Bowdish v. Page

The plaintiff, as assignee for the benefit of creditors of Mortemore Allison and Lawrence Allison, brought an action against the defendants to recover for the alleged conversion of a quantity of boots, and shoes. The defendants allege, by way of justification, that the property was taken by virtue of an execution issued upon a judgment in favor of the defendant bank against Isaac Allison, and that the title was then in him.

It appears that Isaac Allison was engaged in the business of manufacturing boots and shoes at Canisteo, N. Y.; that he became indebted to Mortemore and Lawrence Allison, who were in the business of banking in the name of “ The Bank of Canisteo,” and they had assumed some liabilities for him as accommodation indorsers; that on the 1st of October, 1883, to secure payment of such indebtedness and to indemnify them against liability as such indorsers, Isaac Allison, by an instrument in writing, sold and transferred to them all the boots and shoes, finished and unfinished, all the leather, stock and other materials on hand in and about the factory occupied by him, and certain other property, giving them power to take possession of the property. The instrument was filed with the clerk

The referee found that, on July 22,1884, the plaintiff went to the factory where the goods were, with one of his assignors, who turned them over to him, and that on the next day (July twenty-third) they went there again, and, at the request of the plaintiff, Isaac Allison went with them; that the plaintiff there insisted that Isaac turn over to him his interest in the stock of goods and give him immediate possession of them, which Isaac at first declined to do ; that the plaintiff promised him that if he surrendered the possession to him he would credit the proceeds of the property as fast as sold upon his, Isaac’s, account, and thereupon Isaac delivered the possession of the goods to the plaintiff, who took possession of them and took from Isaac the keys of the building in which the goods were, locked the door when they left it and kept the keys ; that the plaintiff th$n became and was vested with the entire title and possession of the goods, and that from that time thereafter until dispossessed by the defendants, the plaintiff, as assignee, had the actual and complete possession of the goods in question for the benefit of the creditors of IVIortemore and Lawrence Allison.

On April 30,1884, the defendant bank recovered a judgment for $12,785.03 against Isaac Allison upon his liability as indorser of notes made prior to the date of the mortgage before mentioned. Execution upon the judgment was issued July 29, 1884, to the defendant Page as sheriff, and by his deputy, the .defendant Murray, was levied upon the property August 1, 1884. It was by virtue of the levy taken away March 21, 1885, and sold in April, 1885.

The referee found that the bill of sale or chattel mortgage was made, delivered and taken in good faith, for a good consideration and without any intent of any of the parties to defraud the creditors of the mortgagor.

He also found that on October 31, 1883, the mortgagees took possession of the property with the consent of the mortgagor, that the latter continued to have access to the factory building, proceeded to sell some of the goods for the mortgagees, and paid a portion of the proceeds to them up to July 21, 1884, and that such con-

The chattel mortgage was not refiled within thirty days next preceding the expiration of the year from the time it was filed. It, therefore, ceased to be valid as against the creditors of the mortgagor. (Laws 1879, chap. 418.) But the defendants were in no position to question the validity of the mortgage until the bank judgment was recovered and execution issued upon it. (Button v. Rathbone, Sard & Co., 126 N. Y. 187 .)

The finding of the referee, that the mortgage in its inception was valid as against the creditors of the mortgagor, has the support of evidence, and it is so treated. The plaintiff claims that on the 23d day of July, 1884, he acquired, and thereafter had, the actual and continued ¡possession of the goods until they were taken by defendants in March, 1885, and that during that time he had title to them. If that proposition of fact as found by the referee is sustained by the evidence, the omission to refile the mortgage is not available to the defendants, as such taking possession by the plaintiff preceded in point of time the issuing of the execution upon the judgment of the defendant bank. (Kitchen v. Lowery, 127 N. Y. 55 ; Tremaine v. Mortimer, 128 id. 1; Stephens v. Perrine, 69 Hun, 578 .)

The mortgage was valid between the parties to it, and although it. was valid in its inception it must, in view of the finding of the referee, be assumed that by the dealings between them the mortgage-had, at the time of the assignment to the plaintiff, become void as against creditors of the mortgagor. It has been held that possession of property taken pursuant to a chattel mortgage, void as against the creditors of the mortgagor, is not effectual to support title as against an existing creditor of the mortgagor, although his process by execution is issued after the possession has been so taken by the mortgagee. (Du tcher v. Swartwood, 15 Hun, 31 ; Stimson v. Wrigley, 86 N. Y. 332 , 339; Quinn & Co. v. Hart, 48 Hun, 393 ; Mandeville v. Avery, 124 N. Y. 376 .)

In the cases where it was so held the infirmity of the mortgage as against the creditors of the mortgagor existed at the time it was made and delivered. In that respect they are distinguished from. the present case. But, assuming that by reason of the fact so found

The referee did not in express terms find that the possession was or was not so taken by the plaintiff by virtue of the chattel mortgage. By reference to the evidence upon the subject of the transaction of July 23, 1884, at the factory building, it is seen that the plaintiff testified that he told Isaac that he, as assignee, had some claims against him, consisting of notes and book accounts for overdraft, and called his attention to four notes of $2,000 each, and to his overdraft of $6,800, as his indebtedness, exclusive of interest, and asked him if he could pay. On receiving his answer that he could not, the plaintiff demanded of him that he turn over to him his interest in the stock of goods in the building; that Isaac, claiming that he had been receiving some commission from L. &. JVC. Allison, insisted that if he turned over the goods to the plaintiff the arrangement should be continued; that the plaintiff refused to do so, stating that he knew nothing of their arrangement, and that he wanted the title to the goods absolutely, and as fast as they were sold he would apply the proceeds in payment of his indebtedness; that Isaac said he would turn the goods over to the plaintiff, and then went through the building singling out the goods belonging to him or those in which he claimed to have an interest. He then, stating that he surrendered the possession of the goods to the plaintiff, gave him the keys, and the plaintiff then said that he accepted the goods and claimed them from that time as assignee, etc. These included the goods in question. It appears that some of the boots and shoes and stock in the factory building had been turned out to one Orandall prior to the time of the general assignment to the plaintiffs, and that the Crandall goods, or so much of them as were not in the meantime sold, remained in the building as long as those in question continued there. The indebtedness of Isaac Allison to the plaintiff as such assignee was as so stated by the latter.

In the interview between him and Isaac Allison on the 23d of July, 1884, when the possession of the property was so delivered to

In Bullis v. Montgomery ( 50 N. Y. 352 ) and Steele v. Benham (84 id. 634) no circumstances appeared tending to show an actual change of possession of the property. Here the plaintiff went into the building, and not only were words used to the effect that the possession of the property was surrendered and taken, but in that connection the parcels of property were pointed and singled out and all was done that could well be accomplished for the purpose-other than actually taking the goods from the building, and by giving him the keys the property was placed in the exclusive control of the plaintiff. In view of the character of the property this was sufficient.

And the fact that Isaac Allison, having charge of the Crandall goods there, had from time to time access to the building, and occasionally was authorized by the plaintiff to sell for the latter goods from the stock, did not necessarily have the effect to deny to the plaintiff the continued possession of the goods. This, upon the evidence, was a question of fact for the referee. (Stanley v. Mational Union Bank, 115 N. Y. 122 .)

It may be observed that since the statute upon the subject of assignments for the benefit of creditors was enacted, the assignee is something more than the hand of his assignor. He is a trustee for the creditors. (Laws of 1877, chap. 466.) And his transaction in respect to the property in question may be deemed to have been conducted by him as such trustee in behalf of such creditors.

It is further urged on the part of the defense that the plaintiff, by a proceeding taken somewhat inconsistently with his claim of title to the property, denied to himself the right to effectually assert reliance upon such title in this action. It appears that on December 4,

There is a further reason why the doctrine of election is not applicable to this case. As has been remarked, the plaintiff is a trustee for the creditors of his assignors, and he cannot, by pursuing a futile remedy, produce a forfeiture of the vested rights of Ms eestuis que trust to have the property held by him in that relation made available for their benefit, nor can he voluntarily relinquish their rights in that respect. His power and duty in the execution of. the trust are in harmony, and he cannot effectually proceed in contravention of either, (Shepherd v. McEvers, 4 Johns. Ch. 136 ; Russell v. Russell, 36 N. Y. 581 ; Fitzgerald v. Topping, 48 id. 438.)

The question of value of the goods was contested at the trial. The evidence on the part of the plaintiff was to the effect that their value was upwards of $10,000. They were bid in at the sheriff’s sale for the defendant bank. And it employed persons who were competent for the purpose to examine the goods, make an inventory of them and their value. Those persons were called as witnesses by the defendants, and by their evidence it appeared that they did so, and that they estimated the aggregate value of the goods to be

The weight which the evidence would have had, or whether it would have had any, with the referee, is a question which cannot be determined on this review, but in view of the evidence introduced, including that of the person who, in making an estimate of the value, represented the purchaser, it would seem that the defendants will not be prejudiced by the error in the exclusion of the evidence by the adoption of the lowest price before mentioned, if the plaintiff is disposed to do so to avoid the necessity of another trial. In the view taken no other question requires consideration.

The judgment, therefore, must be reversed and a new trial granted, costs to abide the event, unless the plaintiff stipulates to

Dwight, P. L, Lewis and Haight, JJ., concurred.

Judgment appealed from reversed and new trial granted, with costs to abide the event, unless within twenty days the plaintiff stipulates to reduce the recovery of damages to the sum of $4,542.80 and interest thereon from March 21, 1885. If such stipulation is given the judgment is modified accordingly • and as so modified affirmed, without costs of this appeal to either party.