Deeley v. Dwight — 43 N.Y. St. Rep. 409

Majority

p. 409

Robert Deeley et al., Resp’ts, v. John Dwight et al., App’lts.^[1]

(Court of Appeals, Second Division,

Filed March 8, 1892.)

Headnote

1. Chattel mortgage—Validity.

The legal title to property not in existence actually or potentially cannot be transferred by way of sale or mortgage.

2. Same—Property not yet in existence.

One G. agreed to procure and sell to defendants certain machinery, and they paid him therefor. Subsequently the machinery was manufactured

p. 410

by plaintiffs for G., and he delivered it to defendants, who set it up in their factory. Before much, if any, of the machinery was manufactured, G. gave his note and a chattel mortgage to plaintiffs, but they did not file the; latter until a year after, the defendants having no prior notice of plaintiffs' claim. Meld, that the machinery not having been manufactured at the time G. gave the chattel mortgage, he had no title to it, and the instrument did not vest the legal title in plaintiffs, nor did it create a legal lien upon the property described therein.

Appeal from, an order of the general term of the court of common pleas of the city and county of New York, which set aside a verdict directed at circuit for the defendants and granted a new trial, with costs to abide the event.

In the autumn of 1883 Joseph Grandolfo contracted to sell machinery, to be manufactured and thereafter delivered, to the defendants for $5,666. In performance of the contract Grandolfofurnished additions and performed labor for which the defendants, agreed to pay $557.50., making the full amount of the indebtedness $6,223.50, which the defendants paid as follows: October 23,. 1883, check $2,250; November 22, 1883, check $1,500; December 11, 1883, check $2,473-.50.

The machinery was manufactured by the plaintiffs for Grandolfo and was delivered to him at various dates in February, March and April, 1884, for which he agreed to pay the plaintiffs $4,700. As the different pieces of machinery were delivered toGrandolfo he delivered them to the defendants, who set them up in their factory. February 21, 1884, before much, if any, of the machinery was manufactured, Grandolfo gave his promissory note, due on demand, to Robert Deeley, one of the plaintiffs, for $4,700, the agreed purchase price, to secure the payment of which Glandolfo on that day executed and delivered to Robert Deeley a. chattel mortgage upon the machinery then manufactured and that which was afterwards to be made and delivered pursuant to the oral contract theretofore entered into between them. The-mortgage was in the usual form, and recited that the articles are “ now in the possession of the said party of the first part in the-building of Messrs. John Dwight & Co., First avenue, between One Hundred and Twelfth and One Hundred and Thirteenth-streets in the city of New York.”

The mortgage contained the usual clause selling the goods to the mortgagee upon condition, and as security, and that in case default was made in payment, power was given to take and sell the goods. Afterwards .$1,500 was paid on the note, and May 13, 1885, the mortgagee endorsed a statement upon the mortgage that there was then due and unpaid thereon $4,319.75, and on the same day filed it in the office of the register of the city and county of New York. The mortgage had not been previously filed, and the defendants had no notice of its existence nor of the plaintiffs’ claim, and before it was filed defendants had. expended $5,355.27 in setting it up, in other machinery and improvements to be used in connection with that sought to be recovered.

A. P. Ketchum, for app’lts; Geo. P. HotaMng, for resp’ts.

An action to recover damages for the conversion of chattels is a strictly legal one, which cannot be maintained unless the plaintiff is entitled to the immediate possession of the property, if in existence. Except as provided by statute, possession by the lienor of chattels on which the lien is claimed is indispénsable to support a common law lien. One having such a lien can maintain trover if the property is wrongfully taken or withheld from his possession, but such an action will not lie to enforce an equitable lien as against the owner of the legal title who remains in possession of the property and has not contracted it to the lienor. The instrument under which the plaintiff claims to recover is in form a chattel mortgage. Gandolfo, who executed it, assumes to transfer the legal title to the machinery to Robert Deeley, the plaintiff’s assignor, subject to be defeated upon the payment of $4,700. But the machinery not having been then manufactured Gandolfo had no title to it, Andrews v. Durant, 11 N. Y., 35 ; Comfort v. Kiersted, 26 Barb., 472 , and the instrument did not vest the legal title of the machinery in Deeley, nor did it create a legal lien upon the property described therein. Gardner v. McEwen, 19 N. Y., 123 ; Jones v. Richardson, 10 Met., 481 ; Pettis v. Kellogg, 7 Cush., 456 ; Otis v. Sill, 8 Barb., 102 ; Conderman v. Smith, 41 id., 404; Thomas Chat. Mort., § 137; Jones Chat. Mort., § 138.

We find no case which holds that the legal title to property not in existence actually or potentially can be transferred either by way of sale or mortgage.. That an equitable lien may be created on property to be brought into existence is well settled, and an action to foreclose the lien may be maintained. It was said in Coats v. Donnell, 94 N. Y., 177 , “A contract for a lien-on property not in esse may be effectual in equity to give a lien as between the parties when the property comes into existence, and where there are no intervening rights of creditors or third persons, seems to be established by several decisions in this court.”

Kribbs v. Alford, 120 N. Y., 519 ; 31 St. Rep., 564 , which is relied on by the respondent, is not in conflict, but in harmony with these views. It was there said : “ Invalidity at law imports nothing more than that a mortgage of property thereafter to -be acquired is ineffectual as a grant to pass the legal title. A court of equity, in giving effect to such a provision, does not put itself in conflict with that principle.. It does not hold that a conveyance of that which does not exist operates as a present transfer in equity any more than it does in law. But it construes the instrument as operating by way of present contract to give a lien, which, as between the parties, takes effect and attaches to the subject of it as soon as it comes into the ownership of the party. ■Such we deem the rule to be in equity in this state.” McCaffrey v. Woodin, 65 N. Y., 459 ; Wisner v. Ocumpaugh, 71 id., 113; Coats v. Donnell, 94 id., 168, 177; Hale v. Omaha Nat. Bank, 49 id., 626, 632.

It follows from these views that plaintiffs failed to establish a legal title either as general or special owners, and were not entitled to recover.

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The order should be reversed and the judgment entered on the verdict affirmed, with costs.

All concur.