Wescott v. Gunn — 11 N.Y. Super. Ct. 107

Majority

p. 107

Samuel Wescott v. Alexander W. Gunn and others.

Headnote

The omission to file a chattel mortgage does not affect its validity, as between the parties, and a delay in filing it, only renders it void as against an intervening purchaser in good faith, or an intervening creditor by execution.

"Whether a mortgage which, on its face, is given to secure a present debt, but which is known to have been given only to secure future advances or credits, is valid, as against creditors or purchaser's, is a doubtful question, in respect to which there is a conflict in the decisions.

But if any part of the sum it purports to secure, is proved to have been a subsisting debt at the time of its execution, the mortgage, if duly filed, to the extent of such debt, is certainly valid.

Where a mortgagor, after the delivery of the mortgage, gives his promissory notes for the debt, the acceptance of such notes by the mortgagee is not a

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waiver of the mortgage security. A creditor has a right to take as many securities as his debtor is willing to give.

Judgment for plaintiff, with costs. ■ ■

(Before Bosworth, Hoffman and Slosson, J.J.)

November 10;

December 16, 1854.

This was an action to recover tbe value of certain bousebold and ornamental furniture, which the complaint averred belonged to the plaintiff as a mortgagee, and that the defendants had unlawfully seized and converted the same to their own use.

The answers set up as a justification, that on the 1st of May, 1850, an attachment was issued out of a justices’ court, in the city of New York, at the suit of'the defendant G-unn, against one Henry J. Duff, which was delivered to the defendant, Under-hill, then one of the constables of the city, who, by virtue thereof, seized and took the goods and chattels mentioned and described in the complaint as the properly of Duff; that such proceedings were afterwards had, that on the 7th of May, Gunn recovered a judgment in the same court against Duff for the sum of $75, besides costs, and that an execution upon this judgment was issued and delivered to the defendant Underhill, who, by virtue thereof, levied upon the said goods and chattels, and on some day in the month of June, sold a part thereof at public auction and delivered the remainder to Duff. And the answers further averred, that during all this time the goods in question were' the sole and absolute property of Duff.

The reply averred that the justices’ court had no jurisdiction, and that the attachment, judgment and execution mentioned in the answers were illegal and void, and also insisted that if these proceedings were regular and valid, they constituted no defence to the action.

‘ The cause was tried the second time before Oakley, Ch. J., and a jury, on the 26th May, 1854.

On the trial, the plaintiff read in evidence a mortgage to him by H. J. Duff, covering the goods mentioned in the complaint, conditioned to be void on the payment of $2,596.19, on the 4th of June, 1850, and containing a provision that until default in the payment of that sum, Duff was to remain in possession of the goods and chattels mortgaged. The mortgage bore date on the 15th, and was filed in the Begister’s Office on the 18th of June,

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1849, and a copy thereof, with a certificate of the plaintiff, declaring the sum remaining due to be $1,408.94, was again filed on the 15th June, 1856.

The plaintiff proved by Duff, that on the 18th June, 1849, the balance due from him to the plaintiff for ale previously sold to him by the plaintiff, was between $1,500 and $1,900, and that the mortgage was given at the request of the plaintiff to secure this, balance; and also certain orders for ale not then delivered. He also proved that from time to time he had given notes to the plaintiff for ale, some of which had been paid, and that the sum remaining due on the mortgage at the time of the" trial, was upwards of $1,400. It was also proved, that on the 20th óf May, 1850, a notice in writing was served on the defendant Gunn, that the articles which he had attached and levied on, were covered by the mortgage, and were claimed by the plaintiff.

When the testimony on the part of the plaintiff was closed, the counsel for the' defendants moved to dismiss the complaint upon several grounds that will hereafter be stated.

The Chief Justice denied the motion, and the counsel excepted.

The counsel then gave in evidence the attachment, judgment, and execution mentioned in the answers. The execution was for $79.53, damages and costs, and was indorsed with a receipt of full satisfaction by the defendant Gunn, dated July 5,1850. The Judge said that for the purposes of the trial he should overrule the defence, and would instruct the jury that the only question for their determination was, the amount of the damages that the plaintiff was entitled to recover.

The counsel for the defendants excepted to the decision.

The jury rendered a verdict for the plaintiff for $383.25, the estimated value of the goods sold, with interest.

The Judge suspended judgment on the verdict, and directed the exceptions to be heard in the first instance, at General Term, with power to the court, in case they should be allowed, to' dismiss the complaint.

G. Bowman for the plaiütiff

now moved for judgment on the verdict, contending that the plaintiff’s title under the mortgage was fully established, and that the defendants were not in a position to dispute his title, the attachment and all the subsequent proceedings being irregular and void.

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Q. W Stevens for tbe defendants,

maintained that tbe attachment, judgment, and execution were regular and valid, and insisted that tbe mortgage to tbe plaintiff was fraudulent and void against creditors, of whom the' defendant was one, upon tbe following grounds: 1. That although it was executed on tbe 15th of June, 1849, it was not filed until tbe 18th, and no proof to excuse tbe delay bad been given. 2. That in fact it was given to secure future credits and advances, while on its face it appears to have been given for a sum certain payable on a certain day; and lastly, That tbe plaintiff bad accepted Duff’s notes in payment for tbe ale sold to him, and that tbe taking of these notes operated as a waiver of the mortgage security. He cited 2 "Wend. 596; 24 Wend. 485 ; 8 Denio, 284 .

By the Court.

Whether tbe attachment, judgment and execution were regular, it is unnecessary to consider, since, as tbe mortgage by default of payment became forfeited on the 4th of June, 1850, and before tbe goods covered by it were sold under tbe execution, if tbe goods then belonged to the plaintiff, the sale was itself a wrongful conversion. It may be that tbe temporary interest of Duff as mortgagor, bis right to retain tbe possession until default, was bound by tbe attachment; but if so, it is certain that when his interest ceased, the-lien created by tbe attachment also ceased. From that time, if tbe mortgage was valid, Duff bad no property in tbe goods whatever, but they belonged to the plaintiff as absolute owner, and as such he must be entitled to recover their value in tbe present action.

Tbe case therefore turns wholly upon the objections that have been, raised to the validity of the mortgage, and these I shall consider in their order.

1. The fact that the mortgage was not immediately filed, it is certain would not affect its validity as between the parties, and the only effect of the delay in filing would be to render it void as against an intervening purchaser in good faith, or an intervening creditor by execution. (Smith v. Acker, 23 Wend. 653 .)

Gunn, the landlord of Duff, if he was a creditor at all at that time, became such before the date of the mortgage. He did not become a creditor in the interval between the date and filing of the mortgage. If he was a creditor at the date of the mortgage,

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tbe omission to file it on tbat day did not render it absolutely void as against bim; its only effect was to render it inoperative as against bim, until it was filed.

But be was not a creditor either at tbe date of tbe mortgage, or at tbe period of tbe filing, witbin tbe meaning of tbe statute. (2 R. S. 2d edition, p. 71, § 9.)

Tbe courts bave construed tbat word as meaning a judgment creditor. (Sayre v. Eastwood, 19 Wend. 515 . Smith v. Acker, above cited, p. 670.)

He was not even a creditor at large, for no rent was due from Duff under bis lease, at either of these periods.

IL Tbe objection tbat tbe mortgage is void, because on its face it is expressed to be a security for a sum certain, payable at a day certain, while in proof it appears to bave been given, in part, at least, for further or future advances or credits, might, under other circumstances, be one not free from difficulty.

Tbe authorities are not all agreed on this point, some bolding tbat tbe intention to secure future advances must be expressed on tbe face of tbe instrument, and tbat a mortgage expressed to be for tbe security of a present debt, cannot be made to cover future advances on the strength of a mere parol agreement. (Walker v. Snediker, 1 Hoff. Ch. R. 145; Driver v. McLaughlin, 2 Wend. 596 ; James v. Morey, 2 Cowen, 293.) While others bold a contrary doctrine, and maintain tbat the intention need not be expressed. (Cr aig v. Tappin, 2 Sanf. Ch. R. 78; Bank of Utica v. Finch, 3 Barb. Ch. R. 293.)

I do not think it necessary to pass upon tbe abstract question since, in tbe present case, there are two sufficient answers to tbe objection.

1. At tbe date of tbe mortgage, Duff was indebted to plaintiff to between $1,500 and $1,900, and it was to secure this indebtedness, as well as what are called future advances, or further credits, tbat tbe mortgage was given.

To tbe extent of tbe actual debt, tbe mortgage was good in any event. (Driver v. McLaughlin, above cited.)

2. Gunn was not a creditor who could avail himself of tbe objection if it has any foundation. At tbe time tbe mortgage was given, be was neither a judgment creditor nor a creditor in respect to rent due and unoaid by Duff.

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A mortgage to secure future advances is good, except as against purchasers or creditors intervening before the advances are made. (Bank of Utica v. Finch, 3 Barb. Ch. R. 293, above cited.)

Now, there was no period, from the date of the mortgage, when the actual indebtedness secured by it was reduced below SI,200. (See p. 77.)

HI. The third ground of the motion for a nonsuit is, that the plaintiff received Duff’s notes in payment for the ales sold which were not covered by the mortgage, and the taking of these notes operated as a waiver -of the mortgage security.

From the testimony of Duff, I think the reasonable and fair inference is, that the mortgage was given to secure the balance due on these notes, then laid over and unpaid, — in other words, that the notes were given previously to the mortgage, and that the balance due on 15th June, 1850, the date of the mortgage, was created by these notes not having been paid. But if this were otherwise, and the notes were given after the mortgage, I can perceive no reason for treating it as a waiver of the mortgage security. A creditor has a right to take as many securities as his debtor sees fit to give him. The notes and mortgage being for the same debt, the payment of the former would have extinguished the lien or security of the latter, pro tanto, but that,is all.

This disposes of all the grounds upon which the defendants have relied for a dismissal of the complaint, and each of them being found untenable, it follows that the plaintiff is entitled to judgment upon the verdict.

Judgment for plaintiff with costs.

Cases cited

Smith & Hoe v. Acker 23 Wend. 653 N.Y. p. 110
Divver & Gunton v. McLaughlin 2 Wend. 596 N.Y. Sup. Ct. p. 111