Ingraham, J.:
This action, which was commenced on. the 14th day of September, 1895, was to recover from the defendant for .the conversion of certain bonds by the defendant. The plaintiff made and executed ■ to the defendant as trustee a mortgage to secure the payment of ten bonds of $1,000 each. After this triortgage was executed and recorded the ten bonds were, on the 21st, day of September, 1886, in the possession of the defendant. On. that day one Stranahan, secretary of the mortgagor and the owner of the most of its capital stock, agreed with the defendant that the ten bonds then in its possession should be pledged as security for his indebtedness to defendant, and the defendant thereupon retained possession of said bonds-until on- or about the 27th' day of December, 1890, when it converted " the ' same by delivering, the bonds to the German-American Bank of Buffalo in consideration of the sum of $14,650 paid, by the German-American Bank to the defendant, and the said bank thereupon became the Iona fide owner and holder of said bonds for value before maturity. On tbe 26th day "of August, 1895, the plaintiff demanded of the defendant the said bonds and the coupons ■ thereto attached, or payment to it of the amount due npon the said . bonds, and the defendant has refused to comply with the said demand. On the 4th. day of February, 1893, the defendant, at the ’ request of the German-American Bank, brought an action.to foreclose the mortgage. Judgment was- finally entered in that action, foreclosing the mortgage and directing. a sale of the mortgaged property, which property was sold by the sheriff and a conveyance ■ of the property sold duly executed and delivered to,the purchaser.
I agree with Mr. Justice Scott that there was no conversion of these-ten bonds and no-cause of action existed in.favor of the creditor until the transfer of the bonds by the defendant to the German-American Bank. Prior to-that time the bonds thus in the posses-' sion .of the defendant had no validity and imposed no obligation npon the obligors.- No cause of action existed to enforce the bonds 'or the mortgage to secure them as the bonds were not valid and existing obligations of the mortgagor. The agreement between the defendant and Stranahan was not binding on the mortgagor and created no lien on the bonds and gave to the defendant no right to retain them. ' Consequently nothing that the defendant did gave . [247] validity to the bonds, or imposed any liability at all upon the mortgagor, or gave the creditor any cause of action, against the defendant.
The subsequent delivery of the bonds by the defendant to the ■ German-American Bank was, however, a conversion by the defendant of .the bonds, as by that delivery to the bank the latter became the bona fide holder' for value of the bonds and entitled to enforce them against the mortgagor. This was settled by the Court of Appeals on appeal from a judgment in the action to foreclose the mortgage. (Buffalo Loan, T. & S. D. Co. v. Medina Gas, etc., Co., 162 N. Y. 67.) Upon the delivery of these bonds by the defendant to the bank, therefore, a cause of action arose in.favor of the mortgagor, to whose rights the plaintiff has succeeded, for a conversion of the bonds by the' defendant; and-- as this action was commenced within six years after the act of the defendant, which ' was a conversion of the bonds, it is not barred by the Statute of Limitations. ' ,
The remaining question is whether this cause of action, which thus arose on the 27th day of December, 1890,' was included in the property transferred to the defendant as trustee for the benefit of the bondholders, and whether the subsequent sale under the -judgment foreclosing the mortgage vested the title to this cause of action in the purchaser, and the plaintiff was fthereby divested-of such cause of action. The mortgage whs dated September 15, 1886, and recited the execution of ten six per cent bonds, and to’secure" the payment of. the said bonds, “ granted, -bargained, sold, aliened, remised, released, conveyed and confirmed ” unto' the defendant as trustee -certain'real estate in the village df Medina, ■ county of Orleans, in the State of blew York, which was particularly described, with all the gas works, fixtures, pipes and machinery connected with or pertaining to the gas. works located on said premises; and also all and singular the other real estate of the mortgagor whether the same have been or are now acquired by the mortgagor' or might thereafter be acquired by it, “ and all and singular the scales, fioolsj machinery, fixtures, implements' and appliances df every nature and description, and all the brands, stamps, 'trade'-marks and other arti-. cles of personal property, now'or 'which shall hereafter be acquired by the party of the first part, ahd after default shallbe made herein) all and singular the materials manufactured,' unmanufactured off in [248] process of manufacture, bills receivable, debts, demands, dues, chases in action, accounts, and all other property, rea], personal or mixed, . which have been acquired or may hereafter be acquired by the party of the first part, with all and singular its rights, privileges, franchises, and all and singular the estate, right, title, interest, property, possession, claims and demands whatsoever, as well in equity as in law, of the party of the first part, of, in .or to the game and tp every part and parcel thereof, with the appurtenances,” This instrument was recorded on the 22d-day pf September, 1886.
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Ingraham, J.:
This action, which was commenced on. the 14th day of September, 1895, was to recover from the defendant for .the conversion of certain bonds by the defendant. The plaintiff made and executed ■ to the defendant as trustee a mortgage to secure the payment of ten bonds of $1,000 each. After this triortgage was executed and recorded the ten bonds were, on the 21st, day of September, 1886, in the possession of the defendant. On. that day one Stranahan, secretary of the mortgagor and the owner of the most of its capital stock, agreed with the defendant that the ten bonds then in its possession should be pledged as security for his indebtedness to defendant, and the defendant thereupon retained possession of said bonds-until on- or about the 27th' day of December, 1890, when it converted " the ' same by delivering, the bonds to the German-American Bank of Buffalo in consideration of the sum of $14,650 paid, by the German-American Bank to the defendant, and the said bank thereupon became the Iona fide owner and holder of said bonds for value before maturity. On tbe 26th day "of August, 1895, the plaintiff demanded of the defendant the said bonds and the coupons ■ thereto attached, or payment to it of the amount due npon the said . bonds, and the defendant has refused to comply with the said demand. On the 4th. day of February, 1893, the defendant, at the ’ request of the German-American Bank, brought an action.to foreclose the mortgage. Judgment was- finally entered in that action, foreclosing the mortgage and directing. a sale of the mortgaged property, which property was sold by the sheriff and a conveyance ■ of the property sold duly executed and delivered to,the purchaser.
I agree with Mr. Justice Scott that there was no conversion of these-ten bonds and no-cause of action existed in.favor of the creditor until the transfer of the bonds by the defendant to the German-American Bank. Prior to-that time the bonds thus in the posses-' sion .of the defendant had no validity and imposed no obligation npon the obligors.- No cause of action existed to enforce the bonds 'or the mortgage to secure them as the bonds were not valid and existing obligations of the mortgagor. The agreement between the defendant and Stranahan was not binding on the mortgagor and created no lien on the bonds and gave to the defendant no right to retain them. ' Consequently nothing that the defendant did gave . [247] validity to the bonds, or imposed any liability at all upon the mortgagor, or gave the creditor any cause of action, against the defendant.
The subsequent delivery of the bonds by the defendant to the ■ German-American Bank was, however, a conversion by the defendant of .the bonds, as by that delivery to the bank the latter became the bona fide holder' for value of the bonds and entitled to enforce them against the mortgagor. This was settled by the Court of Appeals on appeal from a judgment in the action to foreclose the mortgage. (Buffalo Loan, T. & S. D. Co. v. Medina Gas, etc., Co., 162 N. Y. 67.) Upon the delivery of these bonds by the defendant to the bank, therefore, a cause of action arose in.favor of the mortgagor, to whose rights the plaintiff has succeeded, for a conversion of the bonds by the' defendant; and-- as this action was commenced within six years after the act of the defendant, which ' was a conversion of the bonds, it is not barred by the Statute of Limitations. ' ,
The remaining question is whether this cause of action, which thus arose on the 27th day of December, 1890,' was included in the property transferred to the defendant as trustee for the benefit of the bondholders, and whether the subsequent sale under the -judgment foreclosing the mortgage vested the title to this cause of action in the purchaser, and the plaintiff was fthereby divested-of such cause of action. The mortgage whs dated September 15, 1886, and recited the execution of ten six per cent bonds, and to’secure" the payment of. the said bonds, “ granted, -bargained, sold, aliened, remised, released, conveyed and confirmed ” unto' the defendant as trustee -certain'real estate in the village df Medina, ■ county of Orleans, in the State of blew York, which was particularly described, with all the gas works, fixtures, pipes and machinery connected with or pertaining to the gas. works located on said premises; and also all and singular the other real estate of the mortgagor whether the same have been or are now acquired by the mortgagor' or might thereafter be acquired by it, “ and all and singular the scales, fioolsj machinery, fixtures, implements' and appliances df every nature and description, and all the brands, stamps, 'trade'-marks and other arti-. cles of personal property, now'or 'which shall hereafter be acquired by the party of the first part, ahd after default shallbe made herein) all and singular the materials manufactured,' unmanufactured off in [248] process of manufacture, bills receivable, debts, demands, dues, chases in action, accounts, and all other property, rea], personal or mixed, . which have been acquired or may hereafter be acquired by the party of the first part, with all and singular its rights, privileges, franchises, and all and singular the estate, right, title, interest, property, possession, claims and demands whatsoever, as well in equity as in law, of the party of the first part, of, in .or to the game and tp every part and parcel thereof, with the appurtenances,” This instrument was recorded on the 22d-day pf September, 1886.
The cause of action which is here sought to be enforced arose on the 2Tth day of December, 1,890, by a conversion by the defendant of the bonds which were secured by the execution and delivery of this mortgage, and on the 4th- day of February, 1893, the ' defendant, as trustee fop the German-American Bank, who was the holder of these bonds, brought an action to foreclose the mortgage. The complaint in that action, after alleging the execution pf the mortgage and the issuing of tl.ie bonds, alleges the transfer of the bonds for value by Stranahan to the German-American Bank of Buffalo and the execution of the mortgage, describing the property mortgaged by the same description as is contained in the mortgage. There is no allegation in the complaint that.the property sought to be foreclosed included subsequently acquired property', The final judgment directing a foreclosure of that mortgage was entered on Jiipe '22; 1895, It directed a sale of the property by the same description as is contained in the mortgage. There was neither in the report of the referee nor in the judgment any finding as to subsequently acquired property or that this cause of action was covered by the mortgage or to be sold under the judgment. What was enforced in that action was the lien given by the mortgagor upon the specified property described, arid the property tiras described' was sold' under the judgment and transferred by the sheriff’s deed to the purchaser. The sheriff’s deed described by metes and bounds the real property covered by the mortgage, and thfen purports to convey all “ Other articles of personal property which then were or .should thereafter be acquired b.y the said The Medina Gas Light Company and after default should be made in the conditions of. said mortgage, all and singular the materials manufactured,-nmnairafac- • tured or in process of manufacture, bills receivable, debts, demands, [249] dues, ekoses in action, accounts and aU other property, real, personal or mixed, which has been acquired or might thereafter be acquired by the said The Medina Gas-Light Company.” The conveyance does not in form purport to convey debts, demands, dues, dioses in action and accbunts which liad actually accrued to the plaintiff after the execution of the mortgage and before default had been made in the condition of the mortgage. The cause of action here sought to be enforced was a chose in action which had arisen prior to the default in the condition of the mortgage and subsequent to the execution and delivery of the mortgage and, therefore, there was no lien that attached or could attach on the execution and delivery of the mortgage. The mortgage contained an agreement between the trustees and the mortgagor by which subsequently acquired property should become subject to the mortgage, and this agreement gave an equitable lien upon property which should be subsequently acquired by the mortgagor, • By the very form of this instrument it was to act in the future, to take effect after default was made in the condition of the mortgage, and was then to affect the property “ which has been acquired or might thereafter be acquired ” by the mortgagor.
In Deeley v. Dwight (132 N. Y. 59), in speaking of a mortgage upon subsequently acquired chattels, it was said: “ The instrument under which the plaintiff claims to recover is in form a chattel mortgage, Gandolfo, who executed it, assumes to transfer the legal title to the machinery to Bobevb Deeley, the plaintiff’s assignor, subject to be defeated upon the payment of $4,700. But the machinery, not having been then manufactured, Gandolfo- had no title to it, * * *, and the instrument did not vest the legal title of the machinery in Deeley, nor did it create a legal lien upon the property described therein. ' * * * We find no case which holds that the legal title to property not in existence actually or potentially can be transferred either by way of sale or mortgage. That an equitable lien may be created on property to be brought into existence is well settled, and an action to foreclose the lien may • be maintained.. * * * If (a court of equity) construes ¿lie instrument as operating by way of-present contract to give a lien, which, as between the parties, takes effect and attaches to the subject of it as soon as it comes into the ownership of the party.”
[250] In National Bank of Deposit v. Rogers (166 N. Y. 380) the action was brought to Have a lien declared upon certain property which the defendant had agreed should be. pledged to the plaintiff to secure the payment of a note held by the plaintiff. .The action was thus in form to have such a lien declared and enforced^ and in such a ease the rule is there stated that “ A party cannot mortgage property which he does not have, but he can - agree to mortgage it or give a. lien upon it as soon as he gets it, and equity will enforce the agreement and establish the lien. * " " * So, where the intent is to give a lien, and what is done to that end is too defective to create it, but is consistent with its creation, and'not a contract for something else, equity will treat as done what was intended to be done, and the lien may be established and foreclosed in the same action.”
• That such an equitable lien, which arises from the ■ contract or agreement that a mortgage should attach to subsequently acquired property, is quite distinct from the actual lien that attaches upon the (execution arid delivery of the mortgage, appears from Rochester Distilling Co. v. Rasey (142 N. Y. 570), for it is there expressly held that a mortgage upon chattels having no actual or potential, exists cence cannot operate to charge them with a lien when they come into (existence as against an attaching or execution creditor. It is there ¡said: “ It results from a review of the authorities that a mortgage (cannot be given future effect as a lien upon personal property, which, at the time óf its delivery, was not in existence, actually or potentially, when the rights of creditors have intervened. * * * The mortgage could have no positive operation to transfer in prce.senti property .not in esse. At furthest, it might operate by way of'a ■present contract between the parties that- the creditor should have ¡a lien upon the property to be subsequently acquired by his debtor, which' equity would -enforce as against, the latter. * *. * ¡Regarding the chattel- mortgage in question as a mere. executory agreement' to give a lien, when the property came into existence, some further act was necessary, in order to make it an actual and effectual • lien as against creditors. But there was no further act by the parties to the instrument tó create such an actual lien and the levy of the execution- upon the crops operated to transfer their possession from the owner to'that of the sheriff.-' As against his possession the - .equities of the mortgagee- are unavailing for any’purpose.”
[251] It has been held that a mortgage of future-acquired property will be enforced only as a right under a contract and not as a trust attached to the property. (6 Cyc. 1053 ; Otis v. Sill, 8 Barb. 103; Wood v. Lester, 29 id. 145,154.)
At law the right of a mortgagee to have subjected to the lien of his mortgage chattels which shall be acquired by the mortgagor subsequent to the execution of the mortgage depends upon the mortgagee taking possession of the chattels after acquired by the mortgagor. In McCaffrey v. Woodin (65 N. Y. 459), Commissioner Dwight, after a review of the authorities, said: “The general idea running through these cases in a court of law appears to be that the executory agreement operates as a license, authority or power, revocable in its nature, until the creditor is either put into possession of the goods at the time or after they come into existence or are vested in the debtor.' As soon as that new act has intervened, the lien of the creditor becomes perfect, and, in the absence of statutory regulation, prevails over the liens of subsequent executions.” It' was, however, also held in that case that the ‘rule in equity'is much less technical and more comprehensive, and approves Holroyd v. Marshall (10 H. L. Cas. 191), when it was held that in equity the lien of the mortgage attached as soon as the property came into possession of the mortgagor. As Lord Chelmsford put it: In equity the estate attaches as soon as the property is acquired by the debtor. “ At law, property non-existing, but to be acquired at a future time, is not assignable; in equity it is so. At law (as we have seen), although a power is given in the deed of assignment to take possession of after acquired property, no interest is transferred, even as between the parties themselves, unless possession is actually taken. In equity it is not disputed that the moment the property comes into existence the agreement operates upon it.” In Moody v. Wright (13 Metc. 17), speaking of an instrument which assumed to give a lien upon subsequently acquired personal property which had no existence at the time of the execution of the mortgage, it was held that neither in a court of law or equity can such security be made effectual by the .making and recording of such instrument, without any further act of. the pan ties, with no delivery by the mortgagor, and no act on the part of the mortgagee, taking' possession or exercising any rights of property in the newly-acquired articles, by virtue off the provisions in [252] the mortgage.. This case. is clearly against .the. authorities in this State, in holding that such an instrument did not giye an .equitable lien,’ But- I think it is an authority for the proposition that to enforce the right of a mortgagee he must either take possession of the specific property or do seme act in relation to it, to subject the property to the existence of the lien. Such an act would be tak- : ing actual physical possession óf the property when it is of such a ' nature that possession can be taken or by commencing a proceeding in equity to subject the specific property to the lien and to enforce-the lien, •
In Rochester Distilling Co. v. Rasey (142 N. Y. 570) Judge Gray says: “Regarding the chattel mortgage in question as a . mere executory agreement to give a lien, when the property came into existence, some further act was necessary, in order' to make it an actual and effectual lien as against creditors.”
It is true that in that ease there were intervening creditors, and the- ■ question depends upon the effect of the sale under the judgment of foreclosurebut these, authorities all .recognize the distinction between. the lien created by the mortgage upon existing property and the equitable lien arising from the contract between the parties that the lien of the mortgage shall extend, to subsequently acquired • , . property. It seems to me to necessarily follow that if a mortgagee wishes to enforce his equitable lien against subsequently acquired property, he must either take actual possession of the property or bring his action for that purpose, describing with. reasonable certainty the property to which he -seeks to have the equitable lien attach or declared and enforced. An action to foreclose the legal lien created by the execution and delivery of the mortgage, without some allegation that , there existed property-upon which there was also an equitable lien and which the mortgagee was entitled to have declared and enforced, would not, as I view it, affect subsequently acquired property, and a sale under a judgment in such an action which did not in effect direct such subsequently acquired property to he sold, .and where it was not in fact sold under the judgment-, would not pass to the purchaser title to the subsequently acquired property, The complaint in this foreclosure action is to enforce the lien created by the execution and delivery of the mortgage. The report of the referee directs judgment for an enforcement of the [253] lien created by the mortgage, and the judgment follows the referee’s report. . -
It seems to me that to include subsequently acquired property upon which it was agreed that there was to be a lien, the property - thus subsequently acquired and which was to- be< subject to the lien of the mortgage must be specifically described and the specific property sold and conveyed.' A conveyance in general terms conveying all the property or chosés in action, bills, notes and demands of the mortgagor would not include specific property which had been acquired subsequent to the execution of the mortgage.
I do- not think, therefore* that the conveyance- by the sheriff to the purchaser Under the judgment of the foreclosure of this mortgage was a transfer of this cause of action against the defendant, and that the judgment should be-affirmed, with costs.
Patterson, P. j., and Olakké*. j., concurred; Laughlin and Scott, JJ., dissented.