Manchester v. Tibbetts — 19 N.Y. St. Rep. 299

Majority

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Sarah M. Manchester, Resp’t, v. J. Warren Tibbetts, App’lt.

(Supreme Court, General Term, Fourth Department,

Filed September, 1888.)

Headnote

1. Chattel mortgage—When there is not delivery of mortgaged PROPERTY IT IS PRESUMPTIVELY VOID.

This action was brought to recover for the conversion of personal property described in a chattel mortgage executed by the mortgagor to his wife, the plaintiff in this action, to secure a promissory note. There was a prior mortgage bearing the same date and resting upon certain of the same property. Both were filed in the proper town clerk’s office. The defendant was sheriff and as such received an execution in favor of certain judgment-creditors of the mortgagor and made a levy upon the property described in plaintiff’s mortgage and sold the same, having refused to deliver it to the plaintiff on demand made subsequent to the levy and prior to the sale. Held, that the mortgaged goods not having been delivered to the mortgagee and continued in her possession, the mortgage was presumptively fraudulent and void as against the creditors of the mortgagor.

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2. Same—Burden of proof.

Held, that such presumption would he absolute in the absence of satisfactory proof on the part of the plaintiff that it was made in good faith and without any intent to defraud creditors.

3. Same—To wife is valid if made in good faith.

Held, that if the indebtedness to the plaintiff existed and the note and mortgage were made in good faith and delivered to her, and the mortgage filed as required by statute, the transfer to her was as valid as though made to another party under similar circumstances.

4. Same—Not invalidated by sale of mortgaged property by mortgagor, IF NOT BY PERMISSION OF MORTGAGEE.

Held, that in the absence of some agreement in the mortgage or by parol, giving such permission to the mortgagor, the fact that he sold some of the mortgaged articles was not sufficient to avoid the mortgage.

5. Same—Conversion—Demand of possession of converted property — By whom properly made.

Held, that at the time of the execution of the plaintiff’s mortgage the other mortgage mentioned not being due, the legal title to the property therein described remained in the mortgagor at that time, and that the plaintiff’s mortgage had become past due at the time of the demand made by the plaintiff of the sheriff, demand was properly made by her, right of possession having been secured to her by the mortgage.

6. Same—Not vitiated by insolvency of mortgagor at time of execution.

Held, that the fact that the mortgagor was insolvent at the time he executed the mortgage to the plaintiff was not sufficient to vitiate it, and the paramount question is, was the mortgage given for an actual tona fide indebtedness with an honest intention of securing that indebtedness to the plaintiff without any intent to hinder, delay or defraud creditors.

Appeal from a judgment entered upon the report of a referee in Tompkins county.

Action to recover for the conversion of personal property described in a chattel mortgage executed by Charles W. Manchester, October 28, 1886, to his wife, Sarah M. Manchester, to secure a promissory note of $1,016.06.

Upon the property covered by the plaintiff’s mortgage there was a prior mortgage to one King, on which there was due something over $300. The King mortgage bore the same date as the plaintiff’s mortgage. Both were filed in the proper town clerk’s office.

The referee’s findings of fact and law sustain the plaintiff’s mortgage. The defendant was sheriff, and as such received an execution in favor of certain judgment-creditors of Charles W. Manchester and made a levy upon the property described in the plaintiff’s mortgage, and sold the same, having refused to deliver the same to the plaintiff on demand therefor, made prior to the sale and subsequent to the levy.

D. P. Van Vleet, for app’lt; Simeon Smith, for resp’t.

Whether or not the plaintiff’s mortgage was void as against the creditors of the mortgagor was made a prominent question of fact upon the trial. The de

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fendant was entitled to the benefit of the presumption declared in the statute while such question was under consideration. That presumption would “be conclusive evidence of fraud, unless it be made to appear on the part of the person claiming under such sale or assignment that the same was made in good faith and without any intent to defraud creditors.” 2 R. S., 136, § 5; Look v. Comstock, 15 Wend., 244 ; Edgell v. Hart, 9 N. Y., 213 ; Russell v. Winne, 37 id., 591.

The onus was upon the plaintiff to establish by evidence satisfactory that the mortgage was “made in good faith and without any intent to defraud creditors.” With a view of establishing that proposition she gave testimony tending to show the origin of the indebtedness which she held against her husband, the amount due thereon, and that for the purpose of securing that indebtedness he •executed to her a promissory note and the chattel mortgage on the 25th of October, 1886.

If such indebtedness actually existed, and the note and mortgage were made in good faith, ana delivered to her, and the mortgage filed as the statute requires, as to the filing of which no question was made, the transfer to her was as valid as though the transfer had been made to another party under similar circumstances. Savage v. O’Neil, 44 N. Y., 298 ; Seymour v. Fellows, 77 N. Y., 178 ; Woodworth v. Sweet, 51 N. Y., 8 ; Rawson v. Pennsylvania Railroad Co., 48 N. Y., 216 .

Upon the question of fact of whether the indebtedness •existed, and,whether the mortgage was made in good faith, to secure the plaintiff, her testimony was given, and the testimony of her husband, and certain facts and circumstances were disclosed tending to sustain the position taken by her in respect to the chattel mortgage. On the other hand, certain facts and circumstances were disclosed in the evidence which form certain indicia of fraud. It was the province •of the referee to determine where the truth lay in respect to the allegations of good faith on the one side, and the allegations of fraud on the other.

While it is true that this court is authorized to review the evidence and to reach a conclusion thereon adverse to the conclusion reached by the referee, it is also the duty of the court in considering the evidence and circumstances to give influence to the finding of the referee. Sperry v. Baldwin, 46 Hun 124 ; 11 N. Y. State Rep., 609.

The referee saw the witnesses; heard them testify, and had somewhat better opportunity of judging as to whether they_ were truthful or not than this court can have. After reading the evidence and allowing the findings of the referee to have its proper influence upon us, we are not inclined to overturn his findings of fact. He has specifically found that there was no agreement or understanding bet

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ween the parties to the mortgage at the time of the execution thereof other than such as was stipulated on the face of the mortgage. In the absence of such a parol agreement, the circumstance disclosed in the evidence that the mortgagor sold some of the articles, may not be held sufficient to avoid the mortgage. Southard v. Benner, et al., 72 N. Y., 424 ; Brackett v. Harvey, 91 N. Y., 214 ; Sperry v. Baldwin (supra), 125 .

Second. When the plaintiff’s mortgage was executed, the mortgage to King was not due, and legal title therefore to the property described in the King mortgage remained in the mortgagor at the time of the execution of the mortgage to the plaintiff, and at the time the plaintiff’s demand was made upon the defendant for the property.

Subsequent to the execution of the mortgage to the plaintiff she made some efforts to take .possession of the property covered by her mortgage. While the circumstances are very slight to indicate that she assumed control and possession of the property, if her chattel mortgage was valid, her right to have the possession of the property at the time the demand was made was secured to her by her mortgage, inasmuch as her mortgage was past due, having been given payable one day aftér its date, and the demand was made several days after ¿he date of the mortgage.

Third It seems upon the whole evidence given upon the trial the referee was of the opinion that the property sold by the defendant was fairly worth “over and above the claims thereon, prior to the plaintiff’s mortgage,” the amount due upon plaintiff’s mortgage.

When the plaintiff rested no motion for a nonsuit was made, and no exceptions were taken upon the trial which are deemed worthy of discussion by the appellant, or which, upon examination, are found to be of any avail to the appellant.

Fourth. The circumstances that the mortgagor was insolvent at the time he executed the mortgage to the plaintiff is not sufficient to vitiate the plaintiff’s mortgage.

The paramount question is, whether the mortgage was given for actual bona fide indebtedness, and with an honest intention of securing that indebtedness to the plaintiff without any intent to hinder, delay or defraud other creditors. Livermore v. Northrup, 44 N. Y., 107 ; Jaycox et al. v. Caldwell et al., 51 id., 395; Syracuse Chilled Plow Co. v. Wing, 85 id., 421.

After the referee made up his mind to believe the testimony of the plaintiff and her husband upon the subject of the plaintiff’s chattel mortgage, we think he was warranted in finding the facts which sustain the mortgage.

While this case has some suspicious circumstances; while some features of it are likely to start a suspicion that the

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transaction between the plaintiff and her husband was fraudulent, we are not prepared to say that the referee has found upon the essential question against the weight of evidence. His report is therefore sustained.

Judgment affirmed, with costs.

Follett and Martin, JJ., concur.