Court Opinion

ID: 5403634
Source: CourtListenerOpinion
Date Created: 2022-01-08 15:56:58.917515+00
Date Added: 2024-06-11T08:30:30.025054
License: Public Domain

McAdam, J.
The plaintiff received from one Margaret Eibs, on February 3, 1896, a chattel mortgage upon certain property in the store No. 728 Tenth avenue, this city, to secure the payment of $155. The mortgage was .delivered on that day, but not filed until February 28, 1896.
At the time the mortgage was made the mortgagor owed the defendant about $400, and between the date of making the mortgage and its filing, the defendant gave her credit to the extent of $125 more, having up to this time no knowledge of the existence of the document.
On March 19, 1896, the mortgagor gave the defendant a bill of sale of the property, and under this bill of sale and a mortgage made by the mortgagor to Eggers & Co., February 5, 1896, for $262.06, and assigned by them to the defendant, the latter took possession of the property about March 23, 1896, and sold it at public auction, receiving the amount of his claim less $21.
The action was to recover damages for the conversion of the property embraced in the plaintiff’s mortgage.
The defendant succeeded in the court below upon the ground that the plaintiff’s mortgage not having been filed until twenty-five days after its delivery, it was void as to said defendant, an existing creditor, and Karst v. Gane, 136 N. Y. 316, and Stephens v. Perrine, 143 id. 476, are cited to sustain the conclusion.
*458Those cases hold that the word “creditors” in the provision of the act of 1833 (chap. 279, § 1, providing that such a mortgage, unless filed as required by the 'act, “ shall be absolutely void as against the creditors of the mortgagor ”) includes creditors whose debts antedate the execution of the mortgage as well as those whose debts were subsequently. contracted, and a simple contract creditor is as much within the protection of the statute as a creditor whose debt has been merged in a judgment. While this is true, the creditor cannot until he has a judgment and lien or a right to a lien upon the specific property invoke the aid of the statute cited. Thompson v. Van Vechten, 27 N. Y. 568; Jones v. Graham, 77 id. 628; Button v. Rathbone, 126 id. 191; Kitchen v. Lowery, 127 id. 60; Kennedy v. Nat. U. Bk., 23 Hun, 494; Grassmuck v. Bauer, 17 Week. Dig. 523; Stewart v. Beale, 7 Hun, 405; Ebling v. Husson, 54 N. Y. Super. Ct. 377. The rule was not only recognized but reiterated in the Stephens case (p. 481) and in the Karst case (pp. 323, 324).
The statute which makes continued possession by the vendor a presumption of fraud (2 Edm. R. S. 141, § 4) provides that the term “ creditors,” as used therein, shall include “ all persons who shall be creditors of the vendor or assignor at any time while such goods and chattels shall remain in his possession or under his control.” Id., § 6. Yet, under this statute, a simple contract creditor, though under its protection .as much as one by judgment, is not in a position to assert his rights as creditor until he obtains a judgment and a lien thereunder or a right to one. Southard v. Benner, 72 N. Y. 424, 426; Stimson v. Wrigley, 86 id. 332, 339; Geery v. Geery, 63 id. 252; Reynolds v. Ellis, 103 id. 115, 123; Sullivan v. Miller, 106 id. 641.
In the Karst case, supra, the creditors had obtained a judgment and the return of an execution unsatisfied, and levied upon the mortgaged property, and under this lien their rights related back and protected them while simple contract creditors of the mortgagor. In the Stephens case, supra, the creditors had also procured a judgment and return of an execution unsatisfied, followed by the appointment of a receiver in supplementary proceedings, who brought the action, and the same principle of protection was applied.
Instead of putting his claim in judgment the defendant, on March 19, 1896, nineteen days after the plaintiff’s mortgage was filed, and with' notice of its existence (Herman on Chat. Mort., *459§ 76, p. 160; Goodwin v. Bayerle, 18 Misc. Rep. 62; 41 N. Y. Supp. 20), took a bill of sale from the mortgagor of the property, and under this bill of sale, and without any process whatever, took possession and disposed of the property.
The plaintiff’s mortgage, though not filed until twenty-five days after it was made, took, effect against the mortgagor from the time of its delivery, and against subsequent purchasers from the time of filing, and was at all times a valid obligation as against her or them. Jones v. Graham, supra; Pancoast v. Am. H. & P. Co., 66 How. Pr. 49. Being valid as against the mortgagor and subsequent purchasers, the bill of sale made by her to the defendant nineteen days after the mortgage was filed gave him no better title than she had. It gave him no lien or right of lien in aid of the statutory provision, because not the act of the law but of the mortgagor. ;
It is unnecessary to discuss what rights the defendant acquired under the Eggers mortgage, for he sold property far in excess of what was required to satisfy.it; so that if he cannot justify under his bill of sale the plaintiff will be entitled to sufficient of the proceeds to satisfy his mortgage. These questions may be considered upon the new trial which will have to follow.
The judgment must be reversed and a new trial ordered, with costs to the appellant to abide the event.
Daly, P. J., and Bischoef, J., concur.
Judgment reversed and new trial ordered, with costs to appellant to abide event.