Bueb v. Geraty

The question involved on this appeal is the priority of the respective chattel mortgages of the plaintiff and the defendant Thomas Connery. John J. Geraty and George H. Ball were co-partners in business in the city of New York. Geraty lived in New York county, while Ball resided in Kings county. The firm, in March, 1895, for money loaned, gave its promissory note in the sum of $1,000, payable on demand, to one Kerwin, who subsequently indorsed it over to the defendant Thomas Connery. In April, 1895, a second demand note in the sum of $2,509 was made to the defendant Thomas Connery, likewise for money loaned. On August 27, 1895, John J. Geraty, in the name of Geraty & Ball, executed a chattel mortgage to the defendant Connery to secure both his and the Kerwin loans. This mortgage was filed on the following day in the office of the register of the county of New York, the county where Geraty lived, but was never filed in Kings county, the place of Ball’s residence. On June 15, 1895, George H. Ball made his promissory note in the sum of $1,590, payable in four months. This was indorsed in the firm name, and both Geraty and Ball requested the plaintiff to add his indorsement that the note might be discounted at the Fifth Avenue Bank. This was done. Three months later, George H. Ball, in the name of Geraty & Ball, executed a chattel mortgage, covering the same property, to the plaintiff as security for the note. This mortgage, dated September 16, 1895, was filed both in New York and Kings counties on September 20, 1895. The note given to* the defendant Thomas Connery having been protested on August 28th, proceedings were instituted on September 20, 1895, to foreclose the mortgage given, and he subsequently took possession of the chattels under and by virtue of these proceedings. The note indorsed by the plaintiff having been likewise protested on September 15th, he made formal demand of the defendant Connery and of' the defendant Geraty—who, with Connery, claimed ownership at the time of the demand—for the delivery of the chattels. This being re: fused, the present action in replevin was instituted. On the trial the defendants claimed the title to the chattels under the foreclosure of the mortgage given by the firm of Geraty & Ball to Thomas Connery, while the plaintiff claimed that the mortgage was void as to him, as it had not been properly filed in the counties where the several members of the firm resided. A verdict was directed for the plaintiff, and the defendant Connery has appealed from an affirmance by the general term to this court.

The statute invoked by the plaintiff and in force when the several mortgages were recorded is,Laws 1833, c. 279; §§ 1, 2, and reads:

“Section 1. Every mortgage, or conveyance intended to operate as a mortgage, of goods and chattels hereafter made, "which shall not be accompanied by an immediate delivery and be followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith, unless the mortgage, or a true copy thereof, shall be filed as directed in the succeeding section of this act.

“See. 2. The instruments mentioned in the preceding section shall he filed in the several towns and cities of this state, where the mortgagor therein, if a resident of this state, shall reside at the time of the execution thereof; and if not a resident, then in the city or town where the property so mortgaged shall be at the time of the execution of such instrument. :S * *”

We think that, under this statute, the defendant Connery’s mortgage would be void against a subsequent mortgagee in good faith, but that the plaintiff has not established that such a bona fide title vested in him. The question, we believe, is new in this state as to where a mortgage on partnership personal property must be recorded to give it validity against creditors, subsequent purchasers, and mortgagees in good faith. The New York statute, however, has been construed in the United States supreme court (Stewart v. Platt, 101 U. S. 731 ), where the rule has been laid down that “a chattel mortgage, executed by a firm upon firm property, is void, under the New York statute, as against creditors, .subsequent purchasers, and mortgagees in good faith, unless filed in the city or town where the individual members of the firm severally reside.” 101 U. S., at page 737. In those states where, under similar statutes, the question has arisen, the same rule has been announced. Granger v. Adams, 90 Ind. 88 ; Briggs v. Leitelt, 41 Mich. 79 , 1 N. W. 942 ; Aultman v. Guy, 41 Ohio St. 598 ; Rich v. Roberts, 48 Me. 548 ; .and see De Courcey v. Collins, 21 N. J. Eq. 357 . The case of Hubbardston Lumber Co. v. Covert, 35 Mich. 254 , has been cited as laying down a contrary rule; but a careful examination of that case will show that it is confined to a mortgage made by a resident partner, where the other partner lives abroad. Besides, a subsequent case in the same state (Briggs v. Leitelt, supra), restricts the application of the rule of the Hubbardston Case to its particular facts, and declares it inapplicable to cases where all the partners reside in the state. The reasoning underlying the accepted rule is that the residence of the mortgagor—i. e. the partnership—is that of the individual members composing the firm. In the eye of the law, a partnership has no existence, as an entity, apart from its component members. Lindl. Partn. (2d Am. Ed.) bk. 1, c. 6, § 1. A firm sues and is sued in the names of the several partners, and in all legal proceedings is reached only through its individual members. The fact that the statute in regard to filing (supra) uses the word “mortgagor” is unimportant, in view of the provision of the statutory construction law that “words in the singular number include the plural.” Laws 1892, c. 677, § 8; Troy Waste Mfg. Co. v. Saxony Woolen Mills, 4 Misc. Rep. 245 , 24 N. Y. Supp. 693 . The partnership, as composed of its individual members, is the mortgagor. The contention that “the firm,” as such, was the mortgagor, and that its residence or domicile was in the city, of New York, where the Connery mortgage was filed, is met by the statement of Mr. Justice Harlan (Stewart v. Platt, supra) that “the statute, upon its face, furnishes persuasive evidence that its framers intended to make a sharp distinction between the place where the property might be at the time of the execution of the mortgage and the place of the mortgagor’s residence. If he be a nonresident of the state of New York, the mortgage may be filed in the town or city where tire property shall be at the time of the execution of the mortgage. If he be a resident,

It follows, therefore, that the Connery mortgage, to have been valid against-creditors, subsequent purchasers, and mortgagees in good faith, should have been filed both in New York and Kings counties.' If the plaintiff had been a mortgagee in good faith, then, as his mortgage was properly filed, and that of Connery not, the latter’s would have been absolutely void as against him. But it is very clear from the evidence that the plaintiff was not, within the meaning of the statute, a mortgagee in good faith, as his security was' given for an antecedent obligation. The consideration, instead of being present, was entirely past. The transaction with reference to the note took place on June 15, 1895. The chattel mortgage was given on September 10, 1895.' According to the record, the idea of giving a mortgage, and its execution, jvere contemporaneous. The respondent contends that the language used at the time of the original transaction imported an agreement to make a mortgage as part consideration of the plaintiff’s indorsement, and that he thereby became a mortgagee in good faith. Even if we concede this proposition sound in law (Harder v. Plass, 57 Hun, 540 , 11 N. Y. Supp. 226 ), it is unsupported in fact. The entire evidence on the subject of .this alleged agreement is embraced in the following testimony of the plaintiff:

“I told them I don’t like to indorse a note, as I had never done it before. Mr. Geraty and Mr. Ball both said I need not be afraid, that they would secure me, that they would take care of the note when it became due, and would take care I should not suffer any loss at all.”

It would be doing considerable violence to this language to construe it into an agreement for a mortgage. It would be distorting it, not construing it. "When the chattel mortgage was given, it was a gratuitous security, for which, at the time, the plaintiff gave, and the mortgagor received, nothing. That which was secured was an antecedent debt; and the plaintiff, therefore, was not, under the statute, a mortgagee in good faith. Jones v. Graham, 77 N. Y. 628 ; Doig v. Haverly, 92 Hun, 176 , 37 N. Y. Supp. 455 ; Button v. Rathbone, 126 N. Y. 187 , 27 N. E. 266 . It cannot avail the plaintiff that the Connery mortgage was likewise given for an antecedent indebtedness. It was prior in date to the plaintiff’s, and therefore valid against Mm, unless he should prove himself to have been a mortgagee in good faith,- Besides, the defendant Connery was in possession; and, in replevin, actual possession is evidence of title against every one who does not show a better title. 20 Am. & Eng. Enc. Law, 1054, and cases cited. The judgment must be reversed.

Judgment reversed, and a new trial ordered, with costs to the appellants to abide the event. All concur.