Court Opinion

ID: 5546729
Source: CourtListenerOpinion
Date Created: 2022-01-10 19:01:25.172923+00
Date Added: 2024-06-11T08:34:56.242353
License: Public Domain

PRYOR, J.
On behalf of creditors, plaintiff, a receiver in supplementary proceedings, challenges the validity of a chattel mortgage on the ground that it reserves to the mortgagor, not only the possession, but the “use,” of the things mortgaged. Of the things the use of which is permitted to the mortgagor, some are necessarily consumed by the use, e. g., “cash in hand,” for the restitution of which no provision is made; “paper, envelopes, stationery,” etc. As to these, indisputably, the mortgage is void. Hangen v. Hachemeister, 114 N. Y. 566, 21 N. E. 1046; Brackett v. Harvey, 91 N. Y. 214. And, if void in part, it is void in toto. Russell v. Winne, 37 N. Y. 591.
Assuming the mortgage invalid as to creditors, still the mortgagee contends that his title is unimpeachable, because he got possession and disposed of the goods in payment of his debt before the creditors were in a position to attack the mortgage. ' If the infirmity in the mortgage were merely that it was not accompanied by possession, then a supply of the defect before the lien of cred*557itors attached might be available to the mortgagee. But here the fact that vitiates the mortgage is what the law characterizes and condemns as fraud in itself, not simply evidence of fraud; and since the possession and sale by the mortgagee were under and by virtue of the mortgage, in law a void instrument, it is clear to demonstration that, as against pursuing creditors, he acquired the things mortgaged by no valid title. The mortgage was void ab initio, and so incapable of cure or confirmation. Mandeville v. Avery, 124 N. Y. 376, 385, 26 N. E. 951; Karst v. Gane, 136 N. Y. 316, 325, 32 N. E. 1073. True, the creditor could not assert his right against the mortgage until armed with proper process; but the right nevertheless existed, and was susceptible of enforcement the moment he perfected his lien by judgment and execution. Karst v. Gane, 136 N. Y. 316, 32 N. E. 1073. That the plaintiff may impeach the mortgage is settled beyond controversy. Mandeville v. Avery, 124 N. Y. 376, 385, 26 N. E. 951. Indeed, the adjudications in that case are quite conclusive on all the points in dispute between these litigants. Judgment for plaintiff, with costs.