Spaulding v. Keyes — 23 N.Y. St. Rep. 454

Majority

p. 454

Ellen Spaulding, Resp’t, v. Marquis L. Keyes and ano., App’lts.

(Supreme Court, General Term, Fourth Department,

Filed May 12, 1889.)

Headnote

1. Husband and wife—Gift to wife—Chattel mortgage.

A gift by a husband to Ms wife, of money belonging to him, is valid, and cannot be reached by his creditors, and where the wife loans such money to her husband, taking in return, as security, a chattel mortgage, . the consideration given for the mortgage is sufficient to support it.

2. Chattel mortgage—Validity of—When determination of jury FINAL.

In an action to recover damages for a wrongful sale of the property mortgaged by virtue of an execution issued upon a judgment against plaintiff’s husband, it was claimed that the mortgage was void, on the ground of fraud. Held, that the finding of the jury that the mortgage was made in good faith, when sustained by the evidence, is final. .

3. Same—When sale by mortgagor valid.

In the absence of any agreement or understanding that a mortgagor may sell the property mortgaged, and apply the proceeds to his own use, a sale by him, and the application of the proceeds in discharge of the mortgage, is legal, and such sale cannot be set up to impair the validity of the mortgagee’s rights under the mortgage.

Appeal from a judgment entered in Otsego county, on the verdict of a jury, and from an order denying a motion for a new trial, made on the judge’s minutes, and heard on a case containing all the evidence.

James A. Lynes, for app’lts; Palmer & Mattice, for resp’t..

This was an action to recover damages for the wrongful sale of certain personal property to which the plaintiff claimed title under a chattel mortgage given her by her husband, William Spaulding. The property in

p. 455

question was sold by virtue of an execution issued upon a judgment against the plaintiff’s husband. The plaintiff’s mortgage was given and filed in the proper clerk’s office before the entry of the judgment upon which such execution was issued. The principal defenses interposed in this action were, first, that the plaintiff’s mortgage was without consideration; second, that it was given with the intent to hinder, delay and defraud the creditors of the mortgagor.

The uncontradicted evidence was to the effect that the plaintiff loaned money to her husband at various times, which, with the interest, amounted to about the sum for which the plaintiff’s mortgage was given, and that such mortgage was given to secure the payment of the money thus loaned and the interest thereon.

It also appeared that this money originally belonged to the plaintiff’s husband, but he received it as a bounty for enlisting as a volunteer in the United States service, and gave it to his wife. The gift was valid, and the money could not be reached by his creditors. Whiting v. Barrett, 7 Lans., 106 ; Youmans v. Boomhower, 3 T. & Cook, 21.

The consideration for the plaintiff’s mortgage was sufficient to uphold it.

The claim most earnestly pressed by the appellant is, that the mortgage was made with an intent to hinder, delay and defraud the creditors of William Spaulding, and was, consequently, void as against the judgment and execution under which such sale was made. This question was directly at issue on the trial, and the jury found that the mortgage was made in good faith, and without any intent to hinder, delay or defraud creditors. The evidence was sufficient to sustain this finding, and the determination of the jury should, we think, be regarded as final.

But it is claimed that the mortgage was void because the ' mortgagor was permitted by the mortgagee to sell the property mortgaged. If there had been an agreement or understanding between the parties that the mortgagor might sell the property and apply the proceeds to his own use, the transaction would doubtless have been fraudulent. Potts v. Hart, 99 N. Y., 168 .

But in this case the understanding and agreement, as. shown by the evidence, was, that the proceeds of the property as sold should be paid to the plaintiff and applied in discharge of her mortgage, which was done. Such an agreement was legal, and did not impair the validity of the plaintiff’s mortgage. Brackett v. Harvey, 91 N. Y., 214 .

Judgment affirmed, with costs.

Habdin, P. J., and Merwin, J., concur.