McCrea v. Hopper

Barrett, J.: This action was brought to foreclose a mortgage upon certain chattels, given by the defendant Moffat to the plaintiff on the 26th — 574 — day of March, 1894. Hopper was made a party defendant as a person having some interest in or lien upon the mortgaged chattels. Judgment was asked against him that he be barred and foreclosed of all equity of redemption in and to the chattels. Moffat did not defend. Hopper alone defended. In his answer he admits the execution and delivery by Moffat to the plaintiff of the latter’s mortgage, also that the same was duly tiled and retiled. He then denies all the other allegations of the complaint. For a further and separate answer and defense, he sets up a chattel mortgage given by Moffat to a company known as the Harlem Reporter Company upon the day when the plaintiff’s mortgage was executed and delivered. He avers that the mortgage to the Harlem Reporter Company covers all the chattels specified in the plaintiff’s mortgage with a few enumerated exceptions; that the plaintiff’s mortgage was, by its terms, made subject to the Harlem Reporter Company’s mortgage, and that the latter was thereafter duly assigned by the company to him for value. Some of the notes, to secure which the Harlem Reporter Company’s mortgage was given, having matured and gone to protest, Hopper asks by way of affirmative relief that this mortgage thus assigned to him be foreclosed, and that the judgment set forth the seniority of his mortgage, and the subordination thereto of the plaintiff’s mortgage. The plaintiff did not reply to these allegations. The question litigated upon the trial was whether Hopper’s mortgage was invalid as against the plaintiff. The sole point of contention upon this head related to the refiling of that mortgage. It was conceded that the plaintiff’s mortgage was filed and refiled according to law. It was also conceded that Hopper’s mortgage was duly filed in March, 1894, and duly refiled in March, 1895. It was also refiled in March, 1896. The plaintiff’s contention is, that this latter refiling was invalid for the reason that the mortgagee, or its assignee, Hopper, failed to comply with an amendment to the act of 1833 (Chap. 379), which was passed in 1895. (Laws of 1895, chap. 354.) The latter act requires, instead of the filing of a copy, a statement describing the mortgage, stating the names 'of the parties, the time when and place where filed, and exhibiting the interest of the mortgagee in the property thereby claimed by him by virtue thereof. The failure to file this statement undoubtedly invalidated Hopper’s mortgage as — 575 — against Moffat’s creditors, and as against subsequent purchasers •or mortgagees in good faith. (Stevenson Brewing Company v. Eastern Brewing Company, 22 App. Div. 523.) Hopper contends that the refiling of a copy of his mortgage, with a statement showing the amount then due, and with the date of filing and refiling indorsed thereon, was equivalent to the statement required by the act of 1895. This contention is plainly groundless. The indorsement was not a statement at all. Certainly not such a statement as is contemplated by the amendatory act, The facts required to be stated are thereby left to mere inference. If the plaintiff’s contention were correct the amendment practically left the law as it was. It is clear, however, that a change was intended and that Hopper failed to comply with the new requirements. The statute must be strictly observed if the validity of the mortgage, as against creditors and subsequent purchasers or mortgagees in good faith, is to be maintained. (Ely v. Carnley, 19 N. Y. 496.) The difficulty; however, with the plaintiff’s contention is that he is not a mortgagee in good faith within the meaning of the statute, as interpreted by the adjudged cases, for the reason that he had full notice of Hopper’s mortgage, and in fact took his own mortgage with such notice embodied in it. His mortgage was in terms “ subject to a chattel mortgage now a lien thereon held by Harlem Reporter Company to secure the sum of fifty-five hundred dollars.” For this reason, as well as because he was not a subsequent mortgagee, he cannot invoke the statute to invalidate Hopper’s mortgage. (Meech v. Patchin, 14 N. Y. 71; Thompson v. Van Vechten, 27 id. 582; Lewis v. Palmer, 28 id. 272; Gildersleeve v. Landon, 73 id. 609; Mack v. Phelan, 92 id. 20.) As was said in the latter case, “ Notice stands in the place of filing.” The plaintiff, however, contends that, even though he fail as a mortgagee, he must succeed as a purchaser at a sheriff’s sale, which was had in December, 1896, upon a judgment obtained against Moffat. It is true that Hopper’s mortgage a ceased to be valid,” as against Moffat’s creditors, upon failure to comply with the act of 1895. It is equally true that notice of an unfiled or improperly refiled mortgage would not affect the title of a purchaser at such a sheriff’s sale. The purchaser referred to in the act is clearly a purchaser from the mortgagor. It is he who is affected with notice of — 576 — the mortgage. The mortgagor’s creditors, however, are not affected by such notice. Hor are purchasers at sheriffs’ sales made under such creditors’ judgments and executions. Any other construction would nullify the statute. It would, upon that construction, only be necessary to proclaim aloud at the sheriff’s sale the existence of a mortgage to prevent any bidding at all; in other, words, to pi-event the collection of the judgment. The statute says that the, mortgage shall cease to l>e valid as against the creditors of the mortgagor, not as against creditors in good faith or creditors without notice. The sale, therefore, under such creditor’s judgment and execution is a sale freed from the mortgage. Here again the plaintiff meets another obstacle to his success. The defendant Hopper’s answer, setting up his mortgage and asking an affirmative judgment of foreclosure therein, was an undoubted counterclaim. There is not a word in the paragraphs of the answer numbered 1 to 11 inclusive which is even suggestive of a defense to the plaintiff’s mortgage. Every word therein contained was appropriate solely to an original complaint in an action by Hopper for the foreclosure of his mortgage. And these paragraphs were followed by the usual demand of judgment for the foreclosure of a mortgage. It is plain that, although not specially denominated a counterclaim in the answer — though in fact pleaded as a further and separate answer and defense — these allegations constituted a counterclaim. The case of Metropolitan Trust Co. v. Tonawanda, etc., R. R. Co. (18 Abb. N. C. 368) is a direct authority upon this point. The facts there were quite similar, and Bbadley, J., in holding that these averments of the answer constituted a counterclaim, said that there was no force in the objection that the answer did not, in express terms, define as a counterclaim the matter set up as such, inasmuch as it distinctly appeared “ by the relief demanded that it was intended as a counterclaim.” So in Bates v. Rosekrans (37 N. Y. 412) Hunt, J., said that “ no particular form of words is necessary to make a pleading a counterclaim, and if the party had in any reasonable language intimated that he intended to make a personal claim in his own favor against the plaintiff, it would have been sufficient.” By not replying to this counterclaim the plaintiff admitted It. He should not, therefore, have been permitted in rebuttal to introduce — 577 — the judgment roll and execution in the creditor’s action, or to prove his purchase at the sheriff’s sale thereunder. Hopper’s counsel objected to this evidence as not within the issues, and the learned judge, in reply to the plaintiff’s observations upon the subject, called attention to the statement of Hopper’s counsel that the plaintiff had not alleged the facts sought to he proved. Notwithstanding all this, the learned judge admitted the evidence. But he made no ruling upon its effect. He apparently disregarded it, or treated it as affording, under the issues presented to him for decision, no ground for denying Hopper his rights under the mortgage. No reference is made to the facts established by this evidence either in the decision or the judgment. Nor did the plaintiff request the learned trial judge to find the facts thus established, or the legal conclusion which he now claims should have been drawn therefrom. He says in his present brief that he did make such requests, and that the learned trial judge refused to pass upon them. But nothing of the kind appears upon the record. All we find is the decision, the judgment and the exception. The exception relates solely to the judge’s decision and judgment with regard to the mortgages and the respective contentions upon that head. But even if the question were properly presented by the record, the result would necessarily be the same. The counterclaim was conclusively admitted by the failure to reply, and the trial judge was bound by that admission. Evidence in hostility to the counterclaim could not prevail as against an admission of record. (Paige v. Willet, 38 N. Y. 28; Getty v. Town of Hamlin, 46 Hun, 1.) We certainly cannot reverse a judgment, correct in all particulars, because of the improper admission of evidence in support of a fact which was not pleaded, and which was entirely outside of the apparent issues between the parties. Hopper went to trial to have it determined whether his mortgage or the plaintiff’s was entitled to priority. That was the sole question presented by the pleadings. The plaintiff, by the offer and introduction of the evidence in question, sought to divert the trial from these issues and to substitute a new issue, namely, whether he was the owner' of the chattels or of Moffat’s interest therein under an independent title quite foreign to that set up in his complaint. It is said that, if the learned judge had rejected the evidence, he might have postponed the trial to enable the plaintiff to move for — 578 — leave to reply to the counterclaim, and in such reply set up his title under the purchase upon the execution sale. So he might, and he might not. We have nothing to do with such possibilities. The question is as to the correctness of the decision upon the pleadings and proofs as they stood when the case was taken under advisement. Was the decision right, notwithstanding the receipt of the evidence 1 W e think it clearly was, and that no evidence could justify a finding as against an express and conclusive admission of record. The judgment should, therefore, he affirmed, with costs. Rumsey, Patterson and Ingraham, JJ., concurred; Van Brunt, P. J., dissented.