Lathers v. Hunt — 16 Daly (N.Y.) 135

Majority

p. 135

Richard Lathers, Appellant, against Jacob H. Hunt, Respondent.

(Decided April 7th, 1890.)

Headnote

Defendant, being indebted to plaintiff for rent, executed to him a chattel mortgage of his household goods on the demised premises. Defendant subsequently abandoned the premises and the goods, and plaintiff took possession thereof. Held, that his taking possession and caring for the goods did not constitute a conversion thereof, or an appropriation of them in satisfaction of the mortgage debt.

Appeal from a judgment of the District Court in the City of New York for the Eleventh Judicial District.

The facts are stated in the opinion.

Joseph Walmsley, for appellant.

L. B. Bunnell, for respondent.

Defendant, being indebted to plaintiff in the sum of one hundred and fifty dollars for rent of a flat at 179 East 93rd Street in the City of New York, and intending to secure the payment thereof, executed and delivered to' the plaintiff a mortgage upon certain household furniture and carpets contained in the premises. The mortgaged chattels having been abandoned by defendant, plaintiff assumed possession thereof, and while still in such possession brought this action to recover from the defendant the amount of arrears of rent to secure the payment of which the mortgage was given. Upon the trial the defendant contended that the possession of the mortgaged chattels by the mortgagee operated as a satisfaction of the mortgage debt, and the trial justice, sustaining defendant’s contention, rendered judgment in his favor.

At common law possession of the mortgaged chattels by the mortgagee was essential to the validity of the mortgage.

p. 136

This is still the law of this state in the ease of mortgages not filed as prescribed by statute, such filing being allowed only as a substitute for possession by the mortgagee, and there is nothing in the statute which prevents the mortgagee from filing his mortgage and having possession of the mortgaged chattels as well. See Laws 1833 c. 279 (3 Rev. St. Banks Bros. 7th ed. p. 2249,) § 1.

So, also, at common law, which remains unchanged, the mortgagee of chattels could proceed in three distinct methods to recover the mortgage debt. He could-bring an action at law for the amount, and sell the mortgaged chattels under judgment obtained therein, or he could bring an action to foreclose the mortgage, or sell the chattels under a power of sale expressly conferred by the terms of the mortgage (Herman on Chattel Mortgages, p. 484, §§ 206, 207; Freeman on Chattel Mortgages, p. 488; Elder v. Rouse, 15 Wend. 218 ; Sterling v. Rogers, 25 Wend. 658 ).

“ A mortgagee does not lose his right to the mortgaged property by obtaining judgment on the mortgage note and then seizing it on execution. The property is pledged as security for the debt, and is not taken in liquidation of it, and a judgment, while it may be a merger of the note so that no other action can be maintained on it, will not extinguish the security; that remains as security for the debt, no matter what form it takes, until the debt itself is extinguished.” (Herman on Chattel Mortgages, p. 487, § 207).

And the principles governing the relative rights and obligations of mortgagor and mortgagee in this respect are not distinguishable from those governing the rights of pledgor and pledgee, and the latter can maintain an action on the debt without offering to return the collateral (James v. Hamilton, 63 N. Y. 616 ).

Defendant having conceded his indebtedness to the plaint-tiff in the amount claimed, it follows from the foregoing that plaintiff should have had judgment.

Larremore, Ch. «L, concurred.

p. 137

J. F. Daly, J.—It is undoubtedly true that a conversion by the mortgagee of mortgaged property entitles the mortgagor to a credit upon the debt to the extent of the value of the property so converted (Small v. Herkimer Manuf. Co., 2 N. Y. 339 ). But there is no proof of conversion in this case. If the allegations of the answer- be taken as averments of conversion, still no evidence was offered that sustains them. There was no conversion of the furniture when the tenant moved out, leaving it in the flat and in the possession of Mrs. Bryan to whom he gave express permission to use it while she occupied the premises. After she moved away,in July, 1888, the plaintiff took possession of it and placed it in other flats, sending the carpets to be cleaned. He had a right to possession, and his act in taking possession did not satisfy the debt, as Judge Bischoee has pointed out. There is no proof that the furniture was subsequently let with any other apartment, or used by the plaintiff, or by any person with his consent.

I concur that the judgment should be reversed, with costs, and a new trial ordered.

Judgment reversed, with costs, and new trial ordered.

Cases cited

Elder v. Rouse 15 Wend. 218 N.Y. Sup. Ct. p. 136
In re Robert J. 2 N. Y. 339 N.Y. 2004-05-11 p. 137