McEchron v. Martine — 111 A.D. 805

Majority

p. 805

William McEchron, as Sole Surviving Executor, etc., of Jones Ordway, Deceased, Respondent, v. Godfrey R. Martine and Mary E. Martine, Appellants, Impleaded with Others, Defendants.

Third Department,

March 7, 1906.

Headnote

Mortgage — realty and chattel mortgage securing samedebt — agreement that resort shall first be had to the realty mortgage — mortgagors not damaged by violation of said agreement by sale under chattel mortgage which conveyed no interest — counterclaim for such damage properly dismissed in action to foreclose realty mortgage.

When a chattel mortgage given as further security for a debt secured by a mortgage on real estate covers only the personal property “ which belongs to us (the mortgagors) in any of the said buildings” and provides that resort shall first be had to the realty mortgage to collect a debt, a sale under such chattel mortgage before an action to foreclose the realty mortgage, which sale only purported to convey the interest of the mortgagors, and they having no interest, does not furnish grounds fora counterclaim in a subsequent action to foreclose the realty mortgage. As the chattel mortgagors had no title at the time of the mortgage, and as only their interest in said bhattels was sold, nothing 1 passed to the. purchaser, and hence the mortgagors were not damaged by the apparent breach of the agreement to resort first to the realty mortgage.

Appeal by the defendants, Godfrey R. Martine and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Warren on the 6th day of May, 1905, upon the report of a" referee.

The action was brought for the foreclosure of a mortgage. The mortgage was executed by Godfrey R. Martine and-Mary.E. Mar-tine upon four several pieces of real estate described therein to Jones Ordway, to secure an indebtedness which, upon April 23,1901, amounted to upwards of $8,000. This mortgage was executed upon the 10th day of January, 1889. This plaintiff is the surviving executor of Jones Ordway, deceased. In August, 1899, the same defendants executed a chattel mortgage upon whai they owned of certain personal property at Blue Mountain lake in the hotel and cottages adjoining. This chattel mortgage was executed to William McEchron and James M. Ordway, as surviving executors of Jones Ordway, deceased, and was for the purpose of securing the same indebtedness which at that timé purported to. be secured by the real

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estate mortgage. This chattel mortgage was in the ordinary form, hut contained this further clause: “ If it shall become necessary to enforce by action the collection of the notes which this mortgage is given to secure resort shall first be had* to the property covered by a certain mortgage (real estate) bearing date January 10,1889, made and executed by Godfrey R. Martine and Mary E. Martinete Jones Ordway, recorded in the office of' the clerk of the county, of Hamilton on the. 14th day of January, 1899, and in the office of the clerk of the county of Warren on the first day of November, 1890, and then to the property hereby transferred and herein described.” It afterwards developed that at the time of the giving of the mortgage the mortgagors were not the owners of two of the pieces of property described in. the real estate mortgage. A third piece of property was afterwardsdeéded by the mortgagors and the lien of the mortgage released by plaintiffs; The mortgage remains,, however, a lien upon the remaining piece of property described in the mortgage, and the purpose of this action was to foreclosé this mortgage as to this piece of property. Th.e court has found that the personal property at'Blue ■ Mountain lake was not at the time of the giving of the chattel mortgage the property of the mortgagors', but was the property of J. Edwin Martine, a brother, and that nothing passed by virtue of the chattel mortgage thus given to the plaintiffs.

On the 23d day of April, 1901, the plaintiff, assuming to act under his chattel mortgage, sold at the front door of the Blue Mountain Lake Hotel all' the interest of. the defendants Godfrey R. Mar-tine and Mary E. Martine in the personal property in such hotel and in the cottages adjoining. Just prior to the sale the. plaintiff’s attorney, acting in the plaintiff’s behalf, received a telegram which was sent by the said Godfrey R. Martine and Mary E. Martine, as follows;

“ Glens Falls, N. Y., April 23, 1901.

“ To Henry W. Williams,

“ Blue Mountain Lake, N. Y.:

“ I have owned, all household goods and .other personal property on Blue Mountain Lake house premises since June, 1890,-and I hereby forbid sale of the same unless your claim antedates mine.

“‘J. EDWIN MARTINE, Chicago,

“ By Godfrey R. Martine.” .

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In disregard of this telegram the interest of the defendants Godfrey B. Martine and Mary E. Martine were sold upon that day for about thfe sum of $500, which full sum has been credited upon the plaintiff’s claim, under this real estate mortgage.

In this action to foreclose this real estate mortgage the defendants Godfrey E. Martine and Mary E. Martine admitted the execution' and consideration thereof and asserted an affirmative defense or counterclaim for damages by reason of the unauthorized sale of this personal property under this chattel mortgage. Defendants contend that under the terms of the chattel mortgage resort must .first be had to the real estate mortgage. Evidence was offered by the defendant of the actual value of the personal property at Blue Mountain lake ^hereupon the following statement was made upon the trial by the plaintiff’s counsel.

“ In the view which we take of this action, the question of damages is not going to be a material one, and we have agreed to allow the defense to swear one witness, as to the value of the personal property, and no other evidence is to be put in on the value except that given by this witness, and we also have agreed upon this stipulation between the parties:

“ That the plaintiff shall offer no evidence as to the value of the personal property set forth in the counterclaim and bill of particulars herein; that in the event that the referee finds that the defendants or either of them are entitled to recover upon said counterclaim, that then such recovery shall go to extinguish the claims' of the plaintiffs against the defendants so that one shall balance the other, and that no judgment for damages shall be entered in favor of either party, and. the excess in favor of defendants or either of them is hereby waived and released; that the plaintiffs waive the objection,-heretofore taken that this counterclaim should have been asserted against them in an action brought against them individually, instead of in a representative capacity, and shall not assert the same as a defense to this action. That if it is found that the defendants are entitled to recover upon the facts stated" in said counterclaim against these plaintiffs, either individually or as executors, they shall recover against these plaintiffs as executors in this action, upon the same.”

The' referee has found that Godfrey E. Martine and Mary E. Martine had no interest in nor possession of the said chattels at the

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time of the giving of the mortgage or at the time of the sale by the plaintiffs under their chattel mortgage, and has dismissed thfe defendants’. counterclaim and directed judgment for the foreclosure of the plaintiff’s real estate mortgage; From the judgment entered upon this decision the defendants Godfrey R. Martine and Mary E. ■ Martine have here appealed.

King & Angell [Joseph A. Kellogg of counsel], for the appellants.

Ashley & Williams [Henry W. Williams of counsel], for the respondent.

,- We agree with the defendants’ contention that a sale under the chattel mortgage was unauthorized until the foreclosure pf the real estate-mortgage. The technical construction which plaintiff’s counsel claims for the stipulation in the chattel mortgage, above quoted, practically takes the life out of the stipulation and nullifies its -effect. A fair interpretation of that stipulation in that mortgage would require the satisfaction of the claim as-f-ar as possible out of the 'real estate mortgage before the chattel' mortgage could be resorted to for aid in-its payment. The fact found by the referee, that the.personal property at Blue Mountain lake was in 18901 conveyed to J. Edwin Martine, and that at the time of the giving of the chattel mortgage and upon April 23, 1901, at the time of the attempted sale thereunder the defendants Godfrey R., Martine and Mary E. Martine, had no interest therein, is supported by the evidence. The inference is quite clear that here was ax transfer of this property for the purpose of evading the creditors of Godfrey R. Martine, but such a transfer is good as between the parties, and the title to the property at all'these times has, therefore, been and now is in J. Edwin Martine, who is not one of the defendants who asserts any counterclaim in this action. This property, however, as well as the real estate at Blue Mountain lake, which’ had been conveyed to a daughter, Mary J. Martine Fletcher, were clearly in the possession of the defendants Godfrey R. Martine and Mary E Martine. They were left in their possession both by the daughter and by the brother who held the legal title to the property.' This right of possession would give to these defendants á right of action

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for a conversion of that property. The right of the possessor to sue for the conversion of property a third person who does not connect himself with the legal title is well established. He stands, however, as the trustee for the legal owner as to any recovery in such an action.

But this personal property was never converted by the plaintiff. Its possession was in no way changed. Ho doniinion was exercised thereover. This telegram was read at the sale, and the title which was in fact sold was simply the title of Godfrey E. Ma'rtine and Mary E. Martine. In fact the chattel mortgage is peculiar in mortgaging only that part of the chattel property “ which belongs to us in any of said buildings or on said premises.” Under the findings of the referee no property passed by the mortgage. Ho property, therefore, - passed under the mortgage sale, and the. April trip of the plaintiff’s attorney, and his pretended sale at Blue Mountain lake, was a harmless incident which damaged no one, and cam-tot be made the basis of any counterclaim by the defendants in this action. The' estoppel' claimed by the defendants as against the plaintiff by reason of the attempted sale under the mortgage has scant support when the mortgage purports to convey only such part of the property as belongs to the defendants. We see no reason, therefore, for disturbing the conclusions of the referee, and the judgment should be affirmed, with costs.

Judgment unanimously affirmed, with costs; Kellogg, J., not sitting.