Majority
Headnote
1,- Chattel mortgage—Default.— The defendant comp-any has proceeded throughout upon an erroneous view of its rights. There never was a forfeiture under its silverware mortgage. That mortgage was entirely independent of the ¡¡Normandie mortgage. The principal relation which the latter bore to the former was that it extended the original terms of payment. It did not alter any •of the other provisions or conditions of the silverware mortgage. • On the contrary, it provided that that security was not to- be changed in any respect, and that the extension of the terms of payment granted by the new mortgag was in consideration of the further collateral security which that new mortgage furnished. The new notes specified in the ¡¡Normandie" mortgage were substituted for the old notes specified in the silverware mortgage. The understanding was that the old notes should remain in the company’s possession, but should not be negotiated; and, when all the new notes were paid, the old notes were to be canceled. It will be observed, however, that the new notes aggregated some $3,500 more than the old. This was because the company had delivered additional silverware to the extent in value of about $3,500 between the time when the silverware mortgage was given and the time of the execution of the ¡¡Normandie mortgage, Thus, this additional silverware was not covered by either mortgage, while the silverware actually covered by the original mortgage was charged with the payment of some $3,500 more than the sum with which it had previously been charged. The •defendant company contends that there was a forfeiture under the silverware mortgage the moment the mortgagor failed to pay at maturity any one of the notes given upon the execution of the ¡¡¡Normandie mortgage. It admits that this forfeiture did not result from the breach of any of the terms or conditions of the ¡Normandie mortgage. This admission was compelled by the seventh' condition of the ¡¡Normandie mortgage, which expressly postponed forfeiture thereunder for thirty days after default in the payment of any of the new notes; it being conceded that the note1 upon which the present forfeiture is claimed was fully paid be-" fore the expiration of these thirty days. The hard doctrine which the defendant company invokes is that these thirty days of grace only apply to the forfeiture of the additional collateral security furnished by the new or ¡¡Normandie mortgage. Upon this it is contended that as the security of the old mortgage was not to be changed in any respect, and as the thirty-day clause is not to be found therein, there was a forfeiture thereunder the
“And the said party of the first part covenants and agrees to and with the party of the second part that, in case default shall ¡be made in the payment of- the sum above mentioned, then,” etc.
To aid the company in effecting an unconscionable forfeiture, we are asked to give these italicized words a most elastic, strained, and unreasonable construction. What is the said sum above mentioned? The clause in which this sum is mentioned reads as follows:
“Upon condition that if the said party of the first part shall and do well and truly pay unto the said party of the second part, their executors, administrators, or assigns, the followiug promissory motes, to wit:
_ —then these presents shall be-void.”
There are several sums here mentioned, and' there is' one total sum. The sum referred to in the “sale” clause is clearly that total sum. The defendant would have us construe the sale clause as though it read “the said sum, or any of the said sums, above mentioned.” We cannot insert these additional words in aid of a forfeiture. Yor does the context admit of any such amplification. The words “the said sum above mentioned” are again used ¡later on in the same “sale” clause. We cannot well give them there a different meaning. Should we give them the same meaning as the defendants ask us to give them when reading the earlier part of the clause, let us see what would result. Under the earlier phrase, construed to read “upon default in the payment of the said sum, or any of the said sums, above mentioned/’ the defendants are authorized to sell and dispose of “the said goods
But this is not all. The words in question occur again in the quiet and peaceable possession clause. Here it is provided that,, “until default be made in the payment of the said sum of money, the mortgagor is to remain and continue in the quiet and peaceable possession of the said goods and chattels, and the full enjoyment of the same.” There is not a break in the entire condition-from the quotation above unto the end. The covenants as to default and peaceable enjoyment follow the formal condition directly, and are part and parcel-thereof. They must all be read together. So -reading them, the condition is not broken until default is made in the payment of the entire sum specified therein. Thus, it is upon default in the payment of the entire sum, namely, the sum of $35,082.95, therein “above mentioned,” that the title: becomes absolute. It is upon that default, and that alone, that) the right to seize and sell the property becomes absolute; andj it is upon that default, and that alone, that he mortgagor loses^ his right to remain and continue in quiet and peaceable posses-! si on. This construction is in harmony with the condition proper,! and with every one of the sequences which follow. Any other: construction would be incongruous and vacillating, and would) require the court really to reframe the conditions so as to mature, the entire debt upon the payment of any one of the notes. '
The rule that, where a mortgage is payable in installments, the mortgagor cannot redeem without paying the whole debt, is of course, inapplicable. The right to foreclose was, by the express terms of the mortgage, limited to default in the payment of the: whole debt. Thus, the operation which the law might otherwise-have given to the naked condition (as suggested by the learned' referee in Leadbetter v. Leadbetter, 32 St. Rep. 890 , and in Bragelman v. Daue, 69 N. Y. 74 ) is varied by the provisions of the-contract itself. As there was no forfeiture, there was nothing to-redeem. The mortgagee has simply taken possession unlawfully.
But, even if there had been a forfeiture, it was distinctly waived. This is not an action to redeem the property. Such an action is to relieve from a forfeiture. There the mortgagor must pay or tender the whole debt before bill filed. This action, however, proceeds upon the theory that there is no forfeiture to be relieved from, and consequently nothing to be redeemed. The claim is that, by the waiver, forfeiture, if any, was completely wiped out; that it then became nonexistent; that, consequently, the original status was restored; and that now the rights of the parties are precisely the same as though the forfeiture had never ¡been. The question which runs through the cases on this head is whether a tender of the whole amount due after forfeiture is sufficicntinlaw to effect such a waiver. The current of authority favors the conclusion that such a tender is insufficient to create a waiver. It is, undoubtedly, sufficient upon a bill to redeem. But, to create a waiver, there must be an acceptance by the mortgagee. The latter is not bound to accept the amount due, and restore the property. He may insist upon his forfeiture, and leave the mortgagor to his bill to redeem. On the other hand, he may waive his right of forfeiture, and he does so upon acceptance of the tender. Hutchings v. Munger, 41 N. Y. 158 ; Van Loan v. Willis, 13 Daly, 281 ; Patchin v. Pierce, 12 Wend. 61 ; O’Rourke v. Hadcock, 114 N. Y. 550 ; 24 St. Rep. 511 . Where the forfeiture results from the nonpayment of an installment, the mortgagor cannot redeem without a tender of the whole amount of the mortgage debt. A tender of the unpaid installment is insufficient either for redemption or to effect a waier. To redeem, there must be a tender of the whole debt. To effect a revesting of the title at law, there must be a tender and acceptance of the whole debt. But, to effect a waiver of the forfeiture and the revesting ,of the original status under the mortgage, there need only be a
The plaintiff, however, does not rely wholly upon the legal effect of the defendants’ acceptance of payment of the only note as to which there was a claim of default. When that note was paid, the defendants distinctly recognized the plaintiff’s equity. The court below would have been quite justified in specially finding (had the decision been made in the old way) that Mr. Robinson then acceded to Mr. Earle’s position, which was that he supposed, of course, he could now take possession of the silverware; that Mr. Robinson said that it was all right; and that, as he (Earle) had paid the note, there was no objection to his taking the silver
In the view which we have last taken of this case, there can be no doubt of the plaintiff’s right to appeal to a court of equity. She had, in fact, no other right. But even in our original view, that there never was a forfeiture, there was still an undoubted right to equitable belief. What the plaintiff seeks is not a specific performance of a contract for the sale of chattels, but a specific performance of the covenant for peaceable possession and quiet enjoyment. Here the contract of sale was executed, and the goods were delivered. The mortgage was given to secure to the mortgagee the purchase price of the goods, and the covenant was given to secure to the mortgagor continuous possession until default. Damages for the breach of such a covenant would be a most incomplete and unsatisfactoiy remedy. The measure of damages would be the value of the right of possession until forfeiture by breach of the condition of the mortgage^ and the value of the property after payment of the mortgage debt. Jones, Chat. Mortg. § 437, and cases cited. It would be practically impossible for the plaintiff here to prove the value of the right of possession. That would involve the value of the use of the property for hotel purposes. The deprivation of that special use goes to the very root of the transaction. The property -was purchased and designed with reference to that special use in a new and important hotel establishment. The particular hotel for which it was purchased has been lost to the vendor by other causes, but the use in other hotel directions is equally essential. The silverware was especially adapted to hotel purposes. It was marked in two or three different ways. Part of it was marked “Hotel New Netherland,” part with an initial “H,” and part with a monogram or coat of aims. There were also designs “gotten up expressly” for Mr. Earle’s use.
Hor would replevin afford an adequate remedy. The defendant could frustrate the possessory power of this remedy by the simple process of rebonding. The effect would be to keep the plaintiff out of the possessory use pending the litigation. Meanwhile the property might be sold. In the end, whether the property was sold or not, the plaintiff would be face to face with the original problem, namely, how to prove the value of the right of possession. He might recover the property in specie, or, if it had been sold, its value. But still he would be without adequate redress for the detention and for the loss of his possessory right. The breach of such a covenant might be far-reaching. If extended to the furniture, carpets, linen, glass, and chinaware of the hotel establishment, it would almost certainly work downright yuin. Even the sudden deprivation of any one of the various
There is, however, still another consideration, which amply supjoorts the equitable remedy. The covenant for quiet and peaceable possession until default was a continuing covenant. There is a daily breach while the defendants keep the plaintiff out of possession. This would lead to a multiplicity of suits, to prevent which a court of equity may properly exercise its jurisdiction. The governing principle is the same as where a lessee covenants to occupy demised premises for a particular purpose, and none other. There an injunction lies to restrain a deviation. Steward v. Winters, 4 Sandf. Ch. 587 . In the latter case the vice chancellor said it was unnecessary for the complainant to establish irreparable injury, “or on a continuing covenant” even substantial injury. Then, too, equity should act reciprocally. It protects the mortgagee’s rights, for it will not permit the mortgagor to sell, and place beyond the reach of the mortgagee, chattels covered by the mortgage. It will equally protect the mortgagor’s rights. It will not permit the mortgagee to deprive him of the continuous use pending payment in due course, upon which the whole transaction hinged. !
The only other point made by the appellants is that the plaintiff failed to secure title to the sheriff’s sale, for the reason that the silverware was not then actually present and exposed to the bidder’s view. The property was sold in the rotunda; or lobby, of the hotel. A large part of the silverware was in an adjoining room, opening out of the rotunda. It was exposed upon a large table, and the door of .the room was not closed. The property was some twenty feet away. Some of it was in the storeroom downstairs, a room which was kept locked only at night. There was, under the circumstances, a sufficient compliance with the law which requires property sold under execution to be open to the inspection of bidders. It would have been impracticable to displace all the furniture and property in the hotel, and pile it up in the rotunda. The rooms were open to the public, and any one could have examined the property. The sale was valid, unon the principle enunciated in Tifft v. Barton, 4 Denio, 171 , and Bank v. Spencer, 20 N. J. Eq. 159 . It may be added that the defendant in the execution was present at the sale, and made no objection. Since then he has fully recognized the plaintiff’s title, and has acted for her in her relations to the property.
The remaining question is upon the plaintiff’s appeal. The learned trial judge refused to grant the plaintiff any compensation for the deprivation of her possessory right. In this, we think, ■he erred. It is true that there was no evidence of the value of the.
The question, then, is one of fact: Does the case show the ¡value of the property, and, if so, what value? We agree with the 'defendants that the true value of the property when taken by them was not its original purchase price. But that original purchase price is an element for consideration in connection with the natural depreciation from use. The purchase price of the property covered by the mortgage was $35,082.95. But, as we have seen, some $3,500 worth of additional silverware was subsequently added thereto. The new notes covered this additional $3¿50Ó, together with interest upon the original $35,082.95. The grand total was $39,483.13, and for this latter sum the new notes were given. The defendants thus took property the purchase price of vdiich aggregated some $38,500. In their answer, the defendants admit that they took possession of all the goods “covered by and included in” the chattel mortgage, “save .and excepting certain of said goods and chattels, of the value of $1,083.58 or thereabouts,” which they claim were missing. There was no claim in the answer that any other goods were miss
It is entirely reasonable and consistent, therefore, to place the value of the property taken by the defendants at the sum of $34,-000. This is probably less than its real value, but it is, at least, a fixed sum of which the defendants cannot well complain. The judgment should therefore be modified by allowing the plaintiff interest upon the sum of $34,000 from April 6, 1894, which was the date of the seizure. As the judgment was not in the alternative, and as interest will not conseciuently run upon the ascertained value from the date of the judgment, such interest should
Concurrence
The judgment appealed from by the defendants should he affirmed, with costs. The judgment so far as appealed from by the plaintiff should he modified by granting her the additional relief indicated in this opinion.
O’BRIEN and INGRAHAM, JJ., concur.
We concur in the affirmance of the judgment on the defendant’s appeal. .We dissent from the modification on the plaintiff’s appeal.
Cases cited
- Patchin v. Pierce 12 Wend. 61 p. 339
- New York Guaranty & Indemnity Co. v. Flynn 55 N. Y. 653 p. 343
- Knapp v. Roche 62 N. Y. 614 p. 345