Manning v. Monaghan — 23 N.Y. Super. Ct. 231

Majority

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Charles A. Manning, Plaintiff and Respondent, v. Patrick Monaghan et al., Defendants and Appellants.

Headnote

1. It is not necessary, in order to enable a mortgagee of chattels, whose mortgage has been once duly filed, pursuant to the statute upon that subject, (Laws of 1833, ch. 279, § 1,) to maintain an action against third parties for talcing the chattels out of the possession of the mortgagor, within a year from the filing of such mortgage, and selling them, that such mortgage should be refiled with the statement required by the statute at the end of such year.

2. A mortgagee of chattels may maintain an action for injury to his reversionary interest therein, caused by a sale thereof, under proceedings against the mortgagee while in possession, in separate parcels, to numerous purchasers.

3. In an action for such injury, it is not necessary for the mortgagee to prove that he has been unable to find such purchasers after diligent search for them.

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4. Proof, in such action, of the purchase of a number of the articles by one person, known to the plaintiff therein, does not render it necessary for the latter to prove a demand by him of such articles from such purchaser, in order to enable him to recover damages for the removal of such" articles, against the sellers. '

5. The mere presence of the mortgagee at such sale, without objecting thereto, is not a waiver of such right.

6. Neither a demand by such plaintiff, from the sellers, of the proceeds of such sale, nor his mere commencement of an action against one of the purchasers at such sale, subsequently discontinued, operates as a.ratification of the sale of all such goods or of those sold to such purchasers.

7. An omission by a plaintiff in such an action, where the sale was made by a Receiver in another action, at the instance of the party thereto, on whose behalf he was appointed, contrary to his duty, under the orders of the Court by whom he was so appointed, to obtain the leave of such Court to commence such action, constitutes no objection to the recovery therein against such Receiver and party by whose direction such sale was made.

(Before Bosworth, Ch. J., and Moncrief and Robertson, J.)

Heard, February 2, 1863;

decided, February 21, 1863.

Appeal by the defendants, from a judgment recovered by the plaintiff against them, after a trial before Mr. Justice Monell and a Jury, on the 8th of January, 1862, and from an order denying a new trial.

The action was brought against Patrick Monaghan, John Cavanagh and Leonard Gosling, to recover damages on account of the seizure and sale of certain household furniture, which one Schenck had mortgaged to the plaintiff. The mortgage was given to secure SI,070, payable in one year, with a provision that until default, the mortgagor should continue in the full possession and enjoyment of the goods. Within. the year, the defendant, Monaghan, recovered a judgment against Schenck, and on the execution being returned unsatisfied, he instituted proceedings supplementary to the execution, which resulted in the appointment of the defendant, Cavanagh, as Receiver. He took the goods, and caused them to be sold at auction. Gosling, the remaining defendant, purchased a portion of the goods at the sale.

The action was first tried before Mr. Justice Bosworth and a Jury, in November, 1856, arid, the Jury having

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passed upon specific questions, the Court directed the questions of law, as far as they related to Cavanagh and Monaghan, the present appellants, to be heard in the first instance at General Term, and that judgment be there applied for in the first instance, and dismissed the complaint as. to the defendant* Gosling. The Court, at General Term, rendered judgment against = the defendants, Monaghan and Cavanagh, and sustained the dismissal of the complaint, as against the defendant, Gosling. (See X Bosw., 459.) Monaghan and Cavanagh then appealed to the Court of Appeals, and the plaintiff also appealed from the judgment of nonsuit, in favor of the defendant, Gosling.

The Court of Appeals ordered a new trial, as against the present appellants, on the ground that there had been a mistrial. (See 23 N. Y. E., 539.) To avoid all doubts upon the point, as to the question of misjoinder of parties, the plaintiff’s counsel, upon the second trial, discontinued the action as against the defendant, Gosling, and elected to proceed against the present appellants, Monaghan and Cavanagh, alone.

Upon the second trial, it was admitted that the mortgage was given to secure a just debt, and that there was a good legal reason for permitting the goods mortgaged to remain in the possession of the mortgagor. It appeared from the evidence, that the chattels consisted of various articles of household furniture, carpets, paintings, &e. That the mortgage was duly filed on the 11th of October, 1854, a few days after it was executed. The mortgage was givén to secure payment of a note which was payable in one year from the date of the mortgage.

The goods in question, comprising the larger part of those included in the mortgage, were taken from the mortgagor’s house by the Eeceiver, the defendant, Cavanagh, at the request and by the direction of the defendant, Monaghan, on the 27th of February, 1855, and were removed to an auction room, where they were sold with other articles, by auction, on the 21st of April, 1855. The plaintiff, the mortgagee, had notice of the sale, and was

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present, with his counsel, at the sale. The defendants,* Monaghan and Oavanagh, had notice of the existence of the mortgage, at the time they seized the goods, but no notice was given at the sale of the existence of the mortgage. On the 5th and 8th days of October, when the mortgage became due, the plaintiff demanded the property, both from the mortgagor and from the defendants, Monaghan and Oavanagh, and they refused to deliver the same, the defendants stating that the goods had been sold at their request, and that they had not then possession thereof.

The counsel for the defendants, Monaghan and Oavanagh, then moved to dismiss the complaint as against them, on the following grounds, viz.:

First. That no proof was given that the defendants, Monaghan or Oavanagh, took the property mortgaged, or any part thereof.

Secondly. That the defendants, Monaghan and Oavanagh, (even though they took the property out of the possession of the mortgagor,) were not liable to the plaintiff upon the alleged cause of action stated in the complaint, because no proof has been given that either the said Monaghan or Oavanagh had possession or control of any part of it when the mortgage became due.

The Justice denied the motion, and the counsel for the defendants excepted.

Some further evidence was then given, showing that there was a large attendance of purchasers at the sale, and that the goods sold well and brought their full value. It was admitted, also, that the mortgage held by the plaintiff had never been refiled.

At the close of the trial, after the counsel for the plaintiff had elected to abandon his claim and discontinue this action as against the defendant Gosling, and such discontinuance had been accordingly entered by the Court, the counsel for the defendants Monaghan and Oavanagh each moved to dismiss the complaint as against the said defendants respectively, on the following grounds, viz.:

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First. Because the defendant Cavanagh, as Receiver, had a right, when he took and sold as against the plaintiff’s mortgage, to sell and dispose of the goods taken by him, and that the plaintiff, for either such taking or sale, cannot maintain this action as against him therefor.

Secondly. Because the evidence shows that the defendant had not the goods, or either of them, at time of the demand made therefor by the plaintiff.

Thirdly. Because the complaint shows that the defendant had not the goods at the time the mortgage became due or after.

Fourthly. Because the evidence shows that the goods, on the 21st of April, 1855, were in the possession of Irving & Co., the auctioneers, and no proof has been shown of a demand of the same or any of them from them, and that without such demand being made, the plaintiff cannot maintain this action against the defendant.

Fifthly. That the plaintiff cannot maintain this action as against the defendant without proving efforts to find the goods mortgaged to him, and damages consequent to him thereupon.

Sixthly. Because no damage to the injury of the plaintiff has been proved against the defendant, and that therefore the plaintiff cannot recover as against him.

Seventhly. Because no evidence of a demand of, or refusal to deliver the goods by, the defendant Gosling, has been proved, and without such proof the plaintiff cannot recover as against the defendant.

Eighthly. Because by the complaint it appears that the goods were in the possession of the defendant Gosling, who claimed as purchaser, and that therefore the defendant is not liable.

Ninthly. Because the plaintiff, by his complaint, has ratified the acts of the defendant Cavanagh, by having demanded from him the proceeds of the sale.

Tenthly. Because the plaintiff having been notified of the said sale, and having the opportunity to attend the same, and having attended to protect his rights, and

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assented to the sale, cannot recover against the defendant for merely selling.

Eleventhly. Because no evidence of the inability of the plaintiff to get the mortgaged goods, having been given, he cannot recover against said defendant.

Twelfthly. Because the plaintiff, under the complaint and evidence, cannot maintain this action against the defendant Oavanagh, he being Receiver, without having first obtained the order of the Court that appointed him.

■Thirteenthly. Because the demand by the plaintiff, on the fifth or eighth day of October, 1854, alleged, and the answer given by the defendants did not constitute a cause of action against the defendant.

■Fourteenthly. Because the plaintiff, by demanding the proceeds of the sale and abandoning this action as against the defendant Gosling, has affirmed the act of sale and cannot maintain this action against the defendant.

Fifteenthly. Because the plaintiff, by not refiling the mortgage within thirty days before the expiration of one year, from the date of filing the mortgage of Mr. Schenck to him, lost his lien upon the property mortgaged as against the defendant.

The motion was denied on each of the grounds thus successively submitted, and an exception taken to each ruling respectively by the defendants.^

The counsel for each of the defendants then requested the Justice to charge the Jury as follows:

First. That it was the duty of the plaintiff to make efforts to get possession of the goods sold from the parties who bought or had them, and /that as no such proof was given, only nominal damages coulci be recovered by the said plaintiff against said defendant.

Secondly. That the plaintiff could only recover against the defendant for such damages as he could prove had resulted to him by reason of the taking away, selling and scattering the property,, such as the expenses in traveling for, and getting possession of the property and the value of the same, if not found.

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Thirdly. That the defendant is entitled to be credited with the value of the goods purchased by the defendant Gosling.

Fourthly. That the defendant was not liable unless he had possession of the goods or some part thereof, at the time the mortgage became due.

The Justice refused each of these requests to charge, and the counsel for defendants excepted to each refusal. In the course of his charge to the Jury the Justice instructed them that if the mortgage was a valid subsisting security in the hands of Mr. Manning, “ then the next inquiry is whether he has, by any act of his, waived that security or consented to the disposition of the property which is covered by it. There is no evidence here of waiver that I am aware of; indeed, there is an entire absence of any act on the part of Mr. Manning, except that which took place at the sale, which can be construed into a waiver, and I may as well here observe, that the presence of Mr. Manning at that time under the circumstances of the case, can in no way affect his rights.”

At the close of the charge, the counsel for the defendants requested the Justice to charge the Jury that it is for them to determine whether Mr. Manning consented to the sale of the property at that time, and to correct and withdraw that part of his charge where he said “ that there is no evidence of the waiver of Mr. Manning,” and to charge that if Mr. Manning were present at the sale and did not object, it is evidence of an assent; that if the plaintiff was present at the sale and did not forbid the sale, or claim his right as mortgagee, it is evidence of a consent, and the plaintiff is not entitled to recover.

This request the Justice refused, saying, however, that he was willing to charge that if the Jury come to the conclusion from the evidence in the case that Mr. Manning consented to the sale, that he cannot recover.

The counsel then requested the Justice to charge that the mere taking could not affect the plaintiff's right as mortgagee.

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The Court answered, “ It was the taking followed up by the selling in the manner the property was sold,” and refused to correct the charge in any other respect. The counsel for the defendants excepted to these refusals.

The Jury found a verdict for the plaintiff for $1,368.06. The defendants moved for a new trial, which was denied and judgment having been entered they each appealed.

Francis Byrne, for defendants, appellants.

I. The mortgage debt not being due, the defendants had a right then to seize, sell and deliver the property, to satisfy the judgment, and no action lies. (Hull v. Carnley, 11 N. Y. R., 501; 17 Id., 202; Goulet v. Asseler, 22 Id., 226; Manning v. Monaghan, 23 Id., 544, 548.)

II. The mere sale and delivery to different purchasers, is a nominal damage at most, and particularly where the auctioneer is known, and the names of the purchasers were given at the sale, and the plaintiff, his counsel, and mortgagor were present, and required no information as to the purchasers, and where the plaintiff, since his mortgage became due, made no efforts to find or to account for the situation of the property.

III. To infer that because articles are sold to different purchasers, they are incapable of reach by, and lost to the mortgagee, is absurd.

IV. The defendant Cavanagh, being Receiver, became possessed of all the rights and property of Mr. Schenck, (Rules of Court, Ho. 92,) and if plaintiff desired to prevent the sale and protect his interests, he could have invoked the aid of the Court. The Receiver was a legal trustee, an officer of the Court, and represented all creditors having a lien on the property; the goods were then in the custody of the law without a levy; (Story’s Equity, §§ 826 to 831; Willard’s Equity, 332, &c.; 19 E". Y. R., 370 9 Id., 142; 8 Paige, 388;) but the sale was by plaintiff’ consent; he was present also, and did not object, he is, therefore, estopped to deny the validity of the sale; besides, he demanded the proceeds of the sale, and there

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fore affirmed it. A demand was made of the property when the defendants had not possession. (Hill v. Covell, 1 Comst., 522; 1 Cow. & Hill, 454-461.)

Y. The policy of the law is to sell distributively, for this is for the best interests of debtor and creditor.

VI. The mortgage not being refiled, ceased “to be valid ” against creditors at the expiration of one year from the date of filing. (2 R. S., 4th ed., 318, § 11; Farmers’ Loan and Trust Co. v. Hendrickson, 25 Barb., 484 ; Nitchie v. Townsend, 2 Sandf., 299 .) The act must be strictly complied with. (Ely v. Carnley, 19 N. Y. R., 496.)

YII. A sale of the goods would have been inevitable, as the mortgagor was insolvent. An auction sale is the true evidence of the market value.

YIII. No proof was given of any actual pecuniary injury, or that the goods were sold at an unreasonable time, or that they would have sold for more.

IX. The goods were not shown to have perished or depreciated by the act of the defendants. The presumption is, that they exist; if so, the plaintiff (had he refiled his mortgage) could have maintained an action against the purchasers, but not having done so, they acquired the rights of the creditors.

X. The action against Mr. Gosling was abandoned; he bought goods proved to be of the value of $410.75; or, as the plaintiff alleged, $380.

XI. The Justice should have dismissed the complaint on the grounds moved for, and have charged and modified his charge as requested; and the various exceptions to the rulings were well taken.

Edwards Pierrepont, for plaintiff, respondent.

I. It is settled by the Court of Appeals, as well as by this Court, in this case, that an action of this nature lies. ( 1 Bosw., 459 ; 23 N. Y. R., 539.)

II. The exceptions are untenable. Some of them have been decided against the appellants on the former trial by the General Term of this Court, and by the Court of

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Appeals. Others are plainly frivolous. The assertions contained in the eighth, ninth, and eleventh motions to dismiss the complaint are not true.

The first objection in this case is that the mortgage was not refiled in one year from its original filing. But the property which forms the subject of this action , was sold by the defendants' directions, nearly six months before the end of that year. If they were wrongdoers at the time of the sale, they cannot shelter themselves under the character of creditors, at this time, to defeat the plaintiff’s claim; his right to such redress became perfect at the time of the sale. The plaintiff cannot lose his right of action, by failing to perform the useless ceremony of refiling the mortgage, after the defendants have rendered it worthless as a security.

The next objection to the plaintiff’s right to recover is that the plaintiff was present at the sale, and did not forbid it. The defendants knew his claim at the time of such sale, and cannot avoid liability when they did everything to defeat it. The plaintiff was not bound to give such notice; the defendants, who were putting the property out of his reach, if. any are, were bound to give it, if they wished to save his rights in enforcing their own. If they sold only the judgment debtor’s right, title and interest, there might have been no necessity for mentioning the mortgage, but selling the articles themselves, after notice of the plaintiff’s lien, in a manner to defeat that lien, was. a wrong for which they are responsible. The plaintiff undoubtedly might have given notice of his mortgage to every purchaser, and sued him for the article bought, in case he refused to deliver, it up, when the mortgage should become due, but he was not bound to do so.

The fact that one of the purchasers (Gosling) was originally sued in this action and afterward omitted as a party, cannot alter the plaintiff’s right or his amdtint of damages against the present defendants. If the former was bound to proceed against the purchasers, the latter

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were exempt, but if the latter were liable, he was not bound to sue the former.

The sole ground of complaint is, that the defendants, with knowledge of the plaintiff’s lien, dispersed the goods, so as to render it impossible for him to enforce it. A purchaser of them from the original mortgagor, would have been equally liable for doing the same thing, with the same knowledge. A mortgagee is entitled, until his mortgage is due, to have the mortgaged property so kept together or placed as to be within his reach when his mortgage becomes due. The mortgagor, and all who acquire title under him, to the equity of redemption, with knowledge of the mortgage, become, substantially, bailees for the mortgagee, and are bound to preserve the property for him when his mortgage becomes due. It is immaterial, therefore, how carefully the sale was conducted and what efforts were made to have the property bring the highest price.

There appears to have been twenty-two lots of articles sold, of which the former defendant, Gosling, bought eleven. Several other persons bought the rest, which were sold separately. There were a great many other articles sold at the same time not belonging to the plaintiff or the mortgagor. Although the testimony is not very definite as to the number of purchasers, the separation of the articles in the sale and the fact that there were several purchasers, is sufficient to sustain the verdict of the Jury. The only instruction given to them in regard to the mode of sale, was that the taking, followed up by the selling in the manner the property was sold, was in violation of the plaintiff’s rights; and an exception was taken to a refusal to correct the previous part of the charge as to the liability of the defendants for taking in any other particular. Where the evidence made out a prima facie case, however vaguely, of numerous purchasers and a scattering of the goods, we have a right to infer, in the absence of evidence to the contrary, that the jury adopted the proper rule of law, and found the facts to conform to it. There was no

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request to the Court -on either side, to render the charge more, explicit as to the mode of selling intended; both parties were willing to presume that the Jury understood it in the sense they desired, and that is sufficient. It was in the power of the defendants to have shown1 distinctly, that the purchasers were few and easily accessible; the sale was undoubtedly, therefore, made.in ,such a way as to debar the plaintiff from being redressed for the loss of his pledge, except by multiplied litigation and considerable research, if successful at all. And the case comes within the rule laid down in it when it was before the Court of Appeals. (23 N. Y. R., 539.)

The first motion to. dismiss the complaint was' properly refused upon either ground upon which it was asked ; it was proved that the defendants took the property, and it was immaterial who had it when the mortgage became due.

Of the grounds upon which the second motion to dismiss the complaint was made, seven of them, consisting of the first and last four except the fourteenth, are directly contrary to the former decision of this case both in this Court and the Court of Appeals. (See 1 Bosw., 459 ; 23 N. Y. R., 539.) The sixth is but a corollary from the preceding five. The fifth and eleventh, which required the plaintiff to do that, by creating necessity for doing which, the liability of the defendants arose, to wit, to find the goods and purchasers, are-of course untenable. The seventh, in regard to the necessity of proceeding against a purchaser, and the fourteenth in regard to the actual suit against a purchaser, have already been disposed of. The tenth in regard to the attendance of the plaintiff at the sale,.has also been disposed of. The eighth and ninth, founded on a, supposed ratification of the sale, and an election to make one of the purchasers liable, are equally without support in the testimony, or in any-rule of law.

In regard to the requests on behalf of the defendants to charge the- jury, the first related to the necessity of the plaintiff’s exerting himself to get the goods from the pur

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chasers; the second to the limiting of his recovery to the expenses he should be put to in a successful search, or their value after an unsuccessful search for them; the third related to making one of the purchasers liable instead of the defendants, and the fourth to the necessity of the defendants having the property within possession at the time of the mortgage becoming due; and these questions have already been disposed of. The request to correct the charge by considering the presence and silence of the plaintiff at the sale as an assent, was properly refused. The leading opinion in the Court of Appeals in this case seems to sanction the doctrine that by the parties in this case omitting to notify the purchasers of the mortgage, the plaintiff’s remedy against the defendants was forthwith perfect, but his right against the purchasers was only complete on the exhaustion of such remedy against the defendants.

There being no errors of law in the case, the judgment and order denying a new trial should be affirmed with costs on each, the latter to be fixed at ten dollars.