Powers v. Freeman , 2 Lans. 127 ( 1869 )

By the Court

— Foster, J.

There can he no question but that the sale of the eight cows, made by the defendant to Ilall, on the first day of October, 1866, transferred all the title, which the defendant had to them, subject only to the mortgage which he took to secure the payment of the purchase price. The mortgage recites, “that Emerson E. Hall, of Antwerp, Jefferson county, is indebted to Erastus B. Freeman, of Leray, in the sum of $400, being for the security of eight red cows, on said Freeman farm in Wilna, that have been sold with said Freeman farm to said Ilall; and this mortgage shall he void if said Hall shall pay up. the first year’s interest oil the balance of purchase money for said farm, for the year 1867, as required in an article of agreement this day made; and in case of non-payment of said interest, said Hall shall not be required to do more than return said cows, or those of eqiud value. How for securing the payment of the said debt, and the interest thereon, from the date thereof, to the said Erastus B. Freeman, I do hereby sell, transfer and assign to the said Erastus B. Freeman, the said eight red cows, nozo the property of said Ilall, and on his-farm in Wilna; Provided always, and this mortgage is on the express condition,” &c. The sale to Hall was not conditional, but was absolute; and the only claim that the defendant could afterward have upon them was under his mortgage. And if Hall afterward sold ary of them, the only claim that defendant could have on them, against the purchaser, was in his character of mortgagee.

The court held that as to the five cows which Hall subsequently purchased, and which he sold to the plaintiff, the defendant had no legal claim, and that for those the plaintiff was entitled to a verdict. To which the defendant’s counsel excepted. I have no doubt that this ruling was correct, and that no verbal arrangement which the defendant and Hall may have entered into after the execution of the mortgage, could, as between the defendant and a subsequent purchaser from Hall, subject the cows, not originally included in the mortgage to its terms, or give the defendant a lien thereon as such mortgagee. If his mortgage was valid as against a purchaser in good faith, he might follow the mortgaged cows into the hands of the purchaser and reclaim them; but he could not in any event claim the five co >vs purchased by Hall of other persons by virtue of that instrument. To allow this would be to uphold mortgages by paroi.

Three of the cows in question were included in the mortgage, and it becomes important to inquire whether, it was ever so filed as to protect the defendant against a Iona fide purchaser of them from the mortgagor.

The statute, 4th Ed. 2 R. S., page 318, sec. 9, declares that “ every mortgage or conveyance intended to operate as a mortgage of goods and chattels 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 as directed in the succeeding section of this act.” And the tenth section declares that “ the instruments mentioned in the preceding section shall be filed in the several towns and cities of this State where a mortgagor therein, if a resident of this State, shall reside at the time of the execution thereof; and if not a resident, then in the city or town where the property so mortgaged shall be at the time of the execution of such instrument.” And the same section requires such filing to be in the Cleric’s office of the town.

There-being-no question that Hall was a resident of the State, and of the town of Antwerp, and that the mortgage or a copy thereof was not filed in the office of the town clerk of that town, the instrument was absolutely void as against subsequent purchasers in good faith and the filing in the town of Wilna in November, 1867, after Hall removed to that town, did not restore vitality to it as against such purchasers.

It is not enough to say, that the filing in Wilna was better, calculated to. give notice of the mortgage, than ■ the filing in Antwerp would have been. The answer to that is, that the language of the statute is clear and explicit, in requiring- it to be.- filed in the town where the mortgagor resides at the time of its execution, and its requirements must be observed by the mortgagee, if he would have his mortgage valid against such purchasers. And he has no right, to-substitute for it anything else, though he may think it would give much better information of its existence than if he literally followed the requirements of the statute. Persons: who subsequently deal with the mortgagor in regard to the mortgaged property, are bound to take notice of the requirements of the statute, and are bound to look for mortgages where the statute declares they shall be filed. . .

If therefore, the plaintiff -was a purchaser of the cows, in good faith, the mortgage as to her was absolutely void, and she was entitled to recover for the three cows, which were included therein, as well as for the other five in question.

The jury have found that she had no knowledge or notice of the mortgage; that Hall’s debt to her was an honest one; that he sold the cows to her in part payment of her debt, and that she took the delivery of them and canceled and gave up to him the $300 note, and indorsed the residue oil the other note, both being then past due. She is, therefore, a purchaser in good faith, provided 'the giving up and canceling of one note, and the indorsement upon the other of the balance of the purchase price, both being 'due, forms such a consideration for the purchase as is necessary -to make one, in that respect, a purchaser in good faith.

We need not stop to -inquire how the law in this respect has formerly been held by the courts in this State, essentially variant from the English decisions, and from the decisions of the courts of several of the ocher States, that while the giving up of a promissory note not matured, constituted such a consideration, that the giving up of a note past due did not. It is sufficient to say, that the decision of the Court of Appeals in the case of Day v. Saunders (3 Keyes, 347), has settled the law that there is no such distinction, and that the canceling and giving up a promissory note after it has become due furnishes a good consideration.

The distinction in that respect was, at best, quite vague, and must have proceeded upon the assumption that promissory notes, while maturing, "were used as a medium of exchange; and, to a considerable extent, were used as a circulating medium, and took the place of money, and that they were to be regarded, in transactions founded upon them for a consideration, as money, while notes which were dishonored did not perform any such office. And the time probably was when such state of tilings was real; but in these days, the idea that notes maturing are, to any considerable extent, used as a medium of circulation, or perform any of the usual offices of money, is too fanciful to give them a 2'U’eference, as a consideration, over such as have matured, the holder of which could at any .time take legal measures to secure a preference over creditors of the payee whose debts were not due, who were not in a situation to take any legal measures to collect their debts.

And however this may be, the ease of Day v. Saunden removes the distinction, and holds that the giving up of either class of such notes constitutes a good consideration.

It is claimed, however, on the part of the defendant, that the decision in Day v. Saunders does not apply to this case. That was an action by-the holder against the accommodation indorser of one Whipple, and on the trial it was established that Whipple was the maker of the note in suit, and that Sanders, the defendant, indorsed it for the accommodation of Whipple, and for the express purpose of turning it out in part payment for a farm which Whipple was about to purchase, and for no other purpose. That Whipple did not purchase the farm, but that he turned out the note to the plaintiff in payment of a prior note of Whipple to them, which was not due, and also in payment of one which was past due; and it had already been decided that so far as the giving up the note, which liad not matured, the consideration to that extent was good; but the court in this district held that the giving up of the note past due did not furnish a consideration for the transfer of the note in suit, and that to that amount the plaintiff could not recover of Sanders. On appeal to the Court of Appeals, the judgment of the Supreme Court was reversed, and it was decided that the giving up of the note which was past due was also a good consideration, and constituted the plaintiffs holders for value to the whole amount of the note in suit, and entitled them to recover the whole amount of it from the indorser, although it had been fraudulently, as to him, put in circulation by the maker.

How, if as against an accommodation indorser of negotiable paper fraudulently put in circulation by the maker, the holder, who gives up for it a promissory note of such maker past due is held to have paid a good consideration, it is impossible for meta discover any reason why the same thing would not constitute a purchase of personal property without notice as against the holder of a chattel mortgage, who himself neglects to give the notice which the statute requires him to give, to protect himself against such purchaser, a purchaser for good consideration also. I think the principle applies equally to either case, and is decisive of that question in this action.

It follows, then, that the judgment below must be affirmed unless some of the rulings of the judge at the circuit wore erroneous.

The views which I have taken necessarily dispose of all the questions raised on the trial, including the charge of the Judge, except one.

Toward the close of the trial the defendant was recalled as a witness in his own behalf, and after having been twice examined in chief and cross-examined on his third examination, his counsel offered : “ Brown — I offer to show that it was then agreed between them before the sale and purchase that they might exchange or sell those, exchange those for others and sell those, and with the avails purchase others, and that they agreed that they should be held, the title vesting in Freeman, the same as those exchanged; and I propose to follow it up by showing that after they were procured by Hall the cows were pointed out; a formal delivery of them under the agreement. Court. — lie says they were pointed out to him. Brown. — And that all of that was brought home to the notice of the plaintiff before her pretended purchase.” This was objected to and excluded, and defendant’s counsel excepted.

It is claimed for the defendant that this “ proposition was m substance to show that Hall purchased the five cows as agent of and for Freeman, delivered them to him, and held the same as his agent only; in other words, that those cows were the property of Freeman and in his possession by Hall as-his agent, and that plaintiff knew the fact when she claimed to purchase.”

How, there is not only nothing in the facts offered to be proved which would tend to establish such agency, but there is no evidence in the case from which such agency could be inferred, nor is there anything to show that from the time alluded to in the offer the defendant ever had the actual possession of any of the cows until he took and drove them away on the 13th of December, 1867. If the proof contained in the offer would establish anything in favor of the plaintiff, it could only have been that the parties attempted by what they did, to subject the five cows purchased by Hall of others to the. original mortgage, though it is not claimed by the offer that any mention was at that time made of the mortgage. And the jury having found upon the whole evidence that the plaintiff had no knowledge or notice of the mortgage, the proof that she knew of the transaction so offered in evidence could not possibly have aided the defendant in his defence.

The mortgage was originally filed by the defendant, on the 2d day of ¡November, 1866. True, it was filed in the clerk’s office of the town of Wilna, but so far as the defendant was concerned, it was a filing, and at all events, more than a year had elapsed after the making of the mortgage, and more than a year after such filing, and therefore when the plaintiff purchased the cows for a good consideration, although she might have known of the mortgage originally, or of the facts proposed to be proved, she had the right from the fact that a copy of it had not been filed at any time, and that much more than a year had elapsed, as well after the date of the mortgage as after the original filing, to presume, when she made the purchase that the claim of the defendant, whatever it may have been was satisfied and discharged.

The statute declares that chattel mortgages, filed pursuant to the act, shall cease to bo valid as against the creditors, and subsequent purchasers and mortgagees in good faith after the expiration of one year from the filing thereof unless within thirty days, next preceding the expiration of the said term of one year, a true co¡3y of the mortgage, together with a statement of the interest of the mortgagee in the property thereby claimed by him, shall be again filed in the office of the clerk of the town where the mortgagor shall then reside. (R. S., 4th ed., 318, § 11.)

If the mortgagee properly file his mortgage when he receives it, and he does not lile a copy with the statenient, within thirty days before the expiration of a year thereafter, subsequent purchasers for a valuable consideration, and without notice that it is not paid, will be protected against it; and certainly the same protection will be afforded to them, if at the-expiration of the year it has not been filed at all, or. has been improperly filed originally, and no copy thereof, with statement, filed within the year.

Ic would not be enough, therefore, for the defendant to show that the plaintiff knew of the original mortgage; but he was bound also to prove, that when she purchased after the expiration of the year, she knew, or had notice, that the mortgage debt had not been paid.

The testimony offered and excluded could not have benefited the defendant, and its exclusion was proper.

The judgment should be affirmed. All concurring.

Judgment affirmed.