Streeter v. Ward — 12 N.Y. St. Rep. 333

Majority

p. 333

Emily P. Streeter and Ella A. Parks, App’lts, v. John L. Ward, Resp’t.

(Supreme Court, General Term, Fourth Department,

Filed July, 1887.)

Headnote

Lease—Agreement that lessor shall have a lien on the growing crops—Filing of same—Effect of—Not a chattel mortgage.

The plaintiffs leased to one Jane Flanders a farm. The lease contained the following clause: “ And it is hereby agreed that said parties of the first part shall have a lie : as security for the payment of the rent aforesaid, upon ail the crops which are or may be put on the said demised premises, and such lien may be enforced on the non-payment of any of the rent aforesaid, by t e taking and sale of such property,” etc. The lessee subsequently sold to the defendant some hay. The rent had not been paid. The plaintiffs seek to enforce the lien contained in the lease. Held, the security clause in the lease created a valied lien upon the hay, in the nature of the lien created by a chattel mortgage, but did not transfer, upon the execution of the lease or upon default in the payment of the rent, the title to the hay which the plaintiff could not acquire under this clause, except by seizing the property or by foreclosing the lien. On the execution of a chattel mortgage, the title is transferred to the mortgagee, but under an instrument in the nature of a chattel mortgage, the so-called mortgagee a quires no title until after possession is taken, or until after the instrument is foreclosed.

The plaintiffs leased to Jane Flanders a farm from April 1, 1885, to April 1, 1886, for $200 rent, $100 payable November 1,1885, and $100 payable February 1, 1886. The lease contained the following clause:

Note.—The cases of Reynold v. Ellis, 34 Hun, 47 ; Thomas v. Bacon, id., 88 , hold that, such a lease is a chattel mortgage and valid against third parties, if filed. This case shows the error of those cases. —[Ed.

p. 334

“ And it is hereby agreed that said parties of the first part should have a hen as security for the payment of the rent aforesaid upon all the crops which are or may be put on the said demised premises, and such lien may be enforced on the non-payment of any of the rent aforesaid by the taking and sale of such property in the same manner as in cases of a chattel mortgage on default thereof. Said sale to be made on six days’ notice, posted upon the demised premises,, and served upon the party of the second part, or left at said premises or at her place of residence.”

The lease was filed in the proper town clerk’s office with the chattel mortgages. In January, 1886, the defendant purchased from the lessee and removed from the farm eight and a half tons of hay (grown on the farm in 1885), at $12 per ton, $102, towards which he paid $5, leaving $97 due. The lessee has not paid the rent, and told the defendant when the hay was sold that he had not. The plaintiffs, without having an assignment of "the cause of action for the recovery of the purchase price, brought this action for its recovery in a justice’s court, where they had a judgment-for $97.48 damages, and $4.97 costs, which was reversed by the judgment of the county court, from which the plaintiffs appeal.

C. W. White, for plaintiffs, resp’ts; Scripture & Backus and Oswald P. Backus, for defendant, resp’t.

The security clause quoted from the lease: created a valid lien upon the hay in the nature of the lien created by a chattel mortgage, but this clause containing no words of sale, like a true chattel mortgage, did not transfer upon the execution of the lease or upon the default in the payment of the rent, the title to the hay which the plaintiffs could not acquire under this clause except hy seizing the property, or by foreclosing the hen. McCaffrey v. Woodin, 65 N. Y., 459 .

A chattel mortgage is an instrument by which the title to personal chattels is transferred to a mortgagee as security for the payment of a debt, or for th e performance of an obligation, with a condition that upon payment or performance the title shah re-vest in the mortgagor; but if the debt is not paid, or the obhgation is not performed, the title becomes absolute in law in the mortgagee, though redeemable in equity. Jones Chat. Mort., § 1; Thomas on Mort., 427;. Overton on Liens, § 481; Nichols v. Mead, 2 Lans, 222 , 225; Butler v. Miller, 1 N. Y., 496 , 500.

A personal mortgage is more than a mere security. It is a sale of the thing mortgaged and operates as a transfer of the whole legal title to the mortgagee, subject only to he defeated by the full performance of the condition.” Butler

p. 335

v. Miller (supra). So generally do chattel mortgages contain words of sale transferring to the mortgagee the title to the chattels, that many of the cases holding or saying that the legal title is in the mortgagee, do not call attention to this important feature; and many cases arising over instruments in the nature of chattel mortgages, but not containing words of sale call the instruments chattel mortgages without calling attention to the omission of such words, and proceed to hold, correctly, that the so-called mortgagee acquires no title until after possession is taken, or until after the instrument is foreclosed. By failing to observe the distinction between true chattel mortgages and instruments in the nature of chattel mortgages, the question as to when the mortgagor parts with, and the mortgagee acquires the legal title, has been somewhat confused by some of the cases and text writers.

The lessee was not authorized by the plaintiffs to make this sale, nor did the lessee assume to act as the plaintiffs’ agent in selling, and the plaintiffs not being the owners of the property, or the assignees of the agreed purchase price or cause of action this action cannot be maintained to recover the agreed purchase price of the hay.

The judgment of the county court is affirmed with costs.

Hardin, P. J., and Boabdman, J., concur.