Manufacturers & Traders' Bank v. Koch

1 Silv. Ct. App. 415, 8 N.Y. St. Rep. 37
CourtNew York Court of Appeals
DecidedApril 19, 1887
StatusPublished

This text of 1 Silv. Ct. App. 415 (Manufacturers & Traders' Bank v. Koch) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Manufacturers & Traders' Bank v. Koch, 1 Silv. Ct. App. 415, 8 N.Y. St. Rep. 37 (N.Y. 1887).

Opinion

Rapallo, J.

This action was brought against Harry H. Koch in his lifetime as sheriff of Erie county. He having died after judgment, it was continued against the present defendant as his administratrix. The cause of action was the taking and conversion by the sheriff of certain personal property which was claimed by the plaintiff by virtue of a chattel mortgage made to it by Lauren C. Woodruff and Alfred B. Benedict, composing the firm of L. C. Woodruff & Co., of the city of Buffalo, to secure certain partnership liabilities of that firm. The mortgage covered the stock in [417]*417trade and other chattels of the firm, and was dated the 30th of October, 1884, and duly filed the same day.

The mortgagee took actual possession of the mortgaged property on the 26th of November, 1884, and continued in possession down to the 26th of December, 1884, when it was levied upon and taken from its possession by the sheriff, who justified the taking under two executions issued on the 19th of December, 1884, upon judgments recovered the same day against said firm of L. C. Woodruff & Co., and alleged that the chattel mortgage under which the plaintiff claimed title was not made in good faith, and was in fraud of the creditors of L. C. Woodruff & Co., the mortgagors. On the trial the question of fraud was submitted to the jury, and they found in favor of the plaintiff, who had judgment on the verdict. That judgment was affirmed by the general term, and the defendant now appeals to this court. As no opinion was rendered in the court below, we must state our reasons for affirming its judgment.

The first point urged on the part of the appellant is that the trial court erred in refusing to nonsuit the plaintiff. The ground upon which a nonsuit was claimed was, in substance, that the uncontroverted evidence established that the mortgage was fraudulent as against creditors. The evidence on the part of the plaintiff showed that at the time the mortgage was given, October 30, 1884, there was a-valid indebtedness on the part of the mortgagors, as co-partners, to the plaintiff, to an amount exceeding the value of the property mortgaged, and the president of the plaintiff testified that the mortgage was given to secure then existing indebtedness, and any that might afterwards arise. The indebtedness in question arose out of dealings of the firm of L. C. Woodruff & Co. with the plaintiff, which had continued for several years before the giving of the mortgage ; and it appeared in evidence that in the spring of 1884 the plaintiff had required security from the firm, and -they [418]*418had given it a similar mortgage, but that after the giving of that mortgage, the firm had continued in possession of the mortgaged property, and had carried on its business, in the course of which it had sold a large part of the mortgaged stock, and had replaced it by new purchases, which were not covered by the mortgage, and that the mortgage of October 30, 1884, was given with the view of covering such after acquired property. During the running of the first mortgage, and before the giving of the second, the plaintiff had made an arrangement with Mr. Richardson, the bookkeeper of L. C. Woodruff & Co., for an agreed compensation, to look after the interests of plaintiff as mortgagee, but no actual possession was taken by or on behalf of the mortgagee until about a month after the giving of the second mortgage, viz., November 26, 1884, when, the mortgage debt having become due, the plaintiff put a deputy sheriff in charge of the property. An arrangement was then made, allowing sales of the mortgage stock, the proceeds to be paid over to the plaintiff as mortgagee, and applied on the -mortgage, and afterwards, and before the levy by the sheriff, the plaintiff, as mortgagee, gave public notice of the sale of the property under the mortgage.

It was claimed on the part of the defendant that the mortgage given in the spring of 1884 was not intended as a security to the plaintiff, but for the purpose of protecting the property against the claims of the creditors of the mortgagors, and enabling them to continue their business for their own benefit; that it was agreed that the mortgagors might make sales for their own benefit; and that the mortgage of October 30, 1884, was a mere renewal or continuation of the previous mortgage. All these points were controverted by testimony on the part of the plaintiff, and presented questions of fact for the jury. The only evidence of actual intent to defraud creditors was to the effect that Lauren C. Woodruff, one of the mortgagors, was indebted on some individual transactions of his own; that L. [419]*419C. Woodruff & Co. were apprehensive that these individual creditors of Woodruff might interfere with the property of the firm; and that one object of giving the mortgage to the plaintiff was to protect the firm property against these individual creditors; and there was some evidence to the effect that the plaintiff was aware of these facts. But, on the other hand, the evidence was that the mortgage was demanded by the plaintiff by direction of a committee of its directors, because it had ascertained that a portion of the mortgaged property had been sold, and it required a new security for the indebtedness to it. Even if it did not know that the property of the firm was liable to be interfered with by individual creditors of Woodruff, it had a right to demand that it should be secured, so as to have a preference over such individual creditors; and securing such, a preference was not a fraud. All these questions were properly submitted to the jury as questions of fact. The court charged the jury that it was for them to say whether the second mortgage was given for the purpose of securing the debt to the plaintiff, and nothing else; that, if given with the view of defrauding the creditors of L. 0. Wood-ruff & Co., it was fraudulent as matter of law.

The allegation that permission was given to the mortgagors to sell the mortgaged property was denied on the part of the plaintiff, and neither of the mortgagors testified to any arrangement or understanding allowing such sales. It does not distinctly appear what sales, if any, of mortgaged property were made after October 30, 1884, and before .November 26th, or that the plaintiff had knowledge of them; for there was property in the store of L. C. Woodruff & Co. not covered by the mortgage. The court left the question to the jury charging them that if they found that there was an agreement or understanding that the mortgagor might sell the mortgaged property, and use the proceeds as they. saw fit, it invalidated the mortgage.

We think the court committed no error in refusing to [420]*420nonsuit the plaintiff, and that the question was properly submitted to the jury.

Some exceptions were taken to the charge, which are now insisted upon:

1. The court was requested to charge that “ the possession of the bank by Richardson was not such a possession by the bank as to remove the case from under the statute.” The court refused to charge otherwise than it had already charged. Aside from any criticism of the form of this request, we think the charge asked for, although perhaps correct in substance as an abstract proposition, was quite unnecessary and irrelevant.

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Bluebook (online)
1 Silv. Ct. App. 415, 8 N.Y. St. Rep. 37, Counsel Stack Legal Research, https://law.counselstack.com/opinion/manufacturers-traders-bank-v-koch-ny-1887.