Walker v. . Henry , 85 N.Y. 130 ( 1881 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The chattel mortgage given by the defendant Joseph Henry, to his brother, the defendant Nicholas Henry, and the subsequent mortgage in renewal thereof, which are alleged to be fraudulent, were executed to secure the payment of various sums of money lent at different times to the mortgagor by the mortgagee. Of the whole amount, $3,000, the sum of $200 was loaned on the day of the date of the mortgage and the remainder prior to that time. The claim that it was given to secure an antecedent debt and was void, as to Minturn, a judgment creditor, whose judgment was docketed before the second mortgage was given, is not well founded. There is nothing in the statute or in the law which interferes with the making of a mortgage to secure such a demand under the circumstances existing. The first mortgage was executed before any judgments had been docketed against the mortgagor, and the mortgagee had no notice of the existence of the debt. Nor does it appear that he had knowledge of the judgments when the second mortgage was given, or that there was any equitable lien in favor of the judgment creditor which gave him any precedence over the mortgagee. The defendant Nicholas Henry was clearly abona fide mortgagee within the statute as against the judgment creditors whom the plaintiff represents, and as such entitled to a preference in collecting his demand out of the proceeds arising upon a sale of the mortgaged property. We have examined the cases cited by the appellant's counsel to uphold the position contended for. They refer mainly to equitable liens and have no application to the facts here presented. The giving of a new mortgage instead of refiling and renewing the same did not affect the lien of the mortgage, or render it invalid except that the mortgagee ran the risk of a levy upon an execution after the first mortgage ceased to be a lien, and before a new one was filed. (Lee v.Huntoon, 1 Hoffm. Ch. 447.) The second mortgage did not extinguish the debt. (Gregory v. Thomas, 20 Wend. 17; Hill v. Beebe, 3 Kern. 556.) It was clearly valid except as against a levy upon an execution issued upon a judgment or a lien by virtue of such execution. The objection that the mortgage was not filed in the town where the mortgagor resided is without merit, as the finding of the court is to the contrary, and no exception is taken to the same.

The point made that the execution on the first judgment was delivered to the sheriff before the second mortgage was given and was not returned until afterward does not aid the plaintiff, as no levy was made or sale had under such execution, and the plaintiff did not enforce his lien. While, perhaps, the plaintiff had a right to levy and sell and thus collect his execution, he allowed it to be returned, and cannot claim that he is entitled to the benefit of the lien acquired after such return. For the enforcement of a lien of an execution a levy and sale is necessary, and such levy should have been made during the life-time of the execution, and no constructive levy can arise or be presumed from the mere delivery of the execution. The goods cannot be seized after the return day, and the writ then ceases to be of any force, and the right of the sheriff under it is at an end. (Hathaway v. Howell, 54 N.Y. 97.) If the judgment creditor had any right under the execution it should have been enforced. And in failing to do this, he lost all claim to a lien on the mortgaged property.

The question of merger does not appear to have been raised upon the trial and there is no finding as to the bill of sale executed by Joseph Henry to Nicholas, or any request to find which presents it for consideration. It is true that the judgment declares the bill of sale as well as all bills of sale or transfers mentioned in the complaint to John Hoppe, and also the chattel mortgage executed by Hoppe to Nicholas Henry to be void as against the creditors of Joseph Henry, and directs that the plaintiff have judgment for the relief demanded in the complaint and that he is entitled to all the property other than that included in the two mortgages to the defendant Nicholas Henry. This was for the benefit of the plaintiff, and there being no finding as to the alleged merger it is not apparent how the question can arise. The bill of sale to Nicholas Henry was not introduced in evidence, but is only referred to in the mortgage from Hoppe to Henry, and as the second chattel mortgage was given afterward and no possession taken under the bill of sale, it was clearly superseded by the chattel mortgage. Even if a merger existed, the subsequent act was a recognition of the mortgage security and reinstated and renewed it as it had previously existed. If any estoppel arose between the parties it was waived by the execution of the second chattel mortgage. It may also be doubted whether the doctrine of merger can be invoked by a creditor to defeat the existence of the lien which the mortgagee here has a right to claim for the protection of his demand.

Upon the trial the plaintiff was asked to state a conversation between himself and Joseph Henry at the time he proceeded as receiver to inventory the property and also with John Hoppe at a subsequent time when he asked him what right he, Hoppe, claimed, also another conversation with Joseph Henry, all of which evidence was objected to and excluded and exceptions taken. There was no offer to show what the conversation was or in what respect it was pertinent, and, therefore, it is not entirely apparent that it was relevant or had any bearing on the case. We also think that as the defendant's claim was under a chattel mortgage which had been filed under the statute, where the possession had not been changed, the declarations of the parties in possession could not bind him or affect his rights. Nor were they competent within the rule that where a combination of several persons for an illegal object is clearly established the acts and declarations of the parties in reference to the subject-matter of the combination is a part of the res gestæ.

The other questions in the case related to the facts, and they are not, therefore, the subject of review upon this appeal.

Most of the questions we have considered are not noticed in the brief submitted by the respondent's counsel or alluded to in the opinion of the General Term, and the record does not disclose that they were very distinctly presented upon the trial.

The judgment was right and should be affirmed.

All concur.

Judgment affirmed.