Darrow v. Wendelstadt — 43 A.D. 426

Majority

p. 426

Gilbert Darrow, Appellant, v. Edward F. M. Wendelstadt, Respondent.

Headnote

Chattel mortgage—upon a default the legal title passes to the mortgagee —the only remedy of the moi'tgagor is in equity..

Upon a default in the ,payment of a debt 'secured by a chattel mortgage, the legal title of the mortgagee to the mortgaged chattels becomes absolute, and the mortgagor thereafter has no rights in the mortgaged property of which a court of law will take cognizance.

The refusal of a tender of the debt made after the default, and the subsequent sale of the chattels by the mortgagee, do not entitle the mortgagor to maintain an action at law for the conversion of the chattels; his remedy, if any, is by an action in equity.

Appeal by the plaintiff, Gilbert Darrow, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Kings on the 26th day of .March, 1898, upon the dismissal of the complaint by direction of the court after a trial before the court and a jury at the Kings County Trial Term.

J. Noble Hayes, for the appellant.

Ayres & Walker, for the respondent.

. This is an action to recover damages for the alleged conversion of groceries and other°contents of a grocery store, which had come into the possession of the plaintiff under a bill of sale which, both parties concede to hav'e been a chattel mortgage. At the time of the alleged conversion, according to the testimony of the plaintiff, he offered to pay the defendant the amount due on the notes secured by the chattel mortgage, but the defendant demanded a larger amount on account of losses which he claimed to have sustained in carrying on the plaintiff’s grocery business. Upon: the plaintiff’s refusal to pay this greater sum, the defendant excluded him from the store and subsequently sold the goods.

It is settled in this State that; after default in the payment of a debt secured by a chattel mortgage, the legal title of the mortgagee becomes absolute, and he is thereafter to be deemed the general owner of the mortgaged property. (Casserly v. Witherbee, 119 N.

p. 427

Y. 522 .) In the case cited, the Court of Appeals expressly held that the mortgagor after default could maintain no action whatever at law against the mortgagee. Ordinarily, nothing remains to the former except a right of redemption, which can be enforced only in equity.

Under this rule the learned trial judge correctly decided that the plaintiff could not maintain the present suit, which is an action at law to recover damages for the conversion of the mortgaged property. He did not hold that the plaintiff had no rights growing out of the facts proved, but merely that he ought not to prevail so far as this particular cause of action was concerned. If the account which the plaintiff gives of his transactions with the defendant is correct, he may well be entitled to some relief, either in the form of an accounting or an opportunity to redeem the mortgaged property. But whatever the relief may be to which he is entitled, it must be sought on the equity' side of the court arid not in a suit at law.

For these reasons the judgment appealed from must be affirmed, without prejudice, however, to the bringing of an appropriate action for equitable relief.

All concurred.

Judgment affirmed, with costs, -without prejudice to the bringing of an appropriate action for equitable relief.