Rogers v. Dwight — 54 N.Y. St. Rep. 920

Majority

p. 920

Jane D. Rogers, App’lt, v. Thomas Dwight, Resp’t.

(Supreme Court, General Term, Fourth Department,

Filed, September 23, 1893.)

Headnote

Chattel mortgage—Temporary removal prom clerk’s office.

A temporary removal of a chattel mortgage from the clerk’s office by the mortgagee in obedience to a subpmna duees tecum in supplementary proceedings brought by a judgment creditor of the mortgagor, without intent to withdraw it from the files, and a failure by mistake or accident to return it in four days, does not aifect its"validity as to such creditor.

.Trial at the Chenango circuit. Verdict for the defendant. Plaintiff alleges that on the 3d of August, 1885, she was the owner of thirteen dairy cows of the value of $325 ; six yearling heifers of the value of $90, and two jmarling bulls of the value of $20, and that the defendant on that day seized, carried away and converted the property to his use. In the defendant’s answer it is alleged that on the 15th of December, 1884, one James O. Hammond owned the cows and personal property described in the complaint, and to secure an indebtedness to the defendant of about $1,000 “the said James O. Hammond duly sold and assigned the same to this defendant by a chattel mortgage duly executed as security for the payment of the said $1,000, payable on or before April 1, 1886; * * * and that on the 17th day of December, 1884, this defendant caused the said chattel mortgage to be duly filed and entered in the town clerk’s office; ” and that after the removal of the mortgagor and his wife to the town of Oxford with the said property, “ this defendant caused a copy of said chattel mortgage to be duly filed and entered in the office of the town clerk of the said town of Oxford. That the said chattel mortgage and the said copy respectively have since remained on file and duly entered in the said offices of the said town clerks of the said towns respectively." It is also alleged that thereafter the defendant seized the property under the chattel mortgage; sold the same at public auction “ and that on such sale this defendant became the purchaser of such property.” It is alleged that the plaintiff recovered a judgment against Hammond, and issued an execution thereon which was returned wholly unsatisfied, and that the plaintiff commenced supplementary proceedings against Hammond before the county judge of Chenango county, who appointed a referee to examine Hammond as to his property and

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take such evidence as might be produced, and the 12th day of June, 1885, was appointed for taking such evidence at Oxford.

It is also alleged that the plaintiff knew that defendant’s mortgage was filed in the clerk’s office, and that on or about the 11th day of June, 1885, plaintiff and her attorney “caused a subpoena duces tecum to be issued and served upon this defendant commanding him under severe penalties to bring and produce the said chattel mortgage before the said referee on the said 12th day of June.” It is also alleged that in pursuance of such subpoena the defendant, on the 12th of June, informed the clerk of such subpoena and obtained permission of him to take and produce said chattel mortgage before the referee “ as his agent or deputy.” It is also alleged “ that on the 17th day of June, 1885, the said plaintiff and her said agent and attorney procured the sheriff to levy upon the said property by virtue of the said execution and well knowing that the said James 0. Hammond did not own any interest therein.” It is also alleged that the sheriff, on the 31st of July, 1885, at the request of the plaintiff, sold the .property mentioned in the complaint and at the sale. “ the plaintiff assuming and pretending to become the purchaser thereof.” Upon the issues framed by the pleadings the question was presented, at the trial whether the plaintiff was the owner of the property or whether the defendant was the owner thereof by virtue of his chattel mortgage and the foreclosure thereof and purchase thereunder. A verdict was rendered for the defendant. A motion was made for a new trial on the minutes and denied, an opinion being delivered by the trial judge. Judgment was entered for the defendant dismissing the plaintiff’s complaint, and the plaintiff appeals from the judgment and the order denying a motion for a new trial.

The following is the opinion of the court below:

This action was for the conversion of a quantity of livestock. The defendant denied the plaintiff’s title, and alleged ownership in himself. The property which was the subject of this litigation was formerly owned by James 0. Hammond. The plaintiff claims title by virtue of a levy and sale under an execution upon a judgment against Hammond. The defendant bases his title upon a sale under a chattel mortgage given by Hammond to him. The chattel mortgage under which defendant claims was duly made and filed in the proper clerk’s office before the entry of plaintiff’s judgment, and it is substantially conceded by the parties that, if defendant’s mortgage had remained continuously in the clerk’s office where it was filed, his title would have been superior to that acquired by the plaintiff. After the plaintiff had obtained her judgment she issued an execution thereon, which was returned wholly unsatisfied; whereupon she instituted proceedings supplementary to execution against Hammond, and duly subpoenaed the defendant to produce his chattel mortgage on so-hearing by the referee before whom such proceedings were pending. The defendant, in obedience to the requirements of such subpoena, went to the clerk’s office where his mortgage was filed, obtained

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the same, and produced it before the referee. The defendant lived about seven miles from the place "where such reference was held. Upon his return home the defendant, who was a physician, was immediately called away to attend one of his patients. He omitted to return his chattel mortgage "to the clerk’s office until after the plaintiff had caused the property to be levied on under a second execution issued by her on said judgment. Thus the question presented is •. Did the plaintiff, by virtue of such levy -and sale under it, obtain a title to this property which was superior to that acquired by the defendant upon a sale under his mortgage? The court, upon the trial, declined to so hold as a matter of law. It, however, submitted to the jury the question whether the defendant, when he took his mortgage from the clerk’s office, intended to withdraw it from the files of that office, and, if he did not, whether he returned it within a reasonable time, and also whether its retention by him was the result of mistake, oversight or accident. The court, in substance, charged that if the defendant intended to withdraw such mortgage from the files of the clerk’s office, or if he did not so intend, but did not return it within a reasonable time, or if he was guilty of negligence in not returning it, or its retention by him was not the result of mistake, oversight or accident, then the plaintiff acquired a title to the property superior to that of the defendant, and was entitled to "a verdict. The jury, by its verdict, in effect found that the defendant did not intend to withdraw his mortgage from the files of the clerk’s office; that he returned it within a reasonable time, and was guilty of no negligence; but that its retention was the result of oversight or accident. If there were any questions of fact for the jury, I think those submitted were proper, and that they were properly submitted. If the want of due diligence on the part of the defendant in returning such mortgage to the clerk’s office forfeited his rights under his mortgage as against "the plaintiff, the question of his negligence was, I think, a question of fact for the jury.

But a more serious question in "this case is whether the court should not have held as a matter of law that the plaintiff’s title under the levy and sale upon her execution was superior to that acquired by the defendant under and by virtue of his mortgage. The statute provides that every chattel mortgage, where there is not an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, unless the mortgage, or a true copy, shall be filed in the office of the clerk of the town where the mortgagor shall reside at the time of the execution of the mortgage. The clerk is required to file such mortgage, and indorse thereon the time of receiving the same, and deposit the same in his office, to be kept there for the inspection of all persons interested. Laws 1833, chap. 279. That defendant’s mortgage was duly and properly filed in the clerk’s office, as required by statute, is admitted. The plaintiff, however, contends that it was not kept there as the statute required: that as the defendant removed it from the clerk’s office, and she procured a levy to be made upon the prop

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■erty while it was absent from the files of that office, she secured a lien by virtue of such levy which was paramount to that of the defendant. Thus the question is presented whether the removal of the defendant’s mortgage from the clerk’s office, under the circumstances established by the evidence in this case, destroyed or suspended his rights as mortgagee as against the plaintiff, so that she acquired a superior lien by virtue of such levy. If the defendant had voluntarily removed his mortgage from the •clerk’s office under such circumstances as to evince an intention to permanently withdraw it from the files of that office, then I should have no doubt but such would have been the effect of such withdrawal. I am also inclined to the opinion, if the defendant had voluntarily taken his mortgage from the clerk’s office, although with an intention of returning it, and while it was absent from the office a levy upon the mortgaged property had been made, that the rights acquired by the plaintiff under such levy would have been superior to the defendant’s rights under his mortgage. As much was intimated in the cases of Fox v. Burns, 12 Barb., 677 , and Swift v. Bari, id., 530. But in this case can it be said that the defendant voluntarily removed his mortgage from the files of the clerk’s office ? It was removed by him in obedience to the commands of a subposnv issued out of this court on the application of the plaintiff, and which was signed by her attorney, as well as the referee, and which, in clear and positive terms, commanded the defendant to produce before such referee the chattel mortgage in question under the penalties of law in case of disobedience. That the removal of this mortgage from the clerk’s office was not the voluntary act of the defendant, but was procured through the agency of the plaintiff, and by means employed by her, is quite manifest.

Assuming, then, that the removal of the defendant’s mortgage was procured by plaintiff, and we are led to inquire whether she can take advantage of its absence from the clerk’s office unless the defendant has been guilty of some act or omission which has changed his relation to the act of such removal so that its absence from the clerk’s office when the levy was made was not the result of the act procured by the plaintiff, but was the result of his subsequent voluntary act or omission. It seems to me that if the absence of this mortgage from the clerk’s office was by the procurement of the plaintiff, and the defendant was free from negligence or any fault on his part by which its absence from the proper office was unduly continued, then the plaintiff cannot secure to herself any advantage by reason of her own act in procuring its removal from the files of the clerk’s office. If the plaintiff had abstracted the mortgage from the clerk’s office, she could have acquired no additional rights by reason of her wrongful act. In this case, while she has not herself removed the defendant’s mortgage from the proper office, she has procured its removal. It was her act, and' it is not apparent to me how she can take advantage of it in the one case, and not in the other. It seems to me, as the removal of the defendant’s mortgage from the clerk’s office was procured by the plaintiff, and was not by

p. 924

the voluntary act of defendant, and the jury having found that defendant did not intend to withdraw the same from said office, and was guilty of no negligence in not returning it, that the plaintiff could not and did not secure any superior right to the property in question by reason of its absence from the clerk’s office at the time when her levy was made. The only authority which has been cited as having any bearing upon this question is the, case of Swift v. Hall, 23 Wis., 532 . In that case the plaintiff held a chattel mortgage which he sent by another to be, and which was, filed in the town clerk’s office February 19, 1867; the same day the plaintiff sent his son to the clerk’s office to see if the mortgage was filed. The son, misunderstanding him, told the clerk his father wanted the mortgage, and he took it to him. The plaintiff then attempted to send it back to the office by a third person, but it was in fact not delivered at the office until February 26th, seven days after- ' wards. On the 25th, six days after its first delivery at and removal from the clerk’s office, a creditor of the mortgagor went to the clerk’s office, and inquired for the mortgage, when the clerk told him that it was not on file; that the plaintiff or his son had taken it. Such creditor thereupon, and on the 25th of February, sued out an attachment, which was levied upon the property covered by the mortgage. On the next day after the levy the plaintiff ascertained that the person employed by him to return the mortgage had forgotten to do so, and plaintiff caused it to he filed at six o’clock that afternoon. The property covered by the mortgage was sold by the defendant under an attachment execution. The action was for conversion by such sale.

On the trial the court submitted to the jury the questions:: First. Did the plaintiff direct his son to withdraw the mortgage from the clerk’s office? Second. Did he use due diligence in returning it? and refused to charge that the absence of the mortgage from the files of the clerk’s office invalidated it as against, an attaching creditor, or that the plaintiff was bound to return it the next day after it was removed, or that such withdrawal and keeping made it invalid against the attaching creditor. The plaintiff had a verdict and judgment thereon, and upon appeal the judgment was affirmed. The court, in substance, held in that case that the removal of the mortgage was not the act of the plaintiff, because he did not authorize it or assent thereto; and, if it was refiled with due diligence, his lien remained as against one who with knowledge of the facts attached the property while the-mortgage was absent from the files; and also held that the question-of the plaintiff’s diligence was properly submitted to the jury. The statute under which this decision was made provides that “no mortgage of personal property hereafter made shall be .valid against any other person than the parties thereto unless possession of the mortgaged property be delivered and retained by the mortgagee, or unless the mortgage or a copy thereof be filed in the office of the town clerk where the mortgagor resides.” Under the Wisconsin statute it has been held, as it has as to creditors-

p. 925

under our statute, that knowledge in a creditor will not preclude Mm from availing himself of the omission of the mortgagee to properly file his mortgage. It seems to me that the case cited, while not perhaps precisely in point in all respects, is an authority which goes far towards sustaining the conclusion at which I have arrived in this case. I am of the opinion that the court properly refused to hold that the defendant, by virtue of the levy and sale under execution, acquired a title to the property in question which was superior to that acquired by the defendant under his mortgage; that it properly submitted to the jury the question of defendant’s negligence or want of due diligence; and that the verdict of the jury should be regarded as final. From these considerations it follows that the plaintiff’s motion for a new trial should be denied, with costs.

Samuel S. Stafford, for app’lt; George W. Ray, for resp’t.

Upon the trial the court submitted to the jury to find whether the defendant took his mortgage from the clerk’s office with the intention and for the purpose of removing it from the files, and whether he took it to Oxford at the request and pursuant to the subpoena and request of the plaintiff. The court charged the jury that if he did not intend to remove it from the files, and took it to Oxford for use in court at the request of the plaintiff, and in pursuance of her subpoena to produce it, intending to return it, and that if the defendant’s delay in not returning it was occasioned by mistake or accident, the defendant was entitled to a verdict. When the defendant applied to the town clerk for a loan of the mortgage he made no avowal of any intention to withdraw the mortgage from the files of the clerk’s office; on the contrary, he avowed that he had been subpoenaed to produce it, and that in obey anee of the subpoena he desired the clerk to permit him to take the mortgage before the referee in obedience to the subpoena. He took it before the referee, and was examined in respect thereto; the plaintiff and her attorney having notice of the purpose for which it was presented, and of the contents-of the mortgage. The defendant was a physician, and when he returned home his patients required his attention; and evidence was given tending to indicate that by mistake and accident he failed to return it to the clerk’s office for a period of about four days; during that period the plaintiff caused a fresh execution to be issued oh the 16th of June, 1885, and the deputy sheriff who had returned the first execution levied on the mortgaged property. As soon as the defendant learned of the levy he immediately returned his mortgage to the clerk’s office. The plaintiff caused the property to be sold on the execution, and bid it in herself, her attorney being present at the sale and acting as clerk. The following Monday the defendant took the property and sold it under his mortgage, and insisted upon the trial that as to this plaintiff the mortgage was on file all the time, and that the plaintiff could not be permitted to take advantage of her own act to deprive the defendant of his lien and rights under his mortgage.

Section 1 of chap. 279, of the Laws of 1833, relating to

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chattel mortgages provides that a mortgage “ shall be absolutely void as against the creditors of a mortgagor, or as against subsequent purchasers and mortgagees in good faith, unless the mortgage or a true copy thereof shall be filed as directed in the succeeding section of this act. Defendant's mortgage was filed and from that time it was, so far as the act relates to it, valid. It did not fall within the condemnation of the section from which the quotation has been made.

In Griswold v. Sheldon, 4 N. Y., 599 , it was said : “ The object of filing the mortgage is to give notice of its existence to all persons who choose to inspect it, and whenp roperly filed it is legal presumptive notice, binding on all persons interested.” In the case here the notice was given by the filing to the plaintiff, and she and her attorney had actual notice and knowledge of defendant’s mortgage. The sheriff who returned the first execution presumptively did so upon the assumption that the mortgage was regularly on file and was a valid lien upon the property in question. In the supplementary proceedings the plaintiff caused a subpoena duces tecum to be issued. Defendant’s mortgage was referred to in that subpoena and it was produced by the request and by the command of the plaintiff before the referee from the clerk’s office. A complete obedience to the subpoena could not take place without á temporary loan by the town clerk from his office of the instrument filed therein. All of the objects of the statute were fulfilled by the filing of the mortgage in the clerk’s office. The filing thereof operated as notice to the plaintiff and the evidence abundantly discloses that she had actual knowledge of the mortgage and that it had been properly filed,, which knowledge was made very apparent to her and her attorney on the 12th of June. On that day the defendant had a lien upon the property and the plaintiff had full knowledge thereof upon that day, which notice and knowledge were possessed bv the plaintiff and her attorney prior to the issuing of the second execution under which' she caused the property to be levied upon and sold and which she assumed to purchase at the sale. She ought not to profit by her act in causing the mortgage to be taken from the clerk’s office. Trenton Bank Co. v. Sherman, 24 Alb. L. J., 390; S. C., 86 N. Y., 221 .

The plaintiff did not part with any consideration; did not become a creditor while the mortgage was temporarily out of the office of the town clerk in the faith that there was no lien upon the property; she was not misled by the fact that the instrument was temporarily removed from the clerk’s office; she is not equitably entitled to the position that would have been held by a creditor whose debt was contracted while the instrument was temporarily out of the office. Again the second section of the act of 1833 provides that the instrument mentioned in the first section shall be filed in the several town clerks offices mentioned, and then provides, viz.: “ And such register and clerks are hereby required to file all such instruments aforesaid presented to. them respectively for that purpose, and to. indorse thereon the time of receiving the same and shall deposit the-

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same in their respective offices, to be kept there for the inspection of all persons interested.” As we have already seen, the defendant filed his mortgage in the clerk’s office, and thereby complied with the requirements of the statute. The statute required the clerk to file it; he did so, and he deposited the same in his office. It was his, duty to keep the same there for “ the inspection of all persons interested.” The command of the statute is upon the clerk; the keeping is to be by the clerk; there is no duty laid in terms upon the mortgagee as to the keeping it; there, is no provision in this section declaring the clerk’s failure to keep it fatal to its validity. There is no provision to the effect that if it be not “ kept there ” by the clerk that it shall be void. In Bishop v. Cook, 13 Barb., 326 , near the close of the opinion it is said: “ The party should not be deprived of his rights by the neglect of the officer.” In Dodge v. Potter, 18 Barb., 193 and 202, it was said: “ It was the duty of the town clerk and non of the mortgagee to number the mortgage. The rights of the mortgagee could not be impaired by the omission to perform that duty.” The case is entirely destitute of evidence to indicate an intention on the part of the defendant to withdraw or suppress his mortgage. The evidence does indicate that it was the act of the plaintiff which caused the temporary removal of the mortgage from the physical possession of the clerk. Surely she ought not to profit by an act performed at her request under the command of her subpoena, which, at most, may be said to have interfered with the duty of the clerk to retain the mortgage in his office. It was her act which induced the clerk to part temporarily with the mortgage from the files. It appears the clerk was advised that it was in pursuance of the subpoena, and that the mortgage was only temporarily to be used before the referee for the purpose of complying with the tenor of the subpoena.

Our attention is called to Fox v. Burns, 12 Barb., 677 ; in that case it appeared that the chattel mortgage was executed on the 15th of March, 1849, and “ on the 18th or 19th of June, 1850, it was taken from the town clerk’s office by the mortgagee; ” and in considering that case Strong, J., observes: “ The withdrawal of this mortgage from the clerk's office by the mortgagee, leaving the cow with the family of the mortgagor, would have invalidated the mortgage as against a subsequent purchaser, etc., in good faith, if it had not before ceased to be valid to that extent.” We think the case is quite distinguishable, from the one before us. Evidently the language was used with reference to a voluntary, absolute, intentional removal of the mortgage from the file by the mortgagee ; and it is to be observed that the expression used by the judge is that such removal “ would have invalidated the mortgage as against a subsequent purchaser, etc., in good faith.” In the case in hand, as we have already seen, the plaintiff had notice; had knowledge of the existence of the mortgage ai)d that it had been regularly filed, and was herself instrumental in the temporary loan of it by the clerk from his office. We think the case before us is quite unlike that one.

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Our attention is called to Swift v. Hart, 12 Barb., 530 . We think that case is quite distinguishable from the one before us. The principal question decided in that case is unlike the one here; the remarks found in the opinion evidently relate to a voluntary withdrawal of the mortgage from the files with the intention to suspend the lien; and it was held that a second filing of a mortgage after an expiration of a year, accompanied with a statement of the amount due thereon, is valid against an execution “ not levied until after the second filing.” We think nothing is to be found in the case sustaining the contention of the appellant. We think no error was committed in refusing to direct a verdict for the plaintiff; nor in refusing to set aside the verdict and the motion for a new trial made upon the minutes. Swift v. Hall, 23 Wis., 533 ; Jones on Chattel Mortgages, § 269.

The foregoing views, as well as those expressed in the opinion of Martin, J., delivered in the court below, lead us to sustain the verdict and the judgment entered thereon.

Judgment and order affirmed, with costs.

Merwin and Parker, JJ., concur.