Castleman v. Mayer

Laughlin, J.: The learned trial justice found that the mortgage was not given or accepted with any fraudulent intent and that the omission to file it was not for any fraudulent purpose. It is contended that from the nature .of the agreement and the transactions had, the contrary [518] should have been found, but we think there is sufficient evidence to sustain these findings. (Spurr v. Hall, 46 App. Div. 457; Hardin v. Dolge, Id. 416; Brackett v. Harvey, 91 N. Y. 214; Niagara County Nat. Bank v. Lord, 33 Hun, 557; Mitchell v. West, 55 N. Y. 107.) A finding was also made to the effect that there was an immediate delivery of possession of the property to the mortgagee and an actual, continued change of possession thereof. The correctness of this finding is also challenged by appellant. The evidence upon which it is based is undisputed and the question narrows to what is the reasonable inference to be drawn from uncontroverted facts. We are of opinion that the delivery of possession on December thirty-first was only colorable. By the express terms' of the agreement,. it was contemplated that the mortgagor should remain in possession, and the evidence not only fails to show' any open or public change of possession (Crandall v. Brown, 18 Hun, 461; Steele v. Benham, 84 N. Y. 634), but, on the contrary, indicates that the change of ownership and possession were intentionally concealed from the public: We think that the finding of delivery and change of possession was not warranted, but, having reached the conclusion that the judgment should be affirmed notwithstanding, it becomes unnecessary to consider the evidence on this point further. On the 26th day of January, 1897, Mayer, at the request of Pryor’s attorneys, voluntarily delivered the key back and Pryor took possession, and later on the same day turned the property over-to the sheriff with authority to sell the same under the mortgage. The sheriff subsequently sold the property at publip auction and it was purchased by Mayer’s sister. H either the date of such sale or the consideration for which the property sold is stated- in the evidence. The judgments upon which the receiver bases this action were recovered in the Municipal Court of Rochester and transcripts thereof filed on the 4th and 19th days of February, 1897, respectively. There being no finding of fraud, the mortgage is unaffected by the Revised Statutes (2 R S. 136, §§ 5, 6), and is valid unless it comes within the condemnation of section 1 of chapter 279 of the Laws of 1833, which provides as follows: “ Every mortgage or con-' veyance intended to operate as a mortgage of goods and ^chattels [519] hereafter made, which shall not be accompanied by an immediate delivery and be followed by an actual and continued change of possession of the things mortgaged, shall be absolutely void as against the creditors of the mortgagor, and as against subsequent purchasers and mortgagees in good faith, unless the mortgage, or a true copy thereof, shall be filed,” etc. It is not essential that a- party be other than a general creditor at the time when the mortgage was given, but, of course, he cannot enforce any right by virtue of this statute until he recovers a judgment or obtains a warrant of attachment and is in a position to acquire a lien upon the mortgaged property. Until that time, for all practical purposes at least, the mortgage remains valid as to him. (Stephens v. Perrine, 143 N. Y. 476; Mandeville v. Avery, 124 id. 376; Karst v. Gane, 136 id. 316, 320, 323; Button v. Rathbone, Sard & Co., 126 id. 187; Jones v. Graham, 77 id. 628; Kitchen v. Lowery, 127 id. 59, 60; Thompson v. Van Vechten, 27 id. 568; Crouse v. Schoolcraft, 51 App. Div. 160.) We are of opinion that the Court of Appeals did not intend to decide in the later cases of Stephens v. Meriden Britannia Co. (160 N. Y. 178, 181, 182), and Sheldon v. Wickham (161 id. 500), that a general creditor at the time of giving the mortgage could not obtain relief under the statute by subsequently becoming a judgment creditor before the property is sold or appropriated under the mortgage. On January 26, 1897, and prior to the recovery of these judgments, the mortgagor voluntarily surrendered possession of the property to the mortgagee. The mortgage being valid between the parties, the mortgagor could then have lawfully turned the property over to the mortgagee in payment of the indebtedness, or as security therefor, regardless of the mortgage, and in that event those who were general creditors only at that time could not reach the property without first paying the amount honestly owing to the mortgagee. (Hardt v. Deutsch, 30 App. Div. 589; Sheldon v. Wickham and Stephens v. Meriden Britannia Co., supra; Parshall v. Eggert, 54 N. Y. 18 ; Tremaine v. Mortimer, 128 id. 1; Bowdish v. Page, 153 id. 104; Schwarzschild & S. Co. v. Mathews, 39 App. Div. 477.) Although the possession was demanded and taken under the mortgage, that would not affect defendant’s rights, since possession was thus voluntarily delivered at a time when the debtor had a right to turn the property over to his [520] creditor as security for the indebtedness. But there is no finding or evidence that any lien was ever obtained by virtue of these judgments, and for aught that appears in the record, the property was sold to a bona fide purchaser, and sufficient of the proceeds paid to the mortgagee and appropriated by him to the payment of the indebtedness owing to him before the judgments were recovered. Defendant Pryor has not how the possession of the property, and he has only been reimbursed therefrom tlie amount actually advanced by him in good faith to Mayer. Ho lien having been acquired, and defendant’s transactions having been free from fraud, plaintiff is entitled to no relief against him. (Kitchen v. Lowery, 127 N. Y. 53, 59; Niagara County Nat. Bank v. Lord, 33 Hun, 557, 564; see also other cases herein cited.) It follows, therefore, that, notwithstanding this erroneous finding, the judgment must be sustained, as the finding was not essential thereto. The judgment appealed from should be- affirmed, with costs.. Adams, P. J., and McLennan, J., concurred; Spring, J., dissented in memorandum in which Williams, J., concurred.