Zimmer v. Wheeler — 2 N.Y. St. Rep. 325

Majority

p. 325

Frederic Zimmer, as administrator, etc., of John M. Decker, deceased, respondent, v. Caroline E. Wheeler and John Daley, appellants.

(Supreme Court, General Term, Fifth Department,

Filed June 17, 1886.)

Headnote

1. Chattel mortgage.

Where a mortgagee of personal property and her agent have knowledge of an unfiled chattel mortgage of earlier date, she cannot claim to be a mortgagee in good faith as against the owner of the prior mortgage.

2. Same—Omission to file.

The omission to file a chattel mortgage does not vitiate the mortgagee’s right against a mortgagee or purchaser with knowledge.

3. Same.

An unfiled chattel mortgage is good' as against all subsequent incumbrancers with knowledge of its existence except a judgment creditor.

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4. Same.

Where a subsequent mortgagee of personal property, at the time of receiving the mortgage in good faith, and in ignorance of the existence of the prior unfiled chattel mortgage, advances money, she is entitled to the property as against the owners of the unfiled chattel mortgage.

5. Same.

A chattel mortgage may be a valid lien as between the parties to it, although never filed.

6. Same.

A chattel mortgage given for a pre-existing indebtedness, although valid as between the parties, does not constitute the mortgagee a purchaser or incumbrancer in good faith within the statute.

7. Evidence—Competency op—Code op Civil Procedure, § 800.

Evidence given at a former trial by a witness since deceased is rendered competent by the Code of Civil procedure, § 880.

8. Same.

Evidence that a judgment was recovered against the mortgagor about the time of the execution of the chattel mortgage to the defendant, competent as being on the question of good faith.

Appeal from a judgment of the Monroe county court, entered upon a verdict in the plaintiff’s' favor, in an action of replevin, and from an order of the same court denying a motion for a new trial founded upon the judge’s minutes. The action was commenced in the municipal court, in the city of Rochester, in the name of John M. Decker, since deceased, and the plaintiff is his administrator. The property in dispute was three horses, formerly the property of Delihah D. Wheeler.

In the months of March, April and June, 1884, Mrs. Wheeler executed three several chattel morthges on the said property to secure Decker as her accommodation indorser, which was in due form and valid as between them. Subsequently, and in November, 1884, the said mortgagor executed another mortgage to the defendant, Caroline E. Wheeler, and the same was filed in the proper town clerk’s office on the twenty-fourth day of the same month, to secure an indebtedness of $1,000, of which $500 was preexisting and $500 loaned at the time the mortgage was executed and delivered. This mortgage was in due form, and as between the parties thereto was good and valid. The Decker mortgage was subsequently, and in December, filed in the proper town clerk’s office. The plaintiff claims title to the property under the Decker mortgage, and the defendant under her own. Both mortgagees permitted the property to remain in the possession of the mortgagor until on or about March, 1885, when the decedent, Mr. Decker, took the property into his possession by virtue of his own mortgage. Subsequently the defendant Wheeler, through her co-defendant Dailey, who acted as her agent, secured pos

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session of the horses, and thereupon the plaintiff brought this action of replevin.

The plaintiff gave evidence tending to show, that at the time the defendant, Mrs. Wheeler, received her mortgage she was advised and knew of the existence of the prior mortgages, which had been executed and delivered to the decedent, Mr. Decker. On this subject the decedent testified in the municipal court, and the same was read upon this trial as the evidence of a deceased witness, that, “in the summer of 1884, in August or September, I had been to the county clerk’s office with one Mary Wheeler, and we had examined them, the mortgages against Frank Wheeler’s (who was the husband of the mortgagor) real estate, and afterwards saw Mrs. Caroline E. Wheeler and told her the amount of the mortgages against him, and I also said I have three chattel mortgages against his horses, and there were other mortgages to cover all his property, she said he would soon have his farm eaten up; I said yes, that he would soon eat up his horses.” The defendant, Mrs. Wheeler, in substance, as a witness in her own behalf, denies this conversation. Frank Wheeler, the husband of the mortgagor, is a son of the defendant Wheeler, and the evidence tended to show that he acted as the agent of his mother in preparing and receiving in her behalf her mortgage and placed the same on file at her request. It was not disputed upon the trial but, that he had full knowledge of the previous mortgages executed to Decker.

The jury found the title of the property to be in the plain.tiff and assessed the value of the property at $500, and judgment was entered upon the verdict.

C. Chamberlain, Jr., for appellants; I. & J. Sullivan, for respondent.

The jury were justified hi finding as a fact that when the defendant received her mortgage, she had full knowledge of the existence of the prior one under which the plaintiff claims title to the property. The evidence tended to show that she had personal knowledge of the fact, and that her agent was fully advised of the existence of the prior incumbrances. In view of these facts and circumstances, she cannot claim to be a mortgagee in good faith as against the plaintiff’s mortgage, and in law his mortgage was prior and superior to the defendant’s. The omission to file a chattel mortgage does not vitiate the mortgagee’s right as against a mortgagee or purchaser with knowledge of the prior incumbrance. Farmers’ Loan and Trust Co. v. Hendrickson, 25 Barb., 484 . Gildersleeve v. Landon, 73 N. Y., 609 .

It has been frequently held that the statute does not

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apply to a case .where the subsequent mortgagee has actual knowledge of the existence of the prior incumbrances. The trial judge ruled that as the defendant was not a judgment creditor, that she was in no position to claim that the plaintiff’s mortgages were void, for the reason that they were not filed. This construction of the statute was correct. Jones v. Graham, 77 N. Y., 628 ; Laws of 1833, chap. 279, § 1; 3 R. S. (7th ed.), p. 2249.

The trial judge instructed the jury, in substance, that if they found that the mortgagee (Mrs. Wheeler) loaned and advanced to the mortgagor, the sum of $500, at the time she received her mortgage, and at that time was ignorant of the existence of the prior mortgages which had been executed and delivered to the plaintiff, and the transaction between herself and the mortgagor had been entered into in good faith and without intent to cheat and defraud his creditors, then she was entitled to a verdict adjudging her to be the owner of the property. These instructions were strictly accurate and fairly presented to the jury the legal questions involved.

The defendant’s counsel asked the court to charge the jury that no hen arises under a mortgage unless the same. is properly filed. The court declined so to charge, and the defendant excepted. As between the parties to the mortgage, there may be a valid hen although the same was never filed. The court also ruled that a mortgage given for pre-existing indebtedness, although in all other respects good and valid as between the parties, did not constitute the mortgagee a purchaser or an_ incumbrancer in good • faith within the meaning of the statute. This ruling was "based upon and justified by the case of Jones v. Graham ( 77 N. Y., 628 ), and the cases were cited there.

Decker, the original plaintiff, was examined as a witness in his own behalf in the municipal court, and at the time of the retrial in the county court he was deceased, and his evidence as there given was read by the plaintiff. This evidence was made competent by the provisions of section 830 of the Code of Civil Procedure.

The plaintiff was permitted to prove upon the trial that one Henry J. Sullivan recovered a judgment from Deliliah D. Wheeler, the mortgagor, on the 20th of November. 1884. This was objected to by the defendant, and the court received the evidence for the limited purpose of establishing that upon that day a money judgment was recovered against Mrs. Wheeler. I think this was competent evidence as bearing upon the question of good faith on the part of the mortgagor in executing and delivering the mortgage, under which the defendant claims title, and proof that execution was issued thereon against her property was prop

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erly received for the same purpose. The rendering of the judgment and. the filing of the chattel mortgage occurred about the same time.

We have examined each and every one of the many other exceptions taken by the defendant upon the trial, and they present no error. •

Judgment and order affirmed, with costs.

Smith, P. J„; Haight and Bradley, JJ., concur.