Nichols v. Mead — 2 Lans. 222

Majority

p. 222

Gilbert Nichols v. Sidney Mead.

(General Term, Seventh District,

March, 1870.)

Headnote

It 5s well settled,' that after a -mortgagee of chattels has taken possession’-of' the mortgaged property; by virtue of a power in the mortgage, the mort-.' gagor has no remaining interest in it, which can be; seized and "sold uitder execution, even'though'the mortgage debt is'not-'due.

The amount sécufed by chattel mortgage was less than the cost of the property mortgaged;'theprovision for sale restricted the mortgagee to sales at cost price; there was provision fortimmediate possession"atid" sale; and for return of the surplus property after sales sufficient to pay "the debt, and the condition was for payment within a year. — Held, the mortgagee' having ■ taken possession,' that the mortgagor had no leviable " interest in'the property mortgaged, though within a year' from the- date " ofthemortgage.

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Where the complaint alleged the taking of goods “ particularly mentioned in’ the affidavit heretofore served upon the defendant in this action.”— Held, that the affidavit was, for the purpose of describing the goods, made part of the complaint.

The plaintiff sued' to recover possession of various articles of merchandise, alleging in his complaint that the same were of the value of $2,500, and- particularly mentioned' in the affidavit heretofore served- on the defendant, &c. He gave bonds and obtained possession. The defendant pleaded a levy, as sheriff, on the. 25th- July, 1868, under' execution ■against' the- mortgagor,-upon judgment bearing date July 21, 1868, for $276.7-9, on a debt due before July 13, 1868.-

Upon the trial plaintiff proved a- chattel mortgage, bearing date June-13; 1-868, executed, to him by one Green, being upon merchandise inventoried, upon a- schedule annexed thereto;at cost-prices,- in the aggregate at the sum of $3,208:81. It recited various debts due from Green- to- the- mortgagor, amounting to a- total of $2,800, and transferred to him the property inventoried-under provisions as follows, viz.: “ Provided always, and this mortgage is on- the express condition that the said mortgagor- shall pay to the-said mortgagee, the just and full sum-of all- moneys which he, the said Nichols, lias necessarily paid or" shall- necessarily pay on account) and by reason of all and singular, the obligations and responsibilities incurred-or assumed by the said Nichols, -for or on account of the said mortgagor up to the date hereof, and the necessary costs, charges- and' expenses hereinbefore mentioned, with interest thereon, in one year from date hereof, then this transfer shall be so far void that- whatever of said property shall be or remain-in-the liands or coiitrol of-said- Nichols, at the time of the payment, so as aforesaid provided and conditioned to be paid by said mortgagor (and which the said mortgagor covenants to pay), together with' the' fair costs or purchase price of- whatever of said property sTrall have been sold or disposed of by said Nichols, prior to such payment by said mortgagor, shall, on - demand of said mortgagor, be returned, restored, given up andpaid by said Nichols-to said mortgagor.”

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“And for the greater security of the said Ficliols, it is further provided, that the said Nichols may, at his option, take immediate possession of said property,-and also of the store No. 121 Genesee street, where the same now is, and occupy said store as freely and fully as I may or do, or might under the lease which I have of the same, during the lifetime of this mortgage, and said Nichols may immediately sell and dispose of said property at public or private sale, and continue so to do, at the best price to be had, not less than the original cost price of the same, except as to odds and ends and remnants, until he shall have derived or realized therefrom, money sufficient to meet, satisfy and fulfill the before mentioned purpose and object of this instrument, and without the let, hindrance or interference of said mortgagor, and to his exclusion from all control, voice or management.”

The plaintiff -also proved by Green that immediately after executing the mortgage, the plaintiff had recpiired him to give possession, and that he had thereupon surrendered possession of his store, and the goods therein, to the plaintiff, and that some days after the defendant levied on the goods so in the plaintiff’s possession; that at the time of the levy, all the goods named in the schedule of the mortgage were in the store, except some sixty dollars worth thereof, which had been sold, part of which were specified, and that no inventory was taken at the time of the levy, or when they were replevied by plaintiff. The defendant moved for a nonsuit upon grounds which sufficiently appear in the opinion of the court, which was granted, and the plaintiff moved upon a ease and exceptions for a new trial. Defendant was served with the affidavit (Code, § 207) referred to in the complaint.

G. O. Rathbone, for the plaintiff.

F. G. Day, for the defendant.

Present — J oiinson, E. D. Smith and J. C. Smith, JJ.

By the Court

The action was to recovei possession of certain' goods and chattels which the plaintiff

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claimed as mortgagee of Frank B. Green. The defendant levied upon the property by virtue of an execution in his hands as sheriff of Cayuga county, issued upon a Judgment against Green in the Supreme Court in favor of certain creditors. At the time of the levy, the plaintiff was in posses siou of the property by virtue of his mortgage.

The plaintiff at the close of his evidence was nonsuited. The nonsuit was right if Green, the judgment debtor, had at the time of the levy, an interest in the mortgaged property, which was subject to be taken and sold oil execution. Otherwise the nonsuit was erroneous, and a now trial must be granted. It is well settled, that after a mortgagee has taken possession of the mortgaged property, by virtue of a power in the mortgage the mortgagor has no remaining interest in it, which can be seized and sold on execution, even though the mortgage debt is not due. The interest of the mortgagors is then but an equity of redemption, which is. not the subject of seizure and sale on execution. (Mattison v. Baucus, 1 N. Y., 205 ; Galen v. Brown, 22 id., 37; Hall v. Sampson, 35 id., 274.) It is claimed on the part of the defendant, that by the terms of the mortgage, the mortgagor had a reserved interest in the property to the amount of $408. 81. But nothing of this kind appears on the face of the instrument, or by the paroi evidence. The mortgage, by its terms, transfers the entire property to the. plaintiff’ subject only to the condition, of payment in one year, which the mortgagor undertook in terms to perform. This transferred the entire legal title to the goods, to the mortgagee, subject to be defeated by payment. (Butler v. Miller, 1 N. Y., 406 .) When payment is made according to the condition of the mortgage, the title reverts to the mortgagors in every case. That is one of the incidents of a defeasible sale. Biit this is quite different from a reserved interest, which is subject to the claims of the creditors of the mortgagor on execution. By the terms of this mortgage, the mortgagee had the right to proceed and sell forthwith, at prices not below the cost price (except in the case of remnants), to

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raise funds, to meet the liabilities as they should fall due respective^, and. when the debt was paid, the residue remaining unsold reverted to the mortgagor. But, as in every other chattel mortgage, the title to the entire stock, is in the mortgagee until the debts are paid. It is clear, therefore, that Green, the mortgagor and judgment debtor, had no interest in the mortgaged property, which was the subject of levy and sale by execution.

If there was any question as to the fact of the plaintiff’s possession, or of fraud in the making of the mortgage, as resjiects the creditors of the mortgagors, it was a question for the jury to determine and not for the court. I do not see that any question properly arises here, upon the complaint, or in regard to the identity of the property levied upon by the defendant, and replevied from him by the plaintiff The complaint alleges the taking of the store of goods, particularly mentioned in the affidavit theretofore served upon the defendant in the action. The affidavit, for the purpose of describing the goods particularly, is thus made part of the complaint, and contains a schedule in detail of the various kinds and items. The taking of these goods is justified by the defendant’s answer. Ho question was made upon the trial, that the same goods levied upon, were not in fact the goods which were taken and redelivered to the plaintiff, by virtue of the process and proceedings in this action. All the evidence in regard to the identity of the property, was out, when the plaintiff rested, and I am unable to perceive that there was any room for doubt as to what property had been levied upon, and replevied from the defendant.

I am of the opinion, therefore, that the plaintiff, as the case stood, was entitled to recover, and that the nonsuit was erroneous.

A new trial should therefore be granted with costs to abide the event.

Hew trial granted.