State Trust Co. v. Casino Co.

5 A.D. 381, 39 N.Y.S. 258
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 15, 1896
StatusPublished
Cited by10 cases

This text of 5 A.D. 381 (State Trust Co. v. Casino Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Trust Co. v. Casino Co., 5 A.D. 381, 39 N.Y.S. 258 (N.Y. Ct. App. 1896).

Opinion

O’Brien, J.:

The only question presented by the appeals is as to whether Maxwell’s lien for storage charges is paramount to the lien of the mort[384]*384gage, appellant’s claim being that these chattels were covered by the mortgage, and that the claim for storage was subject to the lien of the mortgage; while, on the other hand, it is claimed by the storage warehouseman that the lien of the mortgage had been lost by reason' of the failure to relile the said mortgage as a chattel mortgage before the expiration of the year, as provided by law, and that in consequence his lien for storage was a first lien upon the stored property.

In support of the former view, it is insisted that the warehouseman took the property with notice of the mortgage, and that his lien attached subject to the lien of the mortgage; and we are referred to the case of Baumann v. Post (16 Daly, 385), wherein it was held that where chattels covered by a mortgage duly filed are stored by the mortgagor, without the mortgagee’s knowledge, with a warehouseman, after default under the mortgage, so that the mortgagee’s title and right to immediate possession have become absolute, the lien of the warehouseman for storage is subordinate to the lien of the mortgage. Here it appears that default was made under the mortgage; and the trust company was, therefore, at liberty, had it so elected, to proceed to enforce its security, which, however, it did not do. It is also true that at the time the goods were stored the mortgage was perfectly valid, because it had been properly filed and the year had not then expired. Undoubtedly, during that period while the mortgage was valid, the lien of the warehouseman was subject to the lien of the mortgage. The respondent’s claim however is not put upon the ground of his lien being superior to that of the mortgage at the time it first attached, but that by reason of the failure to refile within thirty days prior to the expiration of a year from the original filing the lien of the mortgage was lost and it became void as to existing creditors, among whom was the warehouseman.

But it is insisted that as against the warehousemen, the mortgagee lost no rights; and we are referred to the case of Meech v. Patchin (14 N. Y. 71), which is authority for the proposition that “ the omission to refile a chattel mortgage pursuant to the third section of the act on that subject (Laws of 1833, chap. 279, p. 402) does not render it invalid as against purchasers or mortgagees intermediate the original filing and the omission to refile.” The warehouse[385]*385man, however, is neither a purchaser nor a mortgagee, but claims as a creditor. And the distinction between these classes is well pointed out in the case of Thompson v. Van Vechten (27 N. Y. 582), wherein it is said: “The statute also.declares that every mortgage filed pursuant to its provisions shall cease to be valid against the creditors of the mortgagor or against subsequent purchasers and mortgagees after one year from such filing, unless within thirty days preceding the expiration of the year it shall be again filed with a statement of the interest of the mortgagee. * * * The question is whether a creditor must, in order to avail himself of this provision, have become such during the default in refiling. We have given a construction of this provision in its bearing upon purchasers and mortgagees in Meech v. Patchin (14 N. Y. 71), and we held that a mortgagee could not take an advantage of an omission to refile unless he became such mortgagee during the existence of the default. This was based very much upon the word subsequent, which is used to qualify the term purchasers and mortgagees, and means, as we thought, subsequent to the omission to refile. But this expression is not employed as regards creditors. Reading the statute literally, the creditors who may take advantage of the default in refiling-embrace all the creditors of the mortgagor, without regard to the time when the debts were contracted.” And in Porter v. Parmley (52 N. Y. 185) it is held that failure to refile a chattel mortgage makes the same absolutely void as against creditors.

While, therefore, the mortgage as against creditors is void, it “cannot be legally questioned,” as said in Thompson v. Van Vechten (supra), “until the creditor clothes himself with a judgment and execution, or with some legal process against his property; for creditors cannot interfere with the property of their debtor without process.” Where, however, as here, the warehouseman, being a creditor, as against whom the mortgage is void for failure to refile, has possession of the property, and a right to retain it for his lien, with a right to sell the same to discharge the amount thereof, he is in a very different position from a general creditor ; because the latter, before he can levy on the property or have the right to sell it, must obtain a judgment and issue execution, or obtain some legal process against the property. We think, therefore, that as against [386]*386a chattel mortgage, a creditor in possession of the property, with a right to sell it in discharge of his debt, is in a position similar to that of a judgment creditor in respect to his right to assail or deny the validity of the mortgage.

Some doubt is suggested as to the warehouseman being a creditor — due to the fact that the record is silent as to whether the person who delivered the property to the warehouseman had or had not the authority to enter into a contract for its storage. It is true the record says nothing on this point, but the validity of the warehouseman’s claim as a creditor was not questioned below;. and it is not claimed, nor is there anything to show, that Bond had not such authority, and it does appear that the property, after the mortgagor was dispossessed, was delivered — and, therefore, presumably rightfully delivered — -to the warehouseman for safe-keeping; and in the absence of any evidence to the contrary, we have a right to assume that Bond had at least implied power to safeguard and protect the property for the owner ; and we should not raise the question of the warehouseman’s status as a creditor, which was not assailed below, and is not raised by any party on this appeal.

Apart from this, we think the order below was right in denying the appellant’s motion for an injunction, because the receiver appointed in the action of the American Exchange National Bank represents a creditor of the Casino Company who has obtained a judgment, and, therefore, is in a position to question the validity of the mortgage.

Equally right was the order directing the receiver to sell the property and, after paying the charges of the warehouseman, to retain the proceeds, because in the disposition of the latter the appellant has no interest, and the other parties affected do not appeal.

The appellant insists, however, that the mortgage was valid and refers us to chapter 529 of the Laws of 1895, which removes the necessity for the refiling of a mortgage by a corporation. This statute amends chapter 779 of the Laws of 1868, entitled “ An act in relation to mortgages by railroad companies.” It will be noticed upon reading this latter act, as amended by the Laws of 1895, that instead of confining it to mortgages by railroad companies, the language is changed so as to make it read: “ It shall not be necessary to file or refile as a chattel mortgage any mortgage creating alien upon real and per[387]

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Cite This Page — Counsel Stack

Bluebook (online)
5 A.D. 381, 39 N.Y.S. 258, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-trust-co-v-casino-co-nyappdiv-1896.