Opinion
November Term, 1900.
Alfred J. Gilchrist, for the appellant.
Martin Flannigan, for the respondent.
This is an action to recover $300 damages for the conversion of a lathe and certain appliances connected therewith. The answer contained a general denial and the plea of former adjudication in favor of the defendant. The latter plea appears to have been abandoned on the trial.
The plaintiff sued as the assignee of the Brooklyn Hardware and Sporting Goods Company. It appeared that this concern sold the lathe and appliances in question to one William Holliday and took in payment therefor the purchaser's note, dated April 15, 1899, for $404.50, payable on demand after date. To secure the payment of this note Holliday executed a chattel mortgage upon the lathe and appliances, which was duly filed in the office of the register of Kings county on May 18, 1899.
Holliday subsequently sold the lathe to the defendant Lewinski in October, 1899, and before any demand was made upon him in behalf of the plaintiff he sold the instrument in turn to a stranger, whose identity is not disclosed by the testimony. It does not appear that up to the time of this sale by the defendant any demand had been made upon Holliday for the payment of the note secured by the chattel mortgage.
Under these circumstances, there having been no default in the payment of the note and no demand of possession in behalf of the mortgagee before the sale and delivery of the property to a third person by the defendant, the mortgagee was not in a position to recover damages for conversion against the defendant. ( Hathaway v. Brayman, 42 N.Y. 322.) The case cited holds that where a chattel mortgage contemplates that the mortgagor is to continue in possession until default in payment, the mortgagee cannot recover in an action for an alleged conversion against a purchaser from the mortgagor in possession, before such default, and that the remedy of the mortgagee in such case is to follow the property into the hands of the purchaser and require its delivery to him or the payment of his mortgage debt.
The rights of the parties under such circumstances are thus stated by the Commission of Appeals in Hamill v. Gillespie ( 48 N.Y. 556): "While the property remained in the possession of the mortgagor and the condition of the mortgage unbroken, he had an interest subject to his control and disposition. He could sell and deliver such title as remained to him. The purchaser would take it in case of a sale subject to the lien of the mortgage, whether its existence was ascertained by the purchaser or not, or whether the mortgagor mentioned or omitted to mention it."
These considerations preclude a recovery by the plaintiff as for a conversion of the property in controversy upon the proof contained in this record. The judgment must, therefore, be reversed.
All concurred.
Judgment of the Municipal Court reversed and new trial ordered, costs to abide the event.