Briggs v. Gelm — 122 A.D. 102

Majority

p. 102

Jennie Briggs, as Assignee of Elihu S. Briggs, for the Benefit of His Creditors, Respondent, v. John Gelm, as Sheriff of Chautauqua County, and Andrew J. Butts, Appellants.

Fourth Department,

November 12, 1907.

Headnote

Chattel mortgage — conversion of mortgaged property by sheriff— effect of possession by mortgagor under former statute — burden to show good faith — when possession of mortgagor not fraudulent — laches — delay in filing mortgage.

A chattel mortgage given "before the enactment of section 25 of the Personal Property Law (Laws of 1897, chap. 417), unaccompanied by immediate delivery .and not followed by actual and.continued change of possession bjr'the mortgagee, is presumptively fraudulent and conclusively so unless it be shown by the party claiming under it that it was given in good faith and without fraudulent intent.

In an action against a sheriff for conversion hy selling mortgaged property on execution against the mortgagors, the burden is on one claiming through the mortgagee to establish good faith and absence of fraudulent intent, if there was no delivery and continued change of possession of the mortgaged property.

An agreement that a mortgagor shall retain and use the chattel for his own purpose and for the payment of debts other thán that secured by the mortgage renders the latter fraudulent ,and void.. But when the property consists of unfinished knit goods which gain their value by being manufactured into garments, an agreement that the mortgagor may manufacture and sell the goods and. apply the proceeds on the payment of the mortgage debt after deducting the necessary expenses of manufacture is not fraudulent.

p. 103

A verdict against the sheriff for the conversion of mortgaged chattels will not be set aside as contrary to the evidence unless it be apparent that the jury was actuated by favor, prejudice or passion.

Moreover, when the judgment was not entered upon the verdict until more than two years after the trial, which took place more than eleven years before the argument of the appeal, a new trial will not be granted upon the ground that the verdict was contrary to the evidence.

A delay of two days in filing a chattel mortgage does not raise a conclusive presumption of fraud under section 1 of chapter 279 of the Laws of 1838, and the court may properly refuse to charge that such delay was unreasonable.

' Appeal by the defendants, John Gelm, as sheriff of Chautauqua county, 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 Chautauqua on the 11th day of January, 1899, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 24th day of December, 1896, denying the defendants’ motion for a new trial made upon, the minutes. ,

A. Frank Jenks, for the appellants.

John G. Wicks, for the respondent.

The judgment and order should be affirmed, with costs.

The action was brought by thé assignee for the benefit of creditors of Elihu S. Briggs against the sheriff of Chautauqua county and his deputy to recover for the conversion of personal property. The plaintiff claimed title to the property under a chattel mortgage and a foreclosure sale thereunder. The defendants took and held the property under an execution against the mortgagors, and claimed that the mortgage was void in that it was given with intent to hinder, delay and defraud- their creditors, some of whom were represented by defendants under the execution. The mortgage was given to the plaintiff Briggs and his mother. It was filed the second day after it was given, and was refiled at the end of the year. The mother’s interest in the mortgage and the property was transferred to Briggs about a year after the mortgage was given. The property remained in the possession of the mortgagors one year and three months after the giving of the mortgage, and then the mortgage was foreclosed and the property bid in by Briggs; a month later

p. 104

Briggs made the assignment; and a month after the assignment the defendants took.the property under the execution. The mortgage not having been accompanied by an immediate delivery and followed by an actual and continued change of possession of the mortgaged property was, under the statute, presumptively fraudulent, arid was. conclusively so unless it was shown on the part of the party claiming under it that it was given in good faith and without -a fraudulent intent. (2 R. S. 136, § 5, which was in force when this mortgage was given, and until 1897, when this statute was replaced by section-25 of the Personal Property Law [Laws of 1897, chap. 417] ; the new statute excludes chattel mortgages from the section.)

The burden of proof, therefore, as to fraud Was upon the plaintiff. In order to establish the validity of the mortgage under which he claimed title, he must establish good faith and the absence of fraudulent intent. Evidence was given by the parties respectively bearing upon this question, and the jury found with the plaintiff, that there was no fraud in the inception of the mortgage.

The principal question presented here is whether, considering that the burden of .proof was upon the'plaintiff, the finding of the jury was supported by the evidence, or was contrary to the evidence within the well-established rules applicable to such questions. The particular fraud claimed by the defendants to have been committed was that, in effect, the- mortgagors and mortgagees agreed when the mortgage was given that the mortgagors should retain the possession of the mortgaged property and should use the saíne for their own purposes and for the payment of other debts- than that secured by the mortgage. If that was the case, then the mortgage was to be' used as a cover to prevent other, creditors from "reaching it, and in a legal sense was given to hinder, delay and defraud creditors, and was, therefore, fraudulent and void. The .plaintiff claimed, however, that no such agreement existed; that the property was largely unfinished knit goods, some of it not in the process of manufacture at all; that the value of the property depended upon its being worked up into garments, so as to be put on the market and sold; and that the agreement was that the property Was to be worked up into finished garments and sold and the proceeds, after paying the necessary expenses of manufacture, were to be applied exclusively and solely to the payment of the mortgage debt. If

p. 105

such was the case, then the mortgage was not fraudulent in its inception, but was one the parties might lawfully and properly make. The "court very fully and fairly instructed the jury as to these principles of law and went over the evidence in considerable detail, so that the jury must have understood what they were doing as to this branch of the case.

It is said by the defendants that there was not only a preponderance of direct evidence as to the making of the fraudulent agreement in giving the mortgage, but that there was also a preponderance of evidence as to the manner in which the property was dealt with after the giving of the mortgage, in that the proceeds were applied to the payment of other debts than those secured by the mortgage, and that the mortgagees had knowledge of such application and consented to it. The law was correctly stated to the jury bearing upon this latter question, and the evidence relating thereto was commented upon, so that the jury must have understood what they were doing as to this branch of the case also.

We are thus brought to the question whether we should set aside the verdict of the jury as contrary to the evidence. In order to do this, we must conclude that the jury were actuated by favor, prejudice or passion. (Layman v. Anderson & Co., 4 App. Div. 124 , cited, approved and followed in More v. Knox, 52 id. 145 .)

Looking over the record, and considering the evidence as it appears in print, it seems as though the defense made a strong case in answer to the plaintiff’s claim of good faith and the absence of fraud, but we cannot see the parties and the witnesses, nor observe their appearance and manner of testifying, as the jury could and as the trial judge could. After verdict a motion was made for a new trial upon the minutes, and the' judge who had presided at the trial was called upon to consider this question, and" with his knowledge of the case acquired on the trial, he declined to grant a new trial.

The trial took place more than eleven years ago. The judgment, was not entered upon the verdict until more than two years after the trial; and under the circumstances we think it would not be proper now to set aside the verdict and grant a new trial upon this ground. The defendants should have proceeded with the case more expeditiously, if they desired a retrial of the case for this reason.

It cannot be said that there was such a delay in filing the jnort

p. 106

gage after it was given that it was not 'filed as provided by the statute and, therefore, the presumption of fraud was a conclusive one, under section 1 of chapter 279 of the Laws of 1833. There was a delay of less than two days, which was not unreasonable. The court, on the trial, was asked to charge that such delay was unreasonable, and very properly refused so to instruct the jury,

We think there are no other reasons suggested, no errors in the admission of evidence or in charging the jury that call for a reversal of the judgment or order.

All concurred; Spring, J., not sitting.

Judgment and order affirmed, with costs.