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Stewart v. Slater

13 N.Y. Super. Ct. 83 6 Duer 83 Court June Term, 1856. English

Contents

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Alexander T. Stewart, Wm. H. Burrowes, Francis Warden, John F. King, and Parsons Rose, defendants, appellants v. G eorge Slater, complainant, and Randolph W. Townsend, Cornelius Baker, and Henry Baker, defendants, respondents.

Headnote

The law is now settled, that where a mortgage of chattels is presumed to be fraudulent on the ground that it was not followed by an immediate change of possession, an inquiry into the reasons, motives, or causes for not changing the possession is irrelevant, so far as it is designed to raise any distinct question for the determination of the court or jury.
The true and sole inquiry is, whether the presumption of fraud is repelled by evidence that the mortgage was made " in good faith, and without any intent to defraud creditors and purchasers ?”
This is a question which, when it depends upon extrinsic proof, belongs to a jury alone to determine.
The verdict of a jury in favor of the validity of the transaction, if founded on pertinent evidence, is conclusive, and so also is the finding of a Judge where the cause is properly tried by a Judge without a jury.
A mortgage given by a partner on his separate property, in which a preference is given to a partnership creditor, is not for that reason fraudulent and void as against the separate creditors of the mortgagor, although in some cases the preference may be declared void at the instance of such creditors, upon a complaint filed on their behalf as a class.
A mortgage of personal chattels in all cases vests the legal title in the mortgagee*
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when by its terms or its legal construction he has an immediate right to the possession.
In all such cases, the mortgagee is, in judgment of law, the absolute owner of the property, and the mortgagor has no interest whatever that can he made the subject of a levy and sale under an execution.
This is true if the mortgage is otherwise valid, even when the mortgagor is permitted to remain in possession, for in judgment of law, he is in possession merely by the sufferance, and as the bailee of the mortgagee.
The provision of the Code which requires a Judge by whom a cause is tried without a jury, to file his decision in writing within twenty days after the trial is simply directory, and its non-observance furnishes no ground for the reversal of his judgment.
Judgment at Special Term modified in a single clause, in all other respects affirmed, with costs.
(Before Oakley, Ch. J., Duer and Slosson, J.J.)
June Term, 1856.
Appeal from a judgment at Special Term in favor of the complainant Slater, and of the defendants, who are made respondents,
The complaint was filed by Slater to foreclose a chattel mortgage for $15000, executed and delivered to him by Curtis Judson, upon all the furniture, fixtures, goods, chattels, and personal property of every description then in a hotel in the city of New York, kept by Judson, and known as the Brevoort House. The mortgage is alleged to bear date ou the 80th of November, 1854, and to have been duly filed in the office of the Register of the county.
The complaint admitted the execution and delivery by Judson of certain prior mortgages on the same property, and made the respective mortgagees parties defendants. It is not necessary now to state these mortgages, as they are all specially referred to in the finding of the Judge that is given below.
The defendants, Stewart, Burrowes, Warden, and King, forming the firm of A. T. Stewart & Co., in their answer, claimed to have a lien upon all the mortgaged property, by virtue of a levy under an execution in their favor against Judson, and denied upon several grounds the. validity of all the mortgages.
The other defendants, the prior mortgagees, in their answers set forth the consideration of their respective mortgages, and insisted on their validity.
The material facts upon which the controversy turned, as found by the Judge at Special Term, together with his conclusions of
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law therefrom, are as follows:—As the finding was held by the court at General Term to be conclusive, it is needless to state the evidence upon which it was founded.
Hoffman, J.—This cause came on to be tried before me without a jury, and having heard the evidence and the parties therein, I find the following conclusions of fact, in my opinion, material for the determination of the cause:—
1st. That on the 6th day of December, 1854, a confession of judgment without action was made by the defendant Judson, in favor of A. T. Stewart & Co., defendants in this action, for the sum of $23717.90; that judgment was entered on the 7th, and an execution was issued on the 8th day of December, 1854, and that the sheriff under the same went into the Brevoort House, in which such property was contained, and apprised a clerk that he came to make a levy; that he entered into a number of the rooms and viewed the furniture and articles therein, being all the rooms which were open; that he endorsed upon the execution, after the commencement of this suit, the following words: “On the 8th of December, 1854,1 levied on all the furniture, etc., contained in the building known as the Brevoort House, 5th Avenue, corner of Clinton Place, under the annexed execution.” That he did not leave any one in possession, nor obtain security, nor attempt any further control of the property; that he did not make any inventory thereof, but desisted from any further action on the ground of the possession taken by the defendant Rose, as mortgagee, hereinafter mentioned.
That on the 27th day of November, 1854, a mortgage on the furniture and property of Judson, in the Brevoort House, was given by the defendant Judson to the defendant Randolph W. Townsend, to secure,(among other sums not material in this cause), the sum of $1000 due from Judson to R. W. Townsend, for professional services, and $4900, the amount of a note endorsed by said defendant for Cranston & Judson, and which mortgage was filed on the 28th day of November, at twelve o’clock and ten minutes.
That on the 30th of November, 1854, another mortgage was given by the defendant Judson to the defendant Townsend, for securing the same sums of money, and which was filed on the 1st
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day of December, 1854, at nine o’clock and forty minutes. That the second mortgage was given in confirmation of the first, and in consequence of an inventory of the property not having been annexed thereto.
That the amount due upon the said mortgage, was the sum of $4048.92, on the 10th day of July, 1855, consisting of the sum of $1043.36, due upon the note given by said Judson for professional services, and for the sum of $3005.56, the balance due upon the note held by said Townsend, of the firm of Judson & Cranston. That the consideration of said mortgage has been proven before me to be full and just; that the said mortgages were both made in good faith, and without any intent to hinder, delay, or defraud any creditor, purchaser, or any other person or persons whatsoever, and were and are valid and subsisting instruments against all persons covering the said furniture and property; and that there is due to the defendant Townsend, upon the same, the sum of $4048fiw, as of the date of the 10th day of July, 1855.
That a mortgage dated the 28th of November, 1854, upon the same property in the Brevoort House, was executed by the defendant Judson to the defendant Parsons Rose, to secure payment of the sum of $10,500, and which mortgage was filed on the said 28th day of November, at twelve o’clock and thirty minutes, a true copy of the said mortgage is contained in the preceding case and marked; that such mortgage was given to secure the sum of $7500 or thereabouts, alleged to be due from said Judson to said Rose, for money loaned and advanced to him, and for a note of $3000, endorsed by said Rose for the use of said Judson, and subsequently paid by the former; that the validity of such mortgage is put in issue in the pleadings by the complaint, and it is further claimed that the said Rose is to account for the profits, or a proportion thereof received by him, or to be charged with an occupation rent for the use of such property while in possession of the premises as hereafter stated. And further, that I have reserved the determination as to such mortgage and the amount due thereupon, until the result of the inquiry hereafter directed to be made.
That on the day of November, 1854, a mortgage was given by the said defendant Judson to the defendants Cornelius and Henry M. Baker, to secure the sum of $4796, and which was
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filed on the 6th of December, 1854, at ten o’clock and forty minutes. That such mortgage was executed on the evening of the 5th or the morning of the 6th of December. The consideration of such mortgage was the sum of $796, an amount then due for coal delivered; of the sum of $2000, which would fall due on the 30th of January, 1855, and of the sum of $2000, which would fall due on the 5th day of May, 1855.
That the validity of the said mortgage is not contested by any of the parties in this suit, and the amount due thereupon at this date is the sum $4,917^, as of the said 10th of July,-1855.
That the consideration of the said mortgage has been proven • to me to be full and just; that said mortgage was made in good faith and without any intent to hinder, delay, or defraud any creditor, or purchaser, or any other person or persons whomsoever, was a valid and subsisting instrument covering said furniture and property against all persons claiming the same, subsequent to the filing of the said mortgage.
That the defendant Judson executed to the plaintiff a mortgage of the property in the said Brevoort House, dated the 5th day of December, 1854, for securing the sum of $15000. That such mortgage was filed on the 6th day of December, 1854, at ten o’clock and fifty minutes. That the consideration of such mortgage-was money loaned by the said plaintiff to the said defendant at different periods, and for services rendered by said plaintiff in his capacity of cook and otherwise, while in the employ of said defendant.
That the validity of such mortgage has been questioned, on behalf of the defendants A. T. Stewart & Go., and others, on the ground of usury, and testimony produced as to such alleged usury, under an amendment of the answer for that purpose allowed at the trial.
That the consideration of the said mortgage to the said George Slater has been proven to me to be full and just and not usurious.
• That the said mortgage was made in good faith and without any intent to hinder, delay, or defaud any creditor, purchaser, or any other person or persons whomsoever, and was a valid and subsisting instrument, covering the said furniture and property against all persons, except the said prior incumbrancers.
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That the defendant Judson executed to the defendant Hiram Cranston a mortgage upon the said property, dated the 5th day of December, 1854, and filed on the 7th of that month, for the sum of $25,000. That such mortgage was to secure the said defendant for the balance, if any, which might be found due to him upon an accounting on their copartnership transactions. That the said Cranston sets up in his answer, that the said Judson is largely indebted to him, which is denied on the part of said Judson. That no sufficient evidence has been adduced to decree the cancelment of such mortgage, as claimed; and that the accounts between the parties are to be taken, upon an inquiry as hereafter directed, if required.
That the said defendant Parsons Rose, holding the mortgage before stated, entered into possession of the property on the 9th day of December, 1854, and continued in possession until the appointment of a receiver, on or about the 2d day of April, 1855; and that his possession was taken by virtue of his said mortgage.
That the receiver appointed in this cause has sold the property put into his possession, and has deposited the proceeds thereof, being the sum of $27,331.12.
And I find as conclusions of law as follows:
That the mortgages held by the defendants Cornelius and Henry Baker, by the defendant Hiram Cranston, by the plaintiff George Slater, and by the defendant Randolph W. Townsend, respectively, are not rendered invalid and fraudulent by reason of the said several mortgagees therein not taking immediate possession of the property.
That the possession of the defendant Rose, taken on the 9th of December, superseded any right,to take possession,in the plaintiff, or in the defendants C. & H. Baker, or the defendant Cranston, and was subordinate to the rights of the defendant Townsend under the mortgage held by him, and which is recognized in the mortgage to the said Rose—and that the omission to take possession from the 30th of Eovember in the case of the defendant Townsend, and from the 6th of December in the case of the plaintiff and the defendants C. &. H. Baker, and the defendant Cranston, between such dates respectively and the 9th of December, was so justifiable under the circumstances of this case as to repel any presumption of fraud.
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That there was no such actual levy made under the execution in favor of the defendants A. T. Stewart & Company, as to deprive the said defendants and the plaintiff, the mortgagees in this cause, of any rights held by them or to which they were entitled by virtue of their mortgages respectively.
That the mortgage held by the defendant Townsend is not rendered invalid in whole or in part by being given in part to secure a partnership debt of Cranston and Judson.
That the allegation of usury in the mortgage given to the plaintiff Slater has not been established, and that the same is a valid security for the amount due thereon.
Judgment in conformity to this decision was entered on the 11th of December, 1855, which contained, inter alia, the following clause: “ It is further ordered and adjudged that it be referred to Robert Emmett, Esq., as referee, to ascertain and report as to the mortgage made, by the defendant Curtis Judson to the defendant Parsons Rose, bearing date the 28th of Hovember, 1854, and described in the pleadings herein. That upon such reference, the mortgage to the said Rose be deemed presumptively valid, and made upon a valuable and sufficient consideration, and without any fraudulent intent whatever, but that any party to the action shall be at liberty to impeach the said mortgage, or the consideration thereof, and to produce testimony before the referee for that purpose.”
On the 28th of December, the following exceptions to the finding and decision of the Judge were filed by the appellants:
The defendants, Stewart, Burrowes, Warden, and King hereby except to the finding and decision of the court herein at Special Term, as follows:—
1. The court' should have found and determined, that on December 8th, 1854, the sheriff of the city and county of Hew York went to the Brevoort House, and under and by virtue of the execution, in favor of Alexander T. Stewart and others, against Curtis Judson, for $23,717.90, and interest, duly levied upon all the furniture and property then contained in said house, and belonging to said Judson, or in his possession; that at the time of such levy said property was in the possession of said Judson, and in charge of his clerks and servants, said Judson being temporarily absent from the premises; that said sheriff informed one of said
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clerks so in charge of the fact of such levy being then made, and afterwards made a general inventory of the property so levied upon.
2. The court should have found and determined, that by virtue of such? levy, the defendants, Stewart, Burrowes, Warden, and King acquired a valid lien upon the said property, to the extent of the amount specified in said execution, and became and were entitled to be first paid out of the proceeds thereof, prior to any claim, right, or lien acquired under or by virtue of the mortgages to Randolph W. Townsend, Cornelius and Henry Baker, George Slater, and Hiram Cranston, or either of them.
3. The court should have found and determined, that the said several mortgages executed by the said Judson to the said Randolph W. Townsend, Cornelius and Henry Baker,.George Slater, and Hiram Cranston, of and upon the furniture and property contained in said Brevoort House, were not, nor was either of them, accompanied by an immediate delivery and followed by an actual and continued change of possession of the things mortgaged, and were, therefore, fraudulent and void, as against the said defendants, Stewart, Burrowes,. Warden, and King.
4. The court should have found and determined, that upon the trial of this cause it was not made to appear on the part of the said Randolph W. Townsend, Cornelius and Henry Baker, George Slater, and Hiram Cranston, nor on the part of any, or either of them, that the said several mortgages to them, or either of them, were made in good faith, and without any intent to defraud the creditors of said Judson.
5. The court should have found and determined, that no valid consideration was shown for making the mortgage by Judson to Townsend.
That a copartnership indebtedness of Judson and Cranston to Townsend formed no valid consideration as against the said Stewart, Burrowes, Warden, and King, for making the mortgage to Townsend upon the individual property of said Judson.
That to the extent of such indebtedness of Judson and Cranston to Townsend, the said mortgage to Townsend was entirely void as against said Stewart, Burrowes, Warden, and King, the individual creditors of said Judson.
6. The court should have found and determined, that no valid
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consideration was shown for making the mortgage by Judson to Cornelius and Henry Baker."
7. The court should have found and determined, that after the purchase of the New York Hotel by the defendants, Judson and Cranston, in 1854, it was agreed between them and the plaintiff that inasmuch as Judson had used in such purchase,moneys which he had borrowed from and owed to the plaintiff, the plaintiff should be, and became a copartner with them in said New York Hotel, to the extent and in the share and .proportion that such indebtedness bore to the whole cost or purchase money of said hotel.
That thereby said Slater became and was a copartner in said firm of Judson & Cranston, and all such indebtedness was thereby cancelled.
8. The court should have found and determined that no valid consideration was shown for making the mortgage by Judson to Slater.
9. The court should have found and determined, that the mortgage made by Judson to Slater, was usurious and void, and that Stewart, Burro wes, Warden and King, judgment creditors of said Judson, had a right to set up said usury against the claim of said Slater.
10. The court should have found and determined, that the mortgage made by Judson to Cranston was, without consideration, fraudulent and void as against Stewart, Burro wes, Warden and King, judgment creditors of said Judson.
11. The court erred in finding as conclusions of law—
That the mortgages held by Cornelius and Henry Baker, Hiram Cranston, Greorge Slater and Randolph W. Townsend, respectively, are not rendered invalid and fraudulent by reason of the said several mortgagees therein not taking immediate possession of the property.
Also, that the possession of the defendant Rose, taken on December 9th, 1854, superseded any right to take possession in the plaintiff, or in the defendants C. & H. Baker, or the defendant Cranston, and was subordinate to the defendant Townsend; and that the omission to take possession from the 30th November, in the case of the defendant Townsend, and from the 6th of Decern ber, in the case of the plaintiff, and of the defendants C. & H. Ba
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ker and Cranston, between such dates respectively and the 9th of December, was so justifiable under the circumstances of the case as to repel any presumption of fraud.
Also, that there was no such actual levy made under the execution in favor of the defendants Alexander T. Stewart and Company, as to deprive the said defendants and the plaintiff, the mortgagees in this cause, of any rights held by them, or to which they were entitled by virtue of their mortgages respectively.
Also, that the mortgage held by the defendant Townsend is not rendered invalid, in whole or in part, by being given in part to secure a partnership debt of Judson & Cranston to him.
Also, that the allegation of usury, in the mortgage given to the plaintiff Slater, has not been established.
Also, that the mortgage to Slater is a valid security for the amount found by the court, or claimed to be due thereon, or for any amount whatever.
The court also erred in adjudging that the plaintiff, or the defendants Townsend and Cornelius and Henry Baker, or any or either of them, were entitled to receive and have any of the moneys in court, in this cause, prior to the payment thereout of the amount so due and owing to the defendants Stewart, Burrowes, Warden and King, upon their judgment docketed in this court on the 6th day of December, 1854, against the said Curtis Judson, for $23,717.90.
The defendant Rose hereby excepts to the finding and decision of the court herein, as follows:
1. The court should have found and determined, that on November 28, 1854, and during the absence of said defendant Rose from the city of New York, the defendant Judson made and executed to him a mortgage upon all the property of said Judson contained in said hotel, called the Brevoort House, to secure the payment of $10,500, then actually and honestly owing or due from said Judson individually to said Rose.
That upon' the day said Rose first came to the city of New York, after said mortgage was given, to wit, on December 9th, 1854, he immediately took into his possession and custody all the hotel furniture and property contained in said mortgage.
That the property so mortgaged was insufficient for the purpose of carrying on the hotel; a large part of the furniture, &e., neces
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sary for that purpose, and then used in said hotel, belonged to one James M. Sanderson, or his assigns.
That, from the time of so taking possession, said Rose continued the said property in the said hotel, up to the time of the taking possession thereof by the receiver appointed herein, by the order of this court, dated March 29, 1855. That the continuance of the mortgaged property in said hotel was not injurious to it, but, on the contrary, was highly beneficial to said furniture, and was necessary for its due and proper preservation.
That the evidence upon the trial established the fact, that said furniture and property so mortgaged would have been reduced in value one-half, if the said Rose had not continued it in said hotel in maner aforesaid, up to the time of the sale thereof, by said receiver, under the order of this court.
2. The court should have found and determined, that the said mortgage to the defendant Rose had been duly proven upon the trial, and was a valid and subsisting lien upon the proceeds of the sale of said property, and entitled to be paid thereout.
That there should be paid to said Rose, out of the moneys in court, in this cause, the sum of $10,500, with interest from November 28th, 1854.
That there should also be paid to said Rose, out of said moneys, his costs and expenses in this action.
3. The court erred in directing a reference for the purpose of determining upon the validity of the mortgage to the defendant Rose, all the evidence relating to it having been produced by the parties at the trial; and neither having proposed to offer any new or additional testimony respecting it, the court was bound to find upon the issue thus presented.
4. The court erred in directing a reference respecting an alleged liability of the defendant Rose, arising out of his possession, as mortgagee, of the property mortgaged; or respecting any of the matters directed to be inquired into, upon the reference ordered by the final judgment herein; no facts having been found by the court which would make such reference, for any or either of the purposes aforesaid, necessary or proper.
The appellants herein further except to the judgment in this action, upon the following grounds:
1. Because the finding of the court, upon the facts and the con
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elusions of law thereon, were not made within the time required by law, nor until after the judgment was entered in this action.
The judgment was entered on December 11th, and the finding and conclusions aforesaid were made and bear date December 20th, 1855. •
2. The aforesaid finding and conclusions do not support or authorize the making or entry of the judgment entered herein. Mor is the judgment in accordance with the finding, by the court, of the questions of fact, or law, or both, which arose upon the trial.
i The appeal was heard upon a case containing all the proceedings in the cause
H. Hilton, for the appellants.
H. F. Clark, for complainant Slater.
L. Birdseye, for respondents, C. & H. Baker.
D. D. Field, for R. M. Townsend, respondent.

The first inquiry in the proper order of discussion is, whether the mortgage to Mr. Townsend must be adjudged to be fraudulent and void as against the appellants, Stewart & Go. ? and in considering this, nearly all the important questions arising in the cause will be determined.

The mortgage to Mr. Townsend is sought to be impeached upon two grounds.

I. That it was not accompanied by an immediate change of the possession of the chattels mortgaged, and that no cause for not changing the possession has been shown, that the law will approve.

2. That the larger portion of the debt for the securing which it was given, was not due from Judson individúally, but from the firm of Cranston & Judson, and that this fact rendered the mortgage fraudulent and void on its face as against the separate creditors of Judson, and therefore void as against the appellants, Stewart & Co.

As to the first objection, that there was no immediate change of the possession, we strongly incline to the belief, that the act of 1833,

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which declares that a mortgage of chattels, not followed by an immediate change of the possession shall be absolutely void as against creditors and purchasers, unless the mortgage, or a copy thereof, shall be duly filed as directed by the act, was designed to repeal, and ought to have been construed as repealing the provision in the Revised Statutes, which, when the possession is not changed, raises a presumption of fraud that can only be rebutted by evidence that the mortgage was made “in good faith, and without any intent to defraud creditors or purchasers—the reasonable construction of the act seems to be, that where the possession is changed, the filing of the mortgage, and where the mortgage is filed, a change of the possession, is unnecessary—the change in the one case, and the filing in the other being equivalent to an actual notice, giving to subsequent creditors and purchasers all the security against fraud that can justly be required, and thus placing a mortgage of chattels when filed, substantially on the same footing as a mortgage of lands, when recorded. It must, however, be admitted, that the Supreme Court decided at an early day, that the act of 1833 was not to be construed as repealing the provisions of the Revised Statutes, but that (in the words of Mr. Justice Bronson,) its only effect was “ to add another to the grounds upon which a mortgage of chattels maybe declared void.” ( Wood v. Lowry, 17 Wend. p. 492). Mor can it be denied that there are several cases in the court of errors, in which this construction seems to have been adopted and followed. It is, therefore, probable that the question cannot now be regarded as open. Assuming, then, that the statutory provisions are still in force, is it their just interpretation, that a mortgage of chattels not accompanied by a change of the possession, must be adjudged to be fraudulent and void, unless the reasons given for not changing the possession are satisfactory to the court? In other words, is the question whether the presumption of fraud which the statute raises, is repelled by the evidence—a question of law or of fact? is it to be determined by the court alone, or when evidence is produced, by the jury?

We confess our surprise, that at this day such a question should be raised. Many years have elapsed since it was definitively settled, and the whole argument of the counsel for the appellants was built upon a construction which the court of last resort has overruled and exploded.

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It is true that the former Supreme Court, in Doane v. Eddy, ( 16 Wend. 523 ,) Randall v. Cook, ( 17 Wend. 53 ,) White v. Cole, ( 4 Wend. 119 ,) and many other cases, have held the doctrine for which the counsel contended, namely, that in all cases of a sale or mortgage .of chattels, some good and sufficient reason, such as the law will approve, must be shown for leaving the property in the possession of the vendor or mortgagor; and that when the property is of such a nature that there may be an immediate change of possession, that change must be made, or the law will pronounce the transaction fraudulent as against creditors and purchasers. But it is equally certain that this doctrine, as repugnant to the plain words of the statute and the manifest intention of the legislature, has been distinctly repudiated and in terms overruled by the court of errors in Smith v. Acker, ( 23 Wend. 653 ,) Cole v. White, ( 26 Wend. 519 ,) and Hanford v. Artcher, ( 4 Hill. 272 ,) and that the paramount and controlling authority of these decisions has been fully acknowledged by the present Court of Appeals in Butler v. Miller, (1 Com. 499,) and in Griswold v. Sheldon, (4 Com. 581.)

The law, therefore, is now settled, that when a mortgage of chattels is presumed to be fraudulent, on the ground that it was not followed by an immediate change of possession, an inquiry into the motives, reasons, or causes for not changing the possession is irrelevant, so far as it is designed to raise any distinct question for the determination either of the court or jury. The law is settled that the true and sole inquiry is, whether the presumption of fraud is repelled by evidence, that the mortgage (in the words of the statute) was made “in good faith, and without any intent to defraud creditors or purchasers ?” that the question of fraudulent intent in this, as in all other cases arising under tne statute, where it depends upon extrinsic proof, is purely a question of fact, which it belongs to the jury alone to determine, and that their verdict in favor of the validity of the transaction, if founded on pertinent evidence, is conclusive. Consequently, when a cause involving the question, either from its nature or by the consent of the parties, is tried by a judge at Special Term, his finding of the fact is just as conclusive as the verdict of a jury. The true construction of the statute, therefore, is, that its only effect, when the execution of a mortgage is not followed by

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an immediate delivery of the possession, is to throw the burden of proving that the transaction was fair and honest upon the mortgagee, and when the proof thus given by him is relevant and satisfactory, and the mortgage has been duly filed, it matters not how long, or for what reasons, the mortgagor was permitted to retain the possession.

What, then, is the proof which, in such cases, the mortgagee is required to give to rebut the presumption of fraud ? It is this, and only this: He is bound to show that the debt mentioned on the mortgage was actually due, and that to secure its payment was the sole object of the parties.

We think with the Judge below that this proof was given in relation to each of the mortgages now sought to be impeached, and are therefore of opinion, that his finding, that each of them was made in -good faith and without any intent to defraud creditors or purchasers, is conclusive.

The second objection to the validity of Mr. Townsend’s mortgage, that it was given to secure a partnership debt, is also founded on an erroneous view of the existing law, and, emphatically, of the position and rights of Stewart and Go. as the creditors of Judson.

As each partner in a firm is personally liable for the payment of its debts, there is certainly no law that forbids him from paying, or securing the payment of the whole, or of any portion of them, from his own separate property or funds; and in many cases to make such payment, or give such security, may not only be his right, but as between him and his partners a positive duty; the debt or fund or money, may, in respect to the creditor, be a partnership debt, and yet may be one which, in respect to his partners, he is bound to discharge; and, assuredly, it has never been supposed that the creditor to whom the payment is made or security given, is bound to inquire into the accounts of the firm, or that his right to accept such payment, or security, is at all affected by the insolvency of the partner from whom he receives it.

The cases upon which the learned counsel for the appellant rested his argument, it is not difficult to show, are quite inapplicable. It is true, that when an insolvent firm make an assignment of the partnership property for the benefit, of their creditors, they have no right to- give a preference, in the order of payment, to the

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separate creditors of an individual partner; and it may also be admitted that when an insolvent partner makes an assignment of his separate property for the benefit of his creditors, he has no right to give a preference to a creditor of the partnership; in each case the property assigned' is considered as a trust fund, applicable, in the first instance, to the payment, in one case, of the partnership, and in the other, of the separate creditors; but in neither case, according to the decision of Chancellor Walworth in Kirby v. Schoonmacker (3 Barb. Ch. R. 46), and of this court in Nicholson v. Leavitt (4 Sand. S. C. R. 305), does the illegal preference render the assignment wholly void. It is only the clause giving the preference that is rendered void, and it can only be declared so at the instance, and for the benefit, of the creditors whose claims have been unjustly postponed, and who, by such a declaration, become entitled to share in the fund which the debtor had attempted to divert from its proper application. In Kirby v. Schoonmacker, where the bill was filed by a judgment creditor on his own behalf, to set aside an assignment made by a partnership, upon the ground that it gave a preference to debts due from the partners individually, the Chancellor, holding that the preference was not evidence of a fraudulent intent that could avoid the asr signment, but could be regarded only ás a violation of the equitable rights of the partnership creditors as a class, also held, that it was only upon a bill in behalf of all those creditors that any relief could be granted. The bill, not being of this character, was therefore dismissed.

It is obvious that the doctrine which has thus been stated and explained has no application to the case now before us, for not only is no trust created by the mortgage in favor of the separate creditors of Judson, but those creditors as a class are not before the court, nor from the nature of the action—seeking only the foreclosure of the mortgage—could they properly be made parties. Could we, therefore, admit, which we are far from doing, that a mortgage given by an insolvent partner to secure the payment of a partnership debt, may be avoided at the instance and for the benefit of his separate creditors, it still remains certain, that to this relief the defendants Stewart & Co., merely as judgment creditors, and claiming only upon their own behalf, cannot be entitled. This objection to the validity of the mortgage is not one

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which they, acting separately, have any right to urge, unless upon the supposition that the execution issued upon their judgment, and the levy asserted to have been made under it gave them a lien upon the mortgaged property which may entitle them to share in the distribution of the fund arising from its sale. It is upon the truth of this supposition that the case of the appellants, viewed in its most favorable aspect, wholly depends. If in no event can they be entitled to a share of the fund in court, it is clear that they can have no right to question the propriety of the judgment that has been rendered.

We are, however, very clearly of opinion that the appellants, neither by virtue of their execution nor otherwise, acquired any lien upon the property mortgaged that can entitle them to share in the distribution of its proceeds. This property was not bound by their execution at all, and the pretended levy was illegal and void. Judson was not the owner of the property when the execution was issued, nor had he any interest upon which the process could attach or that could rightfully be made the subject of a levy and sale under it.

There is a wide difference between a mortgage of lands and a mortgage of chattels. In the first case, as the law in this state is now settled, the estate, subject to the mortgage, remains in the mortgagor, is bound by a judgment, and may be sold under an execution, against him—the mortgage is regarded merely as a security for the debt, and not as a transfer of the title. But a mortgage of personal chattels, in all cases, vests the legal title in the mortgagee, and when by the terms, or by the legal construction of the instrument, he has an immediate right to the possession, although the possession may not in fact have been changed, he is, in judgment of law, the absolute owner, and it is merely as his bailee and by his sufferance that the mortgagor retains the possession. The latter has no interest that is bound by, or can be sold under, an execution against him. When by the terms of the mortgage the mortgagor is to remain in possession for a certain time, his temporary interest, subject to the mortgage, may be levied on and sold, but his interest, in other cases, is a right of redemption only, a mere chose in action which, unless united to a right to the possession for a definite period, can never be the subject of a levy and sale under an execution. Such is tire estab

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lished and undoubted law, as laid down by Mr. Justice Gardiner, in conformity to many former decisions, in delivering the judgment of the Court of Appeals in Mattison v. Baucus, (1 Comst. 295,) vide also Hull v. Carnley, ( 2 Duer, 105 ,) and cases there cited, and Butler v. Miller, (1 Comst. 500,) and applying this law to the facts of the case, it is at once manifest that if the mortgage to Townsend, or the mortgage to Rose is valid, the defendants Stewart & Co. have no claim to any portion of the fund to be distributed. If they acquired no lien by their execution, their situation and rights are exactly the same as those of all the other separate creditors of Judson, and which in the present suit we are not at liberty to consider.

That the mortgage to Townsend and the mortgage to Rose are both of them valid we have already decided, in overruling the objection that neither was followed by an immediate change of the possession. The mortgage to Townsend, in addition to the partnership debt of Cranston & Judson, was given to secure a debt of $1,000 then due to him from Judson personally, and to this extent was certainly valid even against the separate creditors of Judson. It contains no provision giving to Judson a temporary right of possession, nor can it be doubted that, by its legal construction, it vested in Townsend an immediate right of possession, as well as the legal title to the property mortgaged. He was, therefore, when the execution of the appellants was issued, in judgment of law, the sole and absolute owner of the property, subject only to a right of redemption in Judson, and in subsequent mortgagees. The same observations are applicable to the mortgage to Rose: $7,500 of the debt it professes to secure was due when the mortgage was executed, and that it gave to him an immediate right to the possession, has not been denied.

Placing our decision that the appellants acquired no lien upon the mortgaged property by force of their execution, and can, therefore, have no title to share in its proceeds, upon the grounds that have been státed, it is unnecessary to consider the questions that were raised upon the hearing in relation to the validity of the iudgment confessed by Judson to the appellants, and the suffir ciency of the levy made by the plaintiff. The objections to the judgment, were it necessary, we should, probably, overrule, but it would be difficult for us to say that a valid levy was, in fact,

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made, or .if made, that it was not subsequently abandoned. It would seem from the evidence that Rose took and retained the possession of the mortgaged property, not only with the acquiescence of the sheriff, but with the knowledge and consent of the appellants.

Our conclusion is, that the judgment at Special Term, directing that the amount due on Mr. Townsend’s mortgage, together with his costs in the action, shall be immediately paid to him out of the fund in court, must be affirmed, and that he is also entitled to his costs on this appeal, to be paid to him by the appellants Stewart &Co.

We are also of opinion that the like judgment must be rendered in relation to the Baker mortgage, the consideration for which was ftdly proved upon the trial, and which was alleged to be void upon the like ground of the non-delivery of the possession.

Nor can we doubt that it is our duty to render the like judgment in favor of the plaintiff Slater. It is true that the proof upon the trial, in relation to the amount of the debt due to him from Judson, was by no means as clear and satisfactory as that in support of the prior mortgages, nor can it be said that the charge of usury was wholly unsustained; but these are questions of fact which were decided by the Judge in his favor, nor can his finding, in relation to either of them, be set aside as against the weight of evidence. All that can be said is, that the evidence was somewhat doubtful and conflicting. It is also proper to be remarked, that the charge of usury was not made at all in the original answer of the defendants Stewart & Co., and that in permitting its introduction by way of amendment, the Judge exercised a discretion which the provisions of the Code hardly seem to justify—an opinion in which he now fully concurs. Whether the defendants would be entitled to set up usury as a defence at all, is a question of law, which, as the fact has been found against them, it is unnecessary now to determine.

I pass now to the appeal of the defendant Rose. His appeal is limited to that portion of the judgment which directs a reference for the purpose of ascertaining the amount due upon his mortgage, and for taking an account of the profits received by him while in possession, and which also permits any party to the action to impeach his mortgage, and the consideration thereof, and to produce

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testimony for that purpose before the referee. This reference, so far as it admits an account to be taken, we have no doubt was properly ordered, but we agree with the counsel for this appellant, that as the existence and amount of the debt for which the mortgage was given were very clearly proved upon the trial, and no evidence to impeach the transaction was then given or offered to be given, the issue as to the validity of his mortgage, which is raised by the pleadings, ought then to have been determined in his favor; the judgment must, therefore, be modified by striking out the clause which permits the mortgage to be impeached before the referee, and by substituting another affirming its validity.

The only objection that remains to be noticed is one which was relied on by all the appellants. It is, that the decision of the Judge was not given in writing, and filed with the clerk within twenty days after the court at which the trial took place, (Code, § 261). As we intimated to the counsel upon the argument, this is not an objection to which, upon the. hearing of an appeal, we can listen, and we trust it will never again be urged. The provision of the Code upon which it is founded, has been frequently decided in the Supreme Court and in this, to be simply directory, and, consequently, that its non-observance by a Judge furnishes no ground for a reversal of his decision. It is neither an irregularity that renders a judgment void, nor an error that justifies its reversal.

The judgment appealed from, modified as I have stated, is, therefore, affirmed.

Cases cited