reinforced by threats of legal proceedings based upon his indebtedness to the assigned estate, personally and orally transferred to the latter the goods in question which were covered by the mortgage. The referee has found that that transfer was followed by an actual possession, taken by the plaintiff and continued until the property was taken away by the sheriff, under a levy upon an execution issuing upon a judgment recovered by the defendant bank against Isaac Allison. The evidence is sufficient to support the findings of the referee and to show that the plaintiff's title to the goods can rest upon the transaction between him and Isaac. It would, at least, show that there was a transfer to secure the payment of Isaac's debt, if not in satisfaction thereof, and that would vest sufficient title and possession in the plaintiff. At that time the bank had acquired no lien; no execution having issued upon its judgment, theretofore entered, until at a date subsequent to the plaintiff's acquisition of title. So far as the subsequent history of the matter shows, or tends to show, Isaac never regained possession of, nor was permitted the exercise of any acts of ownership over the property. The plaintiff had, and retained, the *Page 109 
exclusive possession and Isaac's subsequent access to the building where the goods were stored — a fact upon which the appellant places much reliance — only concerned other property; except that he was allowed to make three sales of goods, the proceeds of which he remitted to the plaintiff. In that situation plaintiff's right to the goods was superior to the bank's; for it rested, not upon the void chattel mortgage, but upon an independent transfer of possession by the mortgagor. Had it been otherwise, the doctrine of Stephens v. Perrine (143 N.Y. 476), would have applied and the plaintiff would have had no right to the property as against Isaac's creditors. The referee's decision in respect to the plaintiff's possession is not predicated upon the chattel mortgage and that possession cannot be qualified by a reference to that source of title. Stephens
v. Perrine was an action to set aside a chattel mortgage, which had not been filed and where no change of possession took place, until the mortgagee availed herself of its terms to take and sell the property covered. The plaintiff in that case was a receiver appointed in supplementary proceedings upon judgments recovered in creditors' actions against the mortgagor. Although it was found that there was no fraudulent intent in making the mortgage, it was, nevertheless, held that the chattel mortgage was void as to the existing creditors of the mortgagor, and that the subsequent act of the mortgagee in taking possession and in purchasing at the auction sale gave her no right to the property; that it made no difference that the creditors had not recovered judgment, because the mortgagee never had or acquired any right as such, and that there can be no distinction as to the result, whether a chattel mortgage is void for fraud, or for non-compliance with the statute. In either case it is illegal. But it was held there that if, before any lien was acquired by the creditors through judgment and levy, the mortgagor had delivered the property to the mortgagee in payment of the debt, it would have been a legal transaction, although constituting a preference. That case and Karst v. Gane (136 N.Y. 316);Tremaine v. Mortimer (128 N.Y. 1) and Mandeville *Page 110 
v. Avery (124 N.Y. 376), held this doctrine, that while the mortgagee cannot enforce a void chattel mortgage against the creditors of the mortgagor, yet, if the mortgagor treats it as void and, before the creditors obtain a lien, transfers the property to the mortgagee in payment of a debt, that the transaction will hold.
We, therefore, hold that, within our decisions, the plaintiff occupied the vantage ground of a right to the possession of these goods, derived directly through Isaac's delivery to him, and any question of a title made defective through the void chattel mortgage was removed.
Nor did the subsequent entering of a judgment in favor of the plaintiff, as against Isaac Allison, in December, 1884, and the execution and sale thereupon, constitute any legal barrier to the plaintiff's claim. At most, it would seem to have been a foreclosure of Isaac's possible equity in the property and the sale was, actually, only of his interest therein. It was not a case of an election of a remedy, which was so far inconsistent with the plaintiff's claim to a title derived through Isaac's delivery to him, as to bind him and to destroy his earlier right. The plaintiff, as an assignee for the benefit of creditors, was not in a position to exercise such an election. In his capacity as a trustee for others, he could not forfeit their rights in the prosecution of some further remedy, as to the existence of which he had been advised. It would not do to hold the broad doctrine that one occupying the position of a trustee could impair or destroy the vested beneficial interests of his cestuis quetrustent, upon the theory that, in his efforts in behalf of the trust estate, he had made an election of an inconsistent remedy. Especially is that true in the present case, where the legal proceedings taken by the assignee might be justified by the doubt as to whether the rights to the property in question had been finally and adequately secured.
The judgment should be affirmed, with costs.
All concur, except HAIGHT, J., not sitting.
Judgment affirmed. *Page 111