Ledoux v. East River Silk Co.

The plaintiff claims the right to foreclose a chattel mortgage given by the insolvent East River Silk Company November 20, 1894, to secure the payment of $20,000 and interest at the rate of 10 per cent. The mortgage was given upon machinery, tools, and fixtures of the silk company at Astoria, Long Island. At the request of the mortgagor, and by consenting delay of the mortgagee, the mortgage was not filed until June 14, 1895. On the morning of the 13th of June, 1895, at 8:30 a. m., the defendant the Bank of America delivered an attachment issued against the silk company to the sheriff of Queens county; and at 9 o’clock on the morning of the same day the defendant the National Union Bank delivered an attachment to the sheriff of Queens county against the silk company. A levy was made upon the property covered by the chattel mortgage, by the sheriff of Queens county, at 9:45 on the morning of the 13th of June, 1895. On the same 13th of June, at 11 o’clock in the morning, the defendants Green and Day were appointed receivers of the silk company in New Jersey, it being a New Jersey corporation; and on the same day, at 4 o’clock in the afternoon, the same receivers were appointed by the supreme court in this state. By agreement of the parties claiming the property covered by the mortgage, such property has been sold, and the proceeds deposited with the United States Trust Company, subject to the liens of the parties claiming

The claim of the plaintiff that there is no valid proof of indebtedness of the company to the attaching creditors cannot be sustained. The granting of the attachment itself, though ex parte, is an adjudication of indebtedness, and cannot, in a struggle for priority of liens, be attacked collaterally. People v. Van Buren, 136 N. Y. 252 , 32 N. E. 775 ; Hall v. Stryker, 27 N. Y. 596 . The judgments, though obtained subsequent to the commencement of this action, are, in the absence of fraud or collusion, conclusive evidence of the indebtedness of the silk company to the banks. Equipment Co. v. Blair, 145 N. Y. 607 , 610, 39 N. E. 962 ; Candee v. Lord, 2 N. Y. 269 . The levy made by the sheriff was sufficient to make him a trespasser in case his authority to levy had been insufficient. Roth v. Wells, 29 N. Y. 471 , 485. There is no evidence to justify a finding that that levy became dormant. If it had, I do not see how it could restore the validity of a mortgage which was absolutely void as against the creditors, so as to permit in this action the extinguishment of their rights. The claim of the plaintiff’s counsel that because a real-estate mortgage may be held to be superior in point of time to the liens of judgment creditors, where it was given in pursuance of a legal obligation to give such mortgage accruing prior to the lien of the creditors (Spring v. Short, 90 N. Y. 538 ), the same rule should apply to the case of a chattel mortgage, cannot be successfully maintained. There

Nor do I see how the plaintiff would be helped greatly if he had the right to attack the existence of the indebtedness to the Bank of America. The fund in question is insufficient to pay the claims of either of the banks; and, if the attachment and judgment of the Bank of America does not absorb legally the fund remaining, that fund would simply drop into the claim of the National Union Bank; and, if the claims of both banks were open to contest, the receivers would take. No contest is here had between the three defendant claimants, and the only contention arises between their claims and that of the plaintiff. In any view which I can take of this case, the plaintiff has no right to a judgment extinguishing the claims of the defendants to the personal property covered by the mortgage for the substituted fund; and therefore, as to all the defendants except the silk company, judgment must be rendered dismissing the complaint, with costs.

Complaint dismissed, with costs.